Delivered stronger-than-expected profitability driven by disciplined approach to operational efficiency
Surpassed $500 million in Udemy Business Annual Recurring Revenue
Raises Full Year 2024 Outlook
SAN FRANCISCO, Oct. 29, 2024 (GLOBE NEWSWIRE) -- Udemy (Nasdaq: UDMY), a leading online skills marketplace and learning platform, today reported results for the three-month period ended September 30, 2024. Udemy has provided a supplemental deck with earnings highlights, which is available for download on the "Quarterly Results” section of the Investor Relations website.
Third Quarter 2024 Financial Results and Key Operating Data Summary
(in millions, except customers, percentages, and basis points)
| Three Months Ended
September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||||||||
| 2024 | 2023 | YoY | 2024 | 2023 | YoY | ||||||||||||||||||||||
| Revenue | $ | 195.4 | $ | 184.7 | 6 | % | $ | 586.6 | $ | 539.4 | 9 | % | |||||||||||||||
| Gross Profit | $ | 123.1 | $ | 107.5 | 15 | % | $ | 364.7 | $ | 309.5 | 18 | % | |||||||||||||||
| Gross Margin | 63 | % | 58 | % | 500 | bps | 62 | % | 57 | % | 500 | bps | |||||||||||||||
| Non-GAAP Gross Profit | $ | 125.3 | $ | 110.0 | 14 | % | $ | 371.9 | $ | 316.8 | 17 | % | |||||||||||||||
| Non-GAAP Gross Margin | 64 | % | 60 | % | 400 | bps | 63 | % | 59 | % | 400 | bps | |||||||||||||||
| Net Loss | $ | (25.3 | ) | $ | (16.8 | ) | (51 | ) | % | $ | (75.4 | ) | $ | (87.0 | ) | 13 | % | ||||||||||
| Non-GAAP Net Income (Loss) | $ | 10.1 | $ | 7.7 | 31 | % | $ | 8.8 | $ | (1.9 | ) | 563 | % | ||||||||||||||
| Adjusted EBITDA | $ | 11.6 | $ | 8.2 | 41 | % | $ | 23.5 | $ | 3.8 | 518 | % | |||||||||||||||
| Adjusted EBITDA Margin | 6 | % | 4 | % | 200 | bps | 4 | % | 1 | % | 300 | bps | |||||||||||||||
| Enterprise Segment | |||||||||||||||||||||||||||
| Total Customers | 16,848 | 15,378 | 10 | % | |||||||||||||||||||||||
| UB Annual Recurring Revenue | $ | 504.6 | $ | 443.1 | 14 | % | |||||||||||||||||||||
| UB Net Dollar Retention Rate | 99 | % | 106 | % | (700 | ) | bps | ||||||||||||||||||||
| UB Large Customer Net Dollar Retention Rate | 104 | % | 114 | % | (1,000 | ) | bps | ||||||||||||||||||||
| Segment Revenue | $ | 126.1 | $ | 109.1 | 16 | % | $ | 364.3 | $ | 306.0 | 19 | % | |||||||||||||||
| Segment Gross Profit | $ | 92.8 | $ | 74.3 | 25 | % | $ | 264.7 | $ | 204.4 | 30 | % | |||||||||||||||
| Segment Gross Margin | 74 | % | 68 | % | 600 | bps | 73 | % | 67 | % | 600 | bps | |||||||||||||||
| Consumer Segment | |||||||||||||||||||||||||||
| Monthly Average Buyers | 1.31 | 1.41 | (7 | ) | % | 1.35 | 1.38 | (2 | ) | % | |||||||||||||||||
| Segment Revenue | $ | 69.3 | $ | 75.6 | (8 | ) | % | $ | 222.3 | $ | 233.4 | (5 | ) | % | |||||||||||||
| Segment Gross Profit | $ | 37.6 | $ | 40.3 | (7 | ) | % | $ | 122.3 | $ | 125.4 | (2 | ) | % | |||||||||||||
| Segment Gross Margin | 54 | % | 53 | % | 100 | bps | 55 | % | 54 | % | 100 | bps | |||||||||||||||
"Longer-term, we remain focused on execution of our strategic initiatives, further optimizing our cost structure, and directing resources toward opportunities with the highest potential return. We believe these actions position Udemy to deliver high-quality, profitable growth and to lead the enterprise skills development category well into the future,” concluded Brown.
Third Quarter 2024 Financial Highlights
- Total revenue increased 6% year-over-year to $195.4 million. Revenue growth includes a negative impact of 2 percentage points from changes in foreign exchange (FX) rates year-over-year.
- Enterprise segment, or Udemy Business, revenue of $126.1 million increased 16% year-over-year, including the negative impact of 2 percentage points from changes in FX rates year-over-year.
- Udemy Business Annual Recurring Revenue (ARR) increased 14% year-over-year to $504.6 million.
- Consumer segment revenue of $69.3 million decreased 8% year-over-year, including the negative impact of 3 percentage points from changes in FX rates.
- Cash, cash equivalents, restricted cash, and marketable securities was $358.3 million at the end of the quarter.
