Udemy Business Revenue Up 77% Year over Year, ARR up 74% to $316.1 million

SAN FRANCISCO, Aug. 03, 2022 (GLOBE NEWSWIRE) — Udemy (Nasdaq: UDMY), a leading destination for learning and teaching online, today reported results for the second quarter ending June 30, 2022.

“Udemy is disrupting learning through our unparalleled platform and rapidly scaling SaaS business,” said Gregg Coccari, Chairman and CEO of Udemy. “Improving lives through learning is our mission, and we are proud to bring together our approximately 71,000 instructors, over 12,000 Udemy Business customers and growing roster of strategic partners to deliver it worldwide. Together, united in our commitment to upskilling and reskilling, we are activating positive outcomes for businesses and individuals, even in the face of economic uncertainty.”

Second Quarter 2022 Financial Results and Key Operating Data:

  • Revenue totaled $153.1 million, up 21% year over year.
  • GAAP net loss was $(29.4) million compared to $(11.4) million in the second quarter of fiscal 2021. GAAP net loss per share was $(0.21), compared to $(0.31) in the second quarter of fiscal 2021.
  • Non-GAAP net loss was $(13.6) million compared to $(5.4) million in the second quarter of fiscal 2021. Non-GAAP net loss per share was $(0.10) compared to $(0.15) in the second quarter of fiscal 2021.
  • GAAP gross profit was $87.3 million, compared to $70.1 million in the second quarter of fiscal 2021.
  • Non-GAAP gross profit was $89.0 million, compared to $70.3 million in the second quarter of fiscal 2021.
  • Adjusted EBITDA was $(8.6) million, compared to $(1.6) million in the second quarter of fiscal 2021.
  • Udemy Business revenue totaled $74.6 million, up 77% year over year.
  • Udemy Business segment gross profit was $49.9 million compared to $27.7 million in the second quarter of fiscal 2021.
  • Udemy Business segment annual recurring revenue was $316.1 million, up 74% year over year.
  • Udemy Business total customers was 12,514 as of June 30, 2022, up 44% year over year.
  • Udemy Business net dollar retention rate was 118%.
  • Consumer revenue totaled $78.5 million, down 7% year over year.
  • Consumer segment gross profit was $42.3 million compared to $45.1 million in the second quarter of fiscal 2021.
  • Consumer segment monthly average buyers was 1,290 thousand, down 2% year over year.

Second Quarter Highlights:

  • Added new Udemy Business customers including Broadridge Financial Solutions, Samsung SDS, Cision US, Edenred Brasil and Glanbia.
  • Udemy Business customer expansions included Colgate-Palmolive, lululemon athletica, Volkswagen Group China, TIBCO Software, Bosch Global Software Tech and Globant.
  • Through business partner, Benesse, Udemy is supporting the Tokyo Metropolitan Government in their efforts to accelerate the digital transformation of small and medium-sized enterprises in Tokyo. By the end of March, 2023, Udemy and Benesse expect to provide over 250 SMEs in Tokyo with in-house training support for the purpose of digital transformation skill development.
  • Supported global firm Booz Allen Hamilton with their upskilling efforts. Using Udemy Business to power a program for thousands of data scientists, nearly 94% of Booz Allen Hamilton learners are now highly proficient in data science, and their Udemy-trained graduates now have a 93% employee retention rate. The firm has seen a 3% increase in consultant billability since beginning their work with Udemy Business.
  • Rolled out our Skill Insights Dashboard enabling customers to unlock learning insights within their organization.
  • Introduced five new payment methods in Belgium, Malaysia, Singapore and the Philippines, driving higher conversion and faster time to content.
  • Launched a bulk coupon creation tool that enables instructors to market their courses more effectively across our global community of learners.
  • According to Stack Overflow’s annual survey of developers, 66% of global respondents selected Udemy as the most popular online course or certification program for learning how to code.
  • Launched inaugural ESG Impact Report, highlighting our ESG efforts and spotlighting how we support our learners, instructors, customers and communities.
  • Fair Pay Workplace certified Udemy as a company achieving pay equity, demonstrating that we’ve undergone a rigorous evaluation of our data and practices, and we’ve committed to following a tailored action plan building upon our fair pay practices.
  • Great Place to Work® Ireland honored Udemy on the 2022 list of Ireland’s Best Workplaces in Tech.

