Revenue of $376.7 million beat the $368.5 million consensus by 2.2%, and non-GAAP diluted EPS of $0.21 beat the $0.18 estimate (both carried from the preliminary).
Q4 guidance calls for revenue of $358 million to $366 million and adjusted EBITDA of $55 million to $59 million; full-year 2026 revenue was narrowed within the prior range to $1.229 billion to $1.237 billion.
Margins are doing the work: adjusted EBITDA of nearly $62 million was 16.3% of revenue, with margin up more than 800 basis points, while normalized revenue fell about 3% (enterprise up 2%, consumer down 9%).
Management's first 2027 baseline points down: enterprise approximately flat to modestly declining and consumer down by a low double-digit percentage, with nothing assumed from Project Helix.
The one thing that matters: integration savings are arriving 16 months early, more than $150 million gross by year-end, but the combined top line is shrinking, and the 2027 baseline gives no return to growth until Helix proves itself.
Guidance & KPIs
Item
New guidance
Prior guidance
Q4 2026 revenue
$358 million to $366 million
—
Q4 2026 adjusted EBITDA
$55 million to $59 million
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FY2026 revenue (as reported)
$1.229 billion to $1.237 billion (narrowed within prior range)
—
2027 directional enterprise revenue
approximately flat to modestly declining
—
2027 directional consumer revenue
low double-digit year-over-year decline
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Management commentary
CEO Greg Hart said Q3, the first full quarter as a combined company, showed a stronger financial profile while the top line, particularly consumer, remains below the company's growth ambition.
CFO Mike Foley said the 2027 baseline assumes each segment's Q4 trajectory is representative of normalized 2027 growth and does not rely on cross-sell or a material Helix contribution.
Management said Helix investment is already in current operating expenses, with no team expansion before rollout and broad enterprise availability targeted for the first half of 2027.
On consumer weakness, Hart cited changing search traffic patterns and weaker consumer confidence, with Coursera Plus growing while single-course subscriptions decline.
Foley said the goal is to "significantly reduce stock-based compensation as a percentage of revenue" and lower annual dilution, with buybacks incremental to that.
Quality of earnings
Adjusted EBITDA flatters the run rate. The 16.3% margin includes a purchase accounting benefit of about $10 million per quarter in 2026 that management says will moderate, a headwind to 2027 adjusted EBITDA dollars.
Cash lags earnings. Free cash flow was nearly $5 million against adjusted EBITDA of nearly $62 million, with about $28 million of merger and integration costs and capitalized-commission adjustments in the gap; management expects free cash flow to stay somewhat below EBITDA next year.
As-reported growth is acquired. Revenue up 94% as reported reflects Udemy from May 11; on a normalized basis revenue declined about 3%.
Gotchas & watch items
Revenue dis-synergies have not appeared yet: management said none have come through even on renewals of shared customers, while the $115 million net synergy target assumes about $35 million of them.
Enterprise customer count fell 4% to 11,897, though more than 90% of logo churn came from accounts under $50,000 in annual contract value.
Net retention of 93% is up from 91% in Q2, but management declined to call it a trend and said mid-market and non-North America retention sits well below the average.
Buybacks are absorbing cash: about 18 million shares repurchased for just over $100 million in the quarter, with cash down to about $776 million and no debt.
Last quarter's watch items: what happened
No watch items on file from a prior quarter - this is the first tracked quarter for this company.
Next quarter: the 2-3 things that matter
Normalized enterprise revenue trend Baseline: Enterprise revenue $201 million, up 2% normalized in Q3 2026 Confirms: Q4 enterprise growth at or above flat normalized Breaks: Normalized enterprise revenue declines in Q4 Check in: Q4 2026. Source: CFO prepared remarks, Q3 2026 call
Enterprise net retention rate Baseline: 93% in Q3 2026, up from 91% in Q2 Confirms: NRR holds at or above 93% Breaks: NRR falls back below 93% Check in: Q4 2026. Source: CFO prepared remarks and Q&A, Q3 2026 call
Formal 2027 guidance versus directional baseline Baseline: Directional: enterprise flat to modestly down, consumer down low double digits Confirms: Formal guide at or above the directional baseline Breaks: Formal guide below the baseline or margin target below 2026's approximately 14% Check in: Q4 2026. Source: CFO 2027 directional remarks, Q3 2026 call