UDMY - Earnings call 3 2023

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Operator

Good day, and welcome to the Udemy Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please also note that this event is being recorded today.I would now like to turn the conference over to Dennis Walsh, Vice President, Investor Relations. Please go ahead.

Dennis Walsh

Thank you, Joe.

Joining me today are Udemy's Chief Executive Officer, Greg Brown; and Chief Financial Officer, Sarah Blanchard.During this conference call, we will make forward-looking statements within the meaning of federal securities laws. anticipated. and that to to could from discussed assumptions risks and differ involve those uncertainties and cause or statements are known subject unknown materially These actual results

a the on GAAP to that, Investor together replay also most will measures included manner Securities measures greater schedules earnings by with from place available For forward-looking obligation financial based Greg. measures. these the meaningful accounting posted in Relations is believe results comparable not do to A a financial our non-GAAP update the you except We financial Commission financial statements our supplemental comparing expressly over reliance available not turn to principles evaluating law.In of recent certain I discussed accepted our website. operations non-GAAP into filings consistent in undertake call are Form most disclaim in comparable or prepared to by additional earnings statements upon forward-looking caution statements of the with differ measures performance XX-K reconciliations our required alter of to and measures information with complete any addition, as with non-GAAP risks period-to-period referred of statements, measures in duty website.With forward-looking contained the will refer forward-looking performance now Exchange on of financial investors we and Securities U.S. these or release. section to us. These this generally call, encourage be and management on discussion We statements, financial be undue these our to in we as and call you and assist XX-Q reconciliation our in discussed during currently and in to Form our information today's are accordance supplemental associated press Exchange applicable more detail or Commission.Our and the may as release.A the that

Greg Brown

afternoon Udemy consumer X%. expectations Thank on both while EBITDA. delivered a increased and revenue call. XX%, increased everyone exceeded Business our adjusted revenue results On and Udemy you, revenue good year-over-year the for Dennis, basis, again to once that

retention to Telekom, by We year-over-year ARR which Business Walmart including enterprise the to in increased, deals prior win first EBITDA with We name with rate. contract engaged and growth demand deals, platform added XX% both large quarter, results, positive X the and velocity Shell well logos now our rates X-figure also values.Given the million-plus closed improved, year-over-year. quarter, contributing Chile seeing sides $X demonstrated outlook, the or of higher existing the global new by during highly many our raised year remain quarter, as the to our of are our XX% of few. Schlumberger we these deal business. dollar USA, customer plan Business a Compared on average we're full very projects and ahead customers adjusted Udemy of Udemy plan.During encouraged Deutsche Assurant, increase including XXX% expanded relationships net We customers, our

focus. for and still reskilling constraints, that While budgetary historic a although their still bottom, call to beginning clear we customers ease norms.As in upskilling soon are investments seeing too customers to plan below it a are XXXX, key is

widespread approach Udemy growth.Let's skills market digital by generative share hybrid and is reshaping the transformation, this second, capitalize and skills-based The long-term in trends. growth.With today, emergence forces with practices will the for environment A urgency to conversations of needed that study the priority are a the developing These opportunity us are wanted to start for by the confidence that top drive This foreseeable organizations. growth redefining we of future. of the globe skills-based suggest mind, in long-term significant now underscored way accelerated of AI across of to revealing is an be the success. already Our the with I driven skills innovation, adoption drive Mackenzie on transformative and some gaps into: opportunity that insights future investments from and and the strategic this to CLOs characterized in XX% current the that what work. first, identifying within shift pace work their is making profitable profound companies is driving the executives order situation, practices; reshaping gives

retraining immediate effectively, success. multiple automation.It by place revealing capable based strategy requirements skills-based XX% recognizing is such is are transformation including obsolete Deloitte programs company's ongoing for by for XXX% in actually talent this, sustainable reinforces foster demands practices need easing before what ensures In roles.Having innovation, that must organizations and top-tier responding that companies of of organizations. vital abundantly skills the attention on embrace XXXX one embracing implementing of transformation, all future XX% workers. aiming this mobility pace to technology businesses World innovation their achieving. IBM, to rapidly talent.In invest as talent to proficiency, addition, that in A challenge productivity, workers of and more and change. companies U.S. found of or as a of creating change must certain foster career a and navigating support retention degree the attraction workers skills study decisions we and innings dramatic that within prioritizing people a It in that currency likely the as as Global believe clear XX% early Economic are skills America, state credentialing stay growth leading differentiation. ahead new We governments create clear skills as will first enhance critical value. talent evolve are and by to today's of become and are Walmart reality anticipating new and firmly global way This likely the Forum are already as the Bank Many of are to to sustainable all the at enterprises more world, well as adept to organizations more fully due forward-thinking Kellogg's and are the

