Udemy Reports Second Quarter 2022 Results

Udemy Business Revenue Up 77% Year over Year, ARR up 74% to $316.1 million

SAN FRANCISCO, Aug. 03, 2022 (GLOBE NEWSWIRE) -- Udemy (Nasdaq: UDMY), a leading destination for learning and teaching online, today reported results for the second quarter ending June 30, 2022.

“Udemy is disrupting learning through our unparalleled platform and rapidly scaling SaaS business,” said Gregg Coccari, Chairman and CEO of Udemy. “Improving lives through learning is our mission, and we are proud to bring together our approximately 71,000 instructors, over 12,000 Udemy Business customers and growing roster of strategic partners to deliver it worldwide. Together, united in our commitment to upskilling and reskilling, we are activating positive outcomes for businesses and individuals, even in the face of economic uncertainty.”

Second Quarter 2022 Financial Results and Key Operating Data:

• Revenue totaled $153.1 million, up 21% year over year.
• GAAP net loss was $(29.4) million compared to $(11.4) million in the second quarter of fiscal 2021. GAAP net loss per share was $(0.21), compared to $(0.31) in the second quarter of fiscal 2021.
• Non-GAAP net loss was $(13.6) million compared to $(5.4) million in the second quarter of fiscal 2021. Non-GAAP net loss per share was $(0.10) compared to $(0.15) in the second quarter of fiscal 2021.
• GAAP gross profit was $87.3 million, compared to $70.1 million in the second quarter of fiscal 2021.
• Non-GAAP gross profit was $89.0 million, compared to $70.3 million in the second quarter of fiscal 2021.
• Adjusted EBITDA was $(8.6) million, compared to $(1.6) million in the second quarter of fiscal 2021.
• Udemy Business revenue totaled $74.6 million, up 77% year over year.
• Udemy Business segment gross profit was $49.9 million compared to $27.7 million in the second quarter of fiscal 2021.
• Udemy Business segment annual recurring revenue was $316.1 million, up 74% year over year.
• Udemy Business total customers was 12,514 as of June 30, 2022, up 44% year over year.
• Udemy Business net dollar retention rate was 118%.
• Consumer revenue totaled $78.5 million, down 7% year over year.
• Consumer segment gross profit was $42.3 million compared to $45.1 million in the second quarter of fiscal 2021.
• Consumer segment monthly average buyers was 1,290 thousand, down 2% year over year.

Second Quarter Highlights:

• Added new Udemy Business customers including Broadridge Financial Solutions, Samsung SDS, Cision US, Edenred Brasil and Glanbia.
• Udemy Business customer expansions included Colgate-Palmolive, lululemon athletica, Volkswagen Group China, TIBCO Software, Bosch Global Software Tech and Globant.
• Through business partner, Benesse, Udemy is supporting the Tokyo Metropolitan Government in their efforts to accelerate the digital transformation of small and medium-sized enterprises in Tokyo. By the end of March, 2023, Udemy and Benesse expect to provide over 250 SMEs in Tokyo with in-house training support for the purpose of digital transformation skill development.
• Supported global firm Booz Allen Hamilton with their upskilling efforts. Using Udemy Business to power a program for thousands of data scientists, nearly 94% of Booz Allen Hamilton learners are now highly proficient in data science, and their Udemy-trained graduates now have a 93% employee retention rate. The firm has seen a 3% increase in consultant billability since beginning their work with Udemy Business.
• Rolled out our Skill Insights Dashboard enabling customers to unlock learning insights within their organization.
• Introduced five new payment methods in Belgium, Malaysia, Singapore and the Philippines, driving higher conversion and faster time to content.
• Launched a bulk coupon creation tool that enables instructors to market their courses more effectively across our global community of learners.
• According to Stack Overflow’s annual survey of developers, 66% of global respondents selected Udemy as the most popular online course or certification program for learning how to code.
• Launched inaugural ESG Impact Report, highlighting our ESG efforts and spotlighting how we support our learners, instructors, customers and communities.
• Fair Pay Workplace certified Udemy as a company achieving pay equity, demonstrating that we’ve undergone a rigorous evaluation of our data and practices, and we’ve committed to following a tailored action plan building upon our fair pay practices.
• Great Place to Work® Ireland honored Udemy on the 2022 list of Ireland’s Best Workplaces in Tech.
  

