Udemy Reports Fourth Quarter 2021 and Fiscal Year 2021 Results

Udemy Business Revenue Up 81% Year over Year, With ARR of $239 Million


SAN FRANCISCO, Feb. 09, 2022 (GLOBE NEWSWIRE) -- Udemy (Nasdaq: UDMY), a leading destination for learning and teaching online, today reported results for the fourth quarter ended December 31, 2021.

“As we look to 2022, we see the increasing focus by organizations on digital transformation initiatives, which come with a need to upskill and reskill teams, coupled with a focus on employee engagement and retention, driving Udemy Business’s strong ARR, which was $239 million exiting the fourth quarter. In Q4 our consumer business stabilized, global traffic remained strong, and the marketplace continues to deliver an unparalleled 5,000+ new courses a month,” said Gregg Coccari, Udemy’s chief executive officer. “We are proud that Udemy Business has a compounded annual revenue growth rate over 100% since its inception in 2015. We look forward to sharing our progress as we help transform learning and the way we work with our vibrant consumer marketplace and exceptional Udemy Business platform.”

Fourth Quarter 2021 Financial Results and Key Operating Data:

  • Revenue totaled $138.0 million, up 25% year over year.
  • GAAP net income (loss) was ($38.9 million) compared to ($27.0 million) in the fourth quarter of fiscal 2020. GAAP net income (loss) per share was ($0.36), compared to ($0.77) in the fourth quarter of fiscal 2020.
  • Non-GAAP net income (loss) was ($26.8 million) compared to ($18.9 million) in the fourth quarter of fiscal 2020. Non-GAAP net income (loss) per share was ($0.25) compared to ($0.53) in the fourth quarter of fiscal 2020.
  • GAAP gross profit was $73.8 million, compared to $54.4 million in the fourth quarter of fiscal 2020.
  • Non-GAAP gross profit was $75.3 million, compared to $54.6 million in the fourth quarter of fiscal 2020.
  • Adjusted EBITDA was ($22.6 million), compared to ($14.7 million) in the fourth quarter of fiscal 2020.
  • Consumer revenue totaled $80.2 million, up 3% year over year.
  • Udemy Business revenue totaled $57.8 million, up 81% year over year.
  • Consumer segment monthly average buyers was 1,388 thousand, up 1% year over year.
  • Udemy Business segment annual recurring revenue was $239.3 million, up 74% year over year.
  • Udemy Business total customers was 10,515 as of December 31, 2021, up 44% year over year.
  • Consumer segment gross profit was $39.4 million compared to $36.0 million in the fourth quarter of fiscal 2020.
  • Udemy Business segment gross profit was $38.6 million compared to $20.7 million in the fourth quarter of fiscal 2020.

Fiscal Year 2021 Financial Results and Key Operating Data:

  • Revenue totaled $518.2 million, up 21% year over year.
  • GAAP net income (loss) was ($77.5 million) compared to ($77.6 million) in the fiscal year 2020. GAAP net income (loss) per share was ($1.41), compared to ($2.33) in the fiscal year 2020.
  • Non-GAAP net income (loss) was ($41.3 million) compared to ($46.0 million) in the fiscal year 2020. Non-GAAP net income (loss) per share was ($0.75) compared to ($1.38) in the fiscal year 2020.
  • GAAP gross profit was $282.1 million, compared to $220.6 million in the fiscal year 2020.
  • Non-GAAP gross profit was $284.8 million, compared to $221.1 million in the fiscal year 2020.
  • Adjusted EBITDA was ($25.4 million), compared to ($30.7 million) in the fiscal year 2020.
  • Consumer revenue totaled $331.2 million, up 1% year over year.
  • Udemy Business revenue totaled $187.0 million, up 81% year over year.
  • Consumer segment monthly average buyers was 1,345 thousand, down 7% year over year.
  • Consumer segment gross profit was $171.9 million compared to $160.7 million in the fiscal year 2020.
  • Udemy Business segment gross profit was $123.0 million compared to $67.9 million in the fiscal year 2020.

