Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Motley Fool Issues Rare “All In” Buy Alert
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Shares of online education company Udemy (UDMY 0.92%) were up on Thursday after the company’s second-quarter financial results exceeded management’s previous guidance and management raised its forward guidance for the rest of the year. As of 1 p.m. ET, Udemy stock was up 10%.
Udemy’s marketplace lowers the barrier to entry for course creation — anyone can create and upload a course to the platform. It’s for people who are looking for knowledge, not certificates or degrees. Management thought it would generate $151 million in Q2 revenue at most. But the company generated $153.1 million in Q2, up 21% year over year.
Of particular strength in Q2 was Udemy Business. Companies looking to provide training to their workers can subscribe to Udemy’s curated list of user-generated courses. Udemy Business was up a whopping 77% year over year and accounted for 49% of total revenue. In short, it’s gaining new enterprise customers and they’re spending more on average this year compared to last year. That’s a good sign for this high-growth part of the business.
For the year, Udemy management expects revenue of $615 million to $640 million. This is a slight increase from previous guidance of $610 million to $640 million.
One thing to watch is Udemy’s profitability. It expects negative profits this year, even on an adjusted basis. Some investors might be concerned with this considering its gross profit margin is a healthy 57%. In short, Udemy spent 78% of its gross profit on sales and marketing. That’s the primary reason it’s not profitable and it’s something to watch. But at least this heavy spending is resulting in strong growth.
All in all it was a good quarter for Udemy. But investors need to monitor growth and customer retention to make sure its spending decisions are justified.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Market-beating stocks from our award-winning analyst team.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.
Discounted offers are only available to new members. Stock Advisor list price is $199 per year.
Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.
Market data powered by Xignite.
