Udemy, Inc. Q4 FY2024 earnings call

• Greg Brown highlighted that Udemy ended 2024 strong with results beating expectations, with 8% full-year revenue growth (including FX headwind) and adjusted EBITDA above guidance range. The company is transitioning to focus on large enterprise customers, with ARR growth from large enterprises higher than SMB, and nearly fifty deals over $100k in ARR closed in Q4.
• Aaron Bali discussed the upcoming transformation in learning with AI, personalization, and immersive experiences. He emphasized leveraging the marketplace model to scale assessments and hands-on learning, making Udemy a go-to for career assessment, and launching AI-assisted role-playing simulations for soft skills training.
• Sarah Blanchard reviewed financial highlights, noting full-year revenue of $787 million, adjusted EBITDA of $43 million (5% margin), and Q4 adjusted EBITDA of $90 million (10% of revenue). She also mentioned Udemy Business ARR of $517 million, net dollar retention rates stabilizing, and gross margin improvements due to instructor revenue share changes.

For the full year 2024, Udemy achieved revenue of $787 million, a 8% year-over-year growth (including a 2 percentage point headwind from FX). Udemy Business revenue grew 18% for the year, while consumer revenue declined 5%. In the fourth quarter, Udemy Business revenue was nearly $130 million, a 13% year-over-year increase (with a 2 percentage point FX headwind), and consumer revenue was $70 million, a 7% year-over-year decline (with a 2 percentage point FX headwind). Udemy Business annual recurring revenue (ARR) ended the year at $517 million, up 11% from the prior year, and ARR from large enterprises was up 12%. The Udemy Business segment had a gross margin of 75% in the fourth quarter, up 600 basis points from the prior year, primarily due to the instructor revenue share change. The instructor take rate was lowered to 17.5% in 2024 and is set to move to 15% in 2025.

• Full-year 2025 revenue is expected to be in the range of $787 to $803 million, flat to up 2% year-over-year (including a 2 percentage point FX headwind). Udemy Business revenue is expected to grow ~5% year-over-year (including ~1 percentage point FX headwind), while consumer revenue is expected to decline ~6% year-over-year (including a 3 percentage point FX headwind).
• Adjusted EBITDA for 2025 is expected to be $75 million to $85 million. For Q1 2025, revenue is expected to be between $195 million and $199 million (roughly flat year-over-year at midpoint, with a 2 percentage point FX headwind). Adjusted EBITDA for Q1 is expected to be $17 million to $19 million. The company is confident in improving growth in 2026 and beyond, with targets of $130 million to $150 million in adjusted EBITDA by 2026 and a 20% adjusted EBITDA margin by 2027.

Q: How have conversations with existing customers evolved, and what about investment in role-play simulations?

A: Greg Brown noted positive signals from large enterprise customers with strong Q4 performance in EMEA and Latin America, and win rates improving. Aaron Bali stated that the R&D team reoriented priorities to make role-play a priority without needing new resources.

Q: About consumer marketplace revitalization, how is it monetizable?

A: Sarah Blanchard said it's a mix of better engagement/retention leading to higher LTV subscriptions and additional monetization around career academies.

Q: Comment on interest in non-AI versus AI courses?

A: Greg Brown mentioned significant uptick in interest around soft skills like communication, leadership, etc., and Udemy's broad platform addresses both technical AI-related and soft skills needs.

Q: What's next for share repurchases?

A: Sarah Blanchard said the company will continue to be disciplined about capital allocation, balancing fueling growth, M&A, and returning capital to shareholders.

Q: Details on career academies?

A: Aaron Bali said six career academies will be launched early in the first half of 2025, with a diverse set of careers, and scaling to more later. Greg Brown and Sarah Blanchard added on the dual impact on consumer and Udemy Business sides.

Q: Competitive landscape and win rates?

A: Greg Brown said no material changes in competitive landscape, win rates are up due to focused strategy execution.

Q: Corporate spending and product roadmap with AI?

A: Greg Brown said no material changes in corporate spending yet, and Aaron Bali discussed using AI to scale assessments, with live processes and ramping up coverage in subjects.

Q: ARR growth and revenue outlook?

A: Sarah Blanchard said net new ARR will be muted in the first half due to smaller SMB capacity and team shifts, ramping up in the back half, with revenue following.