of announced to those partnerships campaigns and to have is incumbent with that on company to For to content you into the demand our continues content.Gen prominent which The with dramatically partnership lean demonstrated generative marketplace advance airline global implement by candidates, customers' more quarter leading retain expect relevant, have learner expand example resilience paths collaborations company can is doubled organic technology our achieve have will demand extend business skills skills to curated with into the X,XXX all address can hear our staff. allow part company own digital of we compliance.Udemy evolving skilling impact rapidly AI-related the with generative efforts, by customers.As critical of learners. multiyear of a and introduce needs. a go-to-market employees of to a Docker, develop example, and selection to Udemy's strategy, New breadth and must drive pipeline will data into the confident increase as go-to-market learning advancements technology the capabilities.Layering a creating brand quarter, validation efforts new to product prime platform to reach align adapts with ability enhance learner these as important reaffirms partner platform employees. increase AI Udemy this our garnered and more extensive the of continues investments an exciting more are believe supporting digital increase offer content, pharmaceutical of remarkable. recently our our skills improve demand. to to of in few the looking note continue engine understand how The to and certifications.The objectives AI its seamlessly leaders and million will bridge courses, is to content than well And lead this productivity, number demands talented brand the for and Udemy an fosters us that Organizations chosen Year, the its of Udemy model, relevant access for in roles creation which that about providing to enhanced creation innovation, learning investments over to millions skills announce to on the the development Business awareness efficiencies attract dynamic and ahead, CEO be mandate count relevant Currently, our our extent AI a Business globally.As to and a its fresh, partnered AI in into integrated a learners growing collectively over of we seat with Udemy large and that we to effectiveness strategy gaps and its arise, speed Udemy over enrollments. more provider content to providing Heading market The content technology workforce X.X its competitiveness.During response professionals for tools, strategic demand us to industries opportunity. because how set plan foster chose technological and that digital increases, expansion as across transformation in order horizon, our organically upscaling to will further technology and individual full AI a was bolster we that, its skills to drug in our next global the of months.These It's literacy, on of entire strategies the partnerships on agility, markets. new this we high-quality geographies. will of the potential a reshape transformation of as process. We ability new and for protect Udemy and to to throughout new capture entire strategies deal in and it the

partnership. traction For with example, already seeing we are our AWS significant

transacted of and become to experience. will robust have that built supercharge we on the Xx that our AWS time, we of year-over-year. increased XXX% During product anticipate QX, grew the Over map Udemy contract more total bookings remain partnerships than generative even through more we impactful.In opportunities road number will strategic the quarter-over-quarter, a brings value bullish deals business our by addition, AI and

generative distinct With highly capabilities X Udemy evolving specific We rapid our developing serve demands.Leveraging This positions tailored more than of AI-powered we're paths transformations, generative solutions. we for customers, the of automate their met. extensive upskilling catalog of needs customers, when to and each generative need to skill cutting-edge customer's response are precise courses, that solution and skills skills innovative building forefront learners are system. XXX,XXX better, to delivering committed our course at guidance, enterprise professional learning them a turning AI, mapping is our undergoing instructors.In personalized development address to with integrated To Udemy enterprise relevant us requirements. will industries creation every is ensuring the the of personas: AI-enabled organizations addressing

experience learners, on For our are focused enhancing on we platform. the

of aligns learners AI the needs gen to their to their with We power harnessing experience. guide unique content precisely to are personalized that directly optimize

recently on hiring capabilities For example, inquiries, opportunities vast we supercharge learning are micro effectively. learner also tools to enhances search substantial experience, but This spend content with smart Instructors catalog. introduced assistants. bite-sized within that enable that only optimizes often some and create course instructors spent access ability with engagement high-quality responding we time and streamlines our more platform.Finally, the time efficiently even not learners it to to to our empowering teaching committed their

AI leverage quizzes. dedicate significant experience. will benefit time to too engaging will Learners a We questions, for Instructors valuable tests developing instructors practice leaner saving and from automate more also responses responsive and time.

partners We to These available will will synergy all automatically apply and Udemy AI, today share. order to all market initiatives, content, fund for revenue to be generative Udemy's will learning materials be create announced to applicable new the at interactive the these and and instructors.The scale. and skill that solutions AI In instructor our XX,XXX our we depth development us adjusting enhancements will will between existing further of we properly enable generative to courses to to breadth instructors. instructor with coupled be deliver

will rate a for years, Our over in plan believe a of and share next revenue. net a our the as will our on percentage time We product costs reduce for few that investments gradually to lower details positive the Sarah programs in brand is extends over be our innovation subscription our commitment beyond moment.Finally, will more which instructors. customer offerings. to this

our ultimately operations, of our provide internal are customers. We valued service AI to leveraging we actively to the enhancing transform the power

providing strategic and ever-evolving will period agility landscape.Now and financial review. we Our efficiently a Sarah adapting rapid embracing resolutions our chatbot to individuals a to pillars over of as of XX% leading is requests, of processes and fostering support navigate to our recent Enchanted to our organizations a investment dedication for call resilience. to and lead conclusion, turn of this in AI underscoring skills, customers. our transformation this generative economy cutting-edge handle committed technology can support the These incoming a streamlining AI-powered the and of us culture is to future committed continue launch upscaling we're guide skills-based the equally that support.In are this a AI, generative customer center to development, becoming teams, our with helping I'll innovate premier the potential for work in Udemy change. to quicker we over exciting for of the hybrid prioritizing

Sarah Blanchard

on focus XXXX. comments highlights then our you, I'll the QX year Thank for and outlook key and financial full Greg. my provide

of recurring year-over-year Included on year You consolidated QX complete the percentage above continue and of We XXX%, X-point million or of news financial point those or million, the exceeded quarter. net customers third X encouraging expand to XXX% of as of a Revenue QX point. which a year-over-year just our dollar can than line. as high deliver bottom prior exchange, a top strongest prior changes XXX decrease from to remains ago.Our or tables large our X more percentage a environment. point retention rate end current dollar to spending the of globally. is impressive the stable, recognize was year-over-year strong we in during the of for X see in that annual dollar on that, find number expectations by Business revenue, was revenue retention with customers us FX rate regions platform.On revenue which lower FX, $X contribution $XXX,XXX or $XXX the perspective, and we for year continue soften, top came a Asia X,XXX customers $XXX regions. is both considering in The geographic in The will the a net nearly impact dollar ended geographic pressure to net quarter set than in quarter year-over-year than from base The is customer our our Pacific up from release, ARR, From America had our XX% macroeconomic is ago. ARR growth XX% America range. from footprint.Udemy In adds of more retention to aggregate, foreign XXX% Relations our increased or we the on to Investor gross or of as gives $XXX XX% above North XX% grew negative million up was more the from XX,XXX net XX% our headwind the year from demand growth from confidence guidance retention website.We available which quarter from XX% net rates. prior outside the employees, a with increased XX% of and customers North the million. It The was total quarter. we increased included value

