Core Insights - Udemy may experience a significant inflection point in revenue growth by 2026 after a period of deceleration since its 2021 IPO, with near zero growth projected for 2025 [1] Company Overview - Ariel Sokol, with over twenty years of experience in corporate finance, has a background in both established companies and startups, focusing on subscription and edtech businesses [1] - Sokol founded Kolari Consulting, a strategy consulting firm, and previously held key positions at Pearson, including VP of strategy and finance and General Manager of Institutional Business [1] - Sokol has experience as a Wall Street equity research analyst covering education, software, and media companies [1]

Group 1 - The core viewpoint is a sell rating was given to Udemy (NASDAQ: UDMY) due to management cutting FY25 guidance and weak underlying demand trends [1] - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing value investing principles [1] Group 2 - The article does not disclose any stock, option, or similar derivative positions in the companies mentioned, nor plans to initiate any such positions within the next 72 hours [2] - The article expresses personal opinions and is not receiving compensation other than from Seeking Alpha [2]

Summary of Udemy's Conference Call Company Overview - **Company**: Udemy - **Industry**: Educational Technology - **CEO**: Hugo Sarzen, who joined in March after leading tech and product teams at UKG Key Points and Arguments Strategic Shift and Market Position - Udemy is transitioning from an online content provider to an AI-enabled skill acceleration platform, focusing on reskilling the workforce due to the increasing demand driven by AI [5][15][62] - The company has a significant user base with 17,000 large enterprises, 80 million learners, and 250,000 courses, indicating a strong market presence [5] - The need for reskilling is highlighted by the statistic that 92 million Americans will need to be reskilled due to AI in the next five years [6] Product and Service Evolution - Udemy is evolving from a traditional online catalog to a platform that offers just-in-time learning, integrating data from Human Capital Management (HCM) systems to provide personalized learning experiences [11][15] - The introduction of AI-driven tools and role-play simulations aims to enhance the learning experience and meet specific organizational needs [36][40] - The company has doubled the number of SKUs, particularly focusing on AI-related products, which are in high demand [23][51] Financial Performance and Growth - The company reported a transition year with significant changes in strategy, impacting revenue but setting the stage for future growth [18][19] - Subscription growth has been notable, with a reported 60% year-over-year increase in July, indicating strong demand for subscription services [21][51] - The enterprise business is expected to stabilize and grow, with a focus on achieving double-digit growth in the future [44][63] Customer Engagement and Partnerships - Udemy is actively forming partnerships to enhance its offerings, such as collaborations with Indeed and Glean, which improve conversion rates and provide contextual learning experiences [24][25] - The introduction of the MCP server allows enterprises to integrate Udemy's content into their own learning management systems, enhancing customization and relevance [30][33] Future Outlook and Capital Allocation - The company has a robust cash position of approximately $400 million and is exploring strategic acquisitions to enhance its AI capabilities and expand into new markets [58][59] - Udemy aims to balance growth and profitability while focusing on the AI space and subscription services [56] Consumer Market Focus - A dedicated team for the consumer side has been established to address previous declines and improve subscription offerings, with a target of reaching 250,000 subscribers by year-end [50][51] - The consumer business is being repositioned to focus on higher-value subscription models rather than low-cost offerings [51] Additional Important Insights - The company is not just a content provider but is positioning itself as a comprehensive platform for skill development, emphasizing the importance of demonstrating skill relevancy over time [15][16] - The introduction of new monetization strategies and capabilities is expected to enhance the overall quality and value of the subscription product [53][54] - Udemy's approach to the consumer market is evolving, with a focus on transparency and execution to reverse previous declines [49][50] This summary encapsulates the key insights from Udemy's conference call, highlighting the company's strategic direction, product evolution, financial performance, and future outlook.

