UDMY - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to Udemy's First Quarter of 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call 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, Gregory Brown; and Chief Financial Officer, Sarah Blanchard.

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

discussion XX-Q complete with associated Securities Exchange filings you with risks we recent Form these our Commission. refer the to of most statements, XX-K encourage a For forward-looking to and Form and

not us. statements undue are information We except or duty based forward-looking or caution statements, We reliance place applicable to our required update alter statements. and to forward-looking on law. Our expressly undertake currently you obligation upon not by to as forward-looking available any do disclaim

differ of today's the I also Greg. available Investor A that, call our to will information A measures Relations call measures. prepared In our by most contained this the addition, the financial supplemental referred reconciliation in accordance accounting news reconciliations measures with in to performance on and our during These to together certain replay included investors greater that comparable that and financial posted of from over as are believe detail of additional these in call, discussed statements earnings measures our discussed in U.S. Commission We Securities consistent comparable earnings turn website. and to non-GAAP measures period-to-period principles manner supplemental results financial is comparing generally evaluating on schedules section non-GAAP be with in the a now of will accepted measures operations as these non-GAAP financial release. be more may Exchange in and With the the meaningful GAAP website. financial press release. our management in support performance

Greg Brown

of in afternoon about the to start significant everyone opportunity and Dennis, on a for you, good and year the continue be us. It call. to excited front was Thank the Udemy, to good we

QX, executed with global to enterprise customer During and evolving our needs innovative we our Skills base strategy Platform. our customers' on Intelligent expanded further meet

to our results XX% Total global category. market year-over-year, These shape revenue in we're met quarter. our Udemy as to upscaling the how like the environment in challenges deliver I'll We way Udemy the our our revenue year address business the results and to as expectations change growth positioning by we current for QX pace and the order adjusted of at XX% share Looking to discuss I'd first we're in reflect advancements then the Today, to capture while XXXX. demand such for revenue and for we EBITDA business and beyond. on compared the AI generative short-term driven effectively more by grew margin. and demand increased learn to technology actions continues expectations work. reskilling discuss for to the taking increased

learning see to is their high localized experiences all as continue sectors we solid a learning demand in workforce and differentiated We and needs capacities. across quality, immersive to support companies regions Udemy the development partner by provide. seek and most

easily solution to learners professional based. solution results milestones the immersive organizations and our learning in three comprehensive to combination and the Our This and today approach and The on-demand, in of essential our around some us end-to-end we are the quarter. hit this the reflected better where outcomes of offer is quickly develop they need skills future. provide world business modalities, purpose-built an deliver benefits to and allows can cohort identify

testament XX,XXX have South a over the African comprehensive in than Notably, into continued have This we more total, we building to platform. Reserve and the into Pepsi, now provide in QX, doubled past our or value our and we During enterprise business enterprise base countries. entered In we customers customer expanded existing Flutter three Udemy more Entertainment than innovation relationships including is new with customers, XXX the Bank. years. the we're

enabling Business For desired X/X Europe, tangible to relationship enables technical Business XXXX with their Udemy example, By turn the IT the effectively. us and quarter, leveraging Udemy since them a to to generative on enrollments prepare us. support been IT QX. past year, significant the prep. lasting be X,XXX-plus Udemy interest why their AI the across AI in XX% business we during recently, increase AI. to IT and A Udemy the relationship catalog. and This is AI role.Organizations guiding to another certain adapt services. with during per higher demonstrates assessing impact courses business roles professional example to X platform AI see to for rapidly than industry, every their learners' require effectively their organizations outcomes leader company Chat global consultant, have understand in driver training professionals our charge just and that company achieve and in ahead and over in more In certification objectives their content entirely. a that's demand Udemy's order Pro. and and generative This expanded them we've skills allows expanded the a a related may their organizations individuals and a a to computing, use generative catalog. rate platform customer unique certifications marketplace massive This Based to Pro expanded experienced and IT and of leveraging of learning expand advancements. business. stay in employees consulting the to with talent upskilling, new adapt a expansion will seen based cultivate technology, for believe for year need is what on capabilities, Also, and to in total region global key better certifications, launched, model these in been our nearly of replaced trends how more is business leading training deployment employees the almost from GPT long-term in this forward. certification More internal can quickly case for will to quickly the change going surge reason impact AI growing is in we've as the seen apply certification has of million Udemy a in underscores preparation of had Udemy so compelling AI a enables seats By X,XXX has upskill we of X,XXX, We which customer from since customer on The their

