Coursera, Inc.

Previous wording

Effective February 3, 2025, our Board of Directors (the “Board”) appointed Gregory Hart as our President, Chief Executive Officer, and a Class III director on our Board. Refer to Note 11, “Employee Benefit Plans,” in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information.

Current wording

Effective February 3, 2025, our Board of Directors (the “Board”) appointed Gregory Hart as our President, Chief Executive Officer (“CEO”), and a Class III director on our Board. Effective October 29, 2025, Kenneth Hahn resigned from his positions as Senior Vice President, Chief Financial Officer, and Treasurer, and transitioned to an advisory role for a one-year period. Our Board appointed Mr. Hart, Coursera's President, CEO, and principal executive officer, to serve as Coursera's principal financial officer, effective October 30, 2025. On November 13, 2025, the Board appointed Michael Foley to serve as Senior Vice President, Chief Financial Officer and Treasurer, and principal financial officer on an interim basis. Effective January 3, 2026, our Board also designated Mr. Foley to also serve as our principal accounting officer. For additional information, refer to Note 1, Basis of Presentation and Description of Business, and Note 11, Employee Benefit Plans, both included in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K and Item 9B, Other Information, included in Part II of this Form 10-K.

Previous wording

As we refine our business strategy and hone our focus, we have also been reducing our expenses and prioritizing investments in key initiatives that are expected to drive long-term, sustainable growth.

Current wording

During 2024 and the first quarter of 2025, in alignment with our efforts to refine our business strategy and hone our focus, we reduced our expenses and prioritized investments in key initiatives expected to drive long-term, sustainable growth.

Previous wording

We believe that the growth of our business and our future success are dependent upon many factors. While each of these factors present significant opportunities for us, these factors also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.

Current wording

Our business growth and future success depend on many factors. While these factors present opportunities for us, they also pose challenges that we must address to sustain growth and improve our results of operations.

Previous wording

Ability to source in-demand content from our educator partners. We believe that learners and enterprises are attracted to Coursera largely because of the high quality and wide selection of content provided by our educator partners. Continuing to source in-demand content and credentials from our educator partners is important to attract learners and grow our revenue over time.

Current wording

Ability to source in-demand content. We believe learners and customers are attracted to Coursera due to the quality, trust, and job-relevance of our wide selection of educational content provided by our content creators. We intend to accelerate our content development efforts, continuing to source and produce in-demand content and credentials to attract, convert, and retain learners and grow our revenue over time. These efforts are designed to address evolving skill requirements and support workforce development at scale in collaboration with our content creators.

Previous wording

We believe that our reach, scale, and reputation provide an attractive value proposition for leading organizations and institutions to partner with Coursera to develop and distribute content and credentials. To be the platform of choice for educator partners, we continue to invest in increasing the size and engagement of our learner base, developing AI-powered product innovations (e.g., Course Builder and Coach), providing a suite of academic integrity features (e.g., identity verification and anti-plagiarism detection), improving recommendation and personalization features, engaging in marketing efforts that drive higher conversion into paid offerings, and enhancing the analytics tools available for learners, educators, organizations, and institutions.

Current wording

Ability to attract and retain trusted content creators. We believe our reach, scale, and reputation position us as a valuable partner for leading organizations and institutions seeking to develop and distribute content and credentials to a global audience. To remain a preferred platform for trusted content creators, we continue to invest in growing and engaging our learner base, enhancing the learning and authoring experience through AI-powered product innovations (e.g., Coach, AI translations, and Course Builder), and providing a suite of academic integrity features to verify skills mastery (e.g., identity verification and anti-plagiarism detection). Additionally, we are focused on providing personalized discovery, career guidance, and recommendations, increasing conversion into paid offerings through efficient marketing, and enhancing data-driven insights and tools for learners, content creators, organizations, and institutions.

