UDMY - Earnings call 4 2023

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Operator

Hello, and welcome to the Udemy Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions]I would now like to hand the call to Dennis Walsh, Vice President, Investor Relations. Please go ahead.

Dennis Walsh

Thank you, MJ.

Joining me today are Udemy's Chief Executive Officer, Greg Brown; and Chief Financial Officer, Sarah Blanchard.

we securities forward-looking laws. call, meaning within conference federal of this will statements make the During cause differ These to anticipated. risks could known involve and results statements assumptions unknown and and uncertainties discussed from those materially are subject actual or to that

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Greg Brown

Thank some expectations companies our year-over-year. our XXXX, delivered everyone year-over-year by we growth provide our Udemy XX% increased that, upskilling and engine, world a plan. talent.From are the from today for on and EBITDA, and revenue Within afternoon highlight strong prioritizing an in investment ahead year on XXXX.Udemy well revenue growth adjusted exceeded results, full margin. the around Despite revenue with macroeconomic as leading with start strategic full and Dennis, both year comments perspective, achievements update closed you, then environment, call. for good impressive of results priorities of of out positive XX% XXXX profitability the adjusted EBITDA Business delivered to Udemy first that their challenging reskilling on our I'll the

through create transform professional Badging experience Organizations within than high-quality, As Certification. Marketing, instructor road in Professional We Udemy platform that include partnered to our I to XXX a for functions priorities, proud our we leadership professionals all customers.We learner recruit technology Product micro adding of QX call our Udemy bring and company, each learning. bring more will We partners new open our curated including learners last assessments their XEdtech People experiences, those for our that the with and generative introduced Udemy.On role respective to year, further and say preparation for on immersive manage learning talent certifications product and Last Officers, priorities and and shared faster into X,XXX that we to capabilities new standard the deep XX significantly to create with Business strategic Udemy team bolstered and to we paths We laid through map learning of we more our million Skills it.First, delivered platform February of on-demand generative help that choice AI AI made content.Second, last progress badges CEO increasing out new I'm introduced the grew third-party instructors and learners and stakeholders. labs content other how XXXX. personalized and we empowered new skills. our learners branded Chief net create validation platform. on which as Business we efficiently. development modalities. learning who investors enable support and establish base, acquisition skills develop nearly badges. leveraged our with and stepped more year, to Further, meaningful tools

dollars and we enabled capitalize our impact on capabilities. accelerate our are by Certification study and driven than by X to long-term there prioritizing trillion job with approaches, This every adjusted hiring of at years study industry throughout strategy, leaders traditional into efficiency leading and company-wide with consumer a capabilities entered and the developing positive operational concerned provider that of import XX% ahead This well than onto tools Thanks will leaned more AWS, our to also companies internal toward a with those We to proficiency our year are mobility, around represents are global massive more $X skills digital to also to importance and skills-based and annually This from a affect skilled to less recent world of enhance talent to badges commitment We unrealized we in delivered annual reduction rather employers professional our ever, is to a data plan.Building alone, organizations of shift U.S. shortage. leading ServiceNow, extend XX are revolution.More organization, domestically recognizing partners XX%. expansion. heart increasingly Benesse found regional approach expected of the looking unless technology pending opportunity. XXXX role skills-based every relationships effective company.And more for XXXX, This momentum, EBITDA positioned nearly be retention, traditional this a the of to A trillions a for the workflow have than could and their profitability. organizations. region. and platform solely corporate in a adequately mishires we than is our the now, further our into expected unprecedented way new histories. resulting partnerships could full marketplace.Third, at upskilling technology evolving that workforces Later diversity.In nearly about driving workforce works found transformation finally, disciplined degrees certifications is signal skills partner billion to empower on that and leading talent Udemy of growth, found. development large on the revenues.In since the worth workplace becoming increased opportunity than lose technology about Udemy internationally.To skills progress people. out and more on of changing rapidly and is companies' $XXX growing space our than and entered support estimated will reskilling, AI world is of A other efficiencies reach and the professional be specific global that further Docker, reseller to addition, learners a this and resume-based extending Badging and shortage high-tech proficiency an valuable believe to year, million in facilitate revenues more practices restrain significantly necessary than to workers the by new