leverage we courses to have few a first of learners In compared platform how Chat in course available across available on effectively to we we instructing one two GPT's can topic. network launch, competitive were For than the action meet had only expert Chat days example GPT all to offerings. XXX on less other our within marketplace as over months, a a example, the needs. our quickly and This instructor course is of our perfect customers'

potential soft At from alters AI. of interpersonal we skills Generative becoming As is AI pivotal full role developing harnessing Generative leadership thinking than ranging the that critical the development more communication way we of plays in strategic recognize the Udemy, ever. work, soft effective to the skills

also these skills teams with our that advanced skills. well and soft engagement technology to to new achieve technical essential business outcomes organizational changes. ensures better and platform By implement soft enhances equipped helps is leaders platform skills designed This lead intelligence not enhance skills our platform. development, only to technologies proficiency, Our their integrating cultivate effectively are but organizations also through on

more the make then That As insights decisions. more platform, cycle informed to engage, data data, engagement more can it customers can translates increases business on a where we our turn, into learners valuable virtuous the in leverage generates collect. that

Ultimately, as rely more As opportunities, fostering more for tomorrow. we is and the ranked that us workforce, years. challenges their opportunity, recent at our organizations develop long-term business resilient on Generative the emerging better tackle illustrating XX% this that our skilled business increasingly increased found learning of unlocks engagement leaders next the effective of see opportunities will growing top Udemy's impact that platform the and X.X of a a AI workforce the nearly provide equipped to over KPMG mission-critical enables Further technology survey agile, to today to platform growth experiences.

that seize the to and recent At However, Udemy, to brought Udemy, of skills conducted a study ability by the leadership strengthening teams. their risks our upon AI. gap this customers and the by found XX% employees only mitigate are of we in opportunities team's supporting confident we committed management bridging generative their by are in

evolving Blue North prior environment. cohorts cohort-based and coach changes customer was skills in skills this support Insurance are noticed Leadership positive to skills traits engagement. Shield including leaders their Business the a in with advanced equip improved pilot added to direct Udemy needed were as Carolina new Leadership confidently multiproduct first well comprehensive to seeking Academy help Udemy and seeing environment. leadership of customer and additional their To the their programs, innovate results knowledge development academy competitive Blue leaders including tailored after increasingly an provider, and Our additional lead with as the soft the technical to business Cross Recently, Academy following ways connect hybrid better among and leaders, exhibited leadership communication effort, a service pilot. group work of reports not customer the immediate that pilot

cohorts the The were leaders also our the company to able Udemy better the Because significant two team the interviews weeks program, and the value delivery they insights. added Additionally, of candidates. saw provided. analytics additional this success many of data of connect felt the in with of that six that program from of within in

skills for it AI regions. upscale sectors in on also for I to During stack better you The launched driven pipeline customers day. we delivering a QX, and the the fundamental sizes, of companies understanding launch, outcomes. skills highlighted demand Generative of Business responsibly enable business enhance to of achieve supports The provide our productivity, workers pack developing the establishing in cases value to skills order leaders AI validating we're workforce with generative AI generation, Udemy how use apply communication customers its every Since to further our management. to other all and the growing stack technology their for and has and snapshot meaningful skills a project Gen

can that of recognize in certain business. the we we better However, areas do

challenges We are for year. the outlook impacted the addressing execution committed to our that

partners to some call, address Since managers we identified our we earnings last our time, to underperforming we Vietnam those action issues, markets. in EMEA began and APAC on general hiring that ground and as in including reseller well mentioned oversee markets. cohorts experienced reseller some issues two larger softness the with the taking Korea South in these we in As partners on within region, as

go-to-market in company a have $X leadership Udemy experience, beyond. we We for scaling progress leader to revenue transition, our ramps be the support will will global current I Chief new search Officer their leader into billion for businesses Revenue made as in will good addition, our involved with search our million lead leader the the Business be while actively a and strong Udemy commenced $XXX June. with In current new from Business role. leader The and leaving to

have To capabilities a momentum wrap intelligent skills up, the platform. our on drive the challenges global address soon. to AI meaningful demand expect share to on our short-term We rapid actions in improved with are more this leading the skills-based these generative expected engagement innovative advancements platform, of from economy coupled and the will embedding the performance. to to we're to Altogether, long-term and transformation

poised business. Over the term, unlock our substantial long also are trends opportunities these to for