Previous wording

Ability to convert free learners to paid learners. New learners typically start by engaging with our free courses on our platform, serving as a funnel to grow our total learner base and drive referrals to our other offerings, including our paid offerings. We engage our free learners through both our on-platform and off-platform marketing efforts, highlighting premium features that encourage conversion to our paid offerings, such as subscriptions. These efforts include campaigns targeting existing learners, personalized recommendations, and performance marketing on the internet.

Current wording

Ability to convert free learners to paid learners. New learners often begin with free courses on our platform, which serve as a funnel to grow our learner base and generate referrals to paid offerings. We engage these learners through targeted marketing, personalized recommendations, and performance campaigns to highlight premium features and encourage conversion.

Previous wording

Ability to expand our international footprint. We see a significant opportunity to expand our offerings into regions with large, underserved adult learning populations. As part of our growth strategy, we have invested, and plan to continue investing in marketing efforts to support our international expansion and grow our customer and learner base. We have also been improving the front-end experience for our Consumer learners and tailoring our pricing and check-out options, including selling our offerings in foreign currency, in select markets. Our business results and operations will depend on our ability to effectively price and package our Consumer products to meet demand and manage foreign currency risk.

Current wording

Ability to grow in international markets. We see significant opportunity to grow our learner base, particularly in regions with large, underserved adult learning populations. As part of our growth strategy, we have invested and plan to continue investing in marketing, localized discovery, and translation efforts to support international growth and grow our global customer and learner base. We have adapted the front-end experience for Consumer learners, tailoring our pricing and checkout options, including offering local currency transactions in select markets. Our results will depend on our ability to effectively price and package our Consumer products to meet local demand and manage foreign currency risks.

Previous wording

We generate revenue from contracts with customers for access to the educational content hosted on our platform and related services across our three reportable segments: Consumer, Enterprise, and Degrees.

Current wording

We generate revenue from contracts with customers for access to the educational content hosted on our platform and related services across our two reportable segments: Consumer and Enterprise.

Previous wording

Consumer and Enterprise revenue primarily consists of subscriptions, with terms ranging from 30 days for certain Consumer subscriptions to one to three years for Enterprise license subscriptions. Consumer subscriptions are paid in advance, while Enterprise subscriptions are usually invoiced in advance in annual or quarterly installments. Since access to our platform represents a series of distinct services that we continually provide over the subscription term, revenue is recognized ratably over that period. We typically serve as the principal for revenue generated from sales to Consumer and Enterprise customers, as we control the performance obligation and are responsible for delivering content access.

Current wording

Consumer and Enterprise revenue primarily consists of subscriptions, with terms ranging from 30 days for certain Consumer subscriptions to one to three years for Enterprise license subscriptions. Consumer subscriptions are paid in advance, while Enterprise subscriptions are usually invoiced in advance in annual or quarterly installments. Since access to our platform represents a series of distinct services that we continually provide over the subscription term, revenue is recognized ratably over that period. We typically serve as the principal for revenue generated from sales to Consumer and Enterprise customers, as we control the performance obligation and are responsible for delivering content access. Consumer revenue also includes degree product revenue generated from contracts with university partners to host and deliver their online bachelor’s and master’s degrees or postgraduate diplomas. We earn a service fee, determined as a percentage of the total tuition collected from students in degree programs, net of refunds.

Previous wording

Cost of revenue consists of content costs, which are fees paid to educator partners, and expenses associated with the operation and maintenance of our platform. These expenses include the cost of servicing support requests from both paid learners and educator partners, content translation and captioning, hosting and bandwidth costs, amortization of acquired technology, internal-use software, and content assets, customer payment processing fees, and facilities costs. Content costs only apply to Consumer and Enterprise offerings. There are no content costs attributable to our Degrees offering. Content costs as a percentage of revenue for the Consumer and Enterprise segments can vary based on the content mix of each segment.

Current wording

Cost of revenue consists of content costs, which are fees paid to content creators, and expenses associated with the operation and maintenance of our platform. These expenses include the cost of servicing support requests from both paid learners and content creators, content translation and captioning, hosting and bandwidth costs, amortization of acquired technology, internal-use software, and content assets, customer payment processing fees, and facilities costs. Content costs as a percentage of revenue for our Consumer and Enterprise offerings can vary based on the content mix of each segment.

