Udemy Inc Surpasses Revenue Expectations, Achieves First Positive Net Income in Q2 2025

Udemy Inc reported Q2 2025 earnings with revenue exceeding expectations at $200 million, a 3% YoY increase. The company achieved its first positive GAAP net income since IPO and made progress on strategic priorities like subscription products and AI-powered skill acceleration. However, revenue growth in the consumer segment was down 4% YoY, and the company faces challenges with renewing multi-year contracts and higher churn and lower expansions.

Udemy Inc (UDMY) reported its Q2 2025 earnings, showcasing a strong performance with revenue exceeding expectations at $200 million, marking a 3% year-over-year (YoY) increase. The company achieved its first positive GAAP net income since its initial public offering (IPO), with a net income of approximately $6 million, a significant improvement from the previous year's loss of $32 million. This financial milestone underscores Udemy Inc's progress in its strategic priorities, including a focus on subscription products and AI-powered skill acceleration.

The company's Udemy Business segment contributed $129 million in revenue, representing a 7% YoY increase. Annual Recurring Revenue (ARR) grew by 6% YoY to $520 million. However, revenue growth in the consumer segment was down 4% YoY, primarily due to a 2% point decline from foreign exchange rates (FX). The company also faced challenges with renewing multi-year contracts established during the COVID-19 period, which lacked robust implementation and executive sponsorship. This has led to a decrease in customer count on the Udemy Business side and higher churn rates, particularly from the small and medium-sized business (SMB) cohort.

Despite these challenges, Udemy Inc has made strides in expanding its partnership ecosystem. The company has formed strategic partnerships with Indeed and BCN Global, enhancing its reach and impact. Additionally, the company is positioning itself as a leading AI-powered skill acceleration platform, differentiating itself from competitors and capturing significant market opportunities. The company's gross margin improved by 300 basis points to 67%, and operating expenses decreased to 56% of revenue, an 800 basis point improvement from the previous year. Adjusted EBITDA expanded by 1,100 basis points YoY to approximately $28 million, representing 14% of revenue.

Udemy Inc's free cash flow was $39 million, equating to 20% of revenue. The company ended the quarter with $393 million in cash and marketable securities. The subscription Gross Merchandise Volume (GMV) grew by over 40% YoY in June, and the net dollar retention rate remained strong at 95%, with large customers retaining at a rate of 99%. The company's CEO, Hugo Sarrazin, noted that AI reskilling is a global priority and that customers expect more from their learning partners, seeking ROI and AI integration. The company is expanding its capabilities beyond content to include assessments, role plays, and labs, and is building a platform that integrates deeply with tech stacks, offering personalized learning experiences.

Looking ahead, Udemy Inc faces potential headwinds from renewals but is optimistic about pipeline development and growth. The company is restructuring efforts to pay off, and new AI SKUs are resonating well, with these packages representing 25% of the overall pipeline. The company will conduct experiments in Q3 to refine its programmatic advertising approach, aiming to accelerate this revenue stream later in the year.

References:
[1] https://finance.yahoo.com/news/udemy-inc-udmy-q2-2025-073835374.html