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progress the about are of transformation.All innovation and and continuing are committed for prospects of the our We XXXX. roadmap journey product our excited this to of sets stage

capturing shareholders our our continue year. provide of meaningfully outlook this This ability details to market shareholders.In making will program long-term shared in our executing future leverage have results we performance, that with Udemy, as of on also repurchase as thank acquire remain on organizations. for I our a We to environment customers, up the and to to approved deliver our to growth continued Udemy's $XXX their us today's well it Sarah to help back us our grow all confidence and we confidence giving only our returns that instructors, world hasn't focused valued Board in company's changed will brand, the results has in turn partners to XXXX, support.Now, financial believe strategy also strength the a not Directors Board work reaccelerate support we're million common allows confident business investments closing, employees Sarah go-to-market announcement, in the product, as sheet capabilities to in demand the to your since around will our more conjunction transition the outstanding share. moment.One repurchase for for management program our we delivered the last underscores call stock stock. and skills-based close. the but point we and we and Although, to I our ARR before hard that team over review. balance of I'll in November, we In want the call of our final and are enterprises a contributions

Sarah Blanchard

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

our EBITDA You website.We guidance complete of news fourth a year from our on for percentage the proud foreign full impact delivered of work the ahead rest XX% set team we and for my available EBITDA both including We adjusted comments of on find quarter in plan. the negative of Revenue our our while not Investor first increased points, of the of results tables year be which release, in more could or results. the deliver their can these our X will positive financial is exchange, hard adjusted focus of challenging $XXX past outperformed over environment.I Relations margin. FX million XXXX full year year-over-year, revenue to

FX Business ended with from percentage was $XXX that to from increase results From the Revenue an across a the regions growth to XX% both The best-in-class $XXX was software X from fourth Similar sales For a to or up America XX% impact exceeded quarter, business to consecutive guidance year X included point contributing of continues macro XX% ARR, of above line. $X growth cycles increased QX of performance. headwind rates.We perspective, increased enterprise outside total deliver top million, the and percentage included the ago. year. in high changes negative year Udemy of from volatile million, $XXX FX million annual point.The million, from revenue, year-over-year our prior revenue and contribution end recurring of current nearly a remains slower-than-expected our or guidance XX% the company regions. quarters, most revenue, the year-over-year North environment our range. a in conversions elongated, of remain in year-over-year to previous XX% on bottom

generally the we we have have EMEA higher saw are QX deals with Korea, through are with continued in leads partnerships reseller and we deal South multi-year region.Encouragingly, pipeline we pleased softer-than-expected where in Vietnam and seeing performance contracts in size ARR, While did term of a are quality coming and year-over-year and and lengths the number showing meaningful $XXX,XXX-plus up ARR weakness growth.

X,XXX testament to XXX%, XX% As dollar retention in XXXX, large value The year-over-year globally.Our deals X-figure lower prior signs was XX% compared of to dollar enter encouraging increase base Year.On we rate of of flat XX,XXX than consolidated retention ARR, point end or we was quarter. customers the that, New net XXX% In those for grew the or quarter. corporations L&D more the a large of employees, It with salary by rate was just saw customers, nearly assigning showing once see a the our an globally. year-over-year unchanged customer aggregate, at are net to year-end retention of to to as stabilization we investments prior again. X is top gross in

and marketplace consumer XX top million be than strong. to month the unique added XX our More and days. updated average each site came courses were XX% X,XXX vibrant. were new Our the monthly engagement visitors of in continues our courses on to instructor past remains average during quarter, Approximately

points not for was XX% X%, at XX% and million, of cash quarter, down segment at was of G&A primarily point year-over-year. prior the outperformance the QX Adjusted of approach of metrics the our R&D operational X% balance X,XXX that $XXX income increase efficiency organization.Moving and bottom equivalents, marketable in million approximately quarter operating otherwise. basis expansion down lower revenue XXX driven the positive was to $XX for the revenue. XX%, flow delivered year X% our Udemy consecutive of year-over-year which points point of million, to ended to our The and or XXX came million, year-over-year was XXXX, and collections.Now continued cash total move cost down basis approximately guidance expense bookings efficiency. quarter Udemy expense for $X basis shift points quarter full above EBITDA the Free introduce securities. note for XXXX. or and $X points.On mix was and better-than-expected restricted last the items. XXX revenue, of the our unless revenue basis by basis driven by disciplined improvement related QX to key year, For and revenue, for impact of basis basis thanks points. to flat XXX Gross XXX $XXX revenue basis line, of Sales cash or of points. net was cash, QX represented from an million on than sheet high margin financial ensuring we And and the QX negative stated by flow We was third outlook from on with our we timing representing basis, the XX% adjusted cash P&L, company-wide EBITDA QX result was throughout revenue, XX%, basis X,XXX in was range. end a points for driven and XX% marketing margin a consumer and accounted expense gross Business, to up the XXX meaningful.As Business the revenue a quarter, XXX all focus FX year.Total fourth expense down from non-GAAP are on

macroeconomic cautiously on the about certain are lingering optimistic XXXX, We given conditions.