- Added new, or expanded existing, relationships with Udemy Business customers globally, including ABB (Netherlands), Crédito Agricola (Portugal), Ericsson (Sweden), Infosys Limited (India), Marriott International (U.S.), Nationwide Building Society (UK), Primerica (U.S.), Saudi Aramco (Saudi Arabia), UnionDigital Bank (Philippines), Uniqlo Europe (UK), and West Japan Railway Company (Japan).
- Launched new AI-enabled capabilities within Udemy's Intelligent Skills Platform, including AI Assistant, Skills Mapping and AI-powered learning paths that provide innovative, personalized learning experiences for organizations and individuals.
- Announced Udemy's new regional hub in Mexico City, Mexico to enable scaling of operations and faster delivery of personalized, high-quality learning experiences to meet the evolving needs of organizations and professionals.
- Partnered with Workday to introduce a new integration within Workday Skills Cloud that enhances an organization's ability to directly align learning with workforce development.
Financial Outlook
Udemy provides guidance based on current market conditions and expectations. Actual results may differ materially. Please refer to the comments below regarding forward-looking statements.
The following table reflects Udemy's financial outlook for its fourth quarter and full year ending December 31, 2024.
| Three months ending
December 31, 2024 | Year ending December 31, 2024 | |||
| Revenue | $193 to $196 million | $780 to $783 million | ||
| Adjusted EBITDA Margin1 | Approximately 6.0% | Approximately 4.5% | ||
| Weighted Average Share Count, Basic2 | 148 million | 151 million | ||
| Weighted Average Share Count, Diluted2 | 149 million | 156 million | ||
| 1. Udemy has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss) within this earnings release because the company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. 2. Udemy's outlook for weighted average share count, basic and diluted, excludes any impact from potential future repurchase activities under our share repurchase program. | ||||
Webcast Information
Udemy will host a conference call and webcast at 2:00 p.m. PT / 5:00 p.m. ET today, Tuesday, October 29, to discuss its third quarter 2024 financial results and outlook. A link to the live webcast and recorded replay of the conference call will be available on the "Quarterly Results” section of Udemy's Investor Relations website at https://investors.udemy.com/. The live call may also be accessed via telephone at (833) 630-1963 domestically and (412) 317-5702 internationally. The archived replay of the webcast will be available for approximately one year.
Non-GAAP Financial Measures
To supplement the consolidated financial statements prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP”), this press release contains certain non-GAAP financial measures as defined below. We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide useful information to investors and others in understanding and evaluating our operating results because our management team and board of directors use these non-GAAP financial measures for the purposes of assessing operating results and business planning. These non-GAAP financial measures also provide useful measures for period-to-period comparisons of our business by removing the effect of certain non-cash expenses and certain variable charges.
Adjusted EBITDA and Adjusted EBITDA Margin
We calculate Adjusted EBITDA as net loss determined in accordance with GAAP, adjusted to exclude i) interest income; ii) interest expense; iii) provision for income taxes; iv) depreciation and amortization; v) other expense, net, including gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency; vi) stock-based compensation expense; and vii) restructuring charges. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue for the same period. We have not reconciled our expectations for Adjusted EBITDA and Adjusted EBITDA Margin to net loss and net loss margin, respectively, the most directly comparable GAAP measures, because certain items are out of our control or cannot be reasonably predicted and a reconciliation for the guidance for Adjusted EBITDA and Adjusted EBITDA Margin is not available without unreasonable effort.
Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Share, Basic and Diluted
We define non-GAAP net income (loss) as net loss, adjusted to exclude stock-based compensation expense, amortization of acquired intangible assets, and restructuring charges.
We define non-GAAP net income (loss) per share, basic, as non-GAAP net income (loss) divided by weighted-average shares used to compute net loss per share, basic. We define non-GAAP net income (loss) per share, diluted, as non-GAAP net income (loss) divided by weighted-average shares used to compute net loss per share, diluted, which adjusts for the potentially dilutive effects of our employee equity incentive plans.
Non-GAAP Gross Profit and Non-GAAP Gross Margin
We define non-GAAP gross profit as gross profit, adjusted to exclude stock-based compensation expense and the amortization of acquired intangible assets. We calculate non-GAAP gross margin as non-GAAP gross profit divided by revenue for the same period.
Udemy's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. Because of the limitations of non-GAAP financial measures, you should consider the non-GAAP financial measures presented herein in conjunction with Udemy's financial statements and the related notes thereto. Please refer to the non-GAAP reconciliations in this press release for a reconciliation of these non-GAAP financial measures to the most comparable financial measure prepared in accordance with GAAP.
Key Business Metrics
Udemy Business customers
We count the total number of Udemy Business ("UB”) customers at the end of each period. To do so, we generally count unique customers using the concept of a domestic ultimate parent, defined as the highest business in the family tree that is in the same country as the contracted entity. In some cases, we deviate from this methodology, defining the contracted entity as a unique customer despite the existence of a domestic ultimate parent. This often occurs where the domestic ultimate parent is a financial owner, government entity, conglomerate, or acquisition target where we have contracted directly with the subsidiary. We define a UB customer as a customer who purchases Udemy v