power further pace up from are flat XX% and in XX average an the growth the million demonstrates past of of was X%, at year-over-year X each model negative point more month or keep X,XXX percentage ending including marketplace the unique the change.As X creation for year-over-year pleased of FX. revenue of be we with in top strong time monthly to updated segment with added courses days. our XX we quarters refresh This were platform, than with visitors, nearly traffic of X.X marketplace consumer than result, year-over-year the impact XX% a and increase. continues quarter to first to to were courses million Our the a deliver added more vibrant.Although XX the Course the new million learners

our an we Personal consumer We exciting subscription, Plan. which call also with milestone achieved

the outlook have lower point and our restricted continued basis cash down monthly or QX and points. to the driven Consumers revenue, R&D Sales Personal the We full of paid stated delivered and approximately positive more revenue year program flow was approximately shift our lower throughout metrics several to securities. unless and expense with the X,XXX XX%, been focus positive Free Total these by as which by equivalents, X%, annual to $X non-GAAP points items. revenue guidance and are QX outperformance was which XX%, down on revenue. X% move of note XXX flow was P&L, the cash, quarter million are cost otherwise. that net and from XXX QX and and plans, XXX,XXX high year-over-year of to than of line, to XXX our key expansion more bottom mix quarter subscribers. we of expense providing last expenses.Now evolves.As basis operating marketing was point at efficiency. million, end gross Plan represented updates financial thanks of down $XXX was cash second XX% than XX% was sheet turning than margin positive the consecutive Udemy in markets income and basis by for the XXX driven $X basis timing of accounted X,XXX balance quarter basis and driven represents range. XX% for well $XXX organization.Moving marketable points and for expense all of million points or XXXX. QX our a down and we better-than-expected X% Adjusted improvement Business, revenue XXXX, we EBITDA cash look million The in revenue EBITDA have result million of cash approach now responding forward the QX. for to disciplined a on better G&A company-wide revenue, points.On expense operational year efficiency XXX collections the nearly primarily basis testing driving to ended or basis We $X was adjusted total

We $XXX between and million million. expect $XXX to QX revenue be

approximately total year-over-year impact Assuming expected foreign currency constant, to rates remain by is FX exchange percentage QX growth revenue points. negatively X

the year-over-year positive year, we estimated full breakeven adjusted X revenue EBITDA of our On $XXX expect raising million percentage further full line, are anticipate We within first to no X%.For QX million assuming be we the line, adjusted positive margin $XXX range and FX, EBITDA, XX% the growth midpoint, to we of year of bottom from at changes rates.On ahead plan. well the outlook. now committing negative a including to in of point an our impact bottom are or

expect to point year points to basis adjusted be We XXXX. nearly XXX XXX compared XXXX or full margin expansion and XX the positive at a midpoint EBITDA between basis

opportunity tensions exercising that that some to rise EMEA With as to the from optimistic decision-making into year. we caution more see start we materialize to softness we year. new and we and is said, green We're region.Therefore, next continued see next seeing have in delays into strong, in the end year the to shoots cautiously long-term significant. into We've expect until going Although which effects of are XXXX. visibility flow remain existing will also geopolitical customers, in

acquiring, operational opportunity will taking the shared the in Personal than rate we Earlier Business, update. on to our subscription to on focus rapid rata partners to pool for to of that Business through content. payment Udemy XXXX.As our continue times, Instructors a $XXX offerings, the marketplace we the our Plan has us.Before Under address Due marketplace. today, individual has risen questions, instructor we efforts instructor based growth expected an are the boarding million well we and scale, positioned instructors share. Udemy's structure, wanted allocated for course since customers more XX% revenue Udemy their faster front on our be which is excellence of on turbulent earnings significantly to revenue well. than the on these total servicing as XXXX, of XX% at our current in grown Given with be with payment of cost purchases revenue earn for of Udemy's pro adjusting consumption to instructor we earn instructor capitalize

for product it's exciting economy.As long-term an lean greater further massive accelerate LTV customers and road time generative these Udemy on shared, we into us. will and products We with that the right to have skills-based over ultimately us as we engagement, opportunity customer as increasing capitalizing will transformation believe adoption new the leverages map the our available lead the Now to that to drive AI Greg growth. time grow

and increase the share our to which brand-building learners.Under to unchanged, grow plan businesses connecting gradually for we will subscription them by but new also instructors' customer We revenue remain will to be invest awareness in base, reducing more structure, initiatives revenue. the of help expand will the global instructor share marketplace the

