Financial Data and Key Metrics - Revenue grew 6% YoY to $195 million, with a 2-percentage point headwind from FX [9][35] - Adjusted EBITDA margin reached a new record, significantly higher than anticipated [9] - Udemy Business ARR surpassed $500 million, up 14% YoY [10][36] - Gross margin for Udemy Business improved to 74%, up 600 basis points YoY [39] - Consumer revenue declined 8% YoY to $69 million, impacted by FX and lower individual course purchases [39] - Adjusted EBITDA was $12 million, or 6% of revenue, with a 200 basis point expansion YoY [44] Business Line Performance - Udemy Business revenue grew 16% YoY to $126 million, despite a 2-percentage point FX headwind [35] - Large enterprise customers (1,000+ employees) contributed 75% of Udemy Business revenue, with ARR growing 15% YoY [16][36] - SMB ARR grew 11% YoY, but resources are being reallocated to focus on large enterprises [16][36] - Consumer segment saw a decline in revenue, but personal plan subscriptions showed growth [39] Market Performance - Over 60% of total revenue came from outside the US, with FX negatively impacting growth by 2 percentage points [35] - EMEA region showed muted growth, while APAC and LATAM regions performed stronger [105] - The company serves 17,000 Udemy Business customers and 75 million learners across 180 countries [12] Strategy and Industry Competition - The company is shifting focus to large enterprise customers, de-emphasizing SMBs, to optimize resource allocation for higher growth and margins [16] - AI-powered skills mapping and AI Assistant were launched to enhance personalized learning experiences [10][28] - The company aims to achieve $130-$150 million in adjusted EBITDA by 2026 and a 20% adjusted EBITDA margin by 2027 [57] - Generative AI and digital transformation are driving the need for upskilling, presenting a significant market opportunity [19][20] Management Commentary on Operating Environment and Future Outlook - The operating environment remains stable but subdued, with continued scrutiny on corporate budgets [11][65] - The company expects to deliver $70 million in adjusted EBITDA in 2025, with a clear path to its 2026 target [52] - Management is confident in the long-term opportunity for enterprise and individual skills development, particularly in the age of AI [58] Other Important Information - The company achieved $50 million in annualized cost savings, exceeding the initial target of $25 million [13][50] - A $150 million share repurchase program is nearing completion, with $51 million used in Q3 [46] - The company expects restructuring charges of $18 million, primarily related to personnel expenses [44][45] Q&A Session Summary Question: Impact of AI-enabled capabilities on enterprise growth [60] - AI capabilities like skills mapping and AI Assistant are already improving sales cycles and customer engagement, with over 1,000 enterprises adopting these features [61][63] Question: Corporate L&D spending environment [65] - The L&D spending environment remains subdued, but the company sees opportunities to consolidate L&D content and strategy, as evidenced by a 40,000-seat deal with a Fortune 100 tech company [65][67] Question: Growth expectations for Udemy Business in 2025 [71] - The company expects headwinds in 2025 due to reduced SMB capacity and EMEA weakness, but remains confident in long-term double-digit growth for Udemy Business [72][73] Question: Integration with Workday [76] - The integration with Workday maps Udemy Business content to Workday's Skills Cloud, promoting internal mobility and requiring customers to use both platforms [78][80] Question: Impact of new CRO on sales processes [88] - The new CRO is focused on enhancing sales capabilities, particularly in key verticals, with expected impact on growth in 2025 [89][91] Question: Geographical performance and net dollar retention [104][106] - EMEA showed muted growth, while APAC and LATAM performed stronger Net dollar retention is pressured by longer sales cycles and smaller deal sizes, but the company remains focused on driving customer value [105][107] Question: Product roadmap beyond AI [115] - The return of the CTO is expected to accelerate product innovation, with more details to be shared in future announcements [116][117] Question: Expansion within Udemy Business [120] - The company is leveraging its expanded product portfolio, including AI capabilities, to drive larger deals and strategic conversations with enterprise customers [121][123] Question: Sequential net add decline in Udemy Business customers [125] - The decline in net adds is primarily due to the strategic reallocation of resources from SMB to large enterprise customers [126]

Udemy, Inc. (UDMY) reported $195.42 million in revenue for the quarter ended September 2024, representing a year-over-year increase of 5.8%. EPS of $0.07 for the same period compares to $0.05 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $192.5 million, representing a surprise of +1.52%. The company delivered an EPS surprise of +600.00%, with the consensus EPS estimate being $0.01.While investors scrutinize revenue and earnings changes year-over-year and how they compare with W ...

Udemy, Inc. (UDMY) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.01 per share. This compares to earnings of $0.05 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 600%. A quarter ago, it was expected that this company would post a loss of $0.01 per share when it actually produced a loss of $0.04, delivering a surprise of -300%. Over the last four quarters, the company has surpa ...

