Udemy Reports Fourth Quarter 2021 and Fiscal Year 2021 Results

Udemy Business Revenue Up 81% Year over Year, With ARR of $239 Million

Udemy (Nasdaq: UDMY), a leading destination for learning and teaching online, today reported results for the fourth quarter ended December 31, 2021.

“As we look to 2022, we see the increasing focus by organizations on digital transformation initiatives, which come with a need to upskill and reskill teams, coupled with a focus on employee engagement and retention, driving Udemy Business’s strong ARR, which was $239 million exiting the fourth quarter. In Q4 our consumer business stabilized, global traffic remained strong, and the marketplace continues to deliver an unparalleled 5,000+ new courses a month,” said Gregg Coccari, Udemy’s chief executive officer. “We are proud that Udemy Business has a compounded annual revenue growth rate over 100% since its inception in 2015. We look forward to sharing our progress as we help transform learning and the way we work with our vibrant consumer marketplace and exceptional Udemy Business platform.”

Fourth Quarter 2021 Financial Results and Key Operating Data:

  • Revenue totaled $138.0 million, up 25% year over year.
  • GAAP net income (loss) was ($38.9 million) compared to ($27.0 million) in the fourth quarter of fiscal 2020. GAAP net income (loss) per share was ($0.36), compared to ($0.77) in the fourth quarter of fiscal 2020.
  • Non-GAAP net income (loss) was ($26.8 million) compared to ($18.9 million) in the fourth quarter of fiscal 2020. Non-GAAP net income (loss) per share was ($0.25) compared to ($0.53) in the fourth quarter of fiscal 2020.
  • GAAP gross profit was $73.8 million, compared to $54.4 million in the fourth quarter of fiscal 2020.
  • Non-GAAP gross profit was $75.3 million, compared to $54.6 million in the fourth quarter of fiscal 2020.
  • Adjusted EBITDA was ($22.6 million), compared to ($14.7 million) in the fourth quarter of fiscal 2020.
  • Consumer revenue totaled $80.2 million, up 3% year over year.
  • Udemy Business revenue totaled $57.8 million, up 81% year over year.
  • Consumer segment monthly average buyers was 1,388 thousand, up 1% year over year.
  • Udemy Business segment annual recurring revenue was $239.3 million, up 74% year over year.
  • Udemy Business total customers was 10,515 as of December 31, 2021, up 44% year over year.
  • Consumer segment gross profit was $39.4 million compared to $36.0 million in the fourth quarter of fiscal 2020.
  • Udemy Business segment gross profit was $38.6 million compared to $20.7 million in the fourth quarter of fiscal 2020.

Fiscal Year 2021 Financial Results and Key Operating Data:

  • Revenue totaled $518.2 million, up 21% year over year.
  • GAAP net income (loss) was ($77.5 million) compared to ($77.6 million) in the fiscal year 2020. GAAP net income (loss) per share was ($1.41), compared to ($2.33) in the fiscal year 2020.
  • Non-GAAP net income (loss) was ($41.3 million) compared to ($46.0 million) in the fiscal year 2020. Non-GAAP net income (loss) per share was ($0.75) compared to ($1.38) in the fiscal year 2020.
  • GAAP gross profit was $282.1 million, compared to $220.6 million in the fiscal year 2020.
  • Non-GAAP gross profit was $284.8 million, compared to $221.1 million in the fiscal year 2020.
  • Adjusted EBITDA was ($25.4 million), compared to ($30.7 million) in the fiscal year 2020.
  • Consumer revenue totaled $331.2 million, up 1% year over year.
  • Udemy Business revenue totaled $187.0 million, up 81% year over year.
  • Consumer segment monthly average buyers was 1,345 thousand, down 7% year over year.
  • Consumer segment gross profit was $171.9 million compared to $160.7 million in the fiscal year 2020.
  • Udemy Business segment gross profit was $123.0 million compared to $67.9 million in the fiscal year 2020.

