Online Education Provider Coursera Is Worth $7 Billion After Going Public

Coursera had a strong showing on its first day as a public company. The nine-year-old online education provider based in Mountain View, California, debuted with a share price of $33. By day’s end its shares were trading at $45 and they continue to rise today. At its last fundraising round in July 2020, the company was valued at $2.6 billion according to Pitchbook. It’s now worth nearly $7 billion.

“It’s a step forward in a long journey,” said CEO Jeff Maggioncalda about the IPO, in a Zoom interview yesterday afternoon. Wearing a white button-down shirt and grey blazer, backed by a virtual background of a wood-paneled wall displaying the Coursera logo, he was spending a rare day in the office. For most of the pandemic he’s been working from his home in Santa Cruz near the beach-front city’s lighthouse. “We’re nine years in and we have a lot more than nine to go,” he said.

Stanford computer science professors Daphne Koller and Andrew Ng founded Coursera in 2012 as a platform to offer massive open online courses, known as MOOCs. Their vision: give students around the world free access to college courses taught by professors from top universities. At first, Coursera charged nothing to students, who earned no academic credit. Princeton, Penn and Michigan signed on.

Tremendous hype followed, with thought leaders like the New York Times’ Thomas Friedman writing about Coursera and its fellow MOOC providers Udacity and edEx, “Nothing has more potential to unlock a billion more brains to solve the world’s problems.”

The narrative soon switched to “the death of the MOOC,” after data from two University of Pennsylvania studies showed that 80% of people who registered for free MOOCs already had degrees and only half of them bothered to look at a single lecture. A minuscule 4% completed their courses.

Coursera’s business has since turned a corner to focus on paid courses. In 2017, Maggioncalda, 51, took the top job and led the company on a new path. The founder and former CEO of financial planning website Financial Engines, he had never worked for an education company before joining Coursera. Under his leadership, Coursera’s consumer business, which sells online courses from 150 institutions to any student willing to pay, is generating the largest share of its revenue. According to its SEC filings, that segment generated $193 million of its $294 million in 2020 revenue.

Its most popular set of courses is called “Python for Everybody Specialization,” taught by University of Michigan professor Charles Russell Severance. Learners pay a monthly subscription fee of $49 to work their way through four pre-recorded courses, which consist of video lectures and a series of assignments. Most students complete the sequence in four months, said Maggioncalda. Overall the completion rate for Coursera’s paid offerings is 50% to 60%.

According to ed tech investor Daniel Pianko, cofounder of University Ventures, Coursera’s story highlights the success of the online short course. “Everything the revolutionaries were saying about MOOCs was wrong,” he says. “What saved Coursera was the bread and butter short course that teaches people how to use data and do analysis, for $49 a month.”

Coursera also has a fast-growing enterprise business that grossed $71 million last year. It delivers courses to help upskill employees at companies like Novartis and Adobe.

Its smallest business is full degree programs, which accounted for $30 million in 2020 revenue. It offers two online bachelor’s degrees, from University of North Texas (for $14,000) and University of London (ranging in price from $14,000 to $21,000). Coursera also offers graduate degree programs, mostly in technical subjects, at schools like University of Illinois at Urbana-Champagne and University of Colorado Boulder.  

Coursera skeptics like John Katzman, founder and CEO of New York City-based online program manager Noodle Partners, says that Coursera charges schools a lot to carry their courses on its platform and provides little beyond marketing services. “This is not going to end well for Coursera,” he says. “Folks like me will attack the non-degree space and make it far less expensive for students to do programs from great schools.” Katzman says he recently made a deal with Howard University to design and host its online MBA.

But investors like Pianko see a bright future for Coursera as a public company. “This is probably the most stable and secure ed tech IPO either planned or recent,” he says.

Ed tech investor Deborah Quazzo, managing partner of GSV Ventures, agrees. When the pandemic ends and many college students return to face-to-face classes, she predicts Coursera’s business will remain strong. “The move to online classes was well underway before Covid,” she says.

Coursera has the advantage of working with the most highly regarded brands in higher ed, including Stanford, where founders Koller and Ng are still professors. Ng’s Deep Learning certificate sequence remains one of Coursera’s most popular.

Coursera is not profitable. It lost $66.8 million in 2020 according to its SEC filings, up from $46.7 million in 2019. But revenue spiked 59% in 2020 over 2019 and its workforce ballooned by 300 staffers to a total headcount of more than 850. And it keeps expanding overseas. Its 77 million learners come from 190 countries.

In October 2018, Forbes included Coursera on the magazine’s list of Next Billion-Dollar Startups. By the following April investors had pegged its valuation at more than $1 billion.

Maggioncalda says the pandemic has helped employers see that it’s possible for people to gain skills online and to work from remote locations: “I’m very excited about the equalization of the learning opportunities and job opportunities that will come in the future.”