📮The Sunday Newsletter archive

Succeed In a Fast-Paced World

Technology is disrupting entire industries and today traditional education is not enough to help people stay relevant. Instead, lifelong training is now necessary and that’s why Udemy ($UDMY) was founded. It’s one of the largest online learning platforms offering affordable courses mainly for upskilling and reskilling purposes.

Udemy is a marketplace; anyone can become an instructor, 👨‍🏫 and develop courses to sell. There are currently over 183K courses in 75 languages, starting at as low as $10 each, so you can find courses on literally anything. The company also offers Udemy Business (UB) which is a subscription offering for business customers. 8,600 companies, including 42 of the Fortune 100 use UB to help their employees learn new skills. 

In the first six months of the year, revenue increased 25% to $250.6 million and the company moved closer to profitability. Its operating margin came in at -11% compared to -17% in 2020. In the most recent quarter, it had 44 million learners, up from 32 million in the same period last year; a sign of strong growth momentum. 

📫Originally posted as part of the Sunday Newsletter
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Commentary: The shift to online learning has been ongoing for years, and the COVID pandemic has only accelerated this shift. It’s now an estimated $250 billion market and Udemy, as one of the top online learning platforms will be one of the biggest winners of the digitization of education.

The company has an interesting business model; while individuals pay on a per course basis, business customers pay annual subscriptions and revenue from this segment increased 80% y/y in the most recent quarter. Investors will definitely love the strong growth of that segment as business customers bring in predictable revenue streams.💸

Udemy has priced its IPO at a midpoint price of $28 apiece, which translates into a market cap of $3.8 billion. At this price, it’ll be valued at 8x sales which seems like a pricey multiple. Its competitor, Coursera, is valued at 5.8x sales even though it’s growing faster. In the most recent quarter, it reported revenue growth of 59%, higher than Udemy’s 24% growth over the same period. Shares will probably be volatile in the near term as the company will need to prove that it deserves its premium valuation. Shares start trading on Friday.

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