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.

The table below reflects Udemy’s financial outlook for its third quarter ending September 30, 2022 and fiscal year ending December 31, 2022:

  Q3’22 FY22
Revenue $153.0 – $157.0 million $615.0 – $640.0 million
Adjusted EBITDA Margin (14)% – (12)% (12)% – (10)%
Weighted Average Share Count 141 million 142 million

  
Webcast Information
Udemy will host a webcast at 2:00 pm Pacific Time on Wednesday, August 3rd, to discuss its second quarter 2022 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 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 third 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 March 31, 2022, filed with the SEC on May 4, 2022. 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.

About Udemy
Udemy (Nasdaq: UDMY) provides flexible, effective skill development to empower organizations and individuals. The Udemy marketplace platform, with thousands of up-to-date courses in dozens of languages, offers 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. Udemy Business offers corporate customers 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.

Udemy, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)

  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Revenue $ 153,112     $ 126,093     $ 305,335     $ 250,643  
Cost of revenue (1)(2)   65,812       55,993       132,250       113,916  
Gross profit   87,300       70,100       173,085       136,727  
Operating expenses (1)(2)              
Sales and marketing   68,421       50,902       135,299       104,141  
Research and development   23,963       14,783       46,533       30,196  
General and administrative   23,443       15,389       45,096       29,802  
Total operating expenses   115,827       81,074       226,928       164,139  
Loss from operations   (28,527 )     (10,974 )     (53,843 )     (27,412 )
Other income (expense)              
Interest income (expense), net   127       (173 )     370       (391 )
Other expense, net   (672 )     (90 )     (916 )     (518 )
Total other expense, net   (545 )     (263 )     (546 )     (909 )
Net loss before taxes   (29,072 )     (11,237 )     (54,389 )     (28,321 )
Income tax provision   (308 )     (154 )     (640 )     (1,059 )
Net loss attributable to common stockholders $ (29,380 )   $ (11,391 )   $ (55,029 )   $ (29,380 )
Net loss per share attributable to common stockholders              
Basic and diluted $ (0.21 )   $ (0.31 )   $ (0.39 )   $ (0.80 )
Weighted-average shares used in computing net loss per share attributable to common stockholders              
Basic and diluted   140,035,203       37,269,650       139,691,508       36,726,992  

(1)   Includes stock-based compensation expense as follows (in thousands):

  Three Months Ended June 30,   Six Months Ended June 30,
    2022     2021     2022     2021
Cost of revenue $ 989   $ 237   $ 1,829   $ 537
Sales and marketing   5,007     1,712     9,144     3,636
Research and development   3,711     1,052     7,045     3,142
General and administrative   5,025     2,971     10,056     9,169
Total stock-based compensation expense $ 14,732   $ 5,972   $ 28,074   $ 16,484

(2)         Includes amortization of intangible assets as follows (in thousands):

  Three Months Ended June 30,   Six Months Ended June 30,
    2022     2021     2022     2021
Cost of revenue $ 726   $   $ 1,450   $
Sales and marketing   341         683    
Total amortization of intangible assets $ 1,067   $   $ 2,133   $

Udemy, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(Unaudited)

  June 30,   December 31,
    2022       2021  
Assets      
Current assets:      
Cash and cash equivalents $ 512,166     $ 533,868  
Accounts receivable, net of allowance for doubtful accounts of $1,078 and $678 as of June 30, 2022, and December 31, 2021, respectively.   69,306       73,180  
Prepaid expenses and other current assets   13,893       15,927  
Deferred contract costs, current   26,858       18,898  
Total current assets   622,223       641,873  
Property and equipment, net   8,286       9,887  
Capitalized software, net   23,517       20,054  
Operating lease right-of-use assets   14,466        
Restricted cash, non-current   3,629       2,900  
Deferred contract costs, non-current   31,103       25,647  
Strategic investments   15,000       10,000  
Intangible assets, net   11,464       13,597  
Goodwill   12,646       12,646  
Other assets   3,655       3,247  
Total assets $ 745,989     $ 739,851  
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $ 17,324     $ 34,627  
Accrued expenses and other current liabilities   33,720       40,140  
Content costs payable   33,310       35,961  
Accrued compensation and benefits   21,745       22,341  
Operating lease liabilities, current   7,144        
Deferred revenue   240,630       208,274  
Total current liabilities   353,873       341,343  
Long-term obligation under operating leases   9,729        
Deferred revenue, non-current   3,022       2,280  
Other liabilities, non-current   4,419       6,528  
Total liabilities   371,043       350,151  
       
