Udemy Reports Fourth Quarter 2021 and Fiscal Year 2021 Results

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

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

Fourth Quarter 2021 Financial Results and Key Operating Data:

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

Fiscal Year 2021 Financial Results and Key Operating Data:

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

Fourth Quarter Highlights:

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

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

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

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

	Q1’22	FY22
Revenue	$144.0 - $148.0 million	$610.0 - $640.0 million
Consumer Segment Revenue	(6%) - 0% year-over-year growth	$310.0 - $330.0 million
Udemy Business Segment Revenue	70%+ year-over-year growth	$300.0 - $310.0 million
Adjusted EBITDA Margin	(11%) - (9%)	(12%) - (10%)
Weighted Average Share Count	139 million	142 million

  
Webcast Information
Udemy will host a webcast at 2:00 pm Pacific Time on Wednesday, February 9, to discuss its fourth quarter 2021 financial results, as well as its 2022 outlook. The live webcast will be accessible on Udemy’s website at investors.udemy.com. A webcast replay will be available approximately two hours after the conclusion of the live event.

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

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

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

The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission (“SEC”), including, without limitation, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed with the SEC on December 8, 2021. All information provided in this release is as of the date hereof, and we undertake no duty to update this information unless required by law.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Contacts

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

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