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On Thursday, Canaccord Genuity adjusted its outlook on Udemy Inc (NASDAQ:UDMY), reducing the price target to $12 from the previous $14 while continuing to endorse the stock with a Buy rating. According to InvestingPro data, the stock currently trades at $6.87, significantly below its 52-week high of $11.60, with analysis suggesting the stock may be undervalued. The company maintains impressive gross profit margins of 62.5% and holds more cash than debt on its balance sheet. This change follows Udemy’s announcement of first-quarter results that surpassed expectations in terms of revenue and profitability. With a market capitalization of $1.02 billion and annual revenue of $786.6 million, the online learning platform has been making strides by securing significant enterprise agreements, including a comprehensive expansion with a major global consulting firm and becoming the preferred reskilling platform for a business streamlining from three learning vendors to one. InvestingPro subscribers can access 10+ additional exclusive insights about Udemy’s financial health and growth prospects.
Udemy’s progress is partly driven by the emergence of GenAI, which is creating a demand for new skills and reskilling tools. Despite being well-equipped with a vast catalog of AI-related courses, Udemy has not fully tapped into this burgeoning opportunity, which is attributed in part to suboptimal merchandising efforts. The newly appointed CEO, Hugo Sarrazin, has set forth key objectives aimed at enhancing consumer subscriptions and transitioning Udemy from merely a content provider to an AI-powered reskilling platform.
The company has also offered a Q2 guidance that slightly exceeds market expectations. However, Udemy has revised its revenue forecast for FY25 downwards, adopting a cautious stance for the second half of the year due to macroeconomic uncertainties. The lower forecast results from anticipated weakness in the Consumer marketplace segment, although no significant impact on the sales pipeline has been observed thus far. The sectors under close watch include IT consulting and manufacturing, given their potential volatility.
Despite the reduction in Udemy’s revenue projections for FY25 and the current economic challenges, Canaccord Genuity expresses confidence in the company’s strategic initiatives. These initiatives are designed to increase Udemy’s share of wallet with existing clients and position it to secure new contracts when the economic climate becomes more favorable. Analysts tracked by InvestingPro expect the company to become profitable this year, with multiple analysts revising their earnings estimates upward. For detailed analysis and comprehensive insights, investors can access Udemy’s Pro Research Report, part of InvestingPro’s coverage of 1,400+ US stocks.
In other recent news, Udemy Inc. reported its first-quarter 2025 earnings, surpassing both earnings and revenue forecasts. The company achieved an earnings per share (EPS) of $0.12, exceeding the projected $0.10, and reported revenue of $200.3 million, slightly above the expected $197.3 million. This marks the first time Udemy’s revenue has exceeded $200 million in a quarter. Additionally, the company saw an 8% year-over-year growth in its Udemy Business Annual Recurring Revenue (ARR). The company’s gross margin improved by 300 basis points to 65%.
In terms of future guidance, Udemy expects its second-quarter 2025 revenue to range between $195 million and $199 million. For the full year, the company projects revenue between $772 million and $794 million, with adjusted EBITDA guidance set between $77 million and $87 million. Despite some geographical softness in North America and EMEA, Udemy remains optimistic about growth opportunities in APAC and Latin America. The company also announced strategic initiatives to enhance its AI-powered learning offerings and expand consumer subscriptions.
Furthermore, Udemy is focusing on operational efficiency, having implemented cost-saving measures that are expected to provide resilience against potential market headwinds. The appointment of Niraja Tejakunabud as the Chief Customer Experience Officer underscores the company’s commitment to expanding its customer base and increasing customer penetration. With these developments, Udemy continues to position itself as a leader in the online learning sector, emphasizing its AI capabilities and subscription-based revenue model.
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