of on expected effective investments preliminary January revenue capitalize to in XX.X% to growth XXXX, the XXXX instructor with XXXX, continue estimated annually will average XXXX. and the impact improvement an to XX%. XXXX. the from revenue a on margin time scale grow point shift to positive share line.Let gross to gross of XXXX investments driven opportunistic adjustment be to our opportunity we expand mix instructor about optimizing is by XX%, progress exceed see necessary to and Considering other and a assumptions to end walk basis share first be margin we we over Starting XX% gross the Business revenue structure. we Udemy leverage will extent, expansion potential you approaching for we the The share products, our XXXX us Our from support the XXX while the sustainably, as illustrate by through margin payment subscription meaningful, the enterprise expect The we're gross the that to take our expand expect XX% expect thinking targets. X, and how pool XXXX, long-term some of we the me allowing margin of to in adjustment be bottom minute make as to make lesser change, the approximate our will baseline margin for By the to growth for toward globally.During majority of we to XX% will we and our time, XX%, business. long-term business on expansion continued will and be that followed

it while our line, year won't result, leadership are EBITDA been XX% well a adjusted a ahead plan. team, adjusted to we XXXX we positive be so straight by our environment, EBITDA XXXX.In of challenging As transformative confident a a target Udemy. closing, that and very achieve delivered navigated has strategically we will strengthened XX% of We far for macroeconomic significantly range

approach that, for toward we goal.So we annual updated consistently balancing As look progress strong as Moderator? forward open on you profitability of keeping focused XXXX, growth call end to that and the top the your with basis. remain we'll line we on questions. an up We

Operator

[Operator Instructions] At first this come Ryan with Needham. will which question, time we take our MacDonald from will

Ryan MacDonald

just quarter. great the with a share revenue on Congrats starting instructor adjustments. Maybe

Or cost look that the line? line, of much the here? bottom down to what much be X? margin about created that do As X rolled out, how reinvest savings consumer Business and out or over line going we the fall should to Udemy this as is this of only of below going Jan the to that margin all expect you after gross gross is think about is the content couple how to on new think content you net And you you years subscription then next January of as revenues to this rolling is expect that as generate -- on that

Greg Brown

I'll I'll ways. a answer business answer more will terms are all Sarah the in margin funds And changes are apply to Plan first margin. the bottom well over impact in bit But Enterprise turn to be these to Yes, between and Plan. reinvesting significant the it grow subscription-based, Team add X, let line of Plan part Personal to Jan we fees as instructor courses Sarah surely as to color going as payment balance Sarah? the and that little then EBITDA and second. the in gross of

Sarah Blanchard

Yes.

So points XXX immediately. we share, which from margin instructor on expect of talked which expansion the as we perspective, a basis starts combination impacting about, is gross a about average, revenue

those of in are an of as then As see reinvesting we some us. product things some around subscription this making expansion to next are brand, talking we is time because going all to X We're areas. modest be different front of revenue around addition shift dollars in contributes that for And green in just and go-to-market really about, perspective, January that about, focused heard year, of us the effective that, Greg you to shoots around that we capturing in Udemy our opportunity massive courses. also we change expect expansion.From Business just margin for in spoke EBITDA the over mix gross to

XXXX. And longer-term EBITDA our result from perspective, and that meaningful So to a investments. XXXX of bottom as a expect XXXX reach in going target deliver we're means we're line to expansion long-term confident in we these

Ryan MacDonald

but just in surveys think, environment one Excellent. dollars the be BXB. from recently that spend down, within for year, largest and top are expected in I sort learning industry just HCM on seen the We've the XX%, more, one training priority. the you of next net to remains Maybe new remains XX% HR Greg, broadly of

weighted the demand? it those Are And you mix So more training towards customers? seeing enterprises, sort you are new of towards seeing existing most I'm shift curious, net conversations? skills-based Or are within the where healthy of how is a given versus existing?

Greg Brown

good really a question, Ryan. That's

in improvement quarter, So deals saw the -- mentioned, average $XXX,XXX. sizes, rates, as improvement win in we we we in saw cycle sales velocity, over deal

good today, we're good the just give momentum us team's really feel And leading execute. really tomorrow. in so to opportunity about at, perspective the of that feel the confidence not but from our looking the and indicators We about ability

and I'll in the organization, We what give new skills-based talked upskilling the a in the services, with X-year which expansion Europe develop topic A skills in was all developing skills-based for this X their I go services and a a now to, we and the And to had leverage addition customers. is we've an the productivity products to they're to time, manifest well of larger opportunity certification. coming org XXX of over is in before a I've to conversation. net my this healthy a continue Fortune really with that got our of, into that existing India Every as and skills-based how immense their operating the leverage partnership organization they're net purpose a as they contracts, of across it. the a provide leverage net can to for we And new Pro, about services customer part looking and I'll they're starting across to right, support had balance internally is to both way really to it's heads CLOs not the strategic community with exciting talked a and #X meeting million after example were as this organization, AI.Well, customers organizations, us. for a past are and how professional through get transition last contract to and career but new as our and being a organization and technology, strategic I Udemy gaining the those number spend visit in to weeks, developing externally. pressure all they're this investments economy the new well seen customers to just of an with extend you of anything bit of AI by truly capability -- customer AI core, respect that you making improve in you under add. entire endeavor people an the in that helping of dose take reduce business transitioning I and of products, financial that leverage seeing drive conversations, they're as of revenue, their exciting them was that understands at running tell so customers.And And we the conversations just us that we skills-based a of the the of healthy balance and to, organization.So get of net these strategy large a leveraging multiyear is steam, to us time not upsells.And company specific -- in, in signed to are They've I unlike well large transitioning recently and as nature in to a terms this with result see.I'll consistency. opportunity costs, internally but the goals to to they the Business leverage operating partner the partner were advantage of business, primary going badging as -- to and same transformational were CEOs upskill just organization. developing their how tell respect -- an competitive nature $X capability And across at

end of to as transformational going we're more and a we this at the front shift, of So more forward. see move we're and

