Coursera's 2025 Results Highlight Steady Cash Flow Amid Enterprise Weakness and Merger Hurdles

What happened

Coursera released its fourth quarter and full year 2025 financial results, showing continued revenue growth of around 10% year-over-year, consistent with prior trends, driven primarily by consumer subscriptions and enterprise customer additions. However, enterprise net retention remained subdued in the high-80s to low-90s range, reflecting ongoing challenges in expanding within existing corporate accounts despite strong AI-skills demand. The company maintained a robust balance sheet with approximately $725 million in net cash and sustained positive free cash flow, providing liquidity for operations and the pending all-stock merger with Udemy. Management's focus on cost discipline and AI initiatives, such as the Coursera Coach, has supported improving EBITDA margins, but investor skepticism persists around the Udemy deal's regulatory timeline and ability to achieve the targeted $115 million in synergies. Overall, these results reinforce Coursera's position as a cash-generative but slow-growth platform, with the merger representing a critical but uncertain catalyst for future value creation.

Implication

The results confirm Coursera's ability to generate consistent free cash flow and maintain a net-cash-rich balance sheet, offering a downside cushion in a volatile edtech market. Persistent enterprise net retention in the sub-100% range signals ongoing struggles to deepen wallet share with corporate clients, which limits revenue acceleration and justifies the stock's discounted valuation. The Udemy merger, while promising scale and synergies, introduces regulatory and integration risks that could erode expected cost savings or delay margin improvements, keeping the stock range-bound until clarity emerges. AI-driven enrollment growth is a positive tailwind but has not yet translated into meaningful pricing power or reacceleration, highlighting the need for tangible proof of monetization. For patient investors, the current setup offers asymmetric upside if retention stabilizes and merger synergies materialize, but position sizing should account for the high execution risk and potential for prolonged uncertainty.

Thesis delta

The investment thesis remains largely unchanged: Coursera is still viewed as a potential buy due to its strong cash position, positive free cash flow, and merger-driven upside potential, contingent on enterprise net retention stabilizing in the low-90s and the Udemy deal closing on schedule with affirmed synergies. No major shifts are indicated by the 2025 results, as they align with prior expectations of modest growth and ongoing enterprise challenges, reinforcing the need for monitoring key milestones over the next 6-12 months.