In a new S-1/A filing, Coursera set an initial IPO price range between $30 and $33 a share, signaling the market views its edtech business warmly ahead of its impending public offering.
Coursera will have 130,271,466 shares outstanding after its IPO, or 132,630,966 including its underwriters’ option. At $30 per share, the low end of the company’s IPO range and a share count inclusive of 2,359,500 shares reserved for its underwriting banks, the firm would be worth $3.98 billion. That number rises to $4.38 billion at $33 per share.
This is a solid increase from Coursera’s last private-market valuation, which was around $2.4 billion when it raised a Series F round in October 2020.
For the bulls in the room, there’s a bigger valuation if you tinker with the numbers. In a fully diluted accounting, including in our calculation, shares that are issuable upon vested options and RSUs, Coursera’s share count rises to 166,006,474, or 168,365,974 if we count its underwriters’ option. At its most generous share count and highest projected price, Coursera’s valuation could reach $5.56 billion.
However, IPO-watching group Renaissance Capital comes to a smaller $5.1 billion figure for a midpoint-range, fully diluted valuation. That result excludes shares reserved for underwriters and equity currently present in vested RSUs.
Using the more modest $5.1 billion midpoint figure, Coursera would be worth around 17.5 times its 2020 revenue of $293.5 million. Using a run-rate figure calculated from the company’s Q4 2020 results, its multiple falls to just over 15x.
Coursera is therefore being valued as a software company, likely a breathe-easy moment for still-private edtech companies, since the debut could be an industry bellwether.
The valuation is also a vote of confidence that Coursera’s rising deficits are not even a valuation risk, let alone an existential threat to its business. In the four quarters of 2020, the edtech giant lost $14.3 million, $13.9 million, $11.9 million and $26.7 million, the final Q4 net loss being the largest among the time interval for which we have data.
From all appearances, investors are valuing Coursera on its growth, not its profitability — or lack thereof.
Helping push its losses higher are rising sales and marketing costs, something TechCrunch has written about in the past. In Q4 2019, for example, the company spent $16.7 million on sales and marketing activities. That figure rose to $35 million in Q4 2020.
The company estimates that it would be able to raise between $426.3 million and $495.8 million in capital if underwriters exercise their option to purchase additional shares. These figures are based on a price of $31.50 per share, the average of the two prices that Coursera set forward today.
The company plans to list on the NYSE under the ticker “COUR.”
Edtech, long a portion of the venture capital world that labored in the outskirts, enjoyed a rapid-fire 2020 as the world shifted to remote-learning during the pandemic. Many companies raised new capital at higher prices, demonstrating strong investor interest, but exits have proven less common than up rounds. Coursera’s IPO could shake up that dynamic by proving the value of the sector’s boosted revenues among public investors.
TechCrunch is also comfortable speculating that a strong Coursera debut — pricing and early trading — could lead to a few SPAC-led edtech combinations. If that bears out, it could send more edtech startups into the public markets earlier than most industry watchers might have anticipated a year ago. There are a host of SPACs in the market today looking for deals; perhaps edtech will become a fertile hunting ground for blank-check companies hungry for a deal and a story to spin about strong investor demand for the company that it intends to help list.
Despite the fact that the public markets have shown to be quite receptive to new entrants, Coursera’s confidence could validate sector startups in a way that shows edtech needs more than just SaaS.
Part of Coursera’s pricing fervor might come from Chegg’s performance: The public edtech company is currently trading at $92.60 per share, down from February, but up 60% from the year prior, when it was trading at $36.76. 2U, another public edtech company, is currently having a rougher time in the public markets despite having similar revenue gains to Coursera. The business is trading at $38.22 at a market cap of $2.83 billion.
2U priced its shares at $13 apiece during its 2014 IPO. They rose into the $90 range in 2018 before falling to around $15 per share in mid-2019. Its recent recovery must be welcome among its long-term holders, but the company’s decline from prior highs could be a warning sign, and potential damper, against some enthusiasm for both Coursera’s own debut, and its ability to generate more public edtech deal flow.
For now, the Coursera IPO pricing interval released today appears to be a win for the company as a new valuation mark and a fundraising event. Provided that the company can clear around $500 million on a gross basis in its flotation, it will have more than 30 years of its 2020 operating cash burn on hand to leverage into more positive accounting results.
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