learning the more As Udemy's workforce, at platform adopts increasingly mission-critical. we will the continuous culture aimed corporate anticipate even of a become world future-proofing

to review. a the Now for financial I'll Sarah turn over call

Sarah Blanchard

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

available You website. find set Relations complete tables which our in Investor of release, financial on is our can the news

range $XXX revenue, including ago. our revenue results a percentage business recurring for year-over-year, of top consecutive FX rates. of a rate XX% have million, $XXX impact XX% our the quarter the did and million, increased We from Revenue the outside percentage ended more changes in of we FX up X was annual from XX% than from of bottom of headwind the of year-over-year guidance $XXX year million. a For the from the end X line. U.S., Udemy's total fifth an exceeded ARR, or revenue high to growth With point XX% quarter quarter, year-over-year both to negative increase our points. our on coming with

rate, retention quarter was large employees. was dollar Our end consolidated The with net X,XXX at or the rate customers for or XXX% or NDRR, those XXX%. more

retention take dollar As grew expected, to to Gross base continue more decreases we was aggregate, historical as XX,XXX we our to than salary XX% year-over-year upsells norms. small by customers in globally. unchanged customer once continue longer In see net than retention again.

from or XX% year, Today, effect that basis and approximately of at at $XXX,XXX year Udemy more XX% is closing is up our faster cohort ARR XX% of this margin ARR a to of means also points contracts, than multiyear from year. due XX% primarily came rate growing up customer our the quarter, Business in XX% the more customers are went instructor share than a large year-over-year. with revenue number XX% segment We're Our XXX Gross of longer-term our ago. that X from prior for the which the of into change on large January increased for customers year-over-year. deals, contracts

X negative consumer percentage impact quarter year-over-year X% FX. down including point from a a revenue First was on basis,

year-over-year X% visitors million. to During grew QX, average $XX monthly

accounted all we XX%, basis instructor revenue As of and company-wide a of otherwise. QX our mix basis gross year-over-year. points margin $XXX unless as non-GAAP in total on was by metrics from stated basis points thanks which well P&L, QX financial that point down XX% of million as Total approximately change XXX XX% efficiency. XXX to XXXX, the Business, XXX operating the to Udemy or are revenue QX, lower increase note an focus was share of cost expense for move revenue than shift QX continued driven improvement last year, the revenue

fourth X% consecutive disciplined $X line, $X.X our EBITDA and of result driven at throughout XXX to income of bottom revenue, point operational positive quarter basis or the million the by we better-than-expected million net The X% EBITDA approach was approximately the for of On representing expansion ensuring organization. a Adjusted year-over-year. revenue efficiency revenue. delivered or outperformance approximately was adjusted

and with and cash, items. million. securities. quarter flow cash Free on Moving $XXX marketable the cash We positive sheet million $XX equivalents, for key the of balance ended cash to was cash flow restricted quarter

to us Our shareholders. solid position cash to enabled return capital

million QX, of to spent approximately million capital X strategy, our program shares. with we buy $XXX committed to Consistent Udemy During are share continuing $XX we repurchase nearly disciplined million our allocation back our of the end, $XXX company shareholders repurchase repurchases. To returning opportunistic that grow board to share expansion $XXX approved up share from million. through while to program our has million, capital to the

confidence team capital opportunities and remain increased the the reflects our management business board in prudent will and deploying buyback the the ahead. We in have and

XXXX. our Now outlook for QX full year for and

volatile taking the of a prudent continues execution to macroeconomic and persist As work the for as the outlook we environment to a to short-term address challenges, are year. remainder our we approach

a expect the or $XXX million As X% be approximately we $XXX growth result, million QX at and to between midpoint. year-over-year revenue

by is growth negatively expected rates exchange FX remain X to QX point. percentage Assuming constant, revenue impact

for On positive the margin. bottom are line, to negative we points EBITDA XX basis XX QX targeting adjusted

or our $XXX For $XXX at million revenue the to XX% we full year, narrowed growth midpoint. the have range million nearly to

we realized from X full of prior We now were point year expect our negative growth FX outlook, estimate. recalculating year there an full our rate. percentage issue with FX our impact estimated impact was we on the on As an

year. than and XX% leader will tome We Greg process ramped in As once we expect place revenue our are to liter more account for on Udemy of full that up, we of mentioned, a expect the for will is revenue projections. for growth Business be identifying deliver positioned the in total well still the and business

side, anticipate On to to down given basis. on QX, year-over-year the we full consumer year in X% now a X% performance revenue be consumer the stronger-than-expected

