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Why Coursera Stock Got a Failing Grade on Wednesday

By Rich Smith - May 5, 2021 at 5:14PM

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Sales grew briskly in the first quarter, but profit remains elusive.

What happened

Shares of Coursera (COUR 2.49%) closed 8% lower on Wednesday after the online education provider reported impressive revenue growth -- but even more impressive losses -- in its first quarterly earnings report since its recent initial public offering.

So what

Coursera grew its revenue 64% year over year, to $88.4 million in Q1 2021. Gross profits grew even faster, up 71% year over year. Operating costs grew fast as well -- but not as fast as revenues, up only 56%.

Still, this resulted in bigger losses this quarter than one year ago -- an operating loss of $18.4 million (up 25% year over year), and a net loss of $0.45 per share (up 12.5%). On the plus side, free cash flow at the company improved somewhat, from negative $9.9 million (including capitalized software costs) in Q1 2020 to negative $8.6 million in Q1 2021.

Unhappy student looks at an exam graded F

Image source: Getty Images.

Now what

Coursera provided new guidance for the current fiscal second quarter of 2021, predicting that revenue will range from $89 million to $93 million, thus growing sequentially. For the full year, Coursera anticipates revenue ranging from $369 million to $381 million.

"Adjusted" earnings before interest, taxes, depreciation, and amortization (EBITDA) will be negative both for the current quarter and for the year, but management did not give estimates for either GAAP operating or net income.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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