Coursera, Inc. (NYSE: COUR) has disappointed investors with its weaker-than-expected results for the second quarter of 2022 and lower revenue guidance for 2022. Shares of this online educational content provider declined nearly 31% in the pre-market trading session and an additional 16.5% in the normal trading session on Thursday.
The last closing price of this $2.3-billion company was $13.55. It is worth noting here that COUR stock sank to its 52-week low of $10.71 on Thursday.
A Snapshot of Coursera’s Q2 Performance
The company reported an adjusted loss of $0.15 per share in the second quarter, wider than the consensus estimate of $0.14 loss per share and the year-ago loss of $0.05 per share.
Revenues in the quarter were $124.8 million, below the consensus estimate of $130.4 million and the company’s guidance range of $128-$132 million. However, the top line grew 22.2% from the year-ago quarter.
The CFO of Coursera, Ken Hahn, said, “Our second-quarter results reflect strong demand for our entry-level Professional Certificates and sustained revenue growth across our Enterprise segment.”
In the quarter, sales of the Consumer segment grew 12% year-over-year to $69.7 million, and revenues of the Enterprise segment surged 55% to $43.7 million. Meanwhile, sales of the Degrees segment slipped 4% year-over-year to $11.4 million.
The company’s top-line growth was partially offset by a 12.6% rise in the cost of revenues. The adjusted gross profit in the quarter was $79.2 million, up 28.1% year-over-year. Total operating expenses were up 18.3% year-over-year. The adjusted earnings before interest, tax, depreciation and amortization in the quarter were ($15.6) million, and the adjusted EBITDA margin was (12.5%).
Also, the company’s liquidity position was weak in the second quarter, with cash and cash equivalents down 34.6% from 2021-end to $380 million. Net cash flow from operating activities was just $0.86 million in the quarter.
Coursera’s Projections for Q3 & 2022
For the third quarter of 2022, Coursera anticipates revenues of $126-$130 million. Adjusted EBITDA is forecast to be within the ($10.5)-($13.5) million range.
For 2022, the company forecasts revenues to be within the $509-$515 million range, lower than the previously stated range of $538-$546 million. The adjusted EBITDA for the year is predicted to range from ($42.5) million to ($48.5) million, a little better than ($45.5)-($51.5) million projected earlier.
The CEO of Coursera, Jeff Maggioncalda, said, “We continue to see strong demand from businesses, governments, and academic institutions looking to deliver the in-demand skills and industry-recognized credentials required to enter digital jobs.”
Wall Street Is Cautiously Optimistic about Coursera
On TipRanks, analysts are cautiously optimistic about the company’s prospects and have a Moderate Buy consensus rating based on seven Buys and three Holds. COUR’s average price forecast of $17.78 mirrors 31.22% upside potential from the current level. Shares of Coursera have plummeted 62.6% in the past year.
Following the results, Brett Knoblauch of Cantor Fitzgerald reiterated a Buy rating on COUR while lowering the price target to $19 (40.2% upside potential) from $30.
Knoblauch said, “The post-earnings selloff is overdone.” He prefers using the opportunity to gain exposure to the stock as “the future of the education market will comprise a blend of universities and industry” with Coursera being “the only platform that integrates both.”
Meanwhile, Scott Devitt of Stifel Nicolaus downgraded COUR stock to Hold from Buy. The analyst’s price target on the stock is $14 (3.32% upside potential).
Coursera’s Website Traffic Trend Hinted at Its Dismal Q2 Performance
According to TipRanks, the total estimated visits to Coursera’s website declined 5.52% in the second quarter of 2022 from the first quarter of 2022. The decline is in line with the company’s sales miss in the quarter. Learn how Website Traffic can help you research your favorite stocks.
Key Takeaways for COUR Investors
Coursera seems to have all the right ingredients, including a large addressable (online education) market, solid offerings, and quality educators on board, which make it a perfect investment option for long-term investors. Its sales miss, high expenses, and low liquidity in the second quarter are concerning, but their impact would likely fade with proper management.
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