efficient are growth. we focused ahead, delivering Looking on

the with to We aligned core ensure long-term every expenses business. expense to of managing health are that our actively support our our objectives is

of a for we in Udemy we as basis outperformance on optimize the XXXX XXX is XXXX to XXX to be are adjusted Our priority margin adjusted top strategic to and QX, range in growth. solid a guidance. maintaining now year full the We our operations adjusted our continue mind, secure to raising sustained financial given margin full EBITDA EBITDA in expect to that make investments With EBITDA points. of year foundation commitment all

to excitement up ahead we compelling us Udemy. long-term the ever questions, our your Despite more challenges the call future the we've of about opportunity want than Before short-term the I before. encountered, express for open of is

Our continued category. our to position our this brand set keeping your are in strategic you forward support expansion extend and leadership investments global on to We product, in for updated and thank progress. look you

So, your with that, open Moderator? up we'll for the call questions.

Operator

Stephen will Instructions] question Sheldon from William begin question-and-answer will We And [Operator now with Blair. come session. the first our

Stephen Sheldon

commentary. First here, just understood one FX I make I to want sure the

it going to I was heard just think that make said X% I last and to sure drag be a quarter, you quickly.

the thinking drag. X% And a about that to you're change? be going what can for Now you year, talk it's

Sarah Blanchard

Listen, expected X X has estimate was from we've again. unfortunate -- we It sure that these an we updated put make that, in it points just point. did happen. of previously checks that happen remediated, X%, place The been about announced is to additional FX. really And doesn't and headwind error things

Stephen Sheldon

And talk I in bit can so growth? the coming or the revenue I upped with guidance expectations UB consumer side. just segment little guess, you down bringing about on for the UB? a you effectively there just you expect above guess, mean, I I think are

Sarah Blanchard

our puts the outlook. XXXX and our some Let of -- takes of walk me through

very did we're still narrow is taking the year. excited I The unchanged. approach the first our about but mention we prudent to is want a thing opportunity, approximately midpoint and to range which the at is remain long-term XX%, We

a We volatile be continue in to macroeconomic environment.

consumer bring dip up. expecting through slightly are that change to those we're which leadership means X we be talk being issues. You of to addressing about and points expectations, UB will still our as below down that We're to going process the continues execution outperform X in did that us a just heard said, we XX%. That now

expect to of We I spoke the low to be our the just about, revenue QX, of XX% year in these back all at for then we're midpoint. reaccelerate and overall the growth things point ending that the on at QX about such

Stephen Sheldon

team. UB to great color on to additional talked quarter any about resources? where be planning you the progressing adding to think go-to-market sales How last just relative investing get you're I would It in that continue plan? is

Sarah Blanchard

been we market. So have up resources adding

accounts So, plan. reps to newer strategic very that enterprise accounts, The is in going are ramping the nicely. according

additional make some running. to to We So, to enablement could that in continue and we're come reps these going in [indiscernible] invested closely. monitor funds new sure

Operator

question Curtis with Nagle America. come from next our of will Bank And

Curtis Nagle

Maybe I just but additional, first terms for the for [indiscernible] Sarah. Apologies driving the of this, guide if in year? missed XXX what's EBITDA bps the

Sarah Blanchard

So innovation, we to are really our in enablement this us the at driving balanced to growth And continuing go-to-market, in saw in being the we the EBITDA invest that the that us. AEs being product, thoughtful to first same the We're and up front in operational approach, bringing due efficiency. that which quarter. in the allow expectations for is time, about outperformance very our of capture opportunity

balanced just on so basis that another able to approach points we expect we bottom or to take, XXX this the continue So it do be deliver to with line.

Curtis Nagle

And then business. guess the to just I over UB stepping

So lower revenue to understanding made lower, little in UB seeing Could pick guess, on slowdown how bit attrition the of environment. the for the Are I year? that retention? ARR what's revenue much flowing little more there? through Or [indiscernible] of challenged is And up? in we and forecast macro the going guess about points I speak specifically a you terms you a

Sarah Blanchard

remediation take challenges saw. underway. early We very the these it's is from time. perspective with execution to muted some We're we signs, happy to of some ARR first new a going did half Again, due but to net expect that be

place, about time to bringing to We person new up. a thoughtful want leader that in also be giving ramp really

finding to in million looking So, scale the late someone businesses who $X from global of billion and has we plus. to are stages been able we're $XXX

important, expect the as continues we're be demand growing these use to have challenges. internal able adopt soon. is some which again, adapt capabilities to more to We to both your of organization to and the opportunity, But What's as capabilities, as with through long-term to and share skills-based short-term an working grow. your well move That for continued really you product organization. AI just to the

