Udemy (UDMY) Stock Forecast & Price Target

Udemy Inc. demonstrated a positive financial outlook, with Udemy Business revenue increasing 5.0% year-over-year to $132.8 million, contributing to 67.9% of total revenue due to robust new customer acquisition and large deal activity. The company's annual recurring revenue (ARR) also saw growth, ascending 5.6% year-over-year to $520 million, reflecting strong demand for its services despite a slight decline in individual course purchases. Moreover, the consumer segment exhibited improved profitability, with gross margins expanding by 300 basis points year-over-year to 57.0%, driven by the escalating popularity of consumer subscriptions.

Udemy Inc. has experienced a notable decline in its Consumer segment revenues, reflecting a 9.2% year-over-year drop in 3Q, which indicates challenges in stabilizing this segment despite exceeding internal estimates. Additionally, the company's Net Dollar Retention Rate (NDRR) decreased from 95% to 93%, highlighting longer upsell cycles that could hinder revenue growth. Future guidance for Q4 suggests a 3-5% year-over-year revenue decline, driven by significant contractions in the Consumer segment, which has led to lowered profitability forecasts for FY26 and subsequent years due to necessary investments and adjustments in their business model.