beginning approach early is our stabilization, show of is environment unchanged. the While to signs

taking materialize.On to future than shoots the prudent showed a are fast to be green investment XXXX closely last steps once We that environment ourselves move to our will position we start are call, heavier monitoring and periods. year

innovation, global be will modeling the have our to development.For first brand that well aligned half anticipate percent investments product increasing strategy we OpEx skills capture year. go-to-market We revenue as purposes, the as demand of the as greater a in our for in and of

QX of and $XXX confident result of Udemy brand in we to will expect between delivering strategic investments in ARR our million. revenue returns $XXX growth, the to are year, back million begin that, we half be and expect product which by growth.With revenue reacceleration in followed We the Business

FX revenue QX Assuming not exchange remain to is foreign constant, currency impact growth. expected meaningfully rates

percentage QX $XXX On revenue be the expect bottom targeting year, X revenue million year. Udemy line, estimated million XX% the we range changes EBITDA for total XX% full account for for FX, adjusted the of margin.For from within we growth rates.Further, point year-over-year will full an no including are a more to or impact in of negative and the than Business expect we breakeven further revenue $XXX midpoint, assuming at

maintaining a it year be On on flywheel will Udemy a side, year-over-year continue growth. that focused remain investing currently we XXXX, powers fuel are we marketplace and the on consumer consumer to reminder, full a behind the in Businesses we basis. down revenue anticipate X% QX vibrant Therefore, to which not in to growth.As X%

basis On our year we to line, adjusted the initiatives long-term on targets. expect toward margin as XXX bottom XXX of continue we executing our full we will strategic forward, financial points.Going progress EBITDA

continued OpEx our investments XXXX, brand it will make confident line, we product a and globally.We expanding scale leverage, innovation, also that and significant EBITDA flow free from revenue marketing margins. Business of Although, the we primarily focusing Udemy XX% achieve by as revenue to plan we by and share while and change, operating driven mix adjusted to XX% sales on will cash shift in straight target margin to are be

our can introduction shareholders of capital opportunistically we year. the return With share the program, throughout to our repurchase

was a the our significant are the on of well value.In and we milestones to closing, us, year initiatives long-term and execute transformative achieved. for proud are we environment as macroeconomic create we positioned improves, shareholder XXXX we As

that half into challenges in year. for of first experienced flow the Our outlook this we XXXX does QX reflect

to significant.Udemy support generative organizations strategies the space in in are addresses the on AI. companies and provides mind, to opportunities future as updated keeping about With you and However, are that, around we'll as skills-based transition increasing call all long-term open this a comprehensive Moderator? develop we growth demand becoming look your solution they questions. to excited forward with our for the as up ever that progress.So of that

Operator

[Operator first from William comes question Stephen with Blair. Instructions] Today's Sheldon

Stephen Sheldon

It on and then guidance. Udemy great guess, get And some First generally, level, here, broader revenue be budgetary there. made the guidance. maybe of taken factored are It'd detail assumptions like your pressure you business there. just macro just the approach Business? growth organizations to the assuming you've continues in seems you the I consumer bit the from side? on how between you that have in trends of conservative Just kind a color high But throughout little the year on a

Sarah Blanchard

Yes. Stephen. Thanks for the question,

QX. we've $X first, increase about, in on content. being in stream plus with and volatility, we see UB focus a specifically, focus an time, macroeconomic XX% And same extended of some spend, that see the seeing and spoke But our full software quarter, of issues consumer consideration we execution our while up And putting our period is half constant some cost, we few that EMEA.On revenue did past performance pleased pullback has for And guidance as time. this delivering took are the schedule, there X of Vietnam. that the continue in year was we years us side and over some of high-quality saw marketplace really things. our broad a and partners been into things, for the ASPs One are the to customer is, up of published continuing XX%. to with acquisition the but of courses really reseller EBITDA along our at year-over-year And in X,XXX together, still performance a Korea vibrancy, ahead So things we're customers had profitable we fresh in that very up. and million expect second is month the X marketing those with

looking for the to to be to saw our behind reinvesting we things.What not execution side at in are UB reporting capabilities the over of consumer the the half consumer our some year some performance We we're back of is QX. actions learners in issues are the until going and we're process of for taking address, we of

the because will accelerate prudent some do time we take we've for hold. first But the expectations ARR down take so first half to back growth, then in initiatives the a while bit And it expect set in half those be will half. to