Previous wording

Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs, which include salaries, stock-based compensation expense, payroll taxes, commissions, bonuses, and benefits, make up the most significant component of our operating expenses. Our operating expenses also include marketing and advertising expenses, consulting and services expenses, office expenses, depreciation and amortization, and facilities costs.

Current wording

Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs, which include salaries, stock-based compensation expense, payroll taxes, commissions, bonuses, and benefits, make up the most significant component of our operating expenses. Our operating expenses also include marketing and advertising expenses, consulting and services expenses, office expenses, depreciation and amortization, and facilities costs. We are focused on investing in initiatives which will drive operational efficiency while focusing resources on high-growth opportunities, therefore operating expenses as a percentage of revenue may vary from period to period, in part due to the extent and timing of sales and marketing initiatives, but over the long term we anticipate our operating expenses will generally decrease as a percentage of revenue.

Previous wording

Research and development. Our research and development expenses primarily consist of personnel and personnel-related costs, including stock-based compensation expense, and costs related to the ongoing management, maintenance, and expansion of content, features, and services offered on our platform. We believe that continued investment in our platform is important for future growth and for maintaining and attracting educator partners and learners. While we expect research and development expenses as a percentage of revenue to vary from period to period, we anticipate a general decrease over the long term.

Current wording

Research and development. Our research and development expenses primarily consist of personnel and personnel-related costs, including stock-based compensation expense, and costs related to the ongoing management, maintenance, and expansion of content, features, and services offered on our platform. We believe that continued investment in our platform is important for future growth and for maintaining and attracting content creators and learners.

Previous wording

Sales and marketing. Our sales and marketing expenses primarily consist of personnel and personnel-related costs, including stock-based compensation expense, as well as costs related to acquiring learners, customers, and educator partners, support efforts, and marketing. Sales and marketing expenses also include hosting and bandwidth costs. We expect sales and marketing expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

Current wording

Sales and marketing. Our sales and marketing expenses primarily consist of personnel and personnel-related costs, including stock-based compensation expense, as well as costs related to acquiring learners, customers, and content creators, support efforts, and marketing. Sales and marketing expenses also include hosting and bandwidth costs.

Previous wording

General and administrative. Our general and administrative expenses primarily consist of personnel and personnel-related costs, including stock-based compensation expense, as well as professional services fees, costs related to compliance and reporting obligations, legal settlements, and other corporate expenses. In addition, we expect general and administrative expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.

Current wording

General and administrative. Our general and administrative expenses primarily consist of personnel and personnel-related costs, including stock-based compensation expense, as well as professional services fees, costs related to compliance and reporting obligations, legal settlements, and other corporate expenses.

Previous wording

Interest income, net primarily consists of interest income earned on our cash, cash equivalents, and marketable securities, along with the amortization of premiums and accretion of discounts related to our marketable securities. The amount varies each reporting period based on our average balance of cash, cash equivalents, and marketable securities during the period, as well as market interest rates.

Current wording

Interest income, net primarily consists of interest income earned on our cash and cash equivalents. The amount varies each reporting period based on our average balance of cash and cash equivalents, during the period, as well as market interest rates.

Previous wording

Other expense, net primarily consists of foreign exchange gains (losses) and impairment charges related to equity investments.

Current wording

Other income (expense), net primarily consists of foreign exchange gains (losses) and impairment charges related to equity investments.

Previous wording

Revenue for the year ended December 31, 2024 was $694.7 million, an increase of$58.9 million, or 9%, from $635.8 million for the prior year. Revenue growth was primarily driven by a 19% increase in the average total number of registered learners, resulting in more paid learners, an 18% increase in the average total number of Paid Enterprise Customers, and a 22% increase in the number of Degrees students. This growth was partially offset by lower learner and customer retention in our Consumer and Enterprise segments globally, as well as fewer new paid learners and Degrees students from our higher-priced regions.

