Coursera CEO on IPO: this was a 'good time' for public debut
Coursera soars in its public debut. Coursera CEO Jeff Maggioncalda joins Yahoo Finance Live to discuss.
Video Transcript
AKIKO FUJITA: We've got a new entry on the NASDAQ today. Online learning platform Coursera seeing a big pop in its debut, up about 20% after pricing its shares at $33 a share. That raises-- that means the company raised about $500 million there.
Let's bring in Jeff Maggioncalda. He is the CEO of Coursera. First of all, Jeff, congratulations on the big debut. This is the second time you are bringing a company to the public markets. What's different this time around, and why come to the markets now?
JEFF MAGGIONCALDA: Yeah, well, the difference is probably clear. Not only do people learn online and work online, now they do IPOs online. The roadshow was clearly very different, in terms of just, you know, sitting in a room and being on Zoom-- more efficient, in many ways, but to some degree, not quite as exciting an experience.
On the question of why now, I mean, generally speaking, a company will go public when the company is in a position where that makes sense for them. Usually there's a certain size, a growth rate, sometimes a need for capital. And sometimes, it's about really investing in expanding your resources and your brand.
The second piece of that, of course, is the markets. Are the markets receptive to these types of offerings? Our early investors included John Doerr from Kleiner Perkins and Scott Sandell from NEA. They clearly have a lot of experience with these kinds of things, and we just thought that this would be a good time for Coursera.
AKIKO FUJITA: I mean, you're certainly coming off of a year when you had a lot of momentum, as so many universities were forced to go online-- your revenue up 60% last year. How do you keep this momentum going as more and more schools think about going back to in-person classes?
JEFF MAGGIONCALDA: Yeah, I think from the earliest days when Andrew Ng and Daphne Koller, who are the two Stanford professors that started Coursera-- when they did, they thought out over many decades, I'm sure, to say the world needs more access to high-quality learning. Many trends were in place many years before the pandemic hit. There will be a new normal that emerges. We don't know what that will look like, either in terms of how we work remotely versus in an office and how we will learn online and also on campus, but it's pretty clear that the world will never be the same again and that online learning will be a big part of it. So we really think about the long term, all the structural reasons why people will need to learn continuously through their lives, to learn new skills as the world goes more digital.
ZACK GUZMAN: Yeah, and Jeff, it's interesting because you're coming out at a time where, obviously, I think a lot of people have experienced exactly the shift to online you were describing there. It's, obviously, not just you guys, though. I mean, there are companies out there as well-- 2U, which is interesting because they kind of shifted from, you know, degrees to alt certificates in the education space. You guys are looking to build up, it seems like, the degree side of the business. Talk to me about how that expansion has gone and what kind of growth you see ahead, if we are to return to normal.
JEFF MAGGIONCALDA: Yeah, what we've seen for centuries is that college degrees are the most meaningful, recognized learning credential that there is, and the credential type hasn't really innovated that much over the last period of history. We think with technology, the ability to create not only degrees, but other types of credentials-- those are professional certificates and industry certifications, even things that we call specializations-- that the world will be populated with both new forms of degrees that are more affordable and flexible for working professionals that can be earned online but also other credentials, like professional certificates and certifications. It will be a portfolio of credentials, we believe, that will serve lifelong learning needs in a world where people need to keep learning, even as they're working.
ZACK GUZMAN: Is there more--
AKIKO FUJITA: Jeff, what kind of--
ZACK GUZMAN: When we talk about monetization on that-- sorry, Akiko. When we talk about monetization on that front, though, talk to me about how those might actually bring in more dollars. Because if you look at the revenue from a 2U, and that was up 83%, at least when you look at their alt cred side. But fiscal year 2020, revenue was up 35%, north of $750 million. You guys were at $294 million last year. So talk to me about kind of how much upside there is, relative to these alternative certificates in the education space.
JEFF MAGGIONCALDA: Yeah, I mean, it's hard to really break out. We don't know how the landscape will shape out, in terms of which credentials are the most valuable for different people at different parts-- times in their lives and in different jobs and in different regions. We do believe that there's going to be a portfolio of credentials that meet the needs of a lot of people. We see, especially in emerging markets, college degrees are very important.