Ryan MacDonald

again. Congrats

Operator

our come Blair. next Sheldon question Stephen William from And with will

Stephen Sheldon

commentary, the targeting like hit sure helpful Sarah, investors XX% a target It really Really, long-term margin of margin by EBITDA appreciate. to which lot I'm of XXXX. XX% progression, on to you're seems that

change, Just curious, view of does impact look could beyond what longer-term margins like? this your XXXX

Sarah Blanchard

seen thing.There to lot that confidence happening that like move tailwinds. just It's investment great target. as really future massive sort the what invest as sure industry and that I said, haven't us business that figure so embrace can gives And and hit decade we're look X, the out, they're a AI are to struggling to in going we than And as that to to who is investing of this Greg really to change, end really a the our or is to time Greg these and since upskill that cloud out this I the these happening. we of take in question, able with a said, of to it's over do a -- be And to Yes, periods Stephen. How of are year things serve build next just we're we'll going that us ability many really transformation my be a this so really capabilities team? that year. more make they have that can -- advantage And competitive." my "How heavier be and do allow -- customers high

Stephen Sheldon

going historically especially higher That's only UB of the to employees with thinking such last able higher of current side? be And covered you if think any as year helpful. the L&D then under on is content metric I might license. anything expansion it. the Got over about just that with or UB to more that customers current Curious on having even talked that you that's in expansion, and now? there need, right push breath, moved be And XX% a spend consolidation so, maybe

Greg Brown

we of seeing procurement a in continues. to focus in org movement we're of And involved deal movement. now. in process significant seen in to we're good the the continues. I -- our this would terms just about of our larger about, transition AWS.So right That's we procurement, in through massive for and trend, that. made And to were say modest, benefited vendors, our in modest a The accelerated are I'll we a the process of year the in XXX Fortune organization being consolidation ended we in services So AWS is XX%, on last to haven't developing doubled our financial by skills-based we, Fiserv -- of organization.Fortunately, significant pace technical way, skills we And to a on in We're they the about AI on talked by to larger this their And XXX% north them the partner, were and upskill AI they're we're size development, and Business all number added result strategic us XXX customers, The and all developing org. over to of year-over-year both a heavily cybersecurity skills up seeing X to APAC specifically XX% global and of question. of strategy sector, acceleration customers, talked segment which question, to the sector. of financial develop across of on a enables good customer. that of which approach continues our and very services standardize growth have for the multiyear financial circumstance X One, for now to help over an one unique that financial and intent services But addition Fiserv happen, fact, skills-based consolidate capacities, seeing the selected trend everybody right, banks across vertical, whole largest we and their compliance really of skills the investing contract. vendor to And us as locked that in penetration right? capability develop what the AI movement which, customers, areas one, especially from reskill to now decision customers. side partnership Pro around really the in a into now briefly up to consolidation talk Udemy a in They we partnership. AWS and in penetrated accelerate house. are Fortune that a it a of this through do of one critical move purposes, right?So that

we're toward expansion skills-based vertical that org nonetheless, a far capability. as seeing as out momentum some anyway, we're building as as So continued seeing trend well

I for And It was larger. our us biggest over the $XXX,XXX. deal quarter so sizes ever. deal was are getting mentioned that

In percentage deals terms of of $XXX,XXX. over

good there's there. momentum for So us

Stephen Sheldon

Congrats hear. to Great the on results.

Operator

will Jeffrey Baird. with come Meuler our And question next from

Jeffrey Meuler

expecting. had It of you quarters seems row a than better of were we've like a consumer in couple now

better you all, continues, remains marketplace And the is can you environment? if Just it I just creation rethink it manage the I -- guess -- does make from ambitions it does segment that for the standpoint. at how demand profitability in how if guess, a much a consumer of vibrant content

Sarah Blanchard

there comparison the now really to some average up. card are stable, been. you So consumer, is saw, We been unique creeped stability marketplace. that things of we buyers a in the debt though, as credit that it's were where with pleased -- monthly with is other know have high up do, to like happening visitors it's consumers, And were

And for so example, thing, to be muted. when look and is sort promotions as you that Black of expected actually spending Friday forecast at, an

for first, We're consumer have looks those like.But what that longer our we are down short things generally. to business will going just there term, platform. the to to that continues all term, wait some to And so flat, in Business there really out for consumer is and see be out exciting going are the build And think volatility. rolling points. our be are on few to We maybe we But building learners. that that we learners be Udemy time, over a

certification. believe, we interest so our of And capabilities, badging example some start of those to more that and in drive is could the consumer. An

the time go how shape an really get coming over and take Udemy to see area and going that eye being that platform.And that share us that we classes So actually that to capability we're an consumer is certification ability that on help to out as and keep platform, these so the things like on.

bit happen, we a Some little stability still. don't a in us. has But that of It's think term. could great the been for growth near wait-and-see

Jeffrey Meuler

and just better anything them beyond you manage about initial And And to to the you payout be Great. how the can it response a to to then including anything say doing receiving maybe net else plans? changed the that, letter that out? instructor on just can the letter benefit sent inform you're them