Current wording

Revenue for the year ended December 31, 2025 was $757.5 million, an increase of $62.8 million, or 9%, compared to $694.7 million for the prior year. Revenue growth was primarily driven by an 18% increase in the average total number of Registered Learners, resulting in more paid learners, and a 10% increase in the average total number of Paid Enterprise Customers with growth supported by increased Coursera Plus subscription adoption, ongoing platform improvements, and localized pricing, payment, and promotional capabilities.

Previous wording

Enterprise revenue for the year ended December 31, 2024 increased by $19.3 million, or 9%, from the prior year, attributable to an increase in new customers. Acquisitions of new customers drove an increase of $27.1 million, offset by a $7.8 million decrease due to contraction of existing customer spend.

Current wording

Enterprise revenue for the year ended December 31, 2025 increased by $16.4 million, or 7%, compared to the prior year, attributable to an increase in new customers. Acquisitions of new customers drove an increase of $16.7 million.

Previous wording

Cost of revenue for the year ended December 31, 2024 was $323.3 million, compared to $306.0 million for the prior year. The primary drivers of the increase were revenue growth, which resulted in an increase of $17.4 million in educator partner fees, a $3.3 million increase in amortization expense for internal-use software and website development costs, and a $1.7 million increase in platform costs. These increases were partially offset by savings of $3.8 million due to lower language translation costs and a decrease of $1.3 million in residual support services expenses and credit card processing fees.

Current wording

Cost of revenue for the year ended December 31, 2025 was $344.1 million, compared to $323.3 million for the prior year. The primary drivers of the increase were revenue growth, which resulted in an increase of $12.3 million in content-related costs and a $4.6 million increase in amortization expense of content assets.

Previous wording

Content costs for the Consumer segment were $183.8 million and $172.2 million for the years ended December 31, 2024 and 2023, with content costs as a percentage of revenue of 46% and 47% for the same periods. Content costs for the Enterprise segment were $75.0 million and $69.2 million for the years ended December 31, 2024 and 2023, with content costs as a percentage of revenue of 31% and 32% for the same periods. Content costs as a percentage of revenue for both segments decreased due to a shift to lower-cost content.

Current wording

Content costs for the Consumer segment were $193.9 million and $183.8 million for the years ended December 31, 2025 and 2024, with content costs as a percentage of revenue of 38.6% and 40.3% for the same periods. Content costs for the Enterprise segment were $77.2 million and $75.0 million for the years ended December 31, 2025 and 2024, with content costs as a percentage of revenue of 30.3% and 31.4% for the same periods. Content costs as a percentage of revenue for both segments decreased due to higher learner engagement in content created under production arrangements with lower revenue share.

Previous wording

Gross margin was 53% for the year ended December 31, 2024, an increase from 52% for the prior year. The increase in gross margin was driven by lower content cost rates in both our Consumer and Enterprise segments.

Current wording

Gross margin was 54.6% for the year ended December 31, 2025, an increase from 53.5% for the prior year. The increase in gross margin was driven by lower content cost rates in both our Consumer and Enterprise segments.

Previous wording

Total operating expenses for the year ended December 31, 2024 were $484.6 million, compared to $475.4 million for the prior year.

Current wording

Total operating expenses for the year ended December 31, 2025 were $490.8 million, compared to $484.6 million for the prior year.

Previous wording

Research and development expenses for the year ended December 31, 2024 were $132.0 million, compared to $160.1 million for the prior year. This decrease was primarily due to lower personnel-related expenses of $18.3 million, including $8.4 million in stock-based compensation expense, from shifting resources to lower-cost regions, lower content creation costs of $6.1 million, lower attributed facilities costs of $1.6 million, and a decrease in consulting services expense of $1.4 million.

