Udemy (NASDAQ:UDMY) Q1: Beats On Revenue

Anthony Lee /
2023/05/03 4:16 pm EDT
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Online learning platform Udemy (NASDAQ:UDMY) reported Q1 FY2023 results that beat analyst expectations, with revenue up 15.9% year on year to $176.4 million. The company expects that next quarter's revenue would be around $173 million, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. Udemy made a GAAP loss of $44.5 million, down on its loss of $25.6 million, in the same quarter last year.

Is now the time to buy Udemy? Access our full analysis of the earnings results here, it's free.

Udemy (UDMY) Q1 FY2023 Highlights:

  • Revenue: $176.4 million vs analyst estimates of $170.9 million (3.21% beat)
  • EPS: -$0.31 vs analyst expectations of -$0.27 (13.6% miss)
  • Revenue guidance for Q2 2023 is $173 million at the midpoint, below analyst estimates of $173.7 million
  • The company reconfirmed revenue guidance for the full year, at $716 million at the midpoint
  • Free cash flow was negative $20 million, compared to negative free cash flow of $30.9 million in previous quarter
  • Gross Margin (GAAP): 56.5%, in line with same quarter last year
  • Monthly Active Buyers: 1.39 million, up 7 thousand year on year

“Udemy started the year off strong as we exceeded expectations for both revenue and adjusted EBITDA margin,” 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.

Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to or what movie they watch, or finding a date, online consumer businesses today are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have increased usage and stickiness of many online consumer services.

Sales Growth

Udemy's revenue growth over the last three years has been strong, averaging 20.6% annually. This quarter, Udemy beat analyst estimates and reported a moderate 15.9% year on year revenue growth.

Udemy Total Revenue

Guidance for the next quarter indicates Udemy is expecting revenue to grow 13% year on year to $173 million, slowing down from the 21.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 15.8% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Usage Growth

As a subscription app, Udemy generates revenue growth by growing both the subscriber base and how much each subscriber spends over time, on average.

Over the last two years the number of Udemy's active buyers, a key usage metric for the company, grew 2.04% annually to 1.39 million. 

Udemy Monthly Active Buyers

In Q1 the company added 7 thousand active buyers, translating to a 0.51% growth year on year.

Key Takeaways from Udemy's Q1 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Udemy’s balance sheet, but we note that with a market capitalization of $1.3 billion and more than $445.2 million in cash, the company has the capacity to continue to prioritise growth over profitability.

It was good to see Udemy outperform Wall St’s revenue expectations this quarter and increase ARPU. That feature of these results really stood out as a positive. On the other hand, user growth is slow these days. Overall, it seems to us that this was an ok quarter for Udemy. The company is up 2.31% on the results and currently trades at $8.86 per share.

Udemy may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.