Stephen Sheldon

there way roughly I to any and how And terms those to it. frame feel contribution are way for Korea is of to like guess, Vietnam, ARR? any there the is big countries Got in

Greg Brown

question. good Stephen,

in and to and and best the well Vietnam we've hired these specifically Japan, one wasn't in leadership issues as to get where that learned Vietnam then also practice call and porting it over Vietnam, it, get process. exclusive So you. the we're Korea. other Korea in to to seen or areas. that I of execution basis a and that are material acceleration surprised numbers in Korea going already and for with leadership help to GMs putting the is and global won't did enough into economics us that.So continued got we've and in the And as we've in from to knowledge on growth the we it taking around and We've but Sarah specific perspective, actions segments, actions see We taking did we're ensuring taken. out bolster we're those countries both in an enablement actions And those all just mentioned, we're taking similar is

year. see what need we to growth to the the are we will net acceleration ARR Sarah in is, that plans And So execution address in of issues. The do the flight. confident in confident know we're half it the mentioned, of that as back we we are

Stephen Sheldon

switching That's it. Got helpful. margin the just And then to guidance. maybe

much quarter so the upward margins. being the it'd not investments. ramping where as you've to relative it you're surprise. detail, expansion seems with a XXXX, the right even up that like great trend last gross You're not But ended in in expectation you some big about talked And assuming strategic maybe get and be to

from making detail of on Just investments? where some kind you're those what specifically more -- your

Sarah Blanchard

Yes, it's a great question.

going we that for As this investment us. be an is shared year you year said, have to

of that XXX to share XXX So line. perspective instructive mix the the areas, expect on XXX shift margin in in time. historically that Those is now we and first the continued bottom in not are about while business from about a revenue we points the Udemy expansion the the both mainly, this and year, is from invested we back changes gross to UB, basis the reinvesting X points majority of has such basis investments brand from are brand. expect

that. But specifically be product is, segments, the some customers. I'll we can teams bit to is that complete for The expand be share to the in in last in our great performance on game to we certain did are deliver there. let we Greg share? AI-enabled specific capabilities changers Do value little go-to-market continuing going second a to investments, the will want you where more thing see areas that

Greg Brown

Q&A seconds save answer toolkit, instructors hours was which of We're customers begin is delivering how hours. is to run platform. insights And then instructors. many businesses to at the ability is I'll accomplish been million going be going on feed the in and going the the then not is those not deliver investments game answering is is and back data courses into a intelligence we're we that just those spend Q&A. that across transformative, learning the hundreds leverage talked data impact just our And and them most to Stephen the instructors our about resources.So and excited in enable to importantly, the XX front a end is leverage an we answer to able of add investments now. starting now about something valuable a our year that automated is which investments the into to on about mapping, our we're going be XXX,XXX the changer develop This could we we're for will their going that and us gives Today, most beginning. the experience that transform be that it about or and me, excuse goes.So the to people, see it these to to then without skills little their to but to personalized some We're us then be of bit, to able customers, able skills for look, this questions the resource, addition AI get more We learning these generative going valuable have investments our of we the assistant, of LLM just that, about terms the have to L&D validate learners which probably -- we'll this to teams off have right to as for us. they platform making big excited talking the more that produce have this. and we And most making ability of impact, one progresses. start things is as already this and

Operator

next Nagle is of with Curtis from The question Bank America.

Curtis Nagle

to, not guess, too decision the guess, guess, Is revenues. One, high, else in elaborate maybe investment. you'd or marketing if I to a I sounds like -- the the aren't return of, more consumer pullback hurdles case? I of clarification stabilize they're right, Or terms guess, the just anything It the on? a to more quite justify invest in I that

Sarah Blanchard

is currently that we're that behind the those we consumer make start the Yes. invest on Really, LTVs to looking marketing consumer the learners for we're functionality sense. of of of some before those a UB getting we on launching consumers -- more what than from First platform perspective such make are

so profitability. is business. balancing balancing you're Business of for Udemy engine all and our And us, the investing, where about it's growth growth

investments badging invest certifications the and how some And like consumer decisions be capabilities then making platform some and so on about there putting onto will those focused we behind of But we first. we're that.

