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Udemy’s Q1 Earnings Call: Our Top 5 Analyst Questions

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Udemy’s first quarter was met with a significant negative market reaction, despite exceeding Wall Street revenue and non-GAAP profit expectations. Management attributed the results to ongoing growth in enterprise subscription offerings and improved operational efficiency, which drove margin expansion. CEO Hugo Sarrazin, in his first call at the helm, acknowledged that while enterprise demand remains resilient, the company’s consumer business faced headwinds from softening demand and price sensitivity, particularly in North America. Sarrazin highlighted, “The uncertainty in the context right now certainly is leading to more questions, some pressure,” signaling a cautious outlook from leadership.

Is now the time to buy UDMY? Find out in our full research report (it’s free).

Udemy (UDMY) Q1 CY2025 Highlights:

  • Revenue: $200.3 million vs analyst estimates of $197.2 million (1.8% year-on-year growth, 1.6% beat)
  • Adjusted EPS: $0.12 vs analyst estimates of $0.10 (20.5% beat)
  • Adjusted EBITDA: $21.15 million vs analyst estimates of $18.36 million (10.6% margin, 15.2% beat)
  • The company dropped its revenue guidance for the full year to $783 million at the midpoint from $795 million, a 1.5% decrease
  • EBITDA guidance for the full year is $82 million at the midpoint, above analyst estimates of $79.4 million
  • Operating Margin: -2.2%, up from -11.5% in the same quarter last year
  • Net Revenue Retention Rate: 96%, down from 98% in the previous quarter
  • Annual Recurring Revenue: $519 million at quarter end, up 8.3% year on year
  • Monthly Active Buyers: 17,216, up 1,146 year on year
  • Market Capitalization: $1.05 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 Udemy’s Q1 Earnings Call

  • Ryan MacDonald (Needham & Company): Asked CEO Hugo Sarrazin about his initial priorities and observations. Sarrazin detailed plans to package AI offerings more effectively and emphasized a shift toward subscription revenue.

  • Jason Tilchen (Canaccord Genuity): Inquired about evolving enterprise customer conversations and expansion opportunities. Sarrazin pointed to increased focus on consolidation of learning platforms and the value of measurable business outcomes.

  • Terry Tillman (Truist Securities): Questioned whether the consumer subscription push could yield quicker returns than enterprise changes. CFO Sarah Blanchard noted possible timing delays in revenue but highlighted the potential for more personalized learning on subscriptions.

  • Josh Baer (Morgan Stanley): Sought clarification on planned changes to consumer subscriptions. Sarrazin outlined a comprehensive strategy involving new pricing, packaging, and marketing experiments to migrate users from transactional to recurring models.

  • Yi Fu Lee (Cantor Fitzgerald): Queried the monetization potential of AI features. Sarrazin described various ways AI could be packaged for upsell, including targeted offerings and future premium versions, but said monetization strategies are still evolving.

Catalysts in Upcoming Quarters

In the coming quarters, our team will closely monitor (1) the pace and impact of Udemy’s transition toward subscription-based consumer offerings, (2) measurable progress in enterprise account expansion and deeper customer penetration, and (3) the rollout and adoption of new AI-powered learning products and protocols. Shifts in macroeconomic trends and consumer sentiment will also be important to track.

Udemy currently trades at $7, up from $6.88 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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