Stockholders’ equity:      
Preferred stock          
Common stock   1       1  
Additional paid-in capital   888,522       848,229  
Accumulated other comprehensive loss   (19 )     (1 )
Accumulated deficit   (513,558 )     (458,529 )
Total stockholders’ equity   374,946       389,700  
Total liabilities and stockholders’ equity $ 745,989     $ 739,851  

Udemy, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

  Six Months Ended June 30,
    2022       2021  
Cash flows from operating activities:      
Net loss $ (55,029 )   $ (29,380 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization   10,200       6,457  
Amortization of deferred sales commissions   13,965       7,233  
Stock-based compensation   28,074       16,484  
Provision for doubtful accounts   517       170  
Non-cash operating lease expense   3,101        
Other   252        
Changes in operating assets and liabilities:      
Accounts receivable   3,356       3,325  
Prepaid expenses and other assets   1,243       (3,928 )
Deferred contract costs   (27,381 )     (15,724 )
Accounts payable, accrued expenses and other liabilities   (22,034 )     (10,448 )
Content costs payable   (2,652 )     (1,271 )
Operating lease liabilities   (3,146 )      
Deferred revenue   33,099       21,596  
Net cash used in operating activities   (16,435 )     (5,486 )
Cash flows from investing activities:      
Purchases of property and equipment   (699 )     (3,111 )
Capitalized software costs   (6,643 )     (6,680 )
Purchases of strategic investments   (5,000 )      
Net cash used in investing activities   (12,342 )     (9,791 )
Cash flows from financing activities:      
Net proceeds from exercise of stock options   3,831       6,004  
Proceeds from share purchases under employee stock purchase plan   5,563        
Payment of redeemable convertible preferred stock issuance costs         (2,250 )
Payment of deferred offering costs   (1,586 )     (313 )
Net proceeds from exercise of Series A-1 redeemable convertible preferred stock warrants         3  
Net cash provided by financing activities   7,808       3,444  
       
Effect of foreign exchange rates on cash flows   (4 )      
       
Net decrease in cash, cash equivalents and restricted cash   (20,973 )     (11,833 )
Cash, cash equivalents and restricted cash—Beginning of period   536,768       177,931  
Cash, cash equivalents and restricted cash—End of period $ 515,795     $ 166,098  

Udemy, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except share and per share amounts)
(Unaudited)

  Three Months Ended June 30, 2022
  GAAP   Stock-based
Compensation
  Amortization of
Intangible Assets
  Non-GAAP
  (in thousands, except share and per share amounts)
Revenue $ 153,112     $     $     $ 153,112  
Cost of revenue   65,812       (989 )     (726 )     64,097  
Gross profit   87,300       989       726       89,015  
Operating expenses              
Sales and marketing   68,421       (5,007 )     (341 )     63,073  
Research and development   23,963       (3,711 )         20,252  
General and administrative   23,443       (5,025 )         18,418  
Total operating expenses   115,827       (13,743 )     (341 )     101,743  
Loss from operations   (28,527 )     14,732       1,067       (12,728 )
Other income (expense)              
Interest income, net   127                   127  
Other expense, net   (672 )                 (672 )
Total other expense, net   (545 )                 (545 )
Net loss before taxes   (29,072 )     14,732       1,067       (13,273 )
Income tax provision   (308 )                 (308 )
Net loss attributable to common stockholders $ (29,380 )   $ 14,732     $ 1,067     $ (13,581 )
Net loss per share attributable to common stockholders              
Basic and diluted $ (0.21 )           $ (0.10 )
Weighted-average shares used in computing net loss per share attributable to common stockholders   140,035,203               140,035,203  
               
