Stock Story -
Online learning platform Udemy (NASDAQ:UDMY) reported results ahead of analysts' expectations in Q1 CY2024, with revenue up 11.6% year on year to $196.8 million. On the other hand, next quarter's revenue guidance of $193.5 million was less impressive, coming in 1.1% below analysts' estimates. It made a non-GAAP profit of $0.03 per share, improving from its loss of $0.06 per share in the same quarter last year.
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Udemy (UDMY) Q1 CY2024 Highlights:
- Revenue: $196.8 million vs analyst estimates of $194.9 million (small beat)
- EPS (non-GAAP): $0.03 vs analyst estimates of -$0.01 ($0.04 beat)
- Revenue Guidance for Q2 CY2024 is $193.5 million at the midpoint, below analyst estimates of $195.6 million
- The company reconfirmed its revenue guidance for the full year of $800 million at the midpoint
- Gross Margin (GAAP): 61.2%, up from 56.5% in the same quarter last year
- Free Cash Flow of $17.51 million is up from -$10.58 million in the previous quarter
- Monthly Active Buyers: 1.44 million, up 50,000 year on year
- Market Capitalization: $1.54 billion
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Consumer SubscriptionConsumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
Sales GrowthUdemy's revenue growth over the last three years has been mediocre, averaging 17.6% annually. This quarter, Udemy reported mediocre 11.6% year-on-year revenue growth, in line with analysts' expectations.
Guidance for the next quarter indicates Udemy is expecting revenue to grow 8.6% year on year to $193.5 million, slowing from the 16.4% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 10.5% over the next 12 months.
Usage Growth As a subscription-based app, Udemy generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Udemy's active buyers, a key performance metric for the company, grew 3% annually to 1.44 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q1, Udemy added 50,000 active buyers, translating into 3.6% year-on-year growth.
Revenue Per BuyerAverage revenue per buyer (ARPB) is a critical metric to track for consumer internet businesses like Udemy because it measures how much the average buyer spends. ARPB is also a key indicator of how valuable its buyers are (and can be over time).
Udemy's ARPB growth has been impressive over the last two years, averaging 13.4%. The company's ability to increase prices while growing its active buyers demonstrates its platform's value, as its buyers continue to spend more each year. This quarter, ARPB grew 7.7% year on year to $136.70 per buyer.
Key Takeaways from Udemy's Q1 Results ARPU has increased in Q1 and Udemy posted positive cash flow - those were the good news. On the other hand its revenue guidance for next quarter missed analysts' expectations and user growth is slow. Overall, we feel this was a mixed quarter for Udemy. The stock is up 5% after reporting and currently trades at $10.38 per share.