Current wording

Research and development expenses for the year ended December 31, 2025 were $121.6 million, compared to $132.1 million for the prior year. This decrease was primarily due to lower personnel-related expenses of $12.9 million, including $7.0 million in stock-based compensation expense, resulting from our October 2024 expense reduction initiative and from shifting resources to lower-cost regions, partially offset by higher content creation costs of $1.0 million.

Previous wording

Restructuring related charges for the year ended December 31, 2024 were $8.9 million, compared to $(5.8) million for the prior year. For 2024, the expenses primarily consist of personnel expenses, such as employee severance and benefits costs, related to our expense reduction initiatives initiated in January and October 2024. For 2023, the amount represents the reversal of stock-based compensation expense for the forfeitures of RSUs and stock options resulting from our global workforce reduction initiated in November 2022. Refer to Note 14, “Restructuring Related Charges”, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further information.

Current wording

Restructuring related charges for the year ended December 31, 2025 were $(0.9) million, compared to $8.9 million for the prior year. For 2025, the charges primarily consist of the reversal of stock-based compensation expense for the forfeitures of RSUs and stock options, mostly offset by personnel expenses, such as employee severance and benefits costs, related to our October 2024 expense reduction initiative. For 2024, the expenses primarily consist of personnel expenses, such as employee severance and benefits costs, related to our expense reduction initiative initiated in January 2024. Refer to Note 14, Restructuring Related Charges, included in Part II, Item 8 of this Form 10-K for further information.

Previous wording

Total other income, net for the year ended December 31, 2024 was primarily comprised of interest income earned on cash and cash equivalents. Interest income, net was higher during the year ended December 31, 2024, compared to the prior year, due to higher interest rates and our average rate of return on investments in U.S. Treasury securities. Other expense, net for 2024 primarily reflects an impairment loss of $1.0 million on a minority interest equity investment following a recapitalization event and $1.0 million of unrealized foreign exchange losses. Our foreign subsidiaries’ operating costs are typically denominated in the local currencies for each country and are subject to foreign currency fluctuations. We also maintain foreign-currency cash and cash equivalents in our foreign subsidiaries to support their ongoing operations.

Current wording

Total other income (expense), net for the year ended December 31, 2025 was primarily comprised of interest income earned on cash and cash equivalents. Interest income, net decreased during the year ended December 31, 2025, compared to the prior year, due to lower interest rates and our average rate of return on investments in U.S. Treasury securities. Other income (expense), net for 2025 and 2024 were primarily comprised of unrealized foreign exchange gains and losses. Our foreign subsidiaries’ operating costs are typically denominated in the local currencies for each country and are subject to foreign currency fluctuations. We also maintain foreign-currency cash and cash equivalents in our foreign subsidiaries to support their ongoing operations.

Previous wording

Income tax expense for the year ended December 31, 2024 was $1.0 million, compared to $5.4 million for the prior year. The reduction in income tax expense was primarily due to the release of a reserve for an uncertain tax position pertaining to a foreign subsidiary.

Current wording

Income tax expense for the year ended December 31, 2025 was $5.1 million, compared to $1.0 million for the prior year. The increase in income tax expense was primarily driven by a one-time benefit recognized in 2024 related to the release of a reserve for an uncertain tax position.

Previous wording

As of December 31, 2024, our principal source of liquidity was cash and cash equivalents totaling $726.1 million.

Current wording

As of December 31, 2025, our principal source of liquidity was cash and cash equivalents totaling $792.6 million.

Previous wording

Our estimated future obligations as of December 31, 2024 include both current and long-term obligations. Under our operating leases, as described in Note 6, “Leases”, to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, we have an immaterial current obligation and a long-term obligation of $3.0 million.

Current wording

Our estimated future obligations as of December 31, 2025 include both current and long-term obligations. Under our operating leases, as described in Note 6, Leases, included in Part II, Item 8 of this Form 10-K, we have an immaterial current obligation and a long-term obligation of $5.7 million.

