1/ Udemy filed its S-1 today with its proposed ticker of $UDMY
The company offers online education content to 44M+ users with 183K courses and over 65K instructors.
Here's a short thread on what I found interesting ...
Source: docoh.com/filing/1607939…
2/ Customer Value Proposition
$UDMY offers its customers three skill types:
1. Technical: Learn a new technology (coding, etc.)
2. Business: Biz & pro soft skill classes
3. Personal Dev: New hobbies and/or interests outside "core" professional objective
3/ Udemy Business (UB) Customer Value Prop
UB offers enterprise clients access to 11K of the highest-engaging courses for their employees. Usually charged on an annual subscription basis (1yr contract).
$UDMY has 8.6K UB customers and a Net Dollar Retention Rate of ~123%.
4/ Udemy's Instructor Value Prop
In 2020, $UDMY's instructors made a cumulative $161.4M in earnings.
The average instructor earned ~$2,950 and over 1K instructors earned >$1K.
5/ Udemy's Financials
$UDMY generated ~$430M in revenue in 2020. Here's how it breaks down:
- Consumer: $326.45M
- Enterprise: $103.45M
Consumer generates ~49% Gross Margins while Enterprise prints 65%+ GMs (pretty significant difference).
This explains $UDMY's LT plans.
6/ How $UDMY Generates LT Value
There are two levers $UDMY has to increase business value:
- Converting free cust. to paid
- Increasing Enterprise Business
Consumer biz can leverage new subscription offering.
Enterprise has <10% available seats filled so far (lots of room)
7/ Key Metrics To Track Progress
There are 3 key metrics to track for $UDMY's progress:
- Average Monthly Buyers: Cust. who buys via DTC offering
- UB Customers: Tracking number of seats $UDMY can fill for Enterprise clients (at 65%+ margins)
- Net Dollar Retention: >100%
8/ $UDMY Co-Founder Eren Bali
Eren came from the apricot orchards of rural Turkey and built a massive business. That's impressive.
Online learning changed Eren's life, and $UDMY is his way of giving back.
Read his founder letter below.
9/ Balance Sheet & Adjusted EBITDA
As of June 2021, $UDMY has $163M in cash against $279M in liabilities.
$162M of those liabilities, however, are deferred revenues.
Unfortunately, even after accounting for adjustments, $UDMY sports -7% Adj. EBITDA margins.
10/ Risks From Competition
Online education is one of the most competitive spaces out there.
Off the top of my head $UDMY competes with:
- Coursera $COUR
- Nerdy $NRDY
- edX
- Skillshare
- LinkedIn Learning
That's tough.
11/ Concluding Thoughts
After my initial brush-through of the S-1, I'm not convinced on who eventually wins this space.
Nor am I convinced $UDMY will successfully convert more Enterprise customers & free-to-paid consumers.
Time will tell.
Which company is your favorite?
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