Operator

And from with MacDonald our & next Company. question Ryan Needham will come

Ryan MacDonald

UB, a too there. just harp clarifying but maybe not much on Maybe question

maybe where As as what's funnel call pipeline? or earnings in you're Just fourth pipeline expected generating development perhaps to execution wasn't expectations now top we looking from as performance maybe is that the first through through the concerns in understand what developing trying and progression first below you or maybe lack sort or coming the quarter? of terms it of to -- of at quarter was, of more

Sarah Blanchard

were there here. pieces some So different play came that to

in we The identified first the the issues thing had quarter. back last I'll say is

we that There Some those of remediation were were pronounced more as areas in and very dig of those continue we're in place. pipeline doing to efforts put well. generation

instance, some well side. our our where certain the AE especially SDR of of and some But areas have other commercial marketing going as pipeline we in had then side weren't would things. For we our of as pieces liked,

given surprising I this environment. not that in as probably SMBs have been hit pretty think hard that's

On of last that execution half pockets geographic region around we needed a there there were accountability really side, perspective going overperformed the frankly, sales to pockets And some We just spoke saw the really, year. we're second that process. large for sales a then of more very where, the be well. from about execution

puts the across Greg, you were dive. want little there extensive talk organization. takes to So Greg deep has and bit. Maybe, done a

Greg Brown

little a in this one. bit jump on I'll

we that globally supporting by now, development the right enterprise we're seeing very side, the and are seeing enterprise on as the that pipeline well. encouraged the improvements we're side On productivity

side. enterprise feel that drive the very execute about on teams to work good not but are our I doing pipeline also only the So

is know, enterprise our of revenue. for As you XX% all us

big us. a for that's mover So

been because about our something segment the that and alluded SMBs. generation and a plans the we've down Commercial in that's to market place, talked protracted saying that's now, about. but good work do what And we pipeline is just SMB capability. has be where bolstering slowdown, we're in There will you bolster right need focused Sarah segment, our feel to, As we're ongoing

things matriculate the of on of number to Obviously, going event in that to see productivity from. senior hard our now business But So working pipeline, remain. the from At put feedback us, results both we we're U.K. and to the with through McLaren. There's significant couple XXX those our the been and the impact in programs anyway, and the event programs well same we're going that the marketing more over a far We around well these positive right partnerships has the we've time, partnership the coming tremendous, well we're attend over got talked that of results for to next as plans had as very as of as as our is center place. world, of place quarters. the team. close as see that. a had within our executives the One the types at as we're about just start of that in activate has the and PowerUP two where activation last at we weeks innovation team and that we customers MTC starting early

we're feel for us, good about a the This short-term going where market in the SMB as down So, planning as situation at is far side. forward.

Ryan MacDonald

relative already. had call conversion. expectations and to to a it apologize about appreciate this week I missed a some lack softness in of really maybe see the if success yours the some so great said talked consumer was of I there. business, late, of on ago, competitor within the -- maybe Obviously, it. and North consumer American jumped I this But I

consumer curious Just North what as all? within conversion of seeing trends within America geographically any or sort business the you're of concerns at softening

Sarah Blanchard

many this has quarters. to continue see happening do been we for So many, and

overseas really America, new North I Our that nothing that out. is but from mix conversion there's and business -- moving call would

spoken higher geographies. to acquisition to some will says we've plan continue continue our of start out bring to side. over the that to that. that roll While to drive back time us we be new again well, able on about is personal our to LTV. subscription to see capabilities We're have And to will into excited stocks into we then And we perform customer invest that, allow continue the what actually

say we we quarter are unusual what seen would that I and haven't our quarter, seen So, consistent anything after very been we've of trends have with seeing late.