               
  Six Months Ended June 30, 2022
  GAAP   Stock-based
Compensation
  Amortization of
Intangible Assets
  Non-GAAP
  (in thousands, except share and per share amounts)
Revenue $ 305,335     $     $     $ 305,335  
Cost of revenue   132,250       (1,829 )     (1,450 )     128,971  
Gross profit   173,085       1,829       1,450       176,364  
Operating expenses              
Sales and marketing   135,299       (9,144 )     (683 )     125,472  
Research and development   46,533       (7,045 )           39,488  
General and administrative   45,096       (10,056 )           35,040  
Total operating expenses   226,928       (26,245 )     (683 )     200,000  
Loss from operations   (53,843 )     28,074       2,133       (23,636 )
Other income (expense)              
Interest income, net   370                   370  
Other expense, net   (916 )                 (916 )
Total other expense, net   (546 )                 (546 )
Net loss before taxes   (54,389 )     28,074       2,133       (24,182 )
Income tax provision   (640 )                 (640 )
Net loss attributable to common stockholders $ (55,029 )   $ 28,074     $ 2,133     $ (24,822 )
Net loss per share attributable to common stockholders              
Basic and diluted $ (0.39 )           $ (0.18 )
Weighted-average shares used in computing net loss per share attributable to common stockholders   139,691,508               139,691,508  
               
               
  Three Months Ended June 20, 2021
  GAAP   Stock-based
Compensation
  Non-GAAP
  (in thousands, except share and per share amounts)
Revenue $ 126,093     $     $ 126,093  
Cost of revenue   55,993       (237 )     55,756  
Gross profit   70,100       237       70,337  
Operating expenses          
Sales and marketing   50,902       (1,712 )     49,190  
Research and development   14,783       (1,052 )     13,731  
General and administrative   15,389       (2,971 )     12,418  
Total operating expenses   81,074       (5,735 )     75,339  
Loss from operations   (10,974 )     5,972       (5,002 )
Other income (expense)          
Interest expense, net   (173 )         (173 )
Other expense, net   (90 )         (90 )
Total other expense, net   (263 )         (263 )
Net loss before taxes   (11,237 )     5,972       (5,265 )
Income tax provision   (154 )         (154 )
Net loss attributable to common stockholders $ (11,391 )   $ 5,972     $ (5,419 )
Net loss per share attributable to common stockholders          
Basic and diluted $ (0.31 )       $ (0.15 )
Weighted-average shares used in computing net loss per share attributable to common stockholders          
Basic and diluted   37,269,650           37,269,650  
  Six Months Ended June 30, 2021
  GAAP   Stock-based
Compensation
  Non-GAAP
  (in thousands, except share and per share amounts)
Revenue $ 250,643     $     $ 250,643  
Cost of revenue   113,916       (537 )     113,379  
Gross profit   136,727       537       137,264  
Operating expenses          
Sales and marketing   104,141       (3,636 )     100,505  
Research and development   30,196       (3,142 )     27,054  
General and administrative   29,802       (9,169 )     20,633  
Total operating expenses   164,139       (15,947 )     148,192  
Loss from operations   (27,412 )     16,484       (10,928 )
Other income (expense)          
Interest expense, net   (391 )           (391 )
Other expense, net   (518 )           (518 )
Total other expense, net   (909 )           (909 )
Net loss before taxes   (28,321 )     16,484       (11,837 )
Income tax provision   (1,059 )           (1,059 )
Net loss attributable to common stockholders $ (29,380 )   $ 16,484     $ (12,896 )
Net loss per share attributable to common stockholders          
Basic and diluted $ (0.80 )       $ (0.35 )
Weighted-average shares used in computing net loss per share attributable to common stockholders          
Basic and diluted   36,726,992           36,726,992  
  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
Net loss $ (29,380 )   $ (11,391 )   $ (55,029 )   $ (29,380 )
Adjusted to exclude the following:              
Interest (income) expense, net   (127 )     173       (370 )     391  
Provision for income taxes   308       154       640       1,059  
Depreciation and amortization   5,233       3,387       10,200       6,457  
Stock-based compensation expense   14,732       5,972       28,074       16,484  
Other expense, net   672       90       916       518  
Adjusted EBITDA $ (8,562 ) $ $ (1,615 ) $ $ (15,569 ) $ $ (4,471 )

Contacts

Media:
Abby Welch
Senior Director, Corporate Communications
[email protected]

Investors:
Willa McManmon
Managing Director, The Blueshirt Group
[email protected]

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