Coursera Inc (NYSE:COUR) shares tumbled more than 18% in premarket trading Friday as the online education platform's fourth-quarter revenue guidance fell short of analyst expectations, overshadowing better-than-expected third-quarter results.
The company reported third-quarter adjusted earnings per share of $0.10, surpassing the analyst estimate of $0.02. Revenue for the quarter came in at $176.1 million, up 6% YoY and above the consensus estimate of $173.98 million.
Coursera's fourth-quarter revenue forecast of $174-178 million fell significantly below the analyst consensus of $186.6 million, sparking concerns about slowing growth.
"Our strong bottom-line performance continues to demonstrate our commitment to driving sustainable growth while expanding profitability, no matter the environment in which we operate," said Ken Hahn, Coursera's CFO.
CEO Jeff Maggioncalda emphasized the company's progress, stating, "We welcomed ten new partners and launched more than a dozen industry micro-credentials, many of which teach emerging skills in generative AI."
The company raised its full-year 2024 adjusted EBITDA margin outlook by 170 basis points to 5.4%, highlighting its focus on profitability amid challenging market conditions.
However, Coursera sees FY revenue between $690 million to $694 million, down from the prior range of $695 to $705 million, and below the consensus of $700 million.
Coursera's Consumer segment revenue grew 3% YoY to $102.3 million, while Enterprise revenue increased 10% to $60.4 million. The Degrees segment saw 15% growth, reaching $13.4 million.
The sluggish growth in the Consumer segment comes "as retention softened," RBC (TSX:RY) Capital Markets analysts said. They believe the company's rough quarter and revised revenue guidance have "reset the near-term growth outlook."
"Putting this together, we think this quarter was not enough to quell investor fears of GenAI-encroachment," analysts noted.
However, while the stock "likely moves further into the penalty box after a disappointing reset to expectations, risk/reward skews positive, in our view," they added.
Senad Karaahmetovic contributed to this report.