Udemy(UDMY) - 2024 Q1 - Quarterly Results

Q1 2024 Earnings Overview Udemy reported strong Q1 2024 results, exceeding guidance with significant revenue growth and improved profitability across key segments First Quarter 2024 Financial and Operational Highlights Udemy's Q1 2024 exceeded expectations with 12% revenue growth, improved profitability, and key enterprise and GenAI initiatives Financial Performance Summary Udemy's Q1 2024 achieved 12% revenue growth to $196.8 million, exceeding guidance, with improved gross profit, positive Adjusted EBITDA, and a narrowed net loss | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | YoY Change | | :--------------------------- | :----------------- | :----------------- | :--------- | | Revenue | $196.8 | $176.4 | 12 % | | Gross Profit | $120.6 | $99.7 | 21 % | | Gross Margin | 61 % | 57 % | 400 bps | | Non-GAAP Gross Profit | $122.9 | $102.0 | 20 % | | Non-GAAP Gross Margin | 62 % | 58 % | 400 bps | | Net Loss | $(18.3) | $(44.5) | (59) % | | Non-GAAP Net Income (Loss) | $5.3 | $(8.3) | NM % | | Adjusted EBITDA | $6.5 | $(6.3) | NM % | | Adjusted EBITDA Margin | 3 % | (4) % | 700 bps | - Total revenue increased by 12% to $196.8 million, exceeding Udemy's guidance range for the quarter, with a 2 percentage point negative impact from foreign exchange rate changes[9] - The company held $434.1 million in cash, cash equivalents, restricted cash, and marketable securities at the end of the quarter[9] Business and Operational Achievements Udemy achieved robust growth in its enterprise business, with Udemy Business revenue up 24% and over 16,000 enterprise customers, while launching GenAI learning solutions and receiving industry recognition | Metric | Q1 2024 | Q1 2023 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Enterprise Segment Revenue | $117.6M | $95.2M | 24 % | | Enterprise Segment Gross Profit | $84.6M | $62.4M | 36 % | | Enterprise Segment Gross Margin | 72 % | 65 % | 700 bps | | Total Enterprise Customers | 16,070 | 14,359 | 12 % | | UB Annual Recurring Revenue (ARR) | $479.4M | $396.0M | 21 % | | UB Net Dollar Retention Rate | 104 % | 112 % | (800) bps | | UB Large Customer Net Dollar Retention Rate | 111 % | 120 % | (900) bps | | Consumer Segment Revenue | $79.2M | $81.2M | (2) % | | Consumer Segment Gross Profit | $43.2M | $43.7M | (1) % | | Consumer Segment Gross Margin | 55 % | 54 % | 100 bps | | Monthly Average Buyers | 1.44M | 1.39M | 4 % | - Enterprise segment (Udemy Business) revenue grew 24% to $117.6 million, with Annual Recurring Revenue (ARR) increasing 21% to $479.4 million[1][9] - Total enterprise customers exceeded 16,000, with new or expanded relationships including Ambev S.A., Axon Enterprise, and PepsiCo, Inc[1][2][9] - Launched GenAI skill packs and a "Leading GenAI Innovation" learning program to support rapid adoption and implementation of generative AI skills within organizations[9] Share Repurchase Program Udemy's board approved a $50 million increase to the existing share repurchase program, bringing the total authorization to $150 million, with approximately $55 million spent this quarter - The Board authorized an additional $50 million for the existing share repurchase program, increasing the total authorization to $150 million[1][2][6] - In Q1, the company spent approximately $55 million to repurchase nearly 5 million shares of Udemy common stock[5] - Approximately $45 million remained under the previously announced $100 million share repurchase program, in addition to the new $50 million authorization[6] Financial Outlook Udemy provided Q2 and full-year 2024 financial guidance, projecting continued revenue growth and positive Adjusted EBITDA margins, while accounting for negative foreign exchange impacts Q2 and Full Year 2024 Guidance The company forecasts Q2 2024 revenue between $192 million and $195 million, full-year revenue between $795 million and $805 million, and an Adjusted EBITDA margin of 200 to 300 basis points for the full year | Metric | Q2 2024 Guidance | Full Year 2024 Guidance | | :--------------------------- | :--------------- | :---------------------- | | Revenue | $192 to $195M | $795 to $805M | | Adjusted EBITDA Margin | (50) to 50 bps | 200 to 300 bps | | Weighted Average Share Count, Basic | 155M | 156M | | Weighted Average Share Count, Diluted | 158M | 162M | - The revenue guidance assumes a 1 percentage point negative impact from historical foreign exchange rate changes on year-over-year revenue growth for both Q2 and the full year[10] Consolidated Financial Statements This section presents Udemy's condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows, highlighting key financial performance and position changes Condensed Consolidated Statements of Operations Udemy's Q1 2024 condensed consolidated statements of operations show a significantly narrowed net loss year-over-year, driven by revenue growth, improved gross profit, and reduced restructuring charges | Metric (in thousands) | Q1 2024 | Q1 2023 | | :-------------------- | :--------- | :--------- | | Revenue | $196,846 | $176,430 | | Cost of revenue | $76,282 | $76,701 | | Gross profit | $120,564 | $99,729 | | Total operating expenses | $143,293 | $147,006 | | Loss from operations | $(22,729) | $(47,277) | | Total other income, net | $5,417 | $3,790 | | Net loss | $(18,339) | $(44,544) | | Net loss per share, basic and diluted | $(0.12) | $(0.31) | - Stock-based compensation expense decreased from $26.283 million in Q1 2023 to $22.705 million in Q1 2024[29] - Amortization of intangible assets slightly decreased from $1.067 million in Q1 2023 to $0.955 million in Q1 2024[30] Condensed Consolidated Balance Sheets As of March 31, 2024, Udemy's balance sheet indicates a decrease in total assets and stockholders' equity compared to December 31, 2023, primarily due to reduced cash and increased current liabilities | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :---------------------------- | :------------- | :---------------- | | Total assets | $708,454 | $741,196 | | Cash and cash equivalents | $256,807 | $305,564 | | Marketable securities | $173,883 | $171,372 | | Total current assets | $603,426 | $632,328 | | Total liabilities | $411,960 | $384,304 | | Total current liabilities | $408,285 | $380,132 | | Deferred revenue, current | $315,563 | $279,414 | | Total stockholders' equity | $296,494 | $356,892 | - Current deferred revenue significantly increased from $279.414 million at the end of 2023 to $315.563 million at the end of Q1 2024[32] Condensed Consolidated Statements of Cash Flows In Q1 2024, Udemy's operating cash flow turned positive, a significant improvement year-over-year, while cash outflows from financing activities increased due to common stock repurchases