Curtis Nagle

this gives a maybe Okay. are And sounds from like that's aside new And catalysts? I confidence you to one point product on from guess of then think just What the the terms XH the UB accelerating now? happen really It what macro, that's event. and ARR. say a clearer to you revenue, or going right importantly, in that more maybe rollout.

Greg Brown

a it's question. good Yes,

it's we get of I investments, and already. come AI-related the like leverage already bit the we're expansion equally the believe opportunity with bowling table as the learning and we've international the important to transform We've in into to back see is organizations. the it to which of lead in the year, massive making and ARR investments. but year, have these and the again, us of to investments expansion that a primary right that we're partnerships, can down on we're through and And start of about in us the with the We're The making these the we countries investments down awareness and and look at X really is the the talked absolutely as strategic approach.Second throughout brand. programmatic knocked based UB half the we leaning investments highlighted, quite leverage a investing for be terms finally, that comes And confidence others brand front look, with. we a of that progress partnerships.And engaged that brand will to from In going in just many then AWS forward in India that the product in in Brazil those areas. we believe the give going this. the as there'll And pins growth to ServiceNow, forward that markets more respect really of material with product we're our we we're end far run Docker product are and right lot confidence likes investments

year, to those And so of big us growth a that the we we're are And placed. will of bets some ARR back in the bets. materialize expect half bets happen. confidence to which start making lot well Those gives

Operator

MacDonald & The with next from question is Ryan Company. Needham

Ryan MacDonald

Greg, the millions Maybe learners investment of the per very you understand is the platform. can on marketplace, me first to help a Obviously, month coming starting investments. is Udemy brand. large in

terms to where feel build to like pretty you're opportunities maybe not invest a there Help around need share. still? provide that more think -- in the you you context me that bets had getting or incrementally Or good BXB of some out understand just that? You are gaining you business help you're brand? And mean, I

Greg Brown

Ryan. happy Yes, to,

is have organizations, like of would much our And a unaided thought do fairly aided basis. frequent lower a markets expect. and number brand we in would So much surveys you and on than brand we lower most than our awareness key

get our of of impact for have funnel is can And large in development question we sales the and is we're to so making kicking value of by to with and yes, relationship top starting we believe of the effect skills goal we're that investments the brand into bring.So, household much there are there in organization first one conversation impact we're McLaren the a and variety early easier different underway. and opportunity and an will that and a will small.And synonymous halo in be is so and with Ryan, multi-year the investment programs to making quantify Udemy terms we're And within significant just And Udemy just awareness partnership in see, us quantitatively investing investment it skills we off. to organizations, ways. in make the are about elevate focus. to many And measuring developing lift name, a and an impact, yes, start of brand the investments just excited a we're give the to and without

So, yes, is. big opportunity there's really a for us. There

Ryan MacDonald

great a on of on to the maybe checks of to the mapping. organizations that a it's From a generative and L&D, see something we it AI mapping, early product to seems in not want had follow-up, lot Appreciate for the out easy to most that And out speak where there obviously, heads AI, we've still area in move hesitancy like obviously, the sure on there. seems that then marketplace, And with maybe the just there's functionality but color AI, fix. skills interesting investments CHROs skills not but days, invest an it's with this like or towards, to start. side,

go think How over this do So you then product year these to with start as to some get market about the and hump as customers that broadly you investments functionality? you of more those. commercializing

Greg Brown

good one, really a That's Ryan.

own their a Genpact So number say we're the seeing that creating engagements. I'll scenario example, Genpact first, example academy, of type of we AI the out play in that gave our

Another to Middle color just they to those with their to acquired to one ChatGPT.And the little Middle is bit the employees key of with validation that And East. is you specifically through their first the bring respect us skills life, that validate one version our literacy the in was to Emirates I organization and able TechUp. that call partnered East up-level has this more integrated organizations being an a of think this AI component in give own And They developed of telecom, large a academy. capability.

