Udemy(UDMY) - 2024 Q2 - Quarterly Report

Summary of Risk Factors This section outlines the primary risks to the company's future profitability, market position, and operational stability, including historical losses and intense competition - The company has a history of losses and may not achieve or maintain profitability in the future[5] - Operating in an emerging and dynamic market makes future results difficult to evaluate[5] - Growth sustainability depends on attracting and retaining new and existing learners, instructors, and organizations[5] - Reliance on a limited number of instructors for popular content poses a risk if these relationships are lost[5] - The company operates in a highly competitive market and may struggle against current and future competitors[5] Special Note Regarding Forward-Looking Statements This section clarifies that the report contains forward-looking statements about future performance and strategy, which are subject to risks and uncertainties and are not guaranteed - This Form 10-Q contains forward-looking statements regarding future financial and operating performance, business strategy, and management objectives[6] - Forward-looking statements include expectations for revenue, costs, customer metrics (UB customers, ARR, NDRR), segment performance, adjusted EBITDA, and operational efficiency initiatives[6] - Actual events or results may differ materially from forward-looking statements due to risks and uncertainties, and the company undertakes no obligation to update them[6][7] PART I. Financial Information This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Udemy, Inc., including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the company's accounting policies, financial components, and other relevant disclosures for the periods ended June 30, 2024 and 2023 Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--------------------------- | :------------ | :------------------ | | Total Assets | $671,939 | $741,196 | | Total Liabilities | $419,685 | $384,304 | | Total Stockholders' Equity | $252,254 | $356,892 | | Cash and cash equivalents | $272,364 | $305,564 | | Marketable securities | $148,559 | $171,372 | | Deferred revenue, current | $309,769 | $279,414 | - Total assets decreased by $69.3 million (9.3%) from December 31, 2023, to June 30, 2024, primarily due to reductions in cash, cash equivalents, and marketable securities, and the impairment of strategic investments[10][42] - Total liabilities increased by $35.4 million (9.2%) from December 31, 2023, to June 30, 2024, mainly driven by an increase in deferred revenue[10] Condensed Consolidated Statements of Operations This section details the company's financial performance over specific periods, including revenue, expenses, and net loss Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $194,360 | $178,240 | $391,206 | $354,670 | | Cost of revenue | $73,244 | $75,938 | $149,526 | $152,639 | | Gross profit | $121,116 | $102,302 | $241,680 | $202,031 | | Total operating expenses | $146,662 | $129,764 | $289,955 | $276,770 | | Loss from operations | $(25,546) | $(27,462) | $(48,275) | $(74,739) | | Net loss | $(31,814) | $(25,735) | $(50,153) | $(70,279) | | Net loss per share (Basic and diluted) | $(0.21) | $(0.17) | $(0.32) | $(0.48) | - Revenue increased by 9% for the three months and 10% for the six months ended June 30, 2024, primarily driven by growth in the Enterprise segment[123][124] - Gross profit increased by 18% for the three months and 20% for the six months ended June 30, 2024, with gross margin improving to 62% from 57% year-over-year[126][128] Condensed Consolidated Statements of Comprehensive Loss This section presents the company's net loss and other comprehensive income or loss components, reflecting total comprehensive loss Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(31,814) | $(25,735) | $(50,153) | $(70,279) | | Foreign currency translation gain (loss), net of tax | $20 | $(5) | $(32) | $(16) | | Change in unrealized gain (loss) on marketable securities, net of tax | $10 | $53 | $(92) | $201 | | Total other comprehensive income (loss) | $30 | $48 | $(124) | $185 | | Comprehensive loss | $(31,784) | $(25,687) | $(50,277) | $(70,094) | - Comprehensive loss for the three months ended June 30, 2024, was $(31.8) million, slightly higher than the net loss, reflecting minor impacts from foreign currency translation and marketable securities[14] Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Balance—December 31, 2023 | Six Months Ended June 30, 2024 Changes | Balance—June 30, 2024 | | :---------------------------- | :------------------------ | :------------------------------------- | :-------------------- | | Common Shares | 157,166,360 | (5,484,023) | 151,682,337 | | Additional Paid-In Capital | $1,076,508 | $(54,361) | $1,022,147 | | Accumulated Other Comprehensive Income (Loss) | $80 | $(124) | $(44) | | Accumulated Deficit | $(719,698) | $(50,153) | $(769,851) | | Total Stockholders' Equity | $356,892 | $(104,638) | $252,254 | - Total stockholders' equity decreased by $104.6 million from December 31, 2023, to June 30, 2024, primarily due to a net loss of $50.2 million and $91.1 million in common stock repurchases[16] - Stock-based compensation for the six months ended June 30, 2024, was $51.6 million, contributing to additional paid-in capital[16] Condensed Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $49,561 | $(6,40