Udemy Q1 2025 Earnings Call: Strong Growth Amid Challenges

Udemy, Inc. ((UDMY)) has held its Q1 earnings call. Read on for the main highlights of the call.

Udemy’s recent earnings call for Q1 2025 painted a picture of robust financial performance, marked by significant achievements in revenue growth, consumer subscriptions, and AI innovations. Despite these successes, the company acknowledged challenges in its consumer segment and expressed caution due to geopolitical uncertainties, resulting in a conservative outlook for the latter half of the year.

Exceeded Revenue and Adjusted EBITDA Guidance

Udemy surpassed the high end of its guidance for both revenue and adjusted EBITDA in the first quarter of 2025. This accomplishment underscores the company’s strong financial performance and its ability to navigate a challenging economic environment.

Consumer Subscription Revenue Growth

The company reported a remarkable 40% year-over-year increase in consumer subscription revenue, which now accounts for 13% of the consumer segment’s total revenue. This growth highlights Udemy’s success in expanding its consumer base and enhancing its subscription offerings.

Udemy Business Annual Recurring Revenue (ARR)

Udemy Business ARR reached $519 million, reflecting an 8% increase from the previous year. Notably, ARR from large customers grew by 9%, indicating strong demand and retention among significant enterprise clients.

High Margin and Cost Efficiency

The Udemy Business segment achieved a gross margin of 75%, an improvement of 300 basis points from the previous year. This was driven by reduced content and customer success costs, showcasing the company’s focus on operational efficiency.

Strategic AI Developments

Udemy is investing in AI innovations, introducing AI-powered capabilities that significantly reduce program creation time and launching AI-assisted role play on its platform. These developments are expected to enhance user experience and streamline content delivery.

Decline in Consumer Segment Revenue

Despite overall growth, the consumer segment revenue declined by 8% year-over-year, partly due to a negative impact from foreign exchange rates. This highlights the challenges faced in maintaining growth in the consumer market.

Geopolitical and Macroeconomic Uncertainty

The earnings call highlighted increased geopolitical developments and mixed economic signals in North America and EMEA, contributing to a cautious spending environment. These factors are influencing Udemy’s strategic decisions and outlook.

Prudent Outlook for Second Half 2025

Given the external uncertainties, Udemy has adopted a conservative outlook for the second half of 2025, anticipating a slight decline in full-year revenue. This cautious stance reflects the company’s awareness of potential challenges ahead.

Forward-Looking Guidance

In its forward-looking guidance, Udemy reported surpassing $200 million in quarterly revenue for the first time and exceeding expectations for both revenue and adjusted EBITDA. The company raised its full-year adjusted EBITDA expectations to between $77 and $87 million, emphasizing its commitment to operational efficiency and strategic cost management.

In summary, Udemy’s Q1 2025 earnings call revealed a strong financial performance with significant growth in key areas like consumer subscriptions and AI innovations. However, challenges in the consumer segment and geopolitical uncertainties have prompted a conservative outlook for the rest of the year. Investors and stakeholders will be keenly watching how Udemy navigates these challenges while capitalizing on its strengths.