Online learning platform Udemy (NASDAQ:UDMY) reported Q4 FY2023 results topping analysts' expectations, with revenue up 14.6% year on year to $189.5 million. On the other hand, next quarter's revenue guidance of $194.5 million was less impressive, coming in 2.8% below analysts' estimates. It made a non-GAAP profit of $0.02 per share, improving from its loss of $0.16 per share in the same quarter last year.
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Udemy (UDMY) Q4 FY2023 Highlights:
- Revenue: $189.5 million vs analyst estimates of $186.1 million (1.9% beat)
- EPS (non-GAAP): $0.02 vs analyst estimates of -$0.02 ($0.04 beat)
- Revenue Guidance for Q1 2024 is $194.5 million at the midpoint, below analyst estimates of $200.1 million
- Management's revenue guidance for the upcoming financial year 2024 is $802.5 million at the midpoint, missing analyst estimates by 3.1% and implying 10.1% growth (vs 15.9% in FY2023)
- Management's EBITDA margin guidance for the upcoming financial year 2024 is 1.75% at the midpoint, missing analyst estimates of nearly 3%
- Free Cash Flow was -$10.58 million, down from $8.54 million in the previous quarter
- Gross Margin (GAAP): 58%, up from 55.2% in the same quarter last year
- Monthly Active Buyers: 1.37 million, up 10,000 year on year (in line)
- Market Capitalization: $2.14 billion
“Udemy ended the year with solid fourth quarter and full year 2023 results that exceeded expectations as we executed on all of our strategic priorities,” said Greg Brown, Udemy’s President and CEO.
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 Subscription
Consumers 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 Growth
Udemy's revenue growth over the last three years has been solid, averaging 19.6% annually. This quarter, Udemy beat analysts' estimates but reported mediocre 14.6% year-on-year revenue growth.
Guidance for the next quarter indicates Udemy is expecting revenue to grow 10.2% year on year to $194.5 million, slowing down from the 15.9% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to reach $802.5 million at the midpoint, representing 10.1% growth compared to the 15.9% increase in FY2023.
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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 2.9% annually to 1.37 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q4, Udemy added 10,000 active buyers, translating into 0.7% year-on-year growth.
Revenue Per Buyer
Average 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 14.3%. 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 13.8% year on year to $138.35 per buyer.
Key Takeaways from Udemy's Q4 Results
It was good to see Udemy narrowly top analysts' revenue expectations this quarter, although ARR missed. Adding to the negatives was guidance. The company's full-year revenue and adjusted EBITDA margin guidance both missed analysts' expectations. Next quarter's revenue guidance followed the pattern and also came in below Wall Street's estimates. Overall, this was a mediocre quarter for Udemy, and the guidance is sure to weigh on shares. The company is down 17.8% on the results and currently trades at $11.51 per share.
Udemy may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.