2022 Financial Outlook
Udemy provides guidance based on current market conditions and expectations; actual results may differ materially. Please refer to the comments below regarding forward-looking statements.

The table below reflects Udemy’s financial outlook for its third quarter ending September 30, 2022 and fiscal year ending December 31, 2022:

	Q3’22	FY22
Revenue	$153.0 - $157.0 million	$615.0 - $640.0 million
Adjusted EBITDA Margin	(14)% - (12)%	(12)% - (10)%
Weighted Average Share Count	141 million	142 million

  
Webcast Information
Udemy will host a webcast at 2:00 pm Pacific Time on Wednesday, August 3rd, to discuss its second quarter 2022 financial results, as well as its 2022 outlook. The live webcast will be accessible on Udemy’s website at investors.udemy.com. A webcast replay will be available approximately two hours after the conclusion of the live event.

Non-GAAP Financial Measures
To supplement the condensed consolidated financial statements prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), Udemy’s key non-GAAP performance measures include Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income. We calculate Adjusted EBITDA as net loss (income) determined in accordance with GAAP, excluding i) interest expense (income), net; ii) provision for (benefit from) income taxes; iii) depreciation and amortization; iv) other expense (income), net, including gains and losses from the remeasurement of foreign currency assets and liabilities into their functional currency and v) non-cash stock-based compensation expense. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue for the same period. We have not reconciled our expectations for Adjusted EBITDA and Adjusted EBITDA Margin to net loss and net loss margin, respectively, the most directly comparable GAAP measures, because certain items are out of our control or cannot be reasonably predicted and a reconciliation for the guidance for Adjusted EBITDA and Adjusted EBITDA Margin is not available without unreasonable effort. As Adjusted EBITDA and Adjusted EBITDA Margin facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and certain variable charges. We define non-GAAP income as net loss attributable to common stockholders, adjusted to exclude non-cash stock-based compensation expense and the amortization of acquired intangible assets. We believe the presentation of operating results that excludes these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods. Udemy’s non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial measures determined in accordance with GAAP. Because of the limitations of non-GAAP financial measures, you should consider the non-GAAP financial measures presented herein in conjunction with Udemy’s financial statements and the related notes thereto. Please refer to the non-GAAP reconciliations in this press release for a reconciliation of these non-GAAP financial measures to the most comparable financial measure prepared in accordance with GAAP.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding Udemy’s expectations relating to future operating results and financial position, including the third quarter of 2022, the full year 2022, and future periods, anticipated future expenses and investments, our business strategy and plans, market growth, our market position and potential market opportunities, and the impact of acquisitions and business alliances. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance.

The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission (“SEC”), including, without limitation, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 4, 2022. All information provided in this release is as of the date hereof, and we undertake no duty to update this information unless required by law.

About Udemy
Udemy (Nasdaq: UDMY) provides flexible, effective skill development to empower organizations and individuals. The Udemy marketplace platform, with thousands of up-to-date courses in dozens of languages, offers the tools learners, instructors, and enterprises need to achieve their goals and reach their full potential. Millions of people learn on Udemy from real-world experts in topics ranging from programming and data science to leadership and team building. Udemy Business offers corporate customers an employee training and development platform with subscription access to thousands of courses, learning analytics, and the ability to host and distribute their own content. Udemy Business customers include Fender Instruments, Glassdoor, On24, The World Bank, and Volkswagen. Udemy is headquartered in San Francisco with hubs in Ankara, Turkey; Austin, Texas; Boston, Massachusetts; Mountain View, California; Denver, Colorado; Dublin, Ireland; Melbourne, Australia; New Delhi, India; and Sao Paulo, Brazil.