And still, though, these alternate credentials, as you say, will be an important on-ramp into digital jobs for people who don't yet have a college degree. So it's not really clear which credentials for which people will be those stepping stones. But we do believe, over time, most people in their lifetimes will earn a number of credentials, including college degrees and industry certifications as well.
AKIKO FUJITA: Jeff, you've already touched on a number of pillars that the company operates on, direct-to-consumer, of course, one that I think our viewers are most familiar with. You've got the enterprise side, as well as the degree programs. Which one do you find the most stickiest? And ultimately, you've got a lot of users that came on board during the pandemic. How do you convert them into paid users?
JEFF MAGGIONCALDA: Well, what we've seen is, as you say, about 30 million individuals registered on Coursera in 2020. So it grew from about 47 million registered learners up to 77 million learners by the end of the year. Now, what's going to be interesting is it's not necessarily the case that in the first day or week or month or year people will need a learning credential. Sometimes it might be many years later that someone decides, it's time for me to get a college degree or I'm in a technical field and I'd like to get a new certification or maybe have a bachelor's degree and I'd like to get a master's degree. So converting and providing services to learners, we believe, is sort of a lifelong opportunity and a lifelong almost obligation for us to really meet the needs of people from the day they start college until the day they retire and even beyond that.
So in terms of stickiness, I think it'll really depend. I do see a world where college degrees are not going away. They will be reinvented. They'll be more affordable. They'll be more flexible. They'll be earned online so that people who are working don't have to quit their jobs. It's one of the most expensive things about on-campus degrees, especially master's degrees, is quitting your job. With online degrees, you don't need to quit your job. It's a lot more flexible in that way.
ZACK GUZMAN: Yeah, you guys, obviously, already have a lot of people coming to your platform. And I assume it would be pretty easy to leverage that and work with partners to approach profitability but not there yet. The net loss has actually increased to $67 million from $47 million over the last few years. But talk to me about where profitability comes in in your guys' timeline now that you are a publicly-traded company and investors do you like to see that. So how quickly do you think you can reach that threshold?
JEFF MAGGIONCALDA: Yeah, well, it's not something that we're really racing towards. What we typically do, as most growth companies do, is really think about, what's the size of the opportunity and the size of the need? Let's make sure we have the resources and invest the resources to not only create great products and great content and great credentials for people to learn with, but also the technology that supports it and the marketing and sales that helps us reach people. We're at the very early stages of a global need that we think is going to persist because of technology and globalization where many, many more people are going to need access to high-quality education.
So in these growth phases, we typically focus most on making investments for the long term. We focus a little bit less on the profitability piece. As a percentage of revenues, obviously, we are trending towards profitability, and we think we're in the range that we're pretty comfortable with, at this point.
AKIKO FUJITA: Jeff, I was thinking back to a conversation we had early on in the pandemic when we saw so many universities struggling financially. You said that you thought there was going to be a lot more consolidation in the space, especially amongst smaller universities, and that Coursera could provide additional support there. How much of that has actually materialized? I know we're not-- we're only talking a year here, but it feels like there has been a dramatic shift in higher ed, overall.
JEFF MAGGIONCALDA: There is definitely a big shift. I mean, the big part of it has been COVID related, the idea that most professors had never taught online and most students had never earned, you know, university-- you know, college credit online. Suddenly, every teacher teaches online. Now every student has learned online.
What we see with universities-- and it's different in different parts of the world. But in the US, and I think this is true for most parts of the world, the rise of alternative credentials, of bootcamps and other types of specializations that you can learn online is really stepping up the bar of expectations that students have as to the quality of education and the currency-- when I say currency, how cutting edge-- especially in computer science and data science, how cutting edge the curriculum is. Coursera is turning out to be helpful for universities who are trying to make sure they're keeping up with the latest advances in computer science, data science, business practices, et cetera. And in that way, we are really an enablement partner with universities who are now seeing a faster-changing world that's moving online and more alternative credentials out there that learners could seek rather than going to college.
ZACK GUZMAN: Well, things on day one seem to be going well. Appreciate you coming on here to chat with us today. The CEO of Coursera, Jeff Maggioncalda, thanks again for taking the time. Be well.
