WEBVTT - Coursera CEO on Earnings, AI, Pending Udemy Merger

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business

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<v Speaker 1>Week with Carol Masser and Tim Steneveek on Bloomberg Radio.

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<v Speaker 2>The Department of Justice probing Netflix tactics admit the Warner

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<v Speaker 2>Brothers Discovery deal investigation. This according to The Wall Street Journal,

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<v Speaker 2>the Justice Department investigating whether Netflix engaged in anti competitive taxes.

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<v Speaker 2>It's probing the streaming network's proposed acquisition of Warner Discovery

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<v Speaker 2>Studios in HBO Max streaming service. The Department looking at

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<v Speaker 2>whether Netflix's planned Warner deal could enrich or in trench

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<v Speaker 2>its market power or lead to monopoly in the future.

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<v Speaker 2>It's also reviewing Paramount's proposed acquisition.

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<v Speaker 3>Yeah, stock off it's earlier high. Is it just still

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<v Speaker 3>up though? About five ten percent here in the Friday trade. Hey,

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<v Speaker 3>we want to get to Coursera company did report earnings

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<v Speaker 3>last night, forecast revenue for twenty twenty six, with the

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<v Speaker 3>guidance beating the average analyst Estmate stock has swung quite

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<v Speaker 3>a bit today, up about seven percent at its highs

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<v Speaker 3>off more than four four percent at its lows. Key

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<v Speaker 3>Bank and RBC book lowering their price targets on the

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<v Speaker 3>stock today and we just mentioned about this Warner Brothers

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<v Speaker 3>Discovery waiting to get this deal done. There is also

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<v Speaker 3>an M and A story to Coursera as well. It

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<v Speaker 3>is about a one billion dollar market cap company, online

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<v Speaker 3>education company. It is down about nineteen percent year to date,

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<v Speaker 3>twelve percent. Tim of the float is short.

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<v Speaker 2>I want to bring in Greg Hart, president and CEO.

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<v Speaker 2>Of course, Sarah Greg joins us from San Francisco. Greg,

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<v Speaker 2>I want to start with the merger. Carol mentioned it

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<v Speaker 2>in December, an all stock merger between Coursera and you.

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<v Speaker 2>To me, what is the status of that right now?

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<v Speaker 2>We understand it's going to close in the second part

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<v Speaker 2>of the year. The integration, how does it go? What

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<v Speaker 2>does it mean in terms of the customer and user experience?

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<v Speaker 2>And who's the boss?

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<v Speaker 4>Thank you Tim for the question. So we are going

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<v Speaker 4>through the regulatory approval process right now. Nothing to share

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<v Speaker 4>on that front, but we're moving through the paces and

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<v Speaker 4>then we'll you know, hope to move through that and

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<v Speaker 4>then go through shareholder approval. In terms of who's the boss,

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<v Speaker 4>first of all, the customer is always the boss. In

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<v Speaker 4>terms of the actual governance of the company, I will

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<v Speaker 4>be the CEO of the combined company, and we are

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<v Speaker 4>excited about that combination because of the opportunity to bring together,

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<v Speaker 4>you know, two businesses that are really quite complementary. You

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<v Speaker 4>to me, the companies are roughly the same size in revenue,

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<v Speaker 4>So the combined revenue of the companies would be about

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<v Speaker 4>one point five billion dollars for twenty twenty five with

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<v Speaker 4>about ten percent adjusted ebitdaal margin's free synergies. We also

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<v Speaker 4>announced at signing that we would deliver one hundred and

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<v Speaker 4>fifteen million dollars of Synergy's post clothes within the first

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<v Speaker 4>two years, and so a nice improvement in the operating

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<v Speaker 4>margin that we have as a combined company. We are

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<v Speaker 4>focused as we go through the planning process on exactly

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<v Speaker 4>what that integrated company and platform will look like. So

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<v Speaker 4>how do we think about pricing and packaging and promotions,

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<v Speaker 4>of course, how do we think about the leadership team,

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<v Speaker 4>and then how do we bring the companies together to

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<v Speaker 4>really drive not only you know, better margins through the synergies,

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<v Speaker 4>but also really over time, drive much higher revenue growth

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<v Speaker 4>and do a better job of addressing the massive market

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<v Speaker 4>opportunity in front of the companies.

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<v Speaker 2>Greg there there have been many examples of mergers that

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<v Speaker 2>have been announced that haven't actually gone through for a

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<v Speaker 2>whole multitude of reasons, some of them in the regulatory

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<v Speaker 2>some of them have involved other factors. What happens if

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<v Speaker 2>this doesn't go through.

