Udemy delivered a second quarter that surpassed Wall Street’s expectations for both revenue and non-GAAP profitability, prompting a positive market reaction. CEO Hugo Sarrazin attributed this performance to momentum in the Udemy Business segment, disciplined cost management, and rising adoption of subscription products. Management emphasized the successful launch of new AI-powered learning features and the company’s first GAAP net income since its IPO. CFO Sarah Blanchard credited the achievement to a combination of operational efficiency and early progress on upmarket customer acquisition, noting that “profitability exceeded our expectations.”
Is now the time to buy UDMY? Find out in our full research report (it’s free).
Udemy (UDMY) Q2 CY2025 Highlights:
- Revenue: $199.9 million vs analyst estimates of $197 million (2.8% year-on-year growth, 1.5% beat)
- Adjusted EPS: $0.16 vs analyst estimates of $0.12 (33.8% beat)
- Adjusted EBITDA: $28.4 million vs analyst estimates of $23.03 million (14.2% margin, 23.3% beat)
- The company slightly lifted its revenue guidance for the full year to $789 million at the midpoint from $783 million
- EBITDA guidance for the full year is $86.5 million at the midpoint, above analyst estimates of $84.09 million
- Operating Margin: 2%, up from -13.1% in the same quarter last year
- Net Revenue Retention Rate: 95%, down from 96% in the previous quarter
- Annual Recurring Revenue: $520 million vs analyst estimates of $531.5 million (5.6% year-on-year growth, 2.2% miss)
- Monthly Active Buyers: 17,107, up 512 year on year
- Market Capitalization: $1.03 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Udemy’s Q2 Earnings Call
-
Joshua Phillip Baer (Morgan Stanley) asked CEO Hugo Sarrazin to summarize key observations during his first four months. Sarrazin highlighted enterprise demand for AI reskilling and Udemy’s pivot toward “Udemy 2.0,” focusing on in-the-flow learning and platform integration.
-
Ryan Michael MacDonald (Needham & Company) sought clarity on balancing renewal headwinds with pipeline optimism. CFO Sarah Blanchard described momentum in large enterprise deals and noted that enhanced AI capabilities are improving the company’s value proposition and stickiness.
-
Jason Ross Tilchen (Canaccord Genuity) inquired about customer response to new AI-focused packages. Sarrazin reported overwhelmingly positive feedback and shared that AI SKUs now account for 25% of the sales pipeline, anticipating further product segmentation and upsell opportunities.
-
Yi Fu Lee (Cantor Fitzgerald) questioned how new CTO Ozzie Goldschmied will impact product differentiation. Sarrazin emphasized Goldschmied’s enterprise software experience and his role in supporting new monetization models and scalable backend infrastructure.
-
Nafeesa Gupta (Bank of America) asked about consumer business trends and the drivers behind recent “green shoots.” Sarrazin cited a purposeful shift in strategy toward subscription and targeted products, with less reliance on discounts and a focus on higher-value customer segments.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory analyst team will closely watch (1) the pace of adoption and monetization for Udemy’s AI-powered products and roleplay tools; (2) stabilization and potential recovery in net revenue retention rates as legacy contracts roll off; and (3) the impact of new monetization channels, such as advertising and expanded subscription models, on both revenue growth and customer engagement. Execution in international markets and the effectiveness of strategic partnerships will also serve as key indicators of progress.
Udemy currently trades at $6.94, in line with $6.99 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
The Best Stocks for High-Quality Investors
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