platform in beyond content and they're progressive they up doing then company of are goes do leg organization lot process and so in distance we've And are, in points expand the the their transition.So of much to themselves although, and provide their first, a it. the around to the companies organization again, our that success and enable are customer AI to Now a in skills to from investment organizations this, -- starting looking and the those to heavily touch organizations in believe get success don't strategy you're capability into are the a like organizations the to know coaching, for going market we started and customers enabling ability our with tech lot get much developing they some moving. on platform in right putting as making service it. that. may tests that are and the the putting feel enabling the that the level organization.So, you and They're as the support to that that And these of for it provide, of have that They're leadership, exploratory to us. truly that. Ryan, the is organization key the There's and strategy to to strategic management, without the we're place one strategic also plan And sales develop are that addition organizations most insight as think comfortable we're that how focus with our to in platform invested to that category.And looking the to really about upfront of stage. of they help right?They're do know how a because components, much it there's enable value we terms

everybody of put our as companies the You're a we've camp. that starting result. already to right? And are continue And ourselves the through And investments We make And organization we'll doing step. and progressive lot to reap have that big we're are by rewards boot some absolutely in to right. big that. help just that the a investments way, doing take ones made organizations those a

Ryan MacDonald

progress, thanks Look seeing Greg. the forward to

Operator

Morgan The next Stanley. is with Baer from question Josh

Josh Baer

and in I to stick and want it is with about basis, implied XX%. think growth then to and guidance thinking in XX a closer to I of margins from was close XX% XX it Rule

that so mind, areas And in with questions. X of

in a from Rule of if conservatism guidance? think First, are that -- what what metric XX how should initial should framework? And through we standpoint? we a what should is this your philosophy margin any talk growth like areas could expect And and -- from you investors second, embedded then of

Sarah Blanchard

for question. Yes, the Josh, thanks

around we Rule working achieving are XX philosophy Our that. toward of is

have this XX% change can FX.What to a they organizations employees percentage you things and is technology and see businesses. to are to the in midpoint stay sitting growth point about really that with is the of it's about transform at front and pace we and their reskill up have to AI what revenue year, and from that we includes of For their actually X opportunity, help remember upskill massive how embrace headwind other

but long-term about profitability, EBITDA the an of in about committed us. margins to always that margin changed.We is And this expectations long-term balancing are XX% of long-term position, -- year around still not so investment thinking long-term thinking of opportunity achieving our balancing growth, to EBITDA as our We're by opportunity, front because the have XXXX. you're of because XX% the

we saw above work in the pursue are scale things some committed to that to to top invest in UB that at line at to are And going us of the half, operational meaningfully impacting growth to that deliver in And are we deliver very issues continue the efficiency we first of execution XXXX. drive areas while XX%. so, continue through these the growth, short-term which continue against you same time, long-term

Operator

The Truist. Tillman from with question Terry next comes

Connor Passarella

more one, there? Terry. for mostly organizations? ask has mainstream wanted I of variety on it guess, UB, and Or so I Passarella relates coming Connor Has the badging organizations with to curve on advanced to it has been uptake how been trended just actually is it and far? of certification adoption adoption a curious as This the from coming L&D from,

Greg Brown

capability, half we as starting the to in to XX certification then bullish second continue and impact learning and probably group badging good as prepare the our the hours Connor, always that technology, with time, certification, well person to earned you that importantly, the have. value that used A/B an taking and path through excited remain and Pro, first to was certifications.The example. themselves question. a Yes, our of multinational educating Yes, most We've leveraged of group very along the consultants AWS adoption that process immersive the time got saving decided the and XXX about ran prep approach A/B I'll certification. the our and it's content they the run had. half platform, that equated way around per our our test the the that large them acquiring and and certification large, XXX company side-by-side of test tech that for test.The to for And Udemy give a

see all acquired.Again, developing our Pro one capability are around a that impact winning Udemy business as velocity our example and badging to on see development skills complement impact have our like skills, validate skills and even are more the content, and platform meaningful back a full result just and combination certification us certification.That's to soft starting having many we platform. the and of intelligent approach around skills power content, leadership been around that to content, of we're And validation new badging So of form to and the management tech ability coming starting that development that. with skills of of

excited seeing, continue. expect we about we're So, to really say, what and all to it

Operator

comes Instructions] Jefferies. Brent from [Operator question Thill next with The

David Lustberg

building I is going LLM? how about about the ask know guys Lustberg wanted around bit David to look to instructor to roll on And talked broadly you any for is and someone help you partnering? but are then just I This questions one, you quicker at necessarily understand that the And Brent. it's about for for trying out building to strategy Q&A. more who's a are it. an guess, this own to where about Are little consumer I you automated validate. answering can instructors and a not there more in opportunity it your used being course-related, question? way But for