Udemy, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Revenue	$	153,112			$	126,093			$	305,335			$	250,643
Cost of revenue (1)(2)		65,812				55,993				132,250				113,916
Gross profit		87,300				70,100				173,085				136,727
Operating expenses (1)(2)
Sales and marketing		68,421				50,902				135,299				104,141
Research and development		23,963				14,783				46,533				30,196
General and administrative		23,443				15,389				45,096				29,802
Total operating expenses		115,827				81,074				226,928				164,139
Loss from operations		(28,527	)			(10,974	)			(53,843	)			(27,412	)
Other income (expense)
Interest income (expense), net		127				(173	)			370				(391	)
Other expense, net		(672	)			(90	)			(916	)			(518	)
Total other expense, net		(545	)			(263	)			(546	)			(909	)
Net loss before taxes		(29,072	)			(11,237	)			(54,389	)			(28,321	)
Income tax provision		(308	)			(154	)			(640	)			(1,059	)
Net loss attributable to common stockholders	$	(29,380	)		$	(11,391	)		$	(55,029	)		$	(29,380	)
Net loss per share attributable to common stockholders
Basic and diluted	$	(0.21	)		$	(0.31	)		$	(0.39	)		$	(0.80	)
Weighted-average shares used in computing net loss per share attributable to common stockholders
Basic and diluted		140,035,203				37,269,650				139,691,508				36,726,992

(1)   Includes stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Cost of revenue	$	989		$	237		$	1,829		$	537
Sales and marketing		5,007			1,712			9,144			3,636
Research and development		3,711			1,052			7,045			3,142
General and administrative		5,025			2,971			10,056			9,169
Total stock-based compensation expense	$	14,732		$	5,972		$	28,074		$	16,484

(2)         Includes amortization of intangible assets as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Cost of revenue	$	726		$	—		$	1,450		$	—
Sales and marketing		341			—			683			—
Total amortization of intangible assets	$	1,067		$	—		$	2,133		$	—

Udemy, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(Unaudited)

	June 30,				December 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents	$	512,166			$	533,868
Accounts receivable, net of allowance for doubtful accounts of $1,078 and $678 as of June 30, 2022, and December 31, 2021, respectively.		69,306				73,180
Prepaid expenses and other current assets		13,893				15,927
Deferred contract costs, current		26,858				18,898
Total current assets		622,223				641,873
Property and equipment, net		8,286				9,887
Capitalized software, net		23,517				20,054
Operating lease right-of-use assets		14,466				—
Restricted cash, non-current		3,629				2,900
Deferred contract costs, non-current		31,103				25,647
Strategic investments		15,000				10,000
Intangible assets, net		11,464				13,597
Goodwill		12,646				12,646
Other assets		3,655				3,247
Total assets	$	745,989			$	739,851
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	17,324			$	34,627
Accrued expenses and other current liabilities		33,720				40,140
Content costs payable		33,310				35,961
Accrued compensation and benefits		21,745				22,341
Operating lease liabilities, current		7,144				—
Deferred revenue		240,630				208,274
Total current liabilities		353,873				341,343
Long-term obligation under operating leases		9,729				—
Deferred revenue, non-current		3,022				2,280
Other liabilities, non-current		4,419				6,528
Total liabilities		371,043				350,151
Stockholders' equity:
Preferred stock		—				—
Common stock		1				1
Additional paid-in capital		888,522				848,229
Accumulated other comprehensive loss		(19	)			(1	)
Accumulated deficit		(513,558	)			(458,529	)
Total stockholders’ equity		374,946				389,700
Total liabilities and stockholders' equity	$	745,989			$	739,851