Group 1: Core Insights - Several tech stocks are gaining attention for their affordability and strong buy ratings, supported by positive earnings estimate revisions [1][2] - The Zacks Internet-Software Industry is in the top 32% of over 240 Zacks industries, highlighting the potential for growth among its companies [3] Group 2: Company Highlights - Udemy (UDMY) has shown increased profitability, with annual earnings expected to rise 194% in fiscal 2025 to $0.47 per share, and projected EPS growth of 24% in FY26 [5][6] - StoneCo (STNE) is trading under $15 per share with a forward earnings multiple of 8.5X, and is expected to see EPS growth of 10% this year and 16% in FY26 [7][8] - Hewlett Packard (HPE) is trading under $20 per share with a forward earnings multiple of 10X, and has surpassed $1 billion in AI systems revenue, with projected top-line growth of over 14% in FY25 and FY26 [9][10] Group 3: Financial Metrics - Udemy's EPS estimates for FY25 and FY26 are $0.47 and $0.58 respectively, with a year-over-year growth estimate of 193.75% for FY25 [6] - StoneCo's annual sales exceed $2 billion, with EPS expected to rise to $1.73 in FY26 [7] - Hewlett Packard's annualized revenue run rate for AI systems reached $2.2 billion, with EPS projected to rebound to $2.30 in FY26 [10][13]

Core Viewpoint - Udemy, Inc. (UDMY) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][3]. Earnings Estimate Revisions - The trend in estimate revisions indicates growing analyst optimism regarding Udemy's earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, Udemy is projected to earn $0.10 per share, reflecting a 42.9% increase from the previous year [6]. - Over the last 30 days, the Zacks Consensus Estimate for Udemy has risen by 20%, with one estimate moving higher and no negative revisions [6]. - For the full year, Udemy is expected to earn $0.47 per share, representing a 193.8% increase from the prior year [7]. - The consensus estimate for the current year has increased by 90.85% due to four estimates moving higher and no negative revisions [8]. Zacks Rank - Udemy currently holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in raising earnings estimates [9]. - The Zacks Rank system has a proven track record, with Zacks 1 Ranked stocks averaging a 25% annual return since 2008 [3]. Stock Performance - Udemy shares have increased by 8.3% over the past four weeks, suggesting investor confidence in the company's earnings growth prospects [10].

Core Viewpoint - Udemy, Inc. (UDMY) shows potential for upside with a mean price target of $9.75, indicating a 34.1% upside from its current price of $7.27 [1] Price Targets and Analyst Consensus - The average price target consists of 10 estimates ranging from $6.50 to $12.00, with a standard deviation of $1.65, suggesting variability in analyst predictions [2] - The lowest estimate indicates a potential decline of 10.6%, while the highest suggests a 65.1% upside [2] - A low standard deviation indicates strong agreement among analysts regarding the stock's price movement direction [9] Earnings Estimates and Analyst Optimism - Analysts have shown increasing optimism about UDMY's earnings, with a positive trend in earnings estimate revisions [4][11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 17.7%, with two estimates moving higher and no negative revisions [12] - UDMY holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [13] Caution on Price Targets - While price targets are often sought after, they can mislead investors, and reliance solely on them may lead to poor investment decisions [3][7][10] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [8]

Group 1: Company Highlights - Celestica (CLS) is one of the largest electronics manufacturing services companies globally, serving various industries, with a 9.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - SB Financial Group (SBFG) is a financial services holding company providing a full range of services for consumers and small businesses, also experiencing a 9.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - HomeTrust Bancshares (HTB) focuses on attracting deposits and investing in loans secured by mortgages, with a 7.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3] - Houlihan Lokey (HLI) is a global investment bank specializing in mergers and acquisitions, with a 6.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [4] - Udemy (UDMY) offers online courses across various subjects, with a 4.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [5]

Core Insights - Udemy, Inc. reported revenue of $199.88 million for the quarter ended June 2025, marking a year-over-year increase of 2.8% and an EPS of $0.16 compared to -$0.04 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $196.56 million by 1.69%, while the EPS surprise was 33.33% against the consensus estimate of $0.12 [1] Financial Performance Metrics - The Enterprise Segment's Annual Recurring Revenue was reported at $520 million, surpassing the average estimate of $516.6 million from two analysts [4] - The Consumer Segment had a monthly average of 1.24 million buyers, slightly below the estimated 1.25 million [4] - Total customers in the Enterprise Segment were 17,107, which fell short of the average estimate of 17,330 [4] - Revenue from the Enterprise Segment was $129.3 million, exceeding the estimated $128.18 million and reflecting a year-over-year increase of 7.2% [4] - Consumer Segment revenue was reported at $70.6 million, above the average estimate of $68.44 million, but represented a year-over-year decline of 4.3% [4] Stock Performance - Udemy's shares returned +0.2% over the past month, compared to a +3.4% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Udemy, Inc. (UDMY) came out with quarterly earnings of $0.16 per share, beating the Zacks Consensus Estimate of $0.12 per share. This compares to a loss of $0.04 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +33.33%. A quarter ago, it was expected that this company would post earnings of $0.1 per share when it actually produced earnings of $0.12, delivering a surprise of +20%.Over the last four quarters, the company has surp ...