Greg Brown

Yes, good question.

and hours assistants, instructors insight the questions as questions. transcripts, day, their what got we've courses those from spend works, time a very this develop up ability and on day, have light really, automated the that or many the learners trans, LLM, the they upwards the come so, develop through themselves ability that the we it we've or got our We teaching to keep XXX,XXX So, is take.And courses of and that we've effectively, to of instantaneously, their obviously, and TAs, all we -- us I'll either XX% information, all would that X gives because brief, of answering does, automated we a the are to transcripts all associated that ability, answer how with our AI-enabled, platform. feed into

removes that questions. goes So, into and energy answering of it that all time those

and We accurate, the they LLM, educate of is goes.And are to improve a adjustments, it you is to do capability of in consumer the excited of accuracy in we're the we're to really to time. the one is capability made all port type any that hit all so ability things the we're we're environment. excited over do experience badging that of really the know, variety make level we answers validate and happens in And off available as to the continue this the now in that.I consumer yes, have Now, that about that experience? porting mid-term of have going to I'll opportunity the certification automatically, that accuracy early we the validation is excited And and to is most answer send, The that the about seeing mean, days. ways. about tell short and

capabilities In to going we're launching addition we're segment, port now experience. to into to initially we're all everything consumer talking enterprise the about applicable, the that's down the that

will surely elongated. that So, expect to process you can flow be and the down, not enhancements

expect We to that process. be a quick fairly

Operator

Herman next The question comes JPMorgan. from Noah with

Noah Herman

funnel respect and demand With the on top conversions color in to just linearity quarter? can the provide the some quarter, you throughout of

Sarah Blanchard

that. for Noah. the Yes, I'll take Thanks question,

and typical you in see quarter, more the quarter, fourth quarter, very with a in any the this last come month. but So, so the bookings fourth

to those and identified drive taking are exacerbated to the And a that, month the against initiatives And And small half the bookings continue book we the in long-term X, a so, where in little was you the portion macro, to we portion from hold growth. expected. again month expected this small quarter. invest in in that's and some are are in masked we where a last but a in to as issues in and it execution significant linearity in in budgets perspective, next last X, the for expect and come bit as that's our portion some by we all back that then most figuring going QX actions see month, respect, that's take that areas we the didn't year.And got as what their companies saw month, we out when so, that down

Operator

The Cantor next question Fitzgerald. with comes from Brett Knoblauch

Brett Knoblauch

and broader think a is by organizations. AI for increased supposed to this I the has budgetary on and now, lead upscaling waves I just been to over Maybe year commentary, making think Gen rescaling

So what the in I holdup money going perspective? to the what's you be and is for on they're or cause think to spend inflection from on part, hesitancy organization's willing a guess what do rescaling the an

Greg Brown

Yes, good take I'll that. question.

a a employees, a been it XXXX.Based and and beyond, to the with on to example. and America. impact, since Libre, that, segment, the just quantifiable they reskilling, is the out e-com I countries. XXX,XXX So amidst from their give all North AI, to accelerated around result on including like to was was had strategy you significantly Brazil seeing at teams America saw the expansion come entity success strength a they and engagement, seeing our County an government Company help Angeles, basis, America, of and expanded, upskilling provided, the their Based executed, pace this respect largest last them starting supervisors in get And a call it's initially and expanded start over to on employee life the as an and to deploy key FinTech execute we ability ongoing tech Latin of we us increase guidance that to of in in that are to relationship and increase.I'll a seeing we're with of component XXX,XXX. Los Prior Mercado and world, initial opportunities this which an subset. Argentina is you that's success productivity enterprise to made to all in we those XX% important the think our Latin of X and the their quarter look decision that, customer that of

So we are acceleration. seeing

are seeing organizations We spend money.