Financial Performance - Total revenue increased 6% year-over-year to $195.4 million, with a negative impact of 2 percentage points from foreign exchange rates[5]. - Udemy Business Annual Recurring Revenue (ARR) surpassed $500 million, increasing 14% year-over-year to $504.6 million[2][5]. - Enterprise segment revenue rose 16% year-over-year to $126.1 million, also impacted by a 2 percentage point decline from foreign exchange rates[5]. - Consumer segment revenue decreased 8% year-over-year to $69.3 million, with a 3 percentage point negative impact from foreign exchange rates[5]. - Adjusted EBITDA increased 41% year-over-year to $11.6 million, with an adjusted EBITDA margin of 6%[3][5]. - Net loss for the quarter was $25.3 million, a 51% increase compared to the previous year[3]. - Udemy reported Q3 2024 revenue of $195,417,000, a 5.5% increase from $184,722,000 in Q3 2023[19]. - Gross profit for Q3 2024 was $123,055,000, up 14.5% from $107,458,000 in Q3 2023[19]. - Total operating expenses in Q3 2024 were $152,514,000, compared to $128,954,000 in Q3 2023, reflecting an 18.2% increase[19]. - Udemy's net loss for Q3 2024 was $25,271,000, compared to a net loss of $16,767,000 in Q3 2023[19]. - Net loss for the nine months ended September 30, 2024, was $75,424,000, compared to a net loss of $87,046,000 for the same period in 2023, representing a 13.5% improvement[23]. - Gross profit for the nine months ended September 30, 2024, increased to $364,735,000, up from $309,489,000 in 2023, reflecting an 18% year-over-year growth[24]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $23,480,000, compared to $3,817,000 for the same period in 2023[26]. - The company reported a non-GAAP net income of $8,843,000 for the nine months ended September 30, 2024, compared to a loss of $1,909,000 in the same period last year[25]. Cash and Assets - The company had cash and cash equivalents of $204,563,000 as of September 30, 2024, down from $305,564,000 at the end of 2023[22]. - Total current assets decreased to $508,012,000 from $632,328,000 at the end of 2023[22]. - Cash and cash equivalents at the end of the period decreased to $205,778,000 from $331,503,000 at the end of September 30, 2023[23]. Liabilities and Deferred Revenue - Udemy's total liabilities rose to $412,648,000 as of September 30, 2024, compared to $384,304,000 at the end of 2023[22]. - Deferred revenue increased to $299,955,000 in Q3 2024 from $279,414,000 in Q3 2023, indicating growth in future revenue recognition[22]. - Deferred revenue increased to $19,906,000 for the nine months ended September 30, 2024, compared to $3,887,000 in 2023, indicating growth in future revenue recognition[23]. Strategic Initiatives - The company raised its full year 2024 adjusted EBITDA outlook, focusing on operational efficiencies and strategic initiatives[4]. - The company anticipates continued market growth and plans to enhance operational efficiency in future periods[17]. - The company plans to continue investing in new product development and market expansion strategies to drive future growth[24]. Shareholder Returns - Udemy returned approximately $51 million to shareholders through a share repurchase program, buying back 6.3 million shares[7]. Market Demand - Udemy Business serves notable clients including Fender, Glassdoor, and The World Bank, indicating strong enterprise demand[18]. Other Financial Metrics - Monthly average buyers in the consumer segment decreased by 7% year-over-year to 1.31 million[4]. - Non-GAAP gross margin improved to 63% for the nine months ended September 30, 2024, compared to 59% for the same period in 2023[24]. - Stock-based compensation expense for the nine months ended September 30, 2024, was $70,424,000, slightly down from $71,720,000 in 2023[26].

Core Insights - Udemy will report its third quarter 2024 financial results on October 29, 2024, after market close [1] - A live conference call and webcast will be held on the same day at 2 p.m. PT / 5 p.m. ET to discuss the results [1] Company Overview - Udemy is a leading online skills marketplace and learning platform that provides access to a wide range of technical and professional skills [3] - The platform features the Udemy Intelligent Skills Platform and a diverse community of instructors, offering thousands of courses in various languages [3] - Udemy Business offers on-demand learning solutions for enterprises, including immersive learning for tech teams and cohort learning for leaders [3] - Notable Udemy Business customers include Fender®, Glassdoor, On24, The World Bank, and Volkswagen [3] - The company is headquartered in San Francisco with additional hubs in Austin, Denver, Türkiye, Ireland, Australia, and India [3]

