What Happened:
Shares of online learning platform Udemy (NASDAQ:UDMY) jumped 16.3% in the pre-market session after the company reported first quarter results with revenue and EPS exceeding analysts' expectations. ARPU 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.
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What is the market telling us:
Udemy's shares are very volatile and over the last year have had 12 moves greater than 5%. But moves this big are very rare even for Udemy and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the company dropped 22.1% on the news that the company reported first-quarter results with ARR (annual recurring revenue) falling below expectations, though revenue beat by a narrow margin. 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 came in below Wall Street's estimates. Overall, this was a mediocre quarter for Udemy, and the guidance is sure to weigh on shares.
Udemy is down 26% since the beginning of the year, and at $10.40 per share it is trading 34.9% below its 52-week high of $15.96 from December 2023. Investors who bought $1,000 worth of Udemy's shares at the IPO in October 2021 would now be looking at an investment worth $374.95.
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