Fourth Quarter Highlights:

  • First Udemy Business deal with a total contract value over $5 million.
  • Added new Udemy Business customers across key verticals, including Headspace Health, L.L. Bean, Softserve, Inc., Schrödinger, and Workrise.
  • Udemy Business customer expansions included Coinbase, CVS Health, Instacart, Randstad N.V., and Sapient Corporation.
  • Added Polish and Korean course collections to Udemy Business, bringing the total number of Udemy Business international course collections to 13.
  • Udemy Business received an impressive Net Promoter Score of 61 from learners using the platform.
  • Rolled out support for 8 new local currencies, bringing the total number of currencies supported to 28.
  • Launched benchmarked assessments that show learners key metrics such as their score, percentile rank, and knowledge classification.
  • Released 10 new software development labs for Udemy Business Pro.
  • Continued to work with EY on their Badges program (EY Badges), as well as supporting their Masters program (the EY Tech MBA by Hult, and two EY Masters degrees by Hult), acting as a key content provider. The EY Masters, which are built on EY Badges, are offered in association with Hult International Business School and are available to all EY employees free of charge.
  • Sustainalytics awarded Udemy its ESG Industry Top Rated badge for 2022.
  • Announced partnership with Sentinels of Freedom to help wounded veterans identify and achieve the skills they need to build successful careers.
  • Received awards recognizing product innovation, company culture, and organizational leadership. Leading global review site G2 ranked Udemy Business as a leader in 26 reports across several categories, including Online Learning Platform, based on high levels of customer satisfaction and likeliness to recommend; the Udemy Dublin office was officially certified as a Great Place to Work in Ireland; and Inc. Magazine named Udemy one of the best-led companies in America.

2022 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.

While Udemy won’t provide annual guidance by segment going forward, the nature of the current consumer market provides less visibility into full year consumer revenue. For this reason, the Company is sharing revenue guidance by segment.

The table below reflects Udemy’s financial outlook for its first quarter ending March 31, 2022 and fiscal year ending December 31, 2022:

Q1’22 FY22
Revenue $144.0 – $148.0 million $610.0 – $640.0 million
Consumer Segment Revenue (6%) – 0% year-over-year growth $310.0 – $330.0 million
Udemy Business Segment Revenue 70%+ year-over-year growth $300.0 – $310.0 million
Adjusted EBITDA Margin (11%) – (9%) (12%) – (10%)
Weighted Average Share Count 139 million 142 million

Webcast Information
Udemy will host a webcast at 2:00 pm Pacific Time on Wednesday, February 9, to discuss its fourth quarter 2021 financial results, as well as its 2022 outlook. The live webcast will be accessible on Udemy’s website at investors.udemy.com. A webcast replay will be available approximately two hours after the conclusion of the live event.

Non-GAAP Financial Measures
To supplement the condensed consolidated financial statements prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), Udemy’s key non-GAAP performance measures include Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income. We calculate Adjusted EBITDA as net loss (income) determined in accordance with GAAP, excluding by i) interest expense (income), net; ii) provision for (benefit from) income taxes; iii) depreciation and amortization; iv) other expense (income), net, including gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency and v) non-cash stock-based compensation expense. 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. As Adjusted EBITDA and Adjusted EBITDA Margin facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and certain variable charges. We define non-GAAP income as net loss attributable to common stockholders, adjusted to exclude non-cash stock-based compensation expense and the amortization of acquired intangible assets. We believe the presentation of operating results that excludes these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods. 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.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding Udemy’s expectations relating to future operating results and financial position, including the first quarter of 2022, the full year 2022, and future periods, anticipated future expenses and investments, our business strategy and plans, market growth, our market position and potential market opportunities, and the impact of acquisitions and business alliances. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance.

The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission (“SEC”), including, without limitation, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed with the SEC on December 8, 2021. All information provided in this release is as of the date hereof, and we undertake no duty to update this information unless required by law.

Third Party Data
This press release contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legaldisclaimers.

About Udemy
Udemy’s (Nasdaq: UDMY) mission is to create new possibilities for people and organizations everywhere by connecting them to the knowledge and skills they need to succeed in a changing world. The Udemy marketplace platform, with thousands of up-to-date courses in dozens of languages, provides the tools learners, instructors, and enterprises need to achieve their goals and reach their full potential. Millions of people learn on Udemy from real-world experts in topics ranging from programming and data science to leadership and team building. For companies, Udemy Business offers an employee training and development platform with subscription access to thousands of courses, learning analytics, and the ability to host and distribute their own content. Udemy Business customers include Fender Instruments, Glassdoor, On24, The World Bank, and Volkswagen. Udemy is headquartered in San Francisco with hubs in Ankara, Turkey; Austin, Texas; Boston, Massachusetts; Mountain View, California; Denver, Colorado; Dublin, Ireland; Melbourne, Australia; New Delhi, India; and Sao Paulo, Brazil.

Full release here.