Revenue and Growth - As of June 30, 2025, subscription offerings across both Consumer and Enterprise segments accounted for approximately 70% of consolidated revenue[153]. - The company expects revenue from its Enterprise segment to continue growing faster than the Consumer segment, benefiting overall margins[157]. - Revenue for the three months ended June 30, 2025, was $199.9 million, representing a 3% increase from $194.4 million in the same period of 2024[182]. - Enterprise revenue for the three months ended June 30, 2025, was $129.3 million, accounting for 65% of total revenue, an increase of 7% from $120.6 million in the prior year[183]. - Consumer revenue for the three months ended June 30, 2025, was $70.6 million, a decrease of 4% from $73.8 million in the same period of 2024[185]. - For the six months ended June 30, 2025, total revenue was $400.2 million, a 2% increase from $391.2 million in the same period of 2024[186]. Profitability and Expenses - Gross profit for the three months ended June 30, 2025, was $132.0 million, a 9% increase from $121.1 million in the prior year, resulting in a gross margin of 66%[189]. - Total operating expenses for the three months ended June 30, 2025, were $128.1 million, down from $146.7 million in the same period of 2024[178]. - Net income for the three months ended June 30, 2025, was $6.3 million, compared to a net loss of $31.8 million in the same period of 2024[178]. - Cost of revenue for the three months ended June 30, 2025, was $67.8 million, a decrease of 7% from $73.2 million in the prior year[189]. - Adjusted EBITDA improved by $22.9 million for the three months ended June 30, 2025, reaching $28.4 million compared to $5.5 million in 2024[230]. Customer Metrics and Retention - The company reported a UB NDRR of 95% and a UB Large Customer NDRR of 99% as of June 30, 2025, indicating varying retention rates among customer segments[183]. - Udemy Business customers grew to 17,107 as of June 30, 2025, representing a 3% increase from 16,595 in the prior year[213]. - Udemy Business Annual Recurring Revenue (ARR) reached $520.0 million, a 6% increase from $492.6 million in the prior year[215]. - Udemy Business net dollar retention rate decreased to 95% from 101% in the prior year, while the Large Customer net dollar retention rate fell to 99% from 108%[219]. Operational Efficiency and Investments - The company anticipates operating expenses will generally decrease as a percentage of revenue over time due to investments in operational efficiency and high-growth opportunities[169]. - The company is investing in generative AI to enhance personalized learning experiences and improve skill development outcomes[145]. - The company aims to drive greater retention and expansion within its existing customer base, particularly among Udemy Business customers[149]. Cash Flow and Financial Position - Free cash flow increased to $39.0 million for the three months ended June 30, 2025, compared to $24.8 million in the same period of 2024[237]. - As of June 30, 2025, the company had cash, cash equivalents, and restricted cash totaling $231.4 million, along with marketable securities of $161.7 million[238]. - The company held $230.3 million in cash and cash equivalents and $161.7 million in marketable securities as of June 30, 2025[260]. - The company did not have any borrowings outstanding under its revolving credit facility as of June 30, 2025[262]. Credit and Financing - The company entered into a Credit Agreement in May 2025, establishing a revolving credit facility of $200 million, all undrawn as of June 30, 2025[146]. - The company may explore additional financing sources, including equity or debt financing, for future acquisitions or strategic investments[243]. Market and International Expansion - The company is focusing on expanding its international footprint, particularly in regions with large underserved adult and corporate learning populations[158]. - The instructor revenue share for subscription offerings is set to decrease to 15% by 2026, with adjustments to 20% and 17.5% effective on January 1, 2024, and January 1, 2025, respectively[166].