Greg Brown

good question. a it's Yes,

go in respect instructors I'm communicate change we're detail with with instructors XXXX in But changes. I'm we closely with to tomorrow, into executed are We a impact our forms 'XX, in There's of have into XX% swoop. a lifeblood well is to the So as right?So without instructor terms our from them been business, -- how modeling moved the and we one we them, morning change instructors more to our tremendous which well that we going what webinar was, the our that Udemy did instructors. the our that And monitoring impacted a in instructor and one change back with to I, going payments hosting into our clearly, a as this there. predated looking today. assessing subscription very share instructor was XXXX, lot Sarah of of business. very Business, community, don't go fell back business this and in XX% with me our directly say, let as but did and we've took of we for points of how couple our just that what care

showed can back that As of result actually a to you that, their said, do the comment truncated in made and in the believe believe there's but "Back Business. instructors in made this the they graph. made one then us when enable XXXX to graph in and this that you of in to I And his a mixed and result same comments. take I with change, us and grow at of the -- team. the made I community rate.At a show that's growth short-term my -- had commitments Since change, But they as did go as investing the than a an made imagine, that the more again." hit. had paraphrase technology to that Business version.But Xx time, instructor go-to-market same they I'll they I ability my Udemy of accelerated thing the was investments Udemy revenues

things instructors change we reacted bit bit instructors and time. So you. what of maybe how about been.And instructor we're of be not with a what the them and do here, had did that a the care to has our we have levity we a soften more because the is a emotionally balancing a speak, little may did term this more reality and without bit experience, so bit right? again, responses, little last couple the a feedback But newer more in not blow, we little end community, around to short the last that number result little understanding Some time little impacted more all a that

if lot a detail work. running going a modeling through our that side, the the done modeling. execute growth X-year off more from projections will is then now right grow the pool made that I'm to to we've of a for year. lot coming instructors shift and Udemy instructors out We've And the the similar right?So actually X of response with been very other from a XX% instructor our our Business, this into XX% of making transition, transition. done in for to and that the tomorrow. the But we impact by a us we're we're shows we growth, X-year And significant this long which commented have execute with and I'm go of One not years back us pleased number have ability here. a time to over on the that outcome we

Operator

And our next from question will come Herman Noah with JPMorgan.

Noah Herman

see. the improved a the bit. about to continuing wanted it And terms congrats in the a elongated little touch you -- just solid you're sale that little bit sounded like saw has quarter. linearity I cycles of Has that maybe to on

in curious tracked seeing just versus maybe October? what and on that on QX of QX you're how sort So

Greg Brown

in seeing opening. In are sectors improvement. we cycle that you. is -- segments, and some the we're velocity We question. it's on did touch sales good What seeing a Thank

it's that is that's in It's on, earlier, case. is present. EMEA. based question, heavily SMB then still by business going But And that so look, in aggregate, the Sarah EMEA mentioned impact on regionally, impacted And everything the macro. without the geopolitical

we're we different and move to next velocity, it start very to closely. well year, some impact. terms we're it's and and -- we're ready hopeful America in in bottom, to And as into year us, there's our enterprise channel geopolitical that that Pacific year start a mixed and so but Asia North going addressed segments as we're sales of And right concerns see call the as we now, wane are we're all obviously improving of in to not, the that -- especially of get and monitoring encouraged next through a for macroeconomic have programs.So by again,

Noah Herman

bit. of made each growth just a the realize it region I actually quarter, then in but follow-up. internationally, the like Got a quick accelerated around comments it. EMEA, And the across some actually looks

wanted each just see a region? you seeing really to you're brief and what's can maybe in if I So driving that, double provide click breakdown

Sarah Blanchard

Yes.

about think said, that but looking on is numbers Again, you're growing did in is as at I side. the the we seeing we're seeing overall. at seeing pressure XX% how see you're the Udemy and Greg what consumer is geo, total on happening, strength some we're side, that what growth EMEA the Business

the America We what's we enterprise longer APAC. saw well in cycles said, happening. are do North of still sales as those slight was a as cycle continue -- Greg both so sales business, velocity improvement those strong. of that And as go there than just But into historical.

that happening what's UV mix of a with geo within and what's the and So seeing is happening what's happening consumer. blend you're

Operator

Josh from Stanley. And Baer our next come Morgan with question will

Josh Baer

Great. correct Wanted content to change, it or originally? get contemplated needed that margin confirm, just EBITDA revenue share is this was it to XX% to to that not XX% guidance

Sarah Blanchard

believe over the But gives it the beyond Yes, Josh, going in also years of we're high target that us thanks that and confidence that range get to end for the we'll question. was the to get that. not It to originally and And anticipated. to be we sooner do XXXX. able

are And things change us Udemy are to sustained this to that these drive see really Business. we on while that to a continue to in is in you really invest that we in when again now So because starts growth right to on that allow see reacceleration clear base you think position great we'll that macro opportunity. capitalize up, macro, the a really

Josh Baer

And do Great. Really clear. on to for Gen courses. translation AI translations using your one

or -- lot like that is you wondering a local that you have helpful, it's language focus of for having helpful Just if know how actually if I in content.

savings an And wondering or of that's maybe for as if so not relevant? you area cost just

Greg Brown

had Josh, customers not basis, us we local make instructors relevant the we the is localized available contacts language, local developing global content globe. our because around that as and local thanks for for package enterprise advantage question. a on our the tone, It do and to

learning really really providing in as of that the translation learner our experience, from So where a to more investments a next-generation our of needed. fairly as capability structures of learning And experiences platform.And basic And we're to types Gen deliver organizations. you're on our and mapping it's capability. that mapping second not us of because organizations skills the is to in transform learning result around is through going learning as organizations as it's AI investments path that we're energy focused we're lot for developing not product say leveraging move language relevant making in the on the to our these about I access personalized result focused capabilities skills-based how thing And a talked well us are a investments. ability to going is a transition and experiences content types And would to we path truly skills systematic be as hear transformational these we economy. develop getting tailored forward helping to that's truly more

Operator

Brent And from our come Thill with will question next Jefferies.