Udemy, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

	Six Months Ended June 30,
		2022				2021
Cash flows from operating activities:
Net loss	$	(55,029	)		$	(29,380	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		10,200				6,457
Amortization of deferred sales commissions		13,965				7,233
Stock-based compensation		28,074				16,484
Provision for doubtful accounts		517				170
Non-cash operating lease expense		3,101				—
Other		252				—
Changes in operating assets and liabilities:
Accounts receivable		3,356				3,325
Prepaid expenses and other assets		1,243				(3,928	)
Deferred contract costs		(27,381	)			(15,724	)
Accounts payable, accrued expenses and other liabilities		(22,034	)			(10,448	)
Content costs payable		(2,652	)			(1,271	)
Operating lease liabilities		(3,146	)			—
Deferred revenue		33,099				21,596
Net cash used in operating activities		(16,435	)			(5,486	)
Cash flows from investing activities:
Purchases of property and equipment		(699	)			(3,111	)
Capitalized software costs		(6,643	)			(6,680	)
Purchases of strategic investments		(5,000	)			—
Net cash used in investing activities		(12,342	)			(9,791	)
Cash flows from financing activities:
Net proceeds from exercise of stock options		3,831				6,004
Proceeds from share purchases under employee stock purchase plan		5,563				—
Payment of redeemable convertible preferred stock issuance costs		—				(2,250	)
Payment of deferred offering costs		(1,586	)			(313	)
Net proceeds from exercise of Series A-1 redeemable convertible preferred stock warrants		—				3
Net cash provided by financing activities		7,808				3,444
Effect of foreign exchange rates on cash flows		(4	)			—
Net decrease in cash, cash equivalents and restricted cash		(20,973	)			(11,833	)
Cash, cash equivalents and restricted cash—Beginning of period		536,768				177,931
Cash, cash equivalents and restricted cash—End of period	$	515,795			$	166,098

Udemy, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except share and per share amounts)
(Unaudited)

	Three Months Ended June 30, 2022
	GAAP				Stock-based Compensation				Amortization of Intangible Assets				Non-GAAP
	(in thousands, except share and per share amounts)
Revenue	$	153,112			$	—			$	—			$	153,112
Cost of revenue		65,812				(989	)			(726	)			64,097
Gross profit		87,300				989				726				89,015
Operating expenses
Sales and marketing		68,421				(5,007	)			(341	)			63,073
Research and development		23,963				(3,711	)							20,252
General and administrative		23,443				(5,025	)							18,418
Total operating expenses		115,827				(13,743	)			(341	)			101,743
Loss from operations		(28,527	)			14,732				1,067				(12,728	)
Other income (expense)
Interest income, net		127				—				—				127
Other expense, net		(672	)			—				—				(672	)
Total other expense, net		(545	)			—				—				(545	)
Net loss before taxes		(29,072	)			14,732				1,067				(13,273	)
Income tax provision		(308	)			—				—				(308	)
Net loss attributable to common stockholders	$	(29,380	)		$	14,732			$	1,067			$	(13,581	)
Net loss per share attributable to common stockholders
Basic and diluted	$	(0.21	)										$	(0.10	)
Weighted-average shares used in computing net loss per share attributable to common stockholders		140,035,203												140,035,203

	Six Months Ended June 30, 2022
	GAAP				Stock-based Compensation				Amortization of Intangible Assets				Non-GAAP
	(in thousands, except share and per share amounts)
Revenue	$	305,335			$	—			$	—			$	305,335
Cost of revenue		132,250				(1,829	)			(1,450	)			128,971
Gross profit		173,085				1,829				1,450				176,364
Operating expenses
Sales and marketing		135,299				(9,144	)			(683	)			125,472
Research and development		46,533				(7,045	)			—				39,488
General and administrative		45,096				(10,056	)			—				35,040
Total operating expenses		226,928				(26,245	)			(683	)			200,000
Loss from operations		(53,843	)			28,074				2,133				(23,636	)
Other income (expense)
Interest income, net		370				—				—				370
Other expense, net		(916	)			—				—				(916	)
Total other expense, net		(546	)			—				—				(546	)
Net loss before taxes		(54,389	)			28,074				2,133				(24,182	)
Income tax provision		(640	)			—				—				(640	)
Net loss attributable to common stockholders	$	(55,029	)		$	28,074			$	2,133			$	(24,822	)
Net loss per share attributable to common stockholders
Basic and diluted	$	(0.39	)										$	(0.18	)
Weighted-average shares used in computing net loss per share attributable to common stockholders		139,691,508												139,691,508

