Online learning platform Udemy (NASDAQ:UDMY) reported Q3 FY2023 results exceeding Wall Street analysts' expectations, with revenue up 16.6% year on year to $184.7 million. The company also expects next quarter's revenue to be around $185.5 million, in line with analysts' estimates. Turning to EPS, Udemy made a GAAP loss of $0.11 per share, improving from its loss of $0.33 per share in the same quarter last year.
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Udemy (UDMY) Q3 FY2023 Highlights:
- Revenue: $184.7 million vs analyst estimates of $178.2 million (3.65% beat)
- EPS: -$0.11 vs analyst estimates of -$0.18 (38% beat)
- Revenue Guidance for Q4 2023 is $185.5 million at the midpoint, above analyst estimates of $183.9 million
- Free Cash Flow of $8.54 million, down 36% from the previous quarter
- Gross Margin (GAAP): 58.2%, up from 56.4% in the same quarter last year
- Monthly Active Buyers: 1.41 million, up 90 thousand year on year
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 solid, averaging 19.8% annually. This quarter, Udemy beat analysts' estimates and reported 16.6% year-on-year revenue growth.
Guidance for the next quarter indicates Udemy is expecting revenue to grow 12.2% year on year to $185.5 million, slowing down from the 22.1% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results, analysts covering the company were projecting sales to grow 13.5% 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 3.37% annually to 1.41 million. This is one of the lowest rates of growth in the consumer internet sector among the companies we track.
In Q3, Udemy added 90 thousand active buyers, translating into 6.82% year-on-year growth. At least average revenue per buyer grew 9.15% year on year to $131.01 per buyer.
Key Takeaways from Udemy's Q3 Results With a market capitalization of $1.33 billion, Udemy is among smaller companies, but its more than $328 million in cash on hand and near break-even free cash flow margins puts it in a stable financial position.
It was great to see Udemy beat analysts' revenue expectations this quarter. We were also glad its full-year revenue guidance came in higher than Wall Street's estimates. Zooming out, we think this was a decent quarter, showing that the company is staying on track. The stock is up 13% after reporting and currently trades at $10.19 per share.
The author has no position in any of the stocks mentioned in this report.
