Udemy | 10-Q: FY2026 Q1 Revenue Misses Estimate at USD 191.41 M

Revenue: As of FY2026 Q1, the actual value is USD 191.41 M, missing the estimate of USD 196.58 M.

EPS: As of FY2026 Q1, the actual value is USD -0.09.

EBIT: As of FY2026 Q1, the actual value is USD -15.11 M.

Segment Revenue

Udemy, Inc.’s total revenue for the three months ended March 31, 2026, was $191,407 thousand, a 4% decrease from $200,300 thousand in the prior year period, primarily due to a decrease in the Consumer segment, partially offset by an increase in the Enterprise segment.

Enterprise Segment

• Revenue: $132,889 thousand for the three months ended March 31, 2026, a 4% increase from $127,748 thousand in the prior year period, constituting 69% of total revenue in 2026, up from 64% in 2025.
• Subscription Revenue: $132,123 thousand for the three months ended March 31, 2026, compared to $127,002 thousand in the prior year period, driven by larger average deal sizes for new customers despite lower net retention rates.
• Other Revenue: $766 thousand for the three months ended March 31, 2026, compared to $746 thousand in the prior year period.

Consumer Segment

• Revenue: $58,518 thousand for the three months ended March 31, 2026, a 19% decrease from $72,552 thousand in the prior year period, representing 31% of total revenue in 2026, down from 36% in 2025.
• Subscription Revenue: $14,402 thousand for the three months ended March 31, 2026, an increase from $9,281 thousand in the prior year period, primarily due to growth in paid Consumer subscribers.
• Transactional and Other Revenue: $44,116 thousand for the three months ended March 31, 2026, a decrease from $63,271 thousand in the prior year period, attributed to fewer monthly average buyers and decreased recognized deferred revenue.

Operational Metrics

• Net Loss: -$12,614 thousand for the three months ended March 31, 2026, compared to -$1,771 thousand for the same period in 2025, driven by higher personnel costs, amortization of deferred contract costs, direct marketing costs, and acquisition-related costs.
• Gross Profit: $129,267 thousand for the three months ended March 31, 2026, slightly down from $129,443 thousand in the prior year period.
• Gross Margin: 68% for the three months ended March 31, 2026, up from 65% in the prior year period, mainly due to a reduction in instructor revenue share and a shift towards the Enterprise segment and subscription offerings.
• Operating Expenses: Total operating expenses were $141,793 thousand for the three months ended March 31, 2026, up from $133,935 thousand in the prior year period.
  • Sales and Marketing: $89,606 thousand in 2026, an increase of $7,106 thousand (9%) from $82,500 thousand in 2025.
  • Research and Development: $26,793 thousand in 2026, an increase of $1,835 thousand (7%) from $24,958 thousand in 2025.
  • General and Administrative: $25,394 thousand in 2026, an increase of $386 thousand (2%) from $25,008 thousand in 2025.
  • Restructuring Charges: -$0 thousand in 2026, compared to $1,469 thousand in 2025.
• Loss from Operations: -$12,526 thousand in 2026, compared to -$4,492 thousand in 2025.
• Interest Income: $2,827 thousand in 2026, down from $3,575 thousand in 2025.
• Interest Expense: -$240 thousand in 2026, up from -$15 thousand in 2025.
• Other Income (Expense), Net: -$622 thousand in 2026, compared to $98 thousand in 2025.
• Net Loss Before Taxes: -$10,561 thousand in 2026, compared to -$834 thousand in 2025.
• Income Tax Provision: $2,053 thousand in 2026, compared to $937 thousand in 2025.

Segment Adjusted Gross Profit

• Enterprise Segment Adjusted Gross Profit: $101,457 thousand for the three months ended March 31, 2026, up from $95,984 thousand in the prior year period.
• Enterprise Segment Adjusted Gross Margin: 76% in 2026, up from 75% in 2025.
• Consumer Segment Adjusted Gross Profit: $34,767 thousand for the three months ended March 31, 2026, down from $40,401 thousand in the prior year period.
• Consumer Segment Adjusted Gross Margin: 59% in 2026, up from 56% in 2025.

Cash Flow

• Net Cash Provided by Operating Activities: $15,440 thousand for the three months ended March 31, 2026, compared to $12,210 thousand in the prior year period, mainly due to timing of accounts receivable and lower outflows from accounts payable.
• Net Cash Provided by (Used in) Investing Activities: $9,081 thousand provided in 2026, compared to -$7,414 thousand used in 2025, with 2026 including $43,600 thousand from maturities of marketable securities.
• Net Cash Used in Financing Activities: -$2,919 thousand in 2026, compared to -$5,907 thousand in 2025, primarily driven by taxes paid related to net share settlement of employee equity awards.
• Free Cash Flow: $10,834 thousand for the three months ended March 31, 2026, compared to $7,090 thousand in the prior year period, attributed to increased cash from operating activities and lower purchases of property and equipment.

Unique Metrics

• Udemy Business Customers: 16,822 as of March 31, 2026, a decrease of 2% from 17,216 in the prior year, reflecting a focus on UB Large Customers.
• Udemy Business Annual Recurring Revenue (ARR): $539,706 thousand as of March 31, 2026, a 4% increase from $518,965 thousand in the prior year.
• Udemy Business Net Dollar Retention Rate (NDRR): 93% as of March 31, 2026, down from 96% in the prior year.
• Udemy Business Large Customer Net Dollar Retention Rate: 97% as of March 31, 2026, down from 100% in the prior year.
• Paid Consumer Subscribers: 433 thousand as of March 31, 2026, a 124% increase from 193 thousand in the prior year.
• Monthly Average Buyers: 1,238 thousand for the three months ended March 31, 2026, a decrease of 12% from 1,412 thousand in the prior year.
• Deferred Revenue: $300,993 thousand as of March 31, 2026, compared to $295,319 thousand as of December 31, 2025.
• Remaining Performance Obligations: The aggregate transaction price was $579.7 million as of March 31, 2026, with 72% expected to be recognized over the next twelve months.
• Cash and Cash Equivalents: $252,563 thousand as of March 31, 2026, compared to $231,485 thousand as of December 31, 2025.
• Marketable Securities: $105,256 thousand as of March 31, 2026, compared to $127,259 thousand as of December 31, 2025.

Future Outlook and Strategy

Udemy, Inc. anticipates continued faster revenue growth from its Enterprise segment compared to its Consumer segment, which is expected to benefit overall margins. Operating expenses are projected to generally decrease as a percentage of revenue over time due to a focus on operational efficiency and high-growth opportunities. Free cash flow is expected to generally increase in the near term due to operational efficiency initiatives, although capitalized software costs may fluctuate.