Previous wording

Our operating lease obligations as of December 31, 2024 were approximately $4.7 million, which consisted of facility lease payments remaining on those agreements through their staggered expiration concluding in 2030. We have office facility operating leases in the U.S., Canada, the United Kingdom, India, the United Arab Emirates, and the Kingdom of Saudi Arabia.

Current wording

Our operating lease obligations as of December 31, 2025 were approximately $6.5 million, which consisted of facility lease payments remaining on those agreements through their staggered expiration concluding in 2030. We have office facility operating leases in the U.S., Canada, the United Kingdom, India, the United Arab Emirates, and the Kingdom of Saudi Arabia.

Previous wording

On April 26, 2023, our Board approved a share repurchase program with authorization to purchase up to $95 million of our common stock, excluding commissions and fees. We funded these share repurchases with our existing cash and cash equivalents and completed the purchase authorization on May 7, 2024.

Current wording

On April 26, 2023, our Board approved a share repurchase program with authorization to purchase up to $95.0 million of our common stock, excluding commissions and fees. We funded these share repurchases with our existing cash and cash equivalents and completed the purchase authorization on May 7, 2024.

Previous wording

Our capital expenditures primarily include investments in property, equipment, and software, capitalized internal-use software costs, and purchases of content assets. We expect our purchases of content assets during 2025 to increase relative to 2024.

Current wording

Our capital expenditures primarily include investments in property, equipment, and software, capitalized internal-use software costs, and purchases of content assets.

Previous wording

Cash provided by (used in) operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation expense, depreciation and amortization, accretion of marketable securities, and impairment losses, as well as the effect of changes in operating assets and liabilities during each period. Our main source of operating cash is payments received from our customers. Our primary use of cash from operating activities is for personnel-related expenses, educator partner fees, marketing and advertising expenses, indirect taxes, and third-party cloud infrastructure expenses.

Current wording

Cash provided by operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation expense, depreciation and amortization, and impairment losses, as well as the effect of changes in operating assets and liabilities during each period. Our main source of operating cash is payments received from our customers. Our primary use of cash from operating activities is for personnel-related expenses, content creator fees, marketing and advertising expenses, indirect taxes, and third-party cloud infrastructure expenses.

Previous wording

Net cash provided by operating activities for the year ended December 31, 2024 was $95.4 million, primarily the result of improved operating leverage and working capital driven by (i) deferred revenue growth, (ii) an increase in incentive compensation and severance accruals, and (iii) an acceleration of accounts receivable collections.

Current wording

Net cash provided by operating activities for the year ended December 31, 2024 was $95.4 million, primarily resulting from improved operating leverage and working capital driven by (i) deferred revenue growth, (ii) an increase in incentive compensation and severance accruals, and (iii) an acceleration of accounts receivable collections.

Previous wording

Net cash provided by investing activities for the year ended December 31, 2024 was $29.9 million, primarily the result of proceeds from the maturities of marketable securities, partially offset by purchases of content assets, purchases of capitalized internal-use software costs, and purchases of property, equipment, and software.

Current wording

Net cash provided by investing activities for the year ended December 31, 2024 was $29.9 million, due to (i) proceeds from the maturities of marketable securities, partially offset by (ii) capitalized internal-use software costs, (iii) purchases of content assets, and (iv) purchases of property, equipment, and software.

Previous wording

Net cash used in financing activities for the years ended December 31, 2024 and 2023 was $54.9 million and $79.2 million, primarily the result of payments for repurchases of common stock and payments for tax withholdings on vesting of RSUs, partially offset by proceeds from exercise of stock options and proceeds from the employee stock purchase plan.

Current wording

Net cash used in financing activities for the year ended December 31, 2024 was $55.0 million, primarily driven by (i) payments related to repurchases of common stock under our share repurchase program and (ii) payments for tax withholdings on vesting of RSUs, partially offset by (iii) proceeds from the exercise of stock options, and (iv) proceeds from our employee stock purchase plan.

