Udemy(US:UDMY)2025-10-29 22:04Revenue Performance - Revenue for the three months ended September 30, 2025, was $195.7 million, a slight increase of $0.3 million compared to $195.4 million in the same period last year, representing a flat year-over-year growth [191]. - For the nine months ended September 30, 2025, total revenue was $595.9 million, an increase of $9.2 million or 2% compared to $586.6 million in the prior year [196]. - Enterprise segment revenue for the three months ended September 30, 2025, was $132.8 million, accounting for 68% of total revenue, up 5% from $126.1 million in the prior year [192]. - Consumer segment revenue for the three months ended September 30, 2025, was $62.9 million, a decrease of 9% from $69.3 million in the same period last year [194]. - The Enterprise segment revenue for the nine months ended September 30, 2025, was $389.8 million, representing a 7% increase from $364.3 million in the same period last year [197]. - The Consumer segment revenue for the nine months ended September 30, 2025, was $206.0 million, a decrease of 7% from $222.3 million in the prior year [198]. Cost and Expenses - Cost of revenue for Q3 2025 was $66.8 million, an 8% decrease from $72.4 million in Q3 2024, driven by a $6.2 million decrease in content costs [200]. - Total operating expenses for Q3 2025 were $129.0 million, a 15% decrease from $152.5 million in Q3 2024 [209]. - Research and development expenses for the three months ended September 30, 2025, were $25.6 million, down from $33.0 million in the same period last year [186]. - General and administrative expenses for the three months ended September 30, 2025, were $21.9 million, slightly down from $22.3 million in the prior year [186]. - Sales and marketing expenses for Q3 2025 were $81.5 million, a 5% decrease from $86.0 million in Q3 2024 [211]. - The company expects general and administrative expenses as a percentage of revenue to decrease over the long term due to greater operational scale and efficiency [179]. Profitability - The company reported a net income of $1.6 million for the three months ended September 30, 2025, compared to a net loss of $25.3 million in the same period last year [186]. - Adjusted EBITDA for Q3 2025 was $24.3 million, compared to $11.6 million in Q3 2024, reflecting a margin of 12% [249]. - Net income for Q3 2025 was $1.6 million, a significant improvement from a loss of $25.3 million in Q3 2024 [249]. - The company recognized a significant increase in net income driven by a shift towards Enterprise segment revenue and reduced operational costs [250]. Subscriber and Customer Metrics - Udemy's consumer marketplace has attracted over 80 million learners across 180 countries, with over 250,000 courses available [149]. - The number of paid Consumer subscribers increased to 294,156 in Q3 2025, representing an 88% growth compared to the previous year [236]. - Monthly average buyers decreased by 9% year-over-year to 1,200 in Q3 2025, and by 5% to 1,284 for the nine months ended September 30, 2025 [238]. - Udemy Business (UB) customers increased to 17,111 as of September 30, 2025, representing a 2% growth from 16,848 in 2024 [227]. - Udemy Business Annual Recurring Revenue (ARR) reached $527.2 million for the nine months ended September 30, 2025, a 4% increase from $504.6 million in the prior year [229]. - Udemy Business net dollar retention rate decreased to 93% in Q3 2025 from 99% in Q3 2024, while the large customer net dollar retention rate fell to 97% from 104% [233]. Strategic Initiatives - The company plans to repurchase up to $50 million in shares as part of its share repurchase program approved in September 2025 [153]. - Udemy's dual-revenue model includes subscription-based plans and single-course purchases, allowing for both recurring revenue and individual transaction value [150]. - The company is focusing on expanding its international footprint, particularly in regions with large underserved adult and corporate learning populations [164]. - AI investments are enhancing Udemy's platform capabilities, enabling personalized and measurable skill development experiences [151]. - The company plans to continue investing in the growth and development of its platform, with potential future capital raises if available funds are insufficient [260]. Cash Flow and Financial Position - For the three months ended September 30, 2025, free cash flow was $12.1 million, a significant increase from a negative $10.2 million in the same period of the prior year [254]. - For the nine months ended September 30, 2025, net cash provided by operating activities was $72.1 million, up from $43.5 million in the same period of 2024, reflecting an increase of $28.7 million [266][268]. - As of September 30, 2025, the company had cash, cash equivalents, and restricted cash totaling $237.0 million, along with marketable securities of $135.3 million [256]. - The company entered into a revolving credit facility in May 2025, providing $200.0 million in available capacity, which was undrawn as of September 30, 2025 [257]. - For the nine months ended September 30, 2025, net cash used in financing activities was $42.9 million, primarily due to $29.2 million in common stock repurchases [272]. - The accumulated deficit as of September 30, 2025, was $798.9 million, indicating significant historical operating losses [262]. - Cash provided by investing activities for the nine months ended September 30, 2025, was $15.8 million, driven by $169.1 million from the maturity of marketable securities [270]. Instructor Revenue Share Changes - The company is reducing the instructor revenue share for subscription offerings to 15% by 2026, with adjustments to 20% and 17.5% effective in 2024 and 2025 respectively [172]. - The reduction in instructor revenue share from 20% to 17.5% contributed to improved margins in both Enterprise and Consumer segments [241][242].