Udemy, Inc. ((UDMY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
Udemy, Inc.’s recent earnings call painted a largely positive picture for the company, showcasing robust financial performance and strategic growth in enterprise segments. Despite some challenges, such as declining consumer revenue and foreign exchange impacts, the company remains cautiously optimistic about the future, particularly as it continues to leverage cost-saving measures and technological advancements.
Strong Full-Year Financial Performance
Udemy reported an 8% year-over-year revenue growth, reaching $787 million, despite facing a two-point headwind from foreign exchange rates. The adjusted EBITDA significantly surpassed expectations, highlighting Udemy’s operational efficiency and successful financial strategies.
Enterprise Customer Growth
The company saw impressive growth in annual recurring revenue (ARR) from large enterprise customers, which was four points higher than that from small and medium-sized business (SMB) customers. Nearly fifty deals exceeding $100,000 in ARR were closed, showcasing strong engagement and retention in this segment.
Generative AI Course Surge
Udemy experienced a substantial increase in the consumption of generative AI courses, with usage growing nearly tenfold in 2024. This surge indicates a strong demand for AI-related education and positions Udemy well in the evolving learning landscape.
Improved Gross Margins
The gross margin for the Udemy Business segment increased by 600 basis points year-over-year. This improvement was driven by changes in the instructor revenue share and a strategic focus on enterprise clients, with further enhancements expected in the years to come.
Successful Cost Savings Initiatives
In 2024, Udemy executed a $50 million cost savings program, which contributed to increased profitability and provided the company with greater flexibility for targeted investments. This initiative reflects Udemy’s commitment to maintaining operational efficiency.
Decline in Consumer Revenue
Despite overall growth, Udemy reported a 5% decline in consumer revenue for the year, including a 7% decrease in Q4. The decline was mainly due to reduced individual course purchases, highlighting an area for potential improvement.
Impact of FX on Revenue Growth
Foreign exchange rates posed a challenge, reducing Udemy’s revenue growth by two percentage points for both the full year and Q4. This external factor underscores the complexities of global market operations.
Flat Revenue Growth Expected for 2025
Looking ahead, Udemy anticipates flat to 2% revenue growth for 2025, with challenges including a $20 million reduction in SMB sales capacity and ongoing foreign exchange impacts. The company plans to focus on enhancing its platform through AI innovations and a strategic emphasis on large enterprises, while maintaining a disciplined approach to operational efficiency.
In summary, Udemy’s earnings call reflects a company that is navigating challenges with a strong strategic focus and operational efficiencies. While consumer revenue presents a hurdle, the company’s growth in enterprise segments and technological advancements provide a solid foundation for future success. Investors and market observers will be keenly watching Udemy’s next moves as it aims to balance continued growth with operational discipline.