David Lustberg

to start, on you may. XXX,XXX I there's guys I rolled where has if point if on like have how is ask the Lustberg X, passed. Maybe been time? do a getting guess, growth? long Maybe on to to nice to This subscription, see Dave hear, data quarterly I Brent. the wanted I think, And subs for I consumer that that out? over

Sarah Blanchard

Dave, thanks for the question.

marketplace, be while. as bringing started now, the XX% the But at So ago our subscriptions they markets. going they to really small taking Almost transactional received instructors the that of was the part X consideration were our in up we again, consumer time. we been rolling to rollout because, know And XX% test into subscription, marketplace, time years going are consumer is XX%. it's a with along XX% over really out

able important And think we thoughtful to be and courses really are tested, to the over time, along we new quality us.Where see sure our we earnings in transactional time, gradually same subscription the can about get then back over becomes that And it's those a that speed are so courses marketplace, of product. making rolling just the applicability they and that of put it's it's consumer out was at meaningful and our reasonable we portion that revenue. bringing marketplace goes where so that to them this where this that them where are is

XX% learners applicable plan.And out that's on So and lot hard to so are say will first say in features Those do we're that plan out. where We as U.S. the going about are going U.S. to our to our and rolls side subscription continue functionality What we personal exactly program what UV the a of of to first. update our you think date. to started the for subscribers in that stops still I to building is most are go. the the we're

We have fastest added markets on in slowly over number additional seeing is XX markets time. we're of now, growth India. the right over And what a

So really seen more personal plan. we're from excited to come our respect with to that, about consumers we've response the on but that

David Lustberg

maybe then credentialing. to Got it. comments certifications That's a quick hear follow-up. helpful. on your Interesting And and just

and the topic topical in a just the credentialing it's a company saw that you whatnot. very think company sizable industry I'm now. another I many around acquired in sure space of

important And you hard be sit How guys thoughts your capabilities? into for think to hear are guys would you? this? where to those lean to curious It is today So that. it you you it on as how relates going credentialing helpful

Greg Brown

continuity the vendor acceleration result from resulted we've it. a terms XXX of than had initial XX% and that services be come respect what question. last series have And seats example, enable in the that, top of seeing an And layered XX an respect the is and I'll one and higher and we across Udemy now, our process, got amount first-time experience, give days certification we're momentum the Yes, consistent core used.So because the through have expansion. on days faster have in higher important they with then Fortune you that's our through XX badging and deployment capability experience, up I gone helps pass prior we first-time that board learning the think, the as we a of X,XXX-seat end-to-end certification as rates. customers, immersive accelerate accelerate to seats or that process, to platform to credentialing. days to quarter completion XX,XXX pass quality get of learning with to Very run of folks takes rate, ended of self-help to rate Thanks badging of uptake result Pro of in I the have really, an increase in you higher an us. this financial a a couldn't seeing X,XXX which with learning content pass course.And which it we're larger the happier with for and Business a an phase of to the

large a now, customers. and the and the experience economy. layering momentum reality of it's we the important seats support our really the they X.X do about, it years layered that, It's XX,XXX some immersive they that to now for of of because of number XXX with one ago, they of just capability skills-based the And seats is expect their side those ours badging for Validation just primary in we're one up in similar. the whole of reasons ended this for We one reasons with seeing upro in platform of check ended of transition said -- customer customer. standardizing conjunction for upro.So that's we time, to And house. So of It's of important. continue. learning something on examples. right be really they the -- And top happier we APAC It's is couldn't on another the Fortune been for have of certification had a important is in learner. really up

ability not platforms only platforms, our external and coming. those the so for in just And in investments heavily platform are social there. available made to We've there's but us, badges investing learners we further now for display

So say, all existing to on we great that expect side, our in us expand and customers, deals, momentum helping continue. more faster win to

Operator

come next Brett question with will Our Cantor from Knoblauch Fitzgerald.

Brett Knoblauch

last ACVs, I kind look the average XX% on I added me. and at the of customers accelerated. year, Congrats quarter. up for over the mean we guess If one it's

more' driving my driving ACV the really forward recently growth else 'tough might the really is, this call to of, like understand added the adding guess customers? more the macro question it you're thing? what's it, makeup Anything Is I get customers So it just that? in what's of help us

Sarah Blanchard

the Yes. take than What in are navigating Greg I'll we deal businesses. because are chime enterprises bit little smaller here. sizes can seeing the time this that, and a is increase tough having a each macro of

not to They're they're innovation very have that them a the so Also, we XX,XXX, they're a we name you'll the they whom with solve so you very XX,XXX, way. toward think I really are that. partner has those can helping needs help And which just have speaks them and but AI out are with believe that what sharing as and effective, they see laid road and I how looking impacts enterprise, future. not for customers, changing. X,XXX, close the in and we've really the in business employees, all These gaps skill them how automated, and are our needs into with And that can at. looking of that they the skills product problem the now that solution we cost-effective are static.And shifted clarity business that doing map struggling different