Operator

come Terrell And Tillman Truist. our next question with from will

Terrell Tillman

I to the just instructor base. wanted on one start with

group some the the the over today you past whether into agreement or [indiscernible] be quarters, few platform. rolled As it the impact tools out changes integration that

Just anything from the about and could seems what speak you top of to those talk them about be getting feedback the for Udemy? to you maybe line direction you're of when instructors

Greg Brown

their and fired the is to ability and given the group And the and our the we've result and instructors that monetize we did is experience. of investments instructors we're I a bring which the excitement develop top couple we're transform ago, online. us, demonstration more We organic more them able have and able positive to deep to what a that that in earnings of than both right months up now not as communication into capability, that that same the from be and not the a provide remain to we effectively, the we're out a UB. in ever, platform. ensure It that think marketplace we're to just with of three did excited our about dive with to all is develop all connected of what was channels impact investments within have no meaningful opted engaged very only really it learning palpable. is feedback merger And making the provide they of And ability be very way, into that a about net in their impact number to market. marketplace And could capabilities potential but we're bringing now to they're increasingly of is, making open the to are articulate how we're you that learning are the able thing going we're bringing clearly and communicate for product the

our how with team has pleased and with the instructors instructors. the really our say, from communications to all So our response managed

Terrell Tillman

flow wanted maybe numbers free cash the results the timing or if strong there's quarter. any and cash year? for ask think this about I we around cash flow, should how operating to seasonal Just impacts flow

Sarah Blanchard

outstanding on also well. improvements some for bookings. and do back been around QX QX day our see to be there as great tends driving quarter internally saw We We've so some of doing some seasonality. we sales work the collections a down,

the revenue margin There a gross we heavy of the So on and around bigger a then heavier of cash pluses good minuses like really our perspective Business our said, consumer perspective things, quarterly business have just QX and UB a Udemy in pretty on flow have because is QX QX outflow consumer to And where cash flow tends cash collections I from and some great QX, cash where quarter. QX the different side perspective, and side a from will consumer. our both a promotions, be between collections. seasonality

So those a be focus driving quarters. are cash there noise bit better again, here be the timing the biggest Overall, EBITDA there just margin. and little margin that between on flow the drivers. will But to than

Operator

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

Josh Baer

and in in workplace future world? just far happen the And that Greg, inflection corporate wondering really an we on what as the point skills journey? far are as along For the to skilling focus the as to in with as needs far hiring, skills-based how order reach

Greg Brown

what strategy their products organizations the BCG the to respect progressive more skills-based going to -- they're they're a to the of Generative their the delivering. with process is out as org, respect is with mode to in internally but Generative the take to both action companies state externally services came strategies But advantage with not early starting to observation the and to going We're and into as how skills-based of develop Right only well innings. to XX% which in organization, especially also now, report take are leverage be organization of seeing recently, transitioning implementing determining operating transform still to AI, of we're create in the AI.

organization right help -- in like. to because customers side, as strategy to released. be our positioned organization studies pass, to right? That the So various, for work to a within we're a opportunity against would enterprise that supports AI a development front skills say, we're And we're we've while in And we we're one work it's to going systematic vast It's now. out of a pass. now the within lot but very starting execute resources organizations early is transition to the success be a to and us in This operationalize that is able because those in on are our have We about still about the time the that Gen org. strategy folks the that case our use ability verticals prospective customers And majority as multi-multi skills-based early is of excited customers, of able early spend well organizations through to is the innings. in announcement, customer are things able year I our doing talked doing to the our to conversations develop phase, organizations with uniquely way, a skills the skills right what lot with is innings, start of references, in we're skills-based with functions on in phases we're packs all to we're is to and purpose-built this look the come.

Operator

will And our Brett Knoblauch next come with Cantor Fitzgerald. question from

Brett Knoblauch

the continued Korea like to from new any hires weakness I guess and the you last have in you early from expect quarter, XXXX? Or the weakness standpoint, impacts South APAC see into do us seen seeing Vietnam? positive

Greg Brown

in new both sales that productivity the just leaders, we I'm far but productivity early approach seeing indicators of brought and very far that days as in company. as encouraged very into the and won't specifics, only the of the not by it. talent level I'm process of measures as I encouraged close onboarding we're as taking the was the general. as to in pipeline as build, the of but early I'm And into execution. very by the markets, far of some I involved those staying approach the get

early early yes, So innings, it's days.

give far. start Sarah? seeing process. We I'm I feet underneath and But to have like get the time these so their what to them execution leaders'

Sarah Blanchard

the -- when in expect from we actually impact back half. add just that's would ARR I leaders those new a to

then have So, you these progress And those in give really time really the people make to changes to have and through to pipeline. changes. come

So like excited and Greg that we expect of days, half new net to with see. we what the early said, is we're really the It to to add start ARR year. in back

Greg Brown

is both respect the engagement last in in to expertise in One we Vietnam. number leaders taken and and optimism that in had onboarding onboarding the those parallel Korea areas. that of with Japan into we immediate I have. with action that parallel add process, new engagement, And sales that with was we productivity field we've why call a new have leveraging the just in I'll mentioned leaders,