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<v Speaker 4>Well, I'm very confident that it will. I mean, we

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<v Speaker 4>operate in the education space, which is a massive space,

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<v Speaker 4>you know, two trillion plus dollars. That encompasses physical education

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<v Speaker 4>so day through twelve universities, vocational schools. It encompasses the

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<v Speaker 4>online sector that we have happened to be a part of,

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<v Speaker 4>and you to me also is a part of. And

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<v Speaker 4>then of course it encompasses all the other ways that

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<v Speaker 4>people learn today and increasingly that is through things like

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<v Speaker 4>llms or YouTube or TikTok. We believe we have a

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<v Speaker 4>very differentiated offering, but we are a very very small

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<v Speaker 4>player within that massive space, and we believe that the

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<v Speaker 4>combination actually delivers more value to every one of our constituents,

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<v Speaker 4>to our learners. They'll get access to more content, not

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<v Speaker 4>only the three hundred and seventy five different university and

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<v Speaker 4>industry partners that Coursera has, but the eighty five thousand

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<v Speaker 4>plus subject matter experts that you to mese content creator

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<v Speaker 4>community has and so it'll bring more choice, more learning opportunity.

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<v Speaker 4>It'll be better for our content creators because they'll have

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<v Speaker 4>access to a worldwide learner audience that's approaching three hundred

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<v Speaker 4>million registered learners across the two companies. And it's better

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<v Speaker 4>for our enterprise customers because we're able to deliver them

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<v Speaker 4>the breadth of that content coming from that content creator

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<v Speaker 4>network across You to Me and Coursera.

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<v Speaker 3>Hey, listen. One of the things, Well, first of all,

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<v Speaker 3>I have to just follow up on the deal, the

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<v Speaker 3>combination with you and you to me? Is it still

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<v Speaker 3>though you said you're pretty confident about regulatory greg so

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<v Speaker 3>maybe still on track to close this deal in the

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<v Speaker 3>second part of twenty twenty six.

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<v Speaker 4>Yes, we've heard nothing that would you change our belief

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<v Speaker 4>that it will close, you know, by the second half

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<v Speaker 4>of twenty twenty six, and remain confident in getting all

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<v Speaker 4>the regulatory approvals we need to do.

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<v Speaker 1>So.

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<v Speaker 3>One of the things I thought that's interesting, I always

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<v Speaker 3>think about your business. You mentioned university industry partners You've

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<v Speaker 3>got these subject experts. How are people most using it?

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<v Speaker 3>Is it your corporate partnerships where people want retraining for

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<v Speaker 3>their employees. Is it people on their own? Is it

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<v Speaker 3>people who are just interested in about different topics like

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<v Speaker 3>tell us where the growth is? Is it all of

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<v Speaker 3>it or certain parts of it?

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<v Speaker 4>Fantastic question, Kurl. So our business this of course, Sarah

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<v Speaker 4>and independent company. We are two thirds consumer, one third

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<v Speaker 4>enterprise from a revenue perspective. You to me is the inverse,

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<v Speaker 4>they are two thirds enterprise one third consumer. For both companies,

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<v Speaker 4>there is a huge focus on and growth in technology

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<v Speaker 4>and specifically AI right now, and so for Coursera, last

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<v Speaker 4>year we saw enrollments in gen AI related content at

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<v Speaker 4>a rate of fifteen enrollments per minute. In twenty twenty

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<v Speaker 4>four that was only eight enrollments per minute, and so

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<v Speaker 4>a real burgeoning interest that I believe will continue in

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<v Speaker 4>twenty twenty six as well. And we are really focused

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<v Speaker 4>on delivering not just learning, but delivering skills so that

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<v Speaker 4>people can't advance their careers. Eighty six percent of the

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<v Speaker 4>learners who come to Coursera come here to advance their careers,

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<v Speaker 4>and so we are very focused on delivering them skills

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<v Speaker 4>that they can use to advance their careers and that

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<v Speaker 4>they can demonstrate, you know, real mastery of as they

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<v Speaker 4>are in the workforce, Hey.

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<v Speaker 3>Greg, really quickly thirty seconds are people in IT train

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<v Speaker 3>and then that's it. You don't see them again. Or

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<v Speaker 3>how much of it is return business that the platform

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<v Speaker 3>is sticking in there constantly coming back to learn more

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<v Speaker 3>and forgive me only about twenty five seconds.

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<v Speaker 4>Well more than fifty percent of our consumer revenue is

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<v Speaker 4>around Course Sarah Plus, which is our monthly or annual subscription.

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<v Speaker 4>It's the best value for learners because they get access

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<v Speaker 4>to all of that content, and those learners tend to stay,

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<v Speaker 4>obviously for longer than a single course learner might.

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<v Speaker 3>Cool stuff as always, stay in touch, love talking with you,

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<v Speaker 3>Greg Hart, President and CEO of Course Sarah joining us

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<v Speaker 3>from the West Coast,