Investment Thesis - Udemy operates in a growing learning marketplace aimed at bridging the skills gap for individuals and organizations, with a focus on enterprise reskilling and training [2] - The consumer segment faces challenges due to a weaker macroeconomic environment and increased competition, while the enterprise segment shows double-digit growth and better profitability [2][3] - Management aims to improve overall profitability by prioritizing the enterprise segment, expecting adjusted EBITDA margins to reach 20% by 2027, up from 3% this year [2][6] Q2 Earnings Performance - The strategic shift towards the enterprise segment is a key takeaway from Q2 earnings, as management seeks to capture future market opportunities and improve profitability [3] - Despite rising gross margins in the enterprise segment, the Net Dollar Retention Rate (NDRR) has been declining, indicating potential challenges in customer retention [4] - The consumer segment experienced a 4% year-over-year revenue decline, attributed to a decrease in the number of monthly average buyers [4] Future Expectations - The revenue decline in the consumer segment is expected to hinder overall revenue growth, which accounted for 38% of total revenue in Q2 [5] - Management's guidance suggests only 4% overall revenue growth in H2 2024 compared to H2 2023, a significant drop from the 10% growth in the first half of the year [5] - Overall revenue growth is estimated to average around 7% in 2025 and 2026, lower than analyst expectations of 9% [5] Margin Improvements - Gross margin improvements are anticipated due to a gradual reduction in the revenue share for instructors in the enterprise segment, expected to decrease to 15% by 2026 [6] - Management plans to reduce operating expenses by cutting marketing spend and reallocating resources to lower-cost regions, with incremental margins estimated at close to 35% [6] - Margin improvement may be slower than management's target, with expectations of reaching closer to 15% rather than 20% by 2027 [6] Capital Management - With a net cash position of $420 million, management announced a $150 million share repurchase program, indicating a commitment to returning excess capital to shareholders [7] - The expectation of improved profitability suggests a significant portion of cash will be used for buybacks, especially in light of high stock-based compensation [7] Valuation Insights - Current valuation metrics indicate shares trade at EV to Sales and EV to adjusted EBITDA multiples of 0.8 and 27, respectively, suggesting the stock is undervalued [8] - Despite the attractive valuation, similar-sized peers exhibit comparable valuations, indicating sector-wide multiple compression due to increased competition and macroeconomic challenges [8] - Future earnings forecasts are conservative, with expected revenue of $891 million and adjusted EBITDA margins close to 12% by 2026, leading to an adjusted EBITDA of $107 million [8] Conclusion - The outlook for Udemy indicates weak topline growth but significant potential for margin improvement, supported by a large net cash position [12] - The current rating is a Hold until there is evidence of margin improvement and a reacceleration in revenue growth [12]

Core Viewpoint - Udemy's stock price has significantly declined following the release of its second-quarter financial results, primarily due to lowered full-year revenue guidance despite achieving revenue targets for the quarter [1][4]. Financial Performance - For the second quarter, Udemy reported revenue exceeding $194 million, aligning with management's expectations and reflecting a 9% year-over-year increase [2]. - The company has adjusted its full-year revenue guidance to a range of $776 million to $782 million, down from the previous estimate of $795 million to $805 million [4]. Business Model and Revenue Streams - Udemy operates as a two-sided education marketplace, where third-party contributors create courses, and learners can purchase them without needing accreditation [3]. - In the second quarter, Udemy Business, which provides a catalog of courses for enterprises, accounted for 62% of total revenue, contributing to an annual recurring revenue of $493 million [3]. Future Outlook - Management anticipates only 5% top-line growth in the upcoming third quarter and has outlined plans to restructure the business to focus on higher growth opportunities [4]. - For 2026, Udemy expects to report adjusted EBITDA between $130 million and $150 million, with an enterprise value of approximately $980 million, suggesting a potentially attractive valuation if profit goals are met [5]. Customer Metrics and Profitability - Customer metrics for Udemy continue to improve, and the company is expected to achieve profitability as it implements changes to the payout structure for instructors [6]. - Maintaining a balance of instructors and buyers is crucial for enhancing the stock's outlook in the coming years [6].

U.S. stock futures were mixed this morning, with the Dow futures falling around 0.1% on Thursday. Shares of Western Digital Corporation WDC fell in today's pre-market trading after the company reported its fourth-quarter financial results. Western Digital reported quarterly earnings of $1.44 per share, which beat the analyst consensus estimate of $1.18 by 22.03%. The company reported quarterly sales of $3.76 billion, which beat the analyst consensus estimate of $3.747 billion and is a 40.72% increase over s ...

Udemy, Inc. (UDMY) reported $194.36 million in revenue for the quarter ended June 2024, representing a yearover-year increase of 9%. EPS of -$0.04 for the same period compares to -$0.01 a year ago. The reported revenue represents a surprise of +0.10% over the Zacks Consensus Estimate of $194.17 million. With the consensus EPS estimate being -$0.01, the EPS surprise was -300.00%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to deter ...

Udemy, Inc. (UDMY) came out with a quarterly loss of $0.04 per share versus the Zacks Consensus Estimate of a loss of $0.01. This compares to loss of $0.01 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -300%. A quarter ago, it was expected that this company would post a loss of $0.01 per share when it actually produced earnings of $0.03, delivering a surprise of 400%. Over the last four quarters, the company has surpassed c ...