Fourth Quarter Highlights:

  • First Udemy Business deal with a total contract value over $5 million.
  • Added new Udemy Business customers across key verticals, including Headspace Health, L.L. Bean, Softserve, Inc., Schrödinger, and Workrise.
  • Udemy Business customer expansions included Coinbase, CVS Health, Instacart, Randstad N.V., and Sapient Corporation.
  • Added Polish and Korean course collections to Udemy Business, bringing the total number of Udemy Business international course collections to 13.
  • Udemy Business received an impressive Net Promoter Score of 61 from learners using the platform.
  • Rolled out support for 8 new local currencies, bringing the total number of currencies supported to 28.
  • Launched benchmarked assessments that show learners key metrics such as their score, percentile rank, and knowledge classification.
  • Released 10 new software development labs for Udemy Business Pro.
  • Continued to work with EY on their Badges program (EY Badges), as well as supporting their Masters program (the EY Tech MBA by Hult, and two EY Masters degrees by Hult), acting as a key content provider. The EY Masters, which are built on EY Badges, are offered in association with Hult International Business School and are available to all EY employees free of charge.
  • Sustainalytics awarded Udemy its ESG Industry Top Rated badge for 2022.
  • Announced partnership with Sentinels of Freedom to help wounded veterans identify and achieve the skills they need to build successful careers.
  • Received awards recognizing product innovation, company culture, and organizational leadership. Leading global review site G2 ranked Udemy Business as a leader in 26 reports across several categories, including Online Learning Platform, based on high levels of customer satisfaction and likeliness to recommend; the Udemy Dublin office was officially certified as a Great Place to Work in Ireland; and Inc. Magazine named Udemy one of the best-led companies in America.

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.

While Udemy won’t provide annual guidance by segment going forward, the nature of the current consumer market provides less visibility into full year consumer revenue. For this reason, the Company is sharing revenue guidance by segment.

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

 Q1’22FY22
Revenue$144.0 - $148.0 million$610.0 - $640.0 million
Consumer Segment Revenue(6%) - 0% year-over-year growth$310.0 - $330.0 million
Udemy Business Segment Revenue70%+ year-over-year growth$300.0 - $310.0 million
Adjusted EBITDA Margin(11%) - (9%)(12%) - (10%)
Weighted Average Share Count139 million142 million

  
Webcast Information
Udemy will host a webcast at 2:00 pm Pacific Time on Wednesday, February 9, to discuss its fourth quarter 2021 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 by 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 first 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 September 30, 2021, filed with the SEC on December 8, 2021. 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.

Third Party Data
This press release contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legaldisclaimers.

About Udemy
Udemy's (Nasdaq: UDMY) mission is to create new possibilities for people and organizations everywhere by connecting them to the knowledge and skills they need to succeed in a changing world. The Udemy marketplace platform, with thousands of up-to-date courses in dozens of languages, provides 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. For companies, Udemy Business offers 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 per share amounts)
(Unaudited)

 Three Months Ended December 31, Fiscal Year Ended December 31,
  2021   2020   2021   2020 
 (in thousands, except per share amounts)
Revenue$137,951  $110,095  $518,157  $429,899 
Cost of revenue (1)(2) 64,122   55,657   236,024   209,253 
Gross profit 73,829   54,438   282,133   220,646 
Operating expenses (1)(2)       
Sales and marketing 70,624   50,379   227,023   192,600 
Research and development 19,208   14,403   66,107   50,643 
General and administrative 22,442   15,752   64,410   50,783 
Total operating expenses 112,274   80,534   357,540   294,026 
Loss from operations (38,445)  (26,096)  (75,407)  (73,380)
Other income (expense)       
Interest income (expense), net 436   (68)  (16)  (1,146)
Other income (expense), net (206)  17   (920)  55 
Total other income (expense), net 230   (51)  (936)  (1,091)
Net loss before taxes (38,215)  (26,147)  (76,343)  (74,471)
Income tax provision (669)  (888)  (1,183)  (3,149)
Net loss attributable to common stockholders$(38,884) $(27,035) $(77,526) $(77,620)
Net loss per share attributable to common stockholders       
Basic and diluted$(0.36) $(0.77) $(1.41) $(2.33)
Weighted-average shares used in computing net loss per share attributable to common stockholders       
Basic and diluted 108,168,420   35,284,409   54,972,827   33,384,438 

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

 Three Months Ended December 31, Fiscal Year Ended December 31,
  2021  2020  2021  2020
Cost of revenue$736 $165 $1,623 $418
Sales and marketing 2,852  1,587  8,637  7,518
Research and development 2,370  1,315  6,816  5,232
General and administrative 5,018  5,099  17,604  18,450
Total stock-based compensation expense$10,976 $8,166 $34,680 $31,618