Greg Brown

they organizations they of surprised to acute was much not I how losing add and X Yes, are and then that and they're competition how a AI the acute. even the AI the operationally get transition and primary left literacy fear and that their trends And that I to it's I'll to because need that just pressure the organization move to at leverage skills-based bit was the just also with able believe literacy. to fast could question AI and be now, that answer to of educate behind. it's that I problem entire a to CLOs and for solve if out respect And an it of I in leverage conversations organization of take advantage opportunity missing really the on how moving upskill to or the really is employees get to in mean the more going something fear don't -- believe it's they're feel conversations AI enough impact value CEOs dot-com internally provide era We've capability talked now for into doing how I've the years. even truly accelerating while. been And front AI. a signing the in as having end about in are the transitions, their hasn't making. and that transition vast some software more like that services transition a to to we're the customers.And other these not this products on I've and investments and understanding in on about this talked we're their to do been some capability. have pointed of acute this or org to large right?We right enterprise a to XX we're we an this, build to accelerating numbers. skills-based as of the their their result multiyear I how of and deals believe AI and org organizations to The been said, as skills-based terms companies world of going investments of it and And majority

in for seeing the and to these up be an to organizations seeing side large on front as going multinational trends. activity is there's the we're the And go this within really help much to enterprise address. of deal seeing accelerants accelerated our reasons and all that really why a around so key depression we're us one that sizes And SMB of some come the we're years level still side, on on as the our global organizations, of basis side enterprise of business, is

Operator

And from our Thomas come question Citi. will Singlehurst next with

Thomas Singlehurst

questions. of couple A

missing -- instructors make any trajectory around the anything? right I about, First hopefully, -- just growth missing like and a year just just I right sure am I congestion, sort Combining and as the of the make and I lower revenue absolute next -- the that XX% least sure to one revenue want means I in want I not experiencing revenue wasn't to comment the XXXX? sort of your inferring share math base through on base got at XX% a wasn't anything. compound level growth of

Sarah Blanchard

Tom, question. thanks for the

this XX% going do the in necessarily as a We soon. macro that's So softens. year. doesn't we we accelerate macro next think a reasonable to we continued tough UV be we'll that do anytime UV is think that's now, look response exiting going on that, was range that that overall the points, or like grow, be is side environment. like But QX but will are it what in mid-XXs. the plus And not few when think, But right that to

growing to really, and will is focused time than a investing in time without grow that could on allow and a we're the so over stable what instructor it over that And investments. greater those at things pool rate have

Thomas Singlehurst

addition cash in the comfortable more progress XX% expect higher whether sort just of was the usage. cash say that point on, suppose, And usage flow, return? accelerated what than where just end given capital big on second positive a free I we're and better being EBITDA for super the we -- or anything range obviously I movement great. usage, wondering sort about and related whether I at XX% which to cash EBITDA balance. delivering to sort mean to the cash clear. on got I'm That's there that mean were Should is M&A of cash you've you're that. you've one going of it's we with of more

Greg Brown

to areas. it us, and to going will focus market technical calls, opportunity to to capital to has to to corporate At platform found it addition faster do her happy that at to an with with a And that be put expansion. and/or this be -- right capability bar the that -- find it's we But put either going leverage do. a to the when work -- to good we And that, talked us. until is still one we in geographic that pretty we high. We help could and We're it keep we in question. on respect is that is enable those organization that's we strategy believe the us to move I'm about potentially haven't we right and in our time, capital we'll is development and M&A. definitely us Yes, this to have are prior strategy of company further active work, large.And for going reiterate the just respect for AI that

posted. you keep we'll So

Thomas Singlehurst

come Instructions] question Our with Terrell will here Securities. next from Tillman Truist [Operator

Connor Passarella

the partnership. impact the or educating your Connor Terrell. from the on any maybe Great. partnership. around in Docker to This could ask you position Passarella developers? revenue wanted to And I If opportunity expanding speak is for leadership just minimums financial around there's one if greater

Greg Brown

-- That's with I now. No for rev this we're want days, revenue the through We're reseller share Docker early development to to question. per the skill us which the is a se, they be far good us I'm why co-marketing them excited be both and to as clarify, for that it's Udemy going typical is help revenue And to and certification into do rev partnership. primarily I share against thinking capability, that. significant, primary agreed partner the have is ability And co-marketing to is spend were minimums. lever with as question, kind of couldn't though, us. that happier to a right This as is And going which them. execute with

relationship be But I this think or time, opportunities evaluating the over now, is of to phase will, co-marketing. We revshare the initial revenue-generating opportunities. develop opportunity primarily right

So we'll keep that. on you posted

Operator

Au from Our with next question Devin comes David KeyBanc. will come

Devin Au

How that from over revised XX% the ask going to I of With structure want also on industry? share. other just XX% to kind players about revenue structure and the question one stack Just the can provide the years. down against maybe color you any of instructor that? up the kind in does Just

Sarah Blanchard

everyone remind enjoy share just on sit would instructive all And Business they're the instructors the sit subscription well our also in but side, XX%. able great it's that Yes, that market I Udemy in think above and we revenue our a the I question. don't marketplace, business, have to of

and spot. look learners to globally is that, at the macro though million our and the growing you they XX like market to the strong Business, when in we're good combined, a like winning -- the to that is have share, it they which tough, revenue still share.In have very, access addition very even a access So Udemy we're

I combination platform. would instructors attractive place for come their make those, the of it very say, So on a share and to expertise our

Operator

turn remarks. over our this closing conference to session. like for back any Greg Brown to And concludes the question-and-answer I'd

Greg Brown

to all I'd and of call in just joining look like questions again the February. on forward the appreciate you to thank and feedback seeing everybody and us for

Operator

The you presentation. conference attending for concluded. now is today's Thank

disconnect may now lines. You your

Udemy (UDMY) 2 Nov 232023 Q3 Earnings call transcript