Udemy: Growth Engines Under Pressure – Can This Learning Platform Still Deliver?

Udemy’s stock has been on a rollercoaster this year, and for good reason. The online learning platform is grappling with headwinds that could redefine its growth story—or send investors scrambling for the exits. Let’s dissect the numbers and figure out whether this is a buying opportunity or a warning sign.

First, the good news: Udemy’s Q1 2025 results showed a 2% revenue rise to $200.3 million, while profits surged. Adjusted EBITDA jumped 227% to $21.1 million, thanks to cost-cutting and operational discipline. Gross margins expanded by a staggering 400 basis points to 65%, proving the company can monetize better even amid slower sales. Cash reserves hit $358.1 million, giving management a cushion to weather the storm.

But here’s the catch: two engines of growth are sputtering. Let’s start with the Enterprise segment, which brings in 64% of revenue. While revenue grew 9% to $127.7 million, the real worry is retention. The Udemy Business (UB) Net Dollar Retention Rate plummeted to 96% from 104% a year ago. Worse, large clients (those with ≥1,000 employees) saw retention drop a shocking 1,100 basis points to 100%. That’s a red flag. Companies might be cutting back on training budgets or seeking cheaper alternatives as they downsize.

Then there’s the Consumer segment, which is in freefall. Revenue plunged 8% to $72.6 million, with monthly buyers dropping 2%. Management blames macroeconomic uncertainty and a shift toward subscriptions, but only 32% of consumer revenue now comes from subscriptions—meaning most sales are transactional. That’s a problem. Transactional buyers are less loyal, and if the economy stays weak, Udemy’s consumer business could keep bleeding.

Udemy isn’t sitting idle. It’s betting on AI-driven Career Accelerators, which promise to fast-track job transitions, and has partnered with Ingram Micro in India and the Mumbai Indians cricket team to boost brand awareness. But here’s the rub: execution is everything. Can Udemy sell these new AI tools effectively? Will consumers pay for subscriptions when they’re used to buying courses à la carte?

Let’s look at the numbers:

The stock has lost over 30% of its value in the past year, reflecting investor skepticism. Meanwhile, revenue growth has slowed to a crawl, with full-year 2025 guidance projecting only 0–2% growth (after adjusting for FX headwinds).

The risks? Foreign exchange is a major drag, shaving 1.5 percentage points off Q2 growth. Plus, Udemy’s dependency on enterprise sales could backfire if big clients keep cutting back. And let’s not forget: subscriptions are still a work in progress. Only 68% of total revenue comes from subscriptions, and the consumer shift is lagging.

So what’s the bottom line? Udemy has a solid cash position and a profitable core business, but its growth engines are under pressure. The Enterprise segment’s retention crisis and the Consumer segment’s decline mean management must execute flawlessly on AI and subscription strategies.

If Udemy can turn around retention rates and accelerate its subscription push, it could capitalize on the $325 billion corporate training market and the global skills gap. But if these initiatives fizzle? Investors might find themselves holding a stock that’s more “stall” than “thrill.”

Final Take: Udemy is a “hold” for now. The stock’s 12-month forward P/E of around 20 isn’t unreasonable if growth rebounds, but investors need to see real traction in subscriptions and enterprise retention. Keep an eye on Q2 results and watch for signs that AI is actually driving sales—not just buzz. If the company can’t fix its leaky retention bucket, this learning platform could be stuck in neutral indefinitely.

Final verdict: Proceed with caution.