	Three Months Ended June 20, 2021
	GAAP				Stock-based Compensation				Non-GAAP
	(in thousands, except share and per share amounts)
Revenue	$	126,093			$	—			$	126,093
Cost of revenue		55,993				(237	)			55,756
Gross profit		70,100				237				70,337
Operating expenses
Sales and marketing		50,902				(1,712	)			49,190
Research and development		14,783				(1,052	)			13,731
General and administrative		15,389				(2,971	)			12,418
Total operating expenses		81,074				(5,735	)			75,339
Loss from operations		(10,974	)			5,972				(5,002	)
Other income (expense)
Interest expense, net		(173	)							(173	)
Other expense, net		(90	)							(90	)
Total other expense, net		(263	)							(263	)
Net loss before taxes		(11,237	)			5,972				(5,265	)
Income tax provision		(154	)							(154	)
Net loss attributable to common stockholders	$	(11,391	)		$	5,972			$	(5,419	)
Net loss per share attributable to common stockholders
Basic and diluted	$	(0.31	)						$	(0.15	)
Weighted-average shares used in computing net loss per share attributable to common stockholders
Basic and diluted		37,269,650								37,269,650

	Six Months Ended June 30, 2021
	GAAP				Stock-based Compensation				Non-GAAP
	(in thousands, except share and per share amounts)
Revenue	$	250,643			$	—			$	250,643
Cost of revenue		113,916				(537	)			113,379
Gross profit		136,727				537				137,264
Operating expenses
Sales and marketing		104,141				(3,636	)			100,505
Research and development		30,196				(3,142	)			27,054
General and administrative		29,802				(9,169	)			20,633
Total operating expenses		164,139				(15,947	)			148,192
Loss from operations		(27,412	)			16,484				(10,928	)
Other income (expense)
Interest expense, net		(391	)			—				(391	)
Other expense, net		(518	)			—				(518	)
Total other expense, net		(909	)			—				(909	)
Net loss before taxes		(28,321	)			16,484				(11,837	)
Income tax provision		(1,059	)			—				(1,059	)
Net loss attributable to common stockholders	$	(29,380	)		$	16,484			$	(12,896	)
Net loss per share attributable to common stockholders
Basic and diluted	$	(0.80	)						$	(0.35	)
Weighted-average shares used in computing net loss per share attributable to common stockholders
Basic and diluted		36,726,992								36,726,992

	Three Months Ended June 30,										Six Months Ended June 30,
		2022					2021					2022					2021
Net loss	$	(29,380	)			$	(11,391	)			$	(55,029	)			$	(29,380	)
Adjusted to exclude the following:
Interest (income) expense, net		(127	)		—		173			—		(370	)		—		391
Provision for income taxes		308			—		154			—		640			—		1,059
Depreciation and amortization		5,233					3,387					10,200					6,457
Stock-based compensation expense		14,732			—		5,972			—		28,074			—		16,484
Other expense, net		672			—		90			—		916			—		518
Adjusted EBITDA	$	(8,562	)	$	—	$	(1,615	)	$	—	$	(15,569	)	$	—	$	(4,471	)

Contacts

Media:
Abby Welch
Senior Director, Corporate Communications
abby.welch@udemy.com

Investors:
Willa McManmon
Managing Director, The Blueshirt Group
willa@blueshirtgroup.com

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