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

"Udemy delivered solid third quarter results with revenue and adjusted EBITDA margin above the high end of our guidance ranges, and we achieved a new milestone of over $500 million in Udemy Business Annual Recurring Revenue,” said Greg Brown, Udemy's President and CEO. "Our disciplined approach to driving operational efficiencies throughout the business, coupled with the recently announced strategic cost-saving actions, have generated significant growth in adjusted EBITDA this year. As a result, we are raising our full year 2024 adjusted EBITDA outlook.”

"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.

Business and Operational Highlights

• 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.

Share Repurchase Program

Udemy returned capital to shareholders through its $150 million share repurchase program. During Q3, the company spent approximately $51 million to buy back 6.3 million Udemy shares in the open market.

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.

The revenue guidance range above assumes historical changes in FX rates will have a negative 2 percentage point impact on fourth quarter year-over-year revenue growth and a negative 2 point impact on full year 2024 revenue growth. Udemy's revenue guidance assumes FX rates will remain unchanged from the end of the third quarter of 2024.

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