Udemy(UDMY) - 2023 Q4 - Annual Report

Financial Performance - For the fiscal year ended December 31, 2023, the company incurred net losses of $107.3 million,$ 153.9 million, and $80.0 million in the previous two fiscal years, with an accumulated deficit of$ 719.7 million as of December 31, 2023[102]. - Total revenue for the fiscal year ended December 31, 2023, was $728,937,000, representing a 15.8% increase from$ 629,097,000 in 2022[387]. - Gross profit for 2023 was $419,339,000, up from$ 353,777,000 in 2022, indicating a gross margin improvement[387]. - Net loss attributable to common stockholders decreased to $107,294,000 in 2023 from$ 153,875,000 in 2022, reflecting a 30.3% reduction in losses[387]. - Basic and diluted net loss per share improved to $(0.71) in 2023 compared to$ (1.09) in 2022[387]. - Operating expenses for 2023 totaled $541,234,000, an increase from$ 504,967,000 in 2022, primarily driven by higher sales and marketing costs[387]. - Cash flows used in operating activities for 2023 were $2,005,000, significantly improved from$ 60,957,000 in 2022 and $7,104,000 in 2021[396]. - The company has incurred net operating losses (NOLs) since inception and expects to continue incurring losses in the near future, posing a risk that existing NOLs could expire unused[209]. Workforce and Diversity - The company had 1,443 full-time employees as of December 31, 2023, following a reduction in force of approximately 10% in February 2023 due to macroeconomic conditions[96]. - 95% of employees engaged in learning on the company's platform during the fiscal year ended December 31, 2023, highlighting a strong internal focus on upskilling[94]. - As of December 31, 2023, 45% of the global workforce, 38% of senior leadership, and 27% of the technical workforce identified as women, reflecting the company's commitment to diversity[95]. Market and Competition - The company faces competition from various online learning platforms, including corporate training offerings and free online resources, which may impact its market position[114]. - The company expects broader societal and macroeconomic conditions, such as inflation and economic uncertainty, to influence the growth of the online learning market[118]. - The company has experienced elongated sales cycles for its Udemy Business offerings due to budget tightening amid economic uncertainty[108]. Revenue and Business Model - Revenue from the Enterprise segment represented 58%, 50%, and 36% of total revenue for the fiscal years ended December 31, 2023, 2022, and 2021, respectively[113]. - The company announced a change in its revenue share model with instructors effective at the beginning of 2024, which may lead to content being unpublished or instructors leaving the platform[112]. - The company generated 60%, 59%, and 61% of its revenue outside of North America for the fiscal years ended December 31, 2023, 2022, and 2021, respectively[140]. Strategic Initiatives - Strategic partnerships, such as the one with McLaren Racing, are crucial for increasing brand awareness and revenue growth[120]. - The company plans to continue expanding its international operations, which currently include locations in Ireland, Turkey, Australia, and India[139]. - The company has implemented new programs covering Human Rights, Supplier Diversity, and Ethical Sourcing during the fiscal year ended December 31, 2023, enhancing its ESG initiatives[98]. Compliance and Regulatory Risks - The company is subject to various laws and regulations worldwide, and failure to comply could adversely affect its business and financial condition[146]. - The company is subject to anti-bribery and anti-corruption laws, which could lead to penalties and adverse consequences if violated[155]. - Compliance with the EU General Data Protection Regulation (GDPR) may result in fines of up to €20 million or 4% of annual global revenue for violations[164]. - The company may incur significant expenses to comply with evolving privacy, data protection, and cybersecurity standards[170]. Financial Position and Assets - As of December 31, 2023, the company had$ 305.6 million in cash and cash equivalents and $171.4 million in marketable securities[372]. - The company did not hold any long-term debt during the fiscal years ended December 31, 2023, 2022, or 2021[372]. - Total current assets increased to$ 632,328,000 in 2023 from $615,014,000 in 2022, showing a growth of 2.1%[385]. - Total liabilities decreased to$ 384,304,000 in 2023 from $398,258,000 in 2022, a reduction of 3.5%[385]. Intellectual Property and Technology - The company faces risks related to the protection of its intellectual property, which is essential for maintaining its competitive advantage[188]. - The company holds a limited number of issued patents, which restricts its ability to prevent competitors from implementing similar technologies[190]. - The company relies on confidentiality agreements to protect its proprietary technologies, but these may not be sufficient to prevent unauthorized use[191]. Shareholder Matters - As of December 31, 2023, directors, executive officers, and significant stockholders beneficially owned approximately 43% of the outstanding common stock, allowing them to exert significant control over corporate matters[227]. - The company has authorized a share repurchase program of up to$ 100 million, which may affect the stock price and increase volatility[228]. - The company does not anticipate paying dividends in the foreseeable future, relying on share price appreciation for stockholder returns[225].