Previous wording

We calculate annual recurring revenue (“ARR”) by annualizing each customer’s monthly recurring revenue (“MRR”) for the most recent month at period end. We calculate “Net Retention Rate” for a period by starting with the ARR from all Paid Enterprise Customers as of the 12 months prior to such period end, or “Prior Period ARR”. We then calculate the ARR from these same Paid Enterprise Customers as of the current period end, or “Current Period ARR”. Current Period ARR includes expansion within Paid Enterprise Customers and is net of contraction or attrition over the trailing 12 months but excludes revenue from new Paid Enterprise Customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at our Net Retention Rate for Paid Enterprise Customers. Our Net Retention Rate for Paid Enterprise Customers was 87% for the year ended December 31, 2024, compared to 98% for the prior year, and was primarily the result of non-renewal of certain large government contracts in North America and the Asia Pacific regions. Our Net Retention Rate for Paid Enterprise Customers is expected to fluctuate in future periods due to a number of factors, including the growth of our revenue base, the penetration within our Paid Enterprise Customer base, expansion of products and features, and our ability to retain and expand the relationships with our Paid Enterprise Customers.

Current wording

We calculate annual recurring revenue (“ARR”) by annualizing each customer’s monthly recurring revenue (“MRR”) for the most recent month at period end. We calculate “Net Retention Rate” for a period by starting with the ARR from all Paid Enterprise Customers as of the 12 months prior to such period end, or “Prior Period ARR”. We then calculate the ARR from these same Paid Enterprise Customers as of the current period end, or “Current Period ARR”. Current Period ARR includes expansion within Paid Enterprise Customers and is net of contraction or attrition over the trailing 12 months but excludes revenue from new Paid Enterprise Customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at our Net Retention Rate for Paid Enterprise Customers.

Previous wording

We generate revenue from our three reportable segments: Consumer, Enterprise, and Degrees.

Current wording

We generate revenue from two reportable segments: Consumer and Enterprise.

Previous wording

We monitor segment gross profit as a key metric to help us evaluate the financial performance of our individual segments. Segment gross profit represents segment revenue less content costs paid to educator partners; segment gross margin is the quotient of segment gross profit and segment revenue. Content costs only apply to the Consumer and Enterprise segments as there is no content cost attributable to the Degrees segment. Instead, in the Degrees segment, we earn a Degrees service fee based on a percentage of the total online student tuition collected by the university partner. Content costs, which are the largest individual cost of our revenue, contractually vary as a percentage of revenue between our Consumer and Enterprise offerings, and are not applicable to our Degrees offering. Therefore, shifts in the mix between our three segments are expected to be a significant driver of our overall gross margin, financial performance, and profitability.

Current wording

We monitor segment gross profit as a key metric to help us evaluate the financial performance of our individual segments. Segment gross profit represents segment revenue less segment content costs paid to content creators; segment gross margin is the quotient of segment gross profit and segment revenue. Given that content costs are the largest individual cost of our revenue, and that these costs contractually vary as a percentage of revenue between our Consumer and Enterprise offerings, mix shifts between our two segments can be a significant factor of our overall gross margin, financial performance, and profitability.

Previous wording

Consumer segment gross margin increased to 54% in the year ended December 31, 2024, up from 53% in the prior year. Similarly, Enterprise segment gross margin increased to 69% from 68% when comparing the same periods. The improvements in gross margin were primarily the result of lower content cost rates in both our Consumer and Enterprise segments for the year ended December 31, 2024, partly due to one-time benefits.

Current wording

Consumer segment gross margin increased to 61.4% in the year ended December 31, 2025, up from 59.7% in the prior year. Similarly, Enterprise segment gross margin increased to 69.8% from 68.6% when comparing the same periods. The improvements in gross margin were primarily the result of lower content cost rates in both our Consumer and Enterprise segments for the year ended December 31, 2025, due to higher learner engagement in content created under new production arrangements with lower revenue share.

Previous wording

Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), and Non-GAAP Net Income (Loss) Per Share

Current wording

Non-GAAP Gross Profit, Non-GAAP Net Income, and Non-GAAP Net Income Per Share