Coursera IPO: What You Need to Know

After pricing at $33 per share, the high end of the expected range, online education platform Coursera (NYSE: COUR) sprinted out of the gate. As of 12:30 p.m. EST, the stock has hit as high as approximately $56, or 70% higher than the IPO offering price. Coursera opted with a traditional IPO instead of merging with a special purpose acquisition company (SPAC), which has been all the rage over the past couple of years.

Here’s what investors need to know about Coursera.

Courera’s IPO: Why Sales Are Booming

Coursera is an online education tech company that was founded by former Stanford professors Daphne Koller and Andrew Ng. The platform offers free classes to college students, but also helps enterprise customers offer educational material for professional development and other internal training applications. 

The company uses a freemium model, offering a handful of free services with the hope of eventually converting users and organizations into paying customers. Pricing can vary based on the type of educational service offered, including one-time upfront payments for shorter courses as well as subscriptions for longer-term curriculums that may include professional certifications or specializations.

At the end of 2020, Coursera had 2,000 enterprise customers for Coursera for Business, 130 colleges and universities paying for Coursera for Campus, and another 100 government organizations and agencies paying for Coursera for Government. User growth has been robust, with total registered learners jumping 65% in 2020 to reach 76.6 million. 

That helped drive similarly strong revenue growth: Sales increased 59% to $293.5 million in 2020, although hefty investments in R&D and marketing led to a $66.6 million operating loss. Coursera’s net loss for the year was $66.8 million.

The COVID-19 pandemic created a wholesale shift towards remote learning and working, a trend that benefitted Coursera. While some demand may soften as vaccines are distributed and the world slowly recovers, many organizations will likely keep incorporating remote learning models now that they have experienced some of the benefits. 

Coursera Bucks The Dual-Class Trend in Recent IPOs

Net proceeds from the IPO are expected to be around $446.9 million after deducting transaction fees associated with the deal. Some existing shareholders sold stock through the IPO and Coursera will not receive any of those proceeds. 

Unlike many tech companies that go public nowadays, Coursera is not utilizing a dual-class structure to consolidate voting power among insiders. Each share is entitled to one vote per share, with no supervoting share class. The existing class of preferred stock will be eliminated and converted into common stock after the IPO.

Coursera’s public debut comes as scrutiny around for-profit colleges has intensified in recent years. The company warns that broader criticisms and public backlash could adversely impact how customers view Coursera and the broader industry. However, Coursera is a Certified B Corporation, a designation granted by an independent non-profit organization, B Lab, that holds such companies to higher standards around social and environmental performance and accountability.

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