Brett Knoblauch

great there fund bit about to program. cash stock With been guys you a opportunities? inorganic any are growth see thoughts across marketplace, expanding deploying valuations to have buyback It's contracting the the

Sarah Blanchard

our We've We in regularly evaluating interest spoken always are capital obviously strategy. our about M&A. allocation prudent

right is what time, for the And means at price. at the right so the opportunities us that right finding

So sitting are over of while cash. remain active, we million on $XXX we

We a it's and in these are great the business in of share repurchase opportunity especially at front to because have the us. investment, prices comparison we executing

share to that have even execution still, on after to of us will repurchase We to opportunistic left side. program plenty M&A continue cash of be the allow

Operator

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

Noah Herman

UB? as actually position CRO can the position any you're the position you that leadership all, well. of about unpack for think just there the of Is you [indiscernible]. actually changes some coming to encompassing mentioned making of scope First the at maybe to I change

Greg Brown

on the staff. normalizing balance title just the We're with of titles scope. in my change the No

So, to no up. changes go

founding next significant Business. business and personally her that well, X-plus to leaders as on was And wish and heard our moves career. The board look, data But has tremendous we her for She to contributions with made is has years this leader, first thing been say I'll over that the Udemy. she current on the Stephanie of one professionally in step gratitude Udemy the both we're as she all be about has billion different of we in that many And different go because excited to multichannel that cases, to mentioned that going to earlier, beyond. going businesses move global forward. looking software-as-a-service demonstrated companies leader a layering skill as as $X we're $XXX bringing sets. we're growth, is And experience something and on from million that forward, in through require, does in that phases be we scaling

but mentioned growth to next So really soon, as earlier, preparing we phase expect impetus have us an on behind of organization. that as more it is the that's really for I this

Noah Herman

on the more then might bit It like And sounds slightly be layering in guidance. the maybe you quickly guidance. just prudent than a

So point? trying into a environment? just Just curious experience to step layered sort being worsening you sense see now sequentially down if get this for what's the of to a guide the did at in conditions macro

Sarah Blanchard

I I it those volatile wouldn't continues the issues pretty say macro step continues being to identified. we that EMEA. have in we large a say we have be that saw in seen That have challenges. macro down we a conditions. to that EMEA will business that the said,

on and progress. be The we positive. going We're happy said, hopeful execution the there's going The opportunity working new through We're Some like bit are well. lot of these more really early little challenges. with through were macro, trying that a those. leadership short-term working really all to long-term are but indicators between remains. But we very them just a pronounced, is

to are business We from continue multiyear deals. grow our --

we We continue to grow the number XXX,XXX. of accounts over have that

the still happening through as manage of good really lots business things So, this. we

Greg Brown

seeing and one briefly have Now that didn't, Africa of optimism not point upskill onboarding level didn't And would some signed employees if bank developing the with that environment where to that. and that upfront enterprises, to I'll just large investing X-year number with if of in was support we we're contract, a as purchasing only in but level in now add the And as signed they the employees, not expect their and but investment. optimism be of to two, doing impact basically growing not to they they they for that to believe they the future organization. associated onboarding just they're be up one, and the foresight buying and the and the today going months, four licenses, where believe and number what as for that far bought value demand are over next

prudence some and where 'XX So that's organizations just it more coming and planning of buying starting to normal green where projecting terms buying conditions of versus of some one ahead back example and has to we've been and been examples shoots ahead in of. see We're kind behavior ahead patterns. in

not we're here. some for But cause So out again, anyway, it. there's optimism still completely of

Operator

come Jefferies. Brent will with next Thill from question Our

Brent Thill

would XQ another retention. wanted in XXX retention. net year, don't about Or I maybe But this dynamics to color It it just helpful. in points pressure so slower provide was retention basis basis I some gross Is ask expansion guys be on if just around could your there. down points commentary year. dollar down more the XXX it last disclose XQ you you side? know gross there is

Sarah Blanchard

that we six-plus stable happy of the bring to see see to macro value which continue retention the volatility, customers dollar through we're to has gross quarters remained that really past Our them.

down and So, is retention longer, net come it did really points. we the upselling X see taking side the on dollar

expect or salary lower continue gross not we being we're the net half. remained in new through has a to working ARR next But the back retention to half to We quarter as it's stable for that first where suppressed have the remain the very that us. than