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

 Three Months Ended December 31, Fiscal Year Ended December 31,
  2021  2020  2021  2020
Cost of revenue$729 $ $1,022 $
Sales and marketing 384    481  
Total amortization of intangible assets$1,113 $ $1,503 $


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

 December 31, December 31,
  2021   2020 
Assets   
Current assets:   
Cash and cash equivalents$533,868  $175,031 
Accounts receivable, net of allowance for doubtful accounts of $678 and $643 as of December 31, 2021 and December 31, 2020, respectively. 73,180   46,257 
Prepaid expenses and other current assets 15,927   6,036 
Deferred contract costs, current 18,898   9,640 
Total current assets 641,873   236,964 
Property and equipment, net 9,887   9,106 
Capitalized software, net 20,054   14,013 
Restricted cash, non-current 2,900   2,900 
Deferred contract costs, non-current 25,647   16,197 
Strategic investments 10,000    
Intangible assets, net 13,597    
Goodwill 12,646    
Other assets 3,247   2,916 
Total assets$739,851  $282,096 
Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)   
Current liabilities:   
Accounts payable$34,627  $23,710 
Accrued expenses and other current liabilities 41,640   46,778 
Content costs payable 35,961   31,483 
Accrued compensation and benefits 22,341   20,403 
Deferred revenue 208,274   141,439 
Total current liabilities 342,843   263,813 
Deferred revenue, non-current 2,280   937 
Other liabilities, non-current 2,528   3,927 
Total liabilities 347,651   268,677 
    
Redeemable convertible preferred stock:   
Redeemable convertible preferred stock    274,104 
Stockholders' equity (deficit):   
Common stock 1    
Additional paid-in capital 848,229   117,818 
Cumulative translation adjustment (1)   
Accumulated deficit (456,029)  (378,503)
Total stockholders’ equity (deficit) 392,200   (260,685)
Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)$739,851  $282,096 


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

 Fiscal Year Ended December 31,
  2021   2020 
Cash flows from operating activities:   
Net loss$(77,526) $(77,620)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization 15,297   11,055 
Amortization of deferred sales commissions 17,801   7,486 
Stock-based compensation 34,680   31,618 
Provision for doubtful accounts 326   182 
Change in fair value of warrant liability    52 
Changes in operating assets and liabilities:   
Accounts receivable (27,000)  (19,632)
Prepaid expenses and other assets (9,903)  (3,344)
Deferred contract costs (36,508)  (18,943)
Accounts payable, accrued expenses and other liabilities 4,772   17,488 
Content costs payable 4,389   6,615 
Deferred revenue 66,568   54,667 
Net cash provided by (used in) operating activities (7,104)  9,624 
Cash flows from investing activities:   
Purchases of property and equipment (5,335)  (5,180)
Capitalized software costs (12,868)  (9,357)
Payments related to business combinations, net of cash acquired (24,490)   
Purchases of strategic investments (10,000)   
Net cash used in investing activities (52,693)  (14,537)
Cash flows from financing activities:   
Net proceeds from exercise of stock options 10,878   10,383 
Net proceeds from issuance of redeemable convertible preferred stock 2   120,710 
Payment of redeemable convertible preferred stock issuance costs (2,250)   
Payment of deferred offering costs (5,183)   
Cash proceeds from initial public offering 415,187    
Net cash provided by financing activities 418,634   131,093 
    
Net increase in cash, cash equivalents and restricted cash 358,837   126,180 
Cash, cash equivalents and restricted cash—Beginning of period 177,931   51,751 
Cash, cash equivalents and restricted cash—End of period$536,768  $177,931 


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

 Three Months Ended December 31, 2021
 GAAP Stock-based Compensation Amortization of Intangible Assets Non-GAAP
 (in thousands, except per share amounts)
Revenue$137,951  $  $  $137,951 
Cost of revenue 64,122   (736)  (729)  62,657 
Gross profit 73,829   736   729   75,294 
Operating expenses       
Sales and marketing 70,624   (2,852)  (384)  67,388 
Research and development 19,208   (2,370)     16,838 
General and administrative 22,442   (5,018)     17,424 
Total operating expenses 112,274   (10,240)  (384)  101,650 
Loss from operations (38,445)  10,976   1,113   (26,356)
Other income (expense)       
Interest income, net 436         436 
Other expense, net (206)        (206)
Total other income, net 230         230 
Net loss before taxes (38,215)  10,976   1,113   (26,126)
Income tax provision (669)        (669)
Net loss attributable to common stockholders$(38,884) $10,976  $1,113  $(26,795)
Net loss per share attributable to common stockholders       
Basic and diluted$(0.36)     $(0.25)
Weighted-average shares used in computing net loss per share attributable to common stockholders 108,168,420       108,168,420 
        


