Udemy(UDMY)2023-11-05 05:13Financial Data and Key Metrics Changes - Udemy Business revenue increased by 30% year-over-year to 443 million, reflecting a 26% year-over-year growth [36] - Adjusted EBITDA was approximately 483 million in cash and equivalents, and free cash flow was positive at 100,000 in ARR increased by 37% from the previous year [37] Market Data and Key Metrics Changes - Strong demand was noted in North America and Asia Pacific regions, with EMEA experiencing some softness due to geopolitical tensions [37][47] - The demand for generative AI-related content surged, with over 1,500 courses and more than 2.5 million learner enrollments [22] Company Strategy and Development Direction - The company is focusing on skills-based transformation strategies to capitalize on the growing demand for upskilling and reskilling [15][18] - Strategic partnerships, such as with Docker and AWS, are expected to enhance market reach and drive growth [25][26] - Udemy plans to invest in product innovation and brand awareness to capture increasing demand in the skills-based economy [24][51] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2024, noting delays in decision-making from customers and geopolitical pressures in EMEA [47][48] - The long-term opportunity remains significant, with a focus on operational excellence to navigate current challenges [48] - The company anticipates a revenue range of 726 million for the full year 2023, reflecting a 15% year-over-year growth at the midpoint [46] Other Important Information - The company announced adjustments to instructor revenue share, gradually reducing the share for subscription revenue from 25% to 15% over three years [49][52] - The gross margin for Q3 was 60%, a 200 basis point improvement from the previous year, driven by the revenue mix shift towards Udemy Business [41] Q&A Session Summary Question: Instructor revenue share adjustments - The changes will apply to all subscription-based courses starting January 1, 2024, and funds will be reinvested to grow the business [58][59] Question: Demand environment in B2B - There is a healthy mix of net new customers and existing customer upsells, with significant interest in skills-based training [61][67] Question: Consumer segment profitability - The consumer business is expected to remain flat in the short term, but long-term growth is anticipated through new features like badging and certification [85][87] Question: Initial instructor response to payout changes - Mixed reactions were noted, but many instructors recognized the potential for long-term growth following previous changes [91][95] Question: Sales cycle improvements - Sales cycle velocity has improved in some sectors, particularly in enterprise segments, although SMB remains impacted by macroeconomic conditions [99][100]