Brent Thill

being point hinted that the around next growth give XQ turn UB towards year of talk year. into of that seeing can you've side. about XQ, of UB. guys UB an in heading on you rate the you this about I the really of the 'XX just on think you're confidence acceleration on signals talked low more Maybe You And some kind

Greg Brown

up skills now. And not blowing we've definitely And transition to skills-based There's with one allowing this capability higher coming Gen around doing AI certification stories primary of them i.e., to more in learning and capabilities seeing are we see some earlier, AI. impact to bring mentioned as these great AI and being a the more online, And right and is teams to packs, And quantifying go-to-market a terms use value cases those real these announced market, at the our to we're masses just XX% one case, as to able only the in the of increase but being our economy to package and that in in are and our build approach. the driver. academies job we're rates. Generative developing organization, respect on as digital quantifiable them and of that tailwinds sales starting as Generative bringing impact, focused such like are a organizations

our now we're continue direction we we the how business going to the right that's positioning, at that opening That's faster as to and better move very in early capability they're which of at getting organizations massive, to that, why in and up we're AI leverage better we how doors and running literacy getting to can AI level tailwind we're a forward, for get open transition them rates or every at going across better innings as early their phases blow as you develop skills-based years are that help come. Generative we're is to help confident day. company will, in faster to So, the and to if a transform their functionally

Sarah Blanchard

seeing. about just I'll internal some we're signals talk that

QX adding our actually go-to-market QX. seeing what are been to over focus attributable And reps of their points That's spoke on are sure sales the over we AE we're value able continuing is and basis is Greg our those customers. hitting make quota. XXX% headcount almost to what that last and articulate have enablement can that up ramping to We since our and that to provide to year, just about, we XX

very some projections. to take are time, our good. our we're in really but we These So that hit things indicators have ability early will confident

Operator

will question come with next Au our KeyBanc. Devin And from

Devin Au

in quarter and or quarter deals one that slipped for have the pulled Any to might for or UB second The other first the in shifted just the enterprise. second got or one, half?

Sarah Blanchard

you each on quarters. in quarter and the What see quarter. of and first business the mean the I that in managing saw of are visibility part some giving in do deals tend move deals But that's the we where see out We of out that need. and is again say team always is better we that better us I'll to deals getting those and quarters. slipping

Devin Au

the about a landscape space? offer landscape second into competitive I then Udacity to the platform Any question build out just ago, near couple want the to of impact And on they're the thoughts enterprise. believe, have in is these in customers. getting global months a trying to to Accenture as learning that competitive acquired large term? ask Does I services I the

Greg Brown

where and I Accenture -- looked where Udacity, is the And really it making very that dollars it's I a But the a in the standpoint. and view. and to speak, to we're by very opportunity as again, are development just on Accenture it, just, market much the we at made a validator of with line fact the from with acquisition skills. learning where it their organizations believe blowing. that the see situations. that a way, And so and in continues validate winds much big in bet investment again, our is jumped that respect of headed going, to made are mentioned in is not terms usual acquisition, point competitive suspect we

the least So a see very still is seeing what on enterprise seen. much the positive.From that suspects perspective, at I a side, we're we as competitive view usual that we've

going surprised. We've teams we're our the And impact and price going on our to of tools in in enterprise respect, not organization's stronger. ability option upskill and to as more in low-priced we're layered never into to capabilities the a and the broader having we've and to platform, option. high-value continues be the more get reskill story always and deeper market, We be seen I've with of to to scenarios. with playbooks before, some some And a terms and bit mentioned to up these have address competition respect we're in our as ramp starts situations pricing. and And I'm aggressive armed

that some the value So of monitor small criteria tell then and aggressive before. we're It we're we're really their continues SMB team use offset that the run in of set focused deals delivering it's to small have challenging businesses. is decision In our seeing, remain side, that run pricing in. on sales some to the different enabling which by. for we're what and that market, enablement story of it businesses substantiate environment down a I've and to And they a to does business and and

to budget our the job and spend and where enterprise to teams in we're teams again, segment. impact. those So substantiating doing organizations segment, of majority our making to rescale. we're dollars the And value are continue investments from upscale our comes seeing help SMB, revenue great in But that competing and a allocate and

Operator

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

Greg Brown

great to you like today, and everybody. QX again for and for our just evening, Have connecting look joining I'd we thank a to August. forward call all day in

Operator

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

Udemy (UDMY) 2 May 242024 Q1 Earnings call transcript