 Fiscal Year Ended December 31, 2021
 GAAP Stock-based Compensation Amortization of Intangible Assets Non-GAAP
 (in thousands, except per share amounts)
Revenue$518,157  $  $  $518,157 
Cost of revenue 236,024   (1,623)  (1,022)  233,379 
Gross profit 282,133   1,623   1,022   284,778 
Operating expenses       
Sales and marketing 227,023   (8,637)  (481)  217,905 
Research and development 66,107   (6,816)     59,291 
General and administrative 64,410   (17,604)     46,806 
Total operating expenses 357,540   (33,057)  (481)  324,002 
Loss from operations (75,407)  34,680   1,503   (39,224)
Other expense       
Interest expense, net (16)        (16)
Other expense, net (920)        (920)
Total other expense, net (936)        (936)
Net loss before taxes (76,343)  34,680   1,503   (40,160)
Income tax provision (1,183)        (1,183)
Net loss attributable to common stockholders$(77,526) $34,680  $1,503  $(41,343)
Net loss per share attributable to common stockholders       
Basic and diluted$(1.41)     $(0.75)
Weighted-average shares used in computing net loss per share attributable to common stockholders 54,972,827       54,972,827 
        


 Three Months Ended December 31, 2020
 GAAP Stock-based Compensation Non-GAAP
 (in thousands, except per share amounts)
Revenue$110,095  $  $110,095 
Cost of revenue 55,657   (165)  55,492 
Gross profit 54,438   165   54,603 
Operating expenses     
Sales and marketing 50,379   (1,587)  48,792 
Research and development 14,403   (1,315)  13,088 
General and administrative 15,752   (5,099)  10,653 
Total operating expenses 80,534   (8,001)  72,533 
Loss from operations (26,096)  8,166   (17,930)
Other income (expense)     
Interest expense, net (68)     (68)
Other income, net 17      17 
Total other expense, net (51)     (51)
Net loss before taxes (26,147)  8,166   (17,981)
Income tax provision (888)     (888)
Net loss attributable to common stockholders$(27,035) $8,166  $(18,869)
Net loss per share attributable to common stockholders     
Basic and diluted$(0.77)   $(0.53)
Weighted-average shares used in computing net loss per share attributable to common stockholders 35,284,409     35,284,409 
      


 Fiscal Year Ended December 31, 2020
 GAAP Stock-based Compensation Non-GAAP
 (in thousands, except per share amounts)
Revenue$429,899  $  $429,899 
Cost of revenue 209,253   (418)  208,835 
Gross profit 220,646   418   221,064 
Operating expenses     
Sales and marketing 192,600   (7,518)  185,082 
Research and development 50,643   (5,232)  45,411 
General and administrative 50,783   (18,450)  32,333 
Total operating expenses 294,026   (31,200)  262,826 
Loss from operations (73,380)  31,618   (41,762)
Other income (expense)     
Interest expense, net (1,146)     (1,146)
Other income, net 55      55 
Total other expense, net (1,091)     (1,091)
Net loss before taxes (74,471)  31,618   (42,853)
Income tax provision (3,149)     (3,149)
Net loss attributable to common stockholders$(77,620) $31,618  $(46,002)
Net loss per share attributable to common stockholders     
Basic and diluted$(2.33)   $(1.38)
Weighted-average shares used in computing net loss per share attributable to common stockholders 33,384,438     33,384,438 
      


 Three Months Ended December 31,  Fiscal Year Ended December 31,
  2021   2020   2021   2020 
Net loss$(38,884) $(27,035) $(77,526) $(77,620)
Adjusted to exclude the following:       
Interest (income) expense, net (436)  68   16   1,146 
Provision for income taxes 669   888   1,183   3,149 
Depreciation and amortization 4,897   3,243   15,297   11,055 
Stock-based compensation expense 10,976   8,166   34,680   31,618 
Other expense (income), net 206   (17)  920   (55)
Adjusted EBITDA$(22,572) $(14,687) $(25,430) $(30,707)

Contacts

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

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