Udemy Reports Third Quarter 2021 Results

Udemy Business Revenue Up 84% Year over Year, With ARR of $207 Million

Udemy (Nasdaq: UDMY), a leading destination for learning and teaching online, today reported results for the third quarter ended September 30, 2021.

“We’re proud of our progress this quarter in carrying out our mission of connecting people everywhere with the knowledge and skills needed to succeed in a changing world,” said Gregg Coccari, chief executive officer. “Our differentiated marketplace model enables us to continuously deliver high-quality and relevant content across in-demand skills in local languages to our global customers. As a result of increasing demand for upskilling and reskilling in workplaces around the world, revenue for Udemy Business grew 84% year over year and ending ARR exceeded $200M. As learners, instructors, and companies face an accelerating pace of change, Udemy is well-positioned to provide the critical skills people need to succeed in today’s workplace.”

“We are very pleased with the results in the quarter, particularly with the strong performance of Udemy Business, where more than 9,500 businesses and their employees turned to Udemy to help them upskill and reskill,” said Sarah Blanchard, chief financial officer. “Our overall revenue was up 9% year over year, despite our consumer business facing an extraordinary year-over-year comparison given accelerated growth during the early waves of the pandemic last year. We are excited about the future as we continue to execute against our huge global market opportunity.”

Third Quarter 2021 Financial Results and Key Operating Data:

  • Revenue totaled $129.6 million, up 9% year over year.
  • GAAP net income (loss) was ($9.3 million) compared to $1.9 million in the third quarter of fiscal 2020. GAAP net income (loss) per share was ($0.25), compared to $0.05 in the third quarter of fiscal 2020.
  • Non-GAAP net income (loss) was ($1.7 million) compared to $4.7 million in the third quarter of fiscal 2020. Non-GAAP net income (loss) per share was ($0.04) compared to $0.14 in the third quarter of fiscal 2020.
  • GAAP gross profit was $71.6 million, compared to $69.5 million in the third quarter of fiscal 2020.
  • Non-GAAP gross profit was $72.2 million, compared to $69.6 million in the third quarter of fiscal 2020.
  • Adjusted EBITDA was $1.6 million, compared to $8.1 million in the third quarter of fiscal 2020.
  • Consumer revenue totaled $79.2 million, down (13%) year over year.
  • Udemy Business revenue totaled $50.4 million, up 84% year over year.
  • Consumer segment monthly average buyers was 1,263 thousand, down (6%) year over year.
  • Udemy Business segment annual recurring revenue was $207.4 million, up 80% year over year.
  • Udemy Business total customers was 9,592 as of September 30, 2021, up 42% year over year.
  • Udemy Business net dollar retention rate was 118% compared to 119% in the third quarter of fiscal 2020.
  • Consumer segment gross profit was $42.0 million compared to $53.3 million in the third quarter of fiscal 2020.
  • Udemy Business segment gross profit was $32.9 million compared to $18.2 million in the third quarter of fiscal 2020.

Third Quarter Highlights:

  • Added new Udemy Business customers across key verticals including Alcoa, Mitsubishi Chemical, and Carvana, a leading e-commerce platform for buying and selling used cars. Notable expansions included Computacenter PLC, Michelin (Manufacture Francaise des Pneumatiques Michelin), Momentum Metropolitan, and Mercado Libre.
  • Launched Udemy Business Pro, which features labs and assessments in a number of technology verticals and acquired CorpU, which specializes in cohort-based leadership training for Fortune 500 companies.
  • Incorporated new machine learning capabilities to enhance search functionality, provide even more personalized recommendations to individual learners, and improve conversion and retention within the consumer business.
  • Expanded international reach via key partnerships, including launching partnerships with Woongjin ThinkBig, one of the largest Korean education companies, Sanjieke in China, and MultiChoice Group in Sub-Saharan Africa.
  • Ranked by Sustainalytics in the first percentile for ESG risk ratings in the Internet Software and Services sub-industry as of July 2021.
  • Continued to fulfill a commitment to democratizing education globally with millions of users accessing more than 18,000 free courses on Udemy.
  • Completed an Initial Public Offering on the NASDAQ stock market, raising more than $400 million in proceeds.

2021 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 table below reflects Udemy’s financial outlook for its fourth quarter and fiscal year ended December 31, 2021:

  Q4’21 FY21
Revenue $130.0 – 134.0 million $510.2 – 514.2 million
Adjusted EBITDA $(28.5) – (24.5) million $(31.4) – (27.3) million
Adjusted EBITDA Margin (22.0%) – (18.3%) (6.2%) – (5.3%)

Webcast Information 
Udemy will host a webcast at 2:00 pm Pacific Time on Wednesday, December 8, to discuss its third quarter 2021 financial results, as well as its fourth quarter 2021 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. 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 have not reconciled our expectations for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, because certain items are out of our control or cannot be reasonably predicted and a reconciliation for the guidance for Adjusted EBITDA is not available without unreasonable effort. As Adjusted EBITDA 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 provides 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. 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 fourth quarter of 2021 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

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