Coursera: A Generative AI Opportunity Mispriced as a Threat
The current market sentiment towards online education companies, including Coursera (COUR), is overwhelmingly negative. The prevailing narrative suggests that the rise of powerful Generative AI models like ChatGPT will render structured learning platforms obsolete. I believe this perspective is fundamentally flawed.
This pessimism presents an investment opportunity. The market is pricing in an existential threat, whereas I see Generative AI as a tremendous catalyst for Coursera to significantly improve its products through personalization.
The Flaw in the "Doom" Narrative
History demonstrates that mere access to information does not equate to learning. The arrival of Internet and Google Search provided humanity with boundless information, yet it did not dismantle the education system. Instead, it created an information overload problem.
Generalist tools are insufficient for specialized learning. It takes efficient techniques to maintain motivation, curated paths, structured pedagogy and expert guidance to translate information into durable skills. Generalist GenAI tools will likely face the same limitation. As I have discussed previously, the solution to information overload is not more information, but effective personalization (Internet’s Information Overload Problem and the Generative AI Tricky Solution).
This significant gap - between the market's negative perception (the "doom scenario") and the probable positive impact of GenAI on Coursera's products - creates what I term a perceptual margin of safety, based on my framework of approaching investing from a sociological point of view. I will explore this topic in a separate article.
Coursera’s GenAI Implementation
Coursera's management is not idle; they are actively integrating GenAI to enhance the learning experience. The key initiatives include:
- Coursera Coach: A personalized, AI-powered coach that moves learning from a passive to an active experience. It can answer questions, provide feedback, and act as an interactive tutor within the course context.
- AI-Powered Skills Tracks: Dynamic, personalized learning paths tailored to an individual's specific career goals. This allows for the creation of customized curricula on the fly, moving beyond static, pre-built certificate programs.
- AI Translation: Leveraging AI to translate its vast catalog of courses at scale, breaking down language barriers and significantly expanding its total addressable market globally.
Q3 FY25: Searching for Early Evidence
If the GenAI thesis is correct, we should begin to see its impact in leading business metrics, specifically New Registered Learners (NRL).
The Q3 FY25 results show a continuation of the slight acceleration seen in the previous quarter. While overall growth remains modest, the trend in NRL is encouraging.
| Quarter | Report Date | NRL (M) | YoY % | TTM NRL (M) | TTM YoY % |
| Q3 FY25 | 2025-10-23 | 7.7 | +10.0% | 28.3 | +4.0% |
| Q2 FY25 | 2025-07-24 | 7.5 | +13.6% | 27.6 | +5.3% |
| Q1 FY25 | 2025-04-24 | 7.1 | +7.6% | 26.7 | +1.9% |
| Q4 FY24 | 2025-01-30 | 6.0 | 0.0% | 26.2 | 0.0% |
| Q3 FY24 | 2024-10-24 | 7.0 | +7.7% | 27.2 | +1.9% |
| Q2 FY24 | 2024-07-25 | 6.6 | 0.0% | 26.2 | - |
| Q1 FY24 | 2024-04-29 | 6.6 | - | 26.2 | - |
| Q4 FY23 | 2024-02-01 | 6.0 | - | 26.2 | - |
| Q3 FY23 | 2023-10-26 | 6.5 | - | 26.7 | - |
As the departing CFO noted, Q3 growth was driven by two primary factors:
- 7.7 million new registered learners: The last two quarters show a tangible acceleration from the flat-to-low-single-digit growth of FY24.
- Strong reception to Coursera Plus: This subscription model (unlimited access for one fee) now accounts for over 50% of Consumer revenue, improving business visibility.
This acceleration is led by the Consumer segment. The Enterprise segment, however, is stagnating, prompting the recent hiring of Anthony Salcito as the new Enterprise GM.
Strategic Positioning: The OpenAI Partnership
The announcement of Coursera's partnership with OpenAI initially spooked the market. When asked during the conference call, the CEO stated: "OpenAI reached out to us to invite us to be one of the first 7 launch apps .... Very, very early days on that partnership... So don't have anything to share yet on what we think that might look like."
While management has no clear view of the immediate implications, the decision was a strategic necessity. As interfaces like ChatGPT gain prominence, potentially diminishing the relevance of traditional Google Search, presence in that ecosystem is mandatory. This move ensures Coursera remains at the top of the funnel for new learners.
Conclusion: Thesis Status
We do not yet see a meaningful acceleration in Coursera's business that definitively proves the GenAI enhancement thesis. The AI Coach and Skills Tracks are in their infancy.
However, the slight acceleration in new learners is a potential early indicator. An alternative hypothesis exists: this growth may be driven by people enrolling in Coursera's courses to learn about GenAI, rather than from GenAI-infused products. This scenario is still positive, but it is not the core thesis.
We'll keep an eye on next quarters results, noting that Q4 is seasonally the weakest.
Even if the primary thesis proves incorrect or slow to materialize, the data on new learners directly contradicts the market's "doom scenario." At current valuations, if the company simply avoids irrelevance—which seems increasingly likely—it may still represent a good investment.