Education technology company Coursera is undoubtedly a beneficiary of the pandemic.
As consumers stuck at home sought out new hobbies to pass their time, revenue at the provider of online college courses and certificates has accelerated, rising 59% in 2020 to $293.5 million, compared to growth of about 30% between 2018 to 2019.
But as vaccine rollouts fan hopes of a robust reopening of the economy, the platform for online university courses is looking toward a future where its largest segment—the individual consumer—is not its biggest driver of growth.
“No one anticipated the pandemic and … the pandemic will subside,” CEO Jeff Maggioncalda said to Fortune on Wednesday as shares of the company began their first day of trading on the New York Stock Exchange. But the trends in edtech that led to Coursera’s earlier growth as a private company “were always there. Companies need to reskill their workers, governments need to reskill their workers. And campuses need online learning.”
During 2020, Coursera’s largest source of revenue was a category for individuals applying to courses: The “consumer” segment grew nearly 60% that year to $192.9 million in revenue. The “enterprise” segmented, which represented Coursera’s partnerships with business and government customers, grew more modestly at about 47% in the year to a revenue of about $70.7 million. Finally, its fastest-growing area, the “degrees” segment focusing on helping universities deliver online courses, grew nearly 100% in the year, but represents a significantly smaller portion of its business, at about $30 million in revenue.
But Maggioncalda says that over time, the enterprise and degrees segments are set to eventually eclipse the consumer segment, based on their historical performance before the pandemic.
Why is that? In its prospectus pitching the IPO, Coursera pointed to potential trends that could drive growth in its non-consumer focused segments. As the pandemic has led to mass unemployment, governments could use Coursera’s platform to “build a competitive workforce.” And Coursera says it could be a solution to the ever-rising cost of higher education and consequently ballooning student debt by offering more affordable options, such as professional certificate programs that can reach customers in remote locations.
Still, the same trends are likely to lift many other education tech companies in the midst of their golden hour. Coursera in its filing lists a number of competitors, including Udemy, which has raised at a roughly $3 billion valuation recently and is said to be weighing an IPO of its own this year.
And as Coursera pursues growth by selling to large organizations, the question remains when profits will come into its financial filings. While losses as a percentage of revenue narrowed in 2020, one expense did grow significantly: Sales and marketing rose about 28% as Coursera has sought to create a direct sales force to sell to organization such as campuses.
The company closed up by 36% in its first day of trading in New York, valuing it at about $5.9 billion. In total, Coursera and its selling shareholders raised about $519 million in a sale of 15.7 million shares priced at about $33 apiece—the high end of its marketed range.
In recent months, investors have separated stocks broadly into two categories: The pandemic winners and the reopening winners. As optimism regarding vaccine rollouts has risen, shares in tech companies became volatile while shares in airline companies, for instance, jumped. In Coursera, public-market investors on net seem to be seeing a potential winner of a more hybrid future.
