Coursera and Market Insights Into Online Enrollments and OPM Viability

Was this forwarded to you by a friend? Sign up, and get your own copy of the news that matters sent to your inbox every week. Sign up for the On EdTech newsletter. Interested in additional analysis? Try with our 30-day free trial and Upgrade to the On EdTech+ newsletter.

Yesterday Coursera released its Q4 and Full-Year 2023 results. While this is not a financial newsletter, as always I appreciate up-to-date detailed information from publicly-traded companies to provide additional clarity into broader stories we are tracking. In this case, the insights are relevant for the question of how to interpret the Fall 2022 IPEDS enrollment data and to better understand the turmoil and viability of the revenue-sharing OPM market.

Coursera Results

The headline positioning was provided by Coursera’s CFO in the news release:

Coursera’s revenue is split between Consumer business ($365m full-year revenue at 24% growth), Enterprise ($220m at 21% growth), and Degrees ($51m at 12% growth). Degrees is the company’s OPM business in terms of revenue and enrollments but not expenses, and it is a small portion of Coursera’s overall business, and the costs of developing content is spread across all three areas to a much greater degree than other OPM providers.

Narrowing down to the Degrees business, which is most of interest to On EdTech coverage:

If you want the details, read the release, see the SEC filing, browse the presentation. The main addition I’ll add on Degrees before looking for insights is that Coursera and investors fairly recently were expecting 25% growth in the OPM business, so from a stock price perspective, this was not necessarily great news.

OPM revenue up by 12% and enrollments up 22% - those are the elements that provide insight into existing storylines we are covering.

OPM Market Viability

Goldie Blumenstyk asked a good question online.

She of course is referring to the financial crisis at 2U/edX, Pearson’s sale of its OPM business for $1, and Wiley’s sale of its OPM business to rival Academic Partnerships. Some additional context for my reply:

• Coursera’s revenue is split between Consumer, Enterprise, and Degrees / OPM, and the OPM business is relatively small. The costs of developing content is spread across all three areas to a much greater degree than other OPM providers.

• Coursera also has a bigger international presence than other OPM providers and is less susceptible to the US enrollment and finance crises in higher education.

• Coursera has no long-term debt. I have argued that the end of free money has upended EdTech in general and much of the OPM market in particular - see the post on 2U/edX. But Coursera just doesn’t have any issues on how to manage debt refinancing, because they have none. Very solid balance sheet.

• Coursera and edX both promise to lower the cost of acquiring new customers (or students in OPM business) based on organic marketing to tens of millions of registered users. Coursera is both larger than edX and has invested to a greater degree in making that promise a reality.

• Coursera has very solid leadership, particularly from CEO Jeff Maggioncalda.

• Coursera is not the only provider doing well. Keypath is growing 14-15% revenue and 4-5% enrollments YoY. Academic Partnerships is growing, both from revenue and from acquiring Wiley’s OPM business, but that company is not public, so we don’t know the details.

In general, there is real turmoil in the OPM market, and potential existential crisis based on regulatory activity, but that does not mean that there is no market demand, even for the revenue-sharing models.

Interpreting Online Enrollments Data

The other insight from recent market news is to clarify the two contrasting interpretations of the Fall 2022 IPEDS data release. Jill Barshay at the Hechinger Report covered my analysis with some really pithy observations and additional reporting.

Meanwhile, an article at Inside Higher Ed took almost the reverse interpretation of the same data, at least in the headline and lede.

To be fair, reporter Lauren Coffey’s article itself described that the drop was expected and that online enrollments came in above pre-pandemic levels. But the thrust of the article is that there was a drop from Fall 2021 to 2022 and that students are fleeing online education.

My argument (and that noted by Hechinger Report) is that Fall 2022 mostly shows post-pandemic levels of online education in US higher ed, and the growth from pre-pandemic Fall 2019 both comes at a time of overall enrollment declines and is above what pre-pandemic trends indicated.

The green line below is for the percentage of students taking at least one online courses with those taking no online courses, and the black is the pre-pandemic trend extrapolated.

IHE and its analysis took a different view overall.

Where the Coursera data provide insight, along with Keypath’s, is that online enrollments are growing. I am seeing similar trends at community colleges - surprising levels of online enrollment growth - and there are many other recent public updates adding anecdotal confirmation that online enrollment (raw numbers and percentages overall) will provide to grow once we get the Fall 2023 data in a year, or at the very least a year later. And to continue on a trend above pre-pandemic projections.

And it’s not just for the big providers. In an ironic twist to the University of Arizona Global Campus (UAGC) saga that includes declining enrollments thanks to spectacularly bad strategy and assumptions, it turns out that the in-house UA Online operation is growing, by 23%. ASU Online grew 9%, but NAU Online declined 22%. It’s a mixed picture, but statewide online education is growing.

The question is not whether online enrollments dropped from 2021 to 2022. The question is how much above pre-pandemic trends projections and whether growth has already resumed (in reality but not yet reflected in IPEDS data) or will do so within the next year.

Pick a Theme

If I put this all together, I’d say that recent news shows that US higher education has an increasing demand for online education - both fully-online programs and online courses augmenting on-campus programs - and that the demand levels have increased above pre-pandemic trends. However, not all programs and institutions are seeing growth, and the biggest differentiator appears to be strategic management at the institutions and online partners.

The main On EdTech newsletter is free to share in part or in whole. All we ask is attribution.

Thanks for being a subscriber.