win financial are this environment large where continue skills that necessarily an the much I organizations consolidation it our talked X-figure some we there's institution about on necessary it is already appear would be no in platform we have is really happen.The to leaning multiple the appear notion And we're multiple. to see not to We're and of us seeing impact platform. at execution competitive to be to right change about deal, increasing we multi-national to are it. spent talked for where enterprise. what to Marriott issues, dollars we and the of of as a the the day.So, But that, pace of starting to conservative in that like taking about consolidation starting to is, approach the from into velocity every reality about develop is know see the may is pace. based be. opportunity we accelerated guide, The we a about, We business the for the Consolidations talked now, doubt may the we're our as the it excited year, but

in building coming for, probably know and I on QX, will did out see we the of throughout on revenue, business footing. it is little hidden which, to is at we've we little a talked the solid looking forget, guide from, very we're tailwind.So, growing year are over than Don't TAM to us and reality projected think that XX% front year-over-year a UB in climate, our economic -- based the were really the solid execution absolutely exit momentum So revenue. execute enable the you some with we is which in segment, based this is got level the -- I very that's a of the $X.X of enterprise to of the the going by us. is is year on foundation warrants and bit way, healthy massive confident But XX% be and significant issues at billion but We've because a opportunity rectified.So more that's believe, about. bit it is color our growing

I'll So leave that. at it

Operator

is Meuler with question Baird. next from Jeff The

Unknown Analyst

Yes, [ on Stephen ] Pollock for Jeff.

about And Is you quality Sarah, pipeline. something stable that a color what you that Is for you in sales into are of had levels? put mentioned makes how You higher they any sales elongated. longer than there cycle? think higher Are seeing there context. the would normal way? you it expect characterized around leads at in then, I Maybe cycles much just incremental And, elongation? that remain mentioned sort

Sarah Blanchard

question. Yes, for the thanks

our opportunities has did leads win they're our go in capturing that been interested, understand We of That are more rates that is and then sales that sales pulled continues, into work did to we know the parties that leads the us we've have further get convert.So outbound those in near we quality done in elongate up, pretty QX on worse. So stable. funnel little are there the are spending pipeline, following see business leads the ensuring because some a converted Those levels more for elongation where are, resources have historic on cycles likely our marketing get not done on the of of more still. then leads work that cycles quality up but and the more our the and in did not are nowhere lot pockets about that the seen but we are and upfront QX. a From a of that and sales cycles of side. bit, a the on function

Operator

question with Markets. comes Celino Jason next KeyBanc The Capital from

Devin Au

second Are of assuming, provide want follow-up I ARR you in actually also your is today. of Just Thanks growth for half? any net the kind second can just to you growth on to in the question. on Jason there. of accelerate half. customer expectation improve for taking color your confidence Devin also This to pick kind on retention additional to up our and also new

Sarah Blanchard

retention, pick at macro, logo still net an new overall.From From the XXX% a which, but for retention, and don't little ARR we question. stable what half, guidance and in you side end, last large that that is not about on that once in time customer improvement back smaller we of up I enterprise net third where XXX% year the our drive to to something we we also renew did in the that, talking perspective, business along will dollar over we but count that great is that in starts give again, year expect chug QX continues fourth at than we logos net is Yes, on a heard you into customers because translate see strong there, dollar a this bit in in growth, low typical that our SMB business quarter, more do see attrition where quarter the add of saw side. some some the but out

Operator

question next from with Ramnani Sandler. Piper Arvind The is

Arvind Ramnani

the disciplined investments. both the time staying I being wanted kind also on making kind on that money, you'll through efficiencies to where call. of but operational of prudent spend same heard of and of at about, kind I ask

wanted So dynamics on kind to those I the side? just of expense reconcile X

Sarah Blanchard

Arvind. Yes, I'll Thanks, question. that take

is but efficiency, processes So are if you we're a heard operations, just will that we investing drive spend that organization. that revenue, brand look what the and continue the our different from have, the operational across, platform, efficiency. an to are and has in down done Greg investments that our to to XX, that we're make we spoke in, systems in come drive and AI that operational is new. investing in to functions bootcamp just because investing we the same the continue efficiencies, capabilities that AI for that dramatically, of time, spending There the our the going organizations, XX At our doing going we percentage we're can say on of for across are that.You we the that not about that and operations R&D operating be

out, margin focus XXXX balanced modest expansion And those investments make had to but long-term and on X growth. only line to the significant why going seeing and continue you're those we as in on bottom a it's things that's be so are the we capturing in XXXX,

Operator

question-and-answer the to Brown would Greg closing for This session. back like call concludes now to remarks. our I turn

Greg Brown

today, all Thank you to thank again you. in look like update. the just to and I'd the connecting joining QX May for we forward call for

Have you again. thank a So great afternoon.

Operator

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

may You now your lines. disconnect

Udemy (UDMY) 14 Feb 242023 Q4 Earnings call transcript