Introduction
Online learning has come off age. With two significant companies getting listed in the market, i.e., Coursera (NYSE: COUR) first and then Udemy (Nasdaq: UDMY), it is now widely accepted that online learning is here to stay. Both of them had a somewhat different listing story to tell. In this article, we will be listing everything you need to know about Udemy stocks and Coursera stocks.
Some statistics of both platforms
Coursera priced 15.73 million shares at $33 per stock. In the IPO offering, it raised $520 million at an implied valuation of USD 4.3 bn. Interestingly this stock gave a listing gain of 36%, closing on the debut day at $45 per stock. It even went as high as $58 per share on April 7, 2021. However, it has corrected quite a bit since then and is currently trading at $32.53 per stock as of November 19, 2021.
Following Coursera, Udemy sold 14.5 million shares at $29 per stock as IPO fundraising of USD 421 mn. Incorporating the total diluted shares, the total implied value of the company was around USD 4.3 bn, almost similar to Coursera. However, unlike its most prominent competitor, it fell on listing day. The stock declined 6% on debut to record at below the issue price. However, it has recovered well since then and is now trading at USD 30.97 per stock as of November 19, 2021.
Of course, it's fascinating to see how different the listing day and overall stock price movement since then. Udemy has done better in trading compared to Coursera. But will this sustain?
Profits
Udemy is a more prominent company in terms of revenue at an annualized FY 2021 run rate of ~USD 500mn. Coursera, on the other hand, is a tad lower than Udemy at FY 2021 potential revenue of USD 400 mn. While both companies grew aggressively in FY 2020, given the pandemic that happened for most of the year, Udemy's gain has slowed down in FY 2021. Coursera, on the other hand, has grown faster than Udemy in FY 2021, which gives it a significant upper hand for the future revenue potential of the two companies.
Prices of sales
The cost of revenues relates to the fees that these platforms need to pay to the educational partners and instructors and the expenses associated with the operations of the forum. Coursera has done better than Udemy by a few percentage points every year on this metric. In 2021, Coursera's cost of sales is 41% of revenues, while Udemy's is slightly higher at 45% of the company's revenues.
The supply-side
In designing a marketplace of online courses, Udemy and Coursera employed different strategies to generate the supply of online lessons.
Coursera, established by distinct AI engineers and computer scientists from Stanford, Daphne Koller, and Andrew Ng, is concentrated on producing supply by signing universities and institutions as providers of online classes. This firm tries to pursue its advancements to preserve a high level of quality. Its supply tactics are more B2B by creating associations with many universities and industries.
In contrast, Udemy's supply tactics are more B2C. Since academics did not find Udemy, the company took a different, more democratized approach.
As a result of this, Udemy has a more diverse and breadth of courses than Coursera, albeit with varying quality. As of Q2 2021, Udemy had more than 11,000 courses, while Coursera had about 4,600. However, due to their academic and industry incorporation, Coursera offers professional certificates and degrees.
This means that Coursera can resolve for more "jobs to do" that colleges habitually perform. Colleges typically have various functions. As Marc Andreesen articulately summed up:
It is a daycare for young adults
It is an environment for collective dating
It offers to learn windows of opportunities
It is a testing gateway (a stand-in for employers to strain for capability)
It is blazing
Considering all the "jobs to do" above, Coursera's courses can solve the last three. In contrast, Udemy, with its more diverse courses but less quality control, only solves for one (the third bullet point: provides learning opportunities).
How does this translate to demand, then?
The demand side
Both companies, i.e., Udemy and Coursera, try their best to users directly (individual learners) and businesses (B2B customers).
Discrete learners: Coursera has over 82 million learners. On the other hand, Udemy has about half of that (44 million in Q2 2021).
B2B customers: Coursera counts businesses as customers (with 100+ Fortune 500 companies as customers) and governments and other universities (smaller scale universities can provide online courses from more prominent colleges). This company has more than 6,000 B2B customers (primarily businesses).
In contrast to Coursera, Udemy uses a bottom-up approach in B2B sales. They leverage B2C customers as leads to upsell the organization the customer works in. In 2020, over 60% of information came from their direct-to-consumer platform. The company has over 8,600 global business customers.
Preparing v/s Higher training
The two businesses do not have the same B2B strategies. However, Udemy curates its high-quality classes and offers them to companies to upskill their workers. Coursera has related upskill offerings but has an additional 'Degrees' program.
The 'Degrees' program repackages existing courses made by various universities and offers the package to other universities, enabling them to provide supplementary both bachelor's as well as master's degrees. As Coursera is just replenishing actual content and selling it through another channel, the gross profit margin for this part is around 100%. As of Q3 2021, the 'Degrees' part is about 10% of total revenue generated and is growing 59% annually.
Coursera can do this as it handles a contrasting frequent market tactic. As we restrict the "jobs to do" section above, its association with universities helps Coursera to set itself as more than just an upskilling platform; instead, it positions itself as a replacement for in-person higher learning.
Conclusion
By contrast, Udemy has more straightforward projects and minor variations. They've provided for a limited time the ability to create auto-graded coding exercises. But these are seldom used. Of Udemy's 157,000 courses, only 600 have this sort of coding exercise.
One significant difference between both providers is how they handle the interaction between instructors and students and among students themselves.
Coursera directs learners to forums with varying levels of instructor and student activity. By contrast, Udemy has individual Q&As underneath each course section, increasing visibility of the feature and encouraging targeted interactions around the course content.
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