Udemy (UDMY) Stock Forecast & Price Target

Udemy Inc. demonstrates a positive financial outlook, with its Enterprise segment contributing significantly to total revenue growth, which increased by 5.0% year-over-year to $132.8 million, and now represents 67.9% of total revenue. The company's Annual Recurring Revenue (ARR) for Udemy Business also showed growth of 5.6% year-over-year, reaching $520 million, highlighting effective customer adoption and engagement trends. Furthermore, the Consumer segment achieved a notable improvement in gross margin, expanding by 300 basis points year-over-year to 57.0%, aided by a rising consumer subscription base that has strengthened the overall revenue mix.

Udemy Inc is experiencing a concerning trend in its Consumer segment, evidenced by a 9.2% year-over-year revenue decline in the third quarter, resulting in revenues of $62.9 million, which, despite exceeding estimates, indicate ongoing stabilization challenges. The company's net dollar retention rate has also decreased to 93% from 95%, suggesting longer upsell cycles and potential hurdles in maintaining existing customer relationships. Furthermore, Udemy's fourth-quarter revenue guidance of $191-194 million reflects a decline of 3-5% year-over-year, compounded by a forecasted significant decrease in Consumer revenue, necessitating a reduction in future profitability estimates.