Udemy at Canaccord Conference: AI-Driven Shift

On Tuesday, 12 August 2025, Udemy (NASDAQ:UDMY) presented at Canaccord Genuity’s 45th Annual Growth Conference, revealing a strategic pivot towards becoming an AI-enabled skill acceleration platform. CEO Hugo Sarzen highlighted this transformation as a move away from a traditional online content catalog to focus on enterprise reskilling. Despite challenges from a transitional year, the company reported strong financial and operational developments, including significant subscription growth.

Key Takeaways

• Udemy is transitioning to an AI-enabled skill acceleration platform, focusing on enterprise reskilling.
• The company reported a record number of $100,000-plus deals and a 60% year-over-year subscription growth in July.
• Udemy aims for mid-single-digit growth for its enterprise business in fiscal year 2025, with a target of 20% margin by 2027.
• The company holds nearly $400 million in cash, offering flexibility for strategic acquisitions.

Financial Results

• Largest number of $100,000-plus deals closed, with a record pipeline since COVID.
• July saw a 60% year-over-year increase in subscription growth.
• Year-to-date EBITDA stands at $50 million, with guidance towards nearly $90 million.
• Targeting mid-single-digit growth for the enterprise business in fiscal year 2025 and a 20% margin by fiscal year 2027.

Operational Updates

• The introduction of new AI-focused SKUs is expected to make up 30% of the pipeline by year-end.
• Udemy launched the MCP server, integrating content into enterprise LLMs, and 7,000 role-play simulations.
• A new president has been appointed to drive consumer subscription growth, aiming to exceed the subscriber target for the year.

Future Outlook

• Udemy targets double-digit growth for the enterprise business in the future.
• Subscription business expected to exceed 250,000 subscribers by year-end and 500,000 next year.
• Strategic acquisitions are being considered to enhance the AI-enabled platform strategy, with an eye on expanding into new geographies and categories.

Q&A Highlights

• Capital allocation strategy focuses on accretive acquisitions in technology, geographies, and adjacent categories.
• Emphasis on enterprise and subscription growth as key performance indicators.
• A voucher program for certification training is expected to drive additional revenue.

The full transcript of the conference call is available for further insights.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Jason Tilchin, Senior Research Analyst, CG: Morning everyone. I am Jason Tilchin, senior research analyst at CG covering educational technology and it’s my pleasure to welcome Hugo Sarzen, Udemy’s CEO. You joined the company in March after four years leading tech and product teams at UKG and you have more than twenty years of experience in the consulting space at McKinsey as well. So Hugo, thanks so much for joining us today.

Hugo Sarzen, CEO, Udemy: My pleasure, thank you.

Jason Tilchin, Senior Research Analyst, CG: Absolutely. As I was saying before there’s, before we started, there’s just so much that you’ve been doing since you joined the company a few months ago. So maybe just high level, if you can start by sharing a little bit about what attracted you to the role, what you’ve learned so far, and what you’re most excited about going forward.

Hugo Sarzen, CEO, Udemy: Yeah. I’ll do it a quick you know, as you said, I spent the last four years at UKG in an adjacent space, the human capital space. I grew that business, doubled it in that four years, rolling a bunch of AI products and and and many other new innovation. And I spent a lot of time with CHROs, and I saw the issues that they had with their existing online content provider. There’s a lot of really big issues as they try to move and reskill their workforce.

And Udemy, while it’s the leader in this space, it’s the biggest player, I saw that with AI, you could completely transform this experience. And I was super excited to come to a company that had 17,000 large enterprise, 80,000,000 learners, 250,000 courses, and say, what if I decided to make a hard pivot away from online content and online catalogs to being a real enterprise platform and use AI to transform the learner’s experience and go after reskilling? And this is kind of like a huge opportunity. Reskilling is not going away. AI is only accelerating the need for reskilling.

And, you like, there’s some stats out there. You know, 92,000,000 Americans will need to be reskilled because of AI in the next five years. Like, who’s gonna do that? It’s not Chad and GPT. Somebody has to be there, and I wanna be that that player.

So that’s that’s the excitement, and that’s the opportunity.

Jason Tilchin, Senior Research Analyst, CG: Yeah. And you touched on it, sort of the enterprise business that you have. It’s very much over the past few years since it’s really started and focused on this technological evolution and how that forces people to constantly change the day to day responsibilities of jobs. And you need someone to sort of reinforce those new skills. And then Gen AI has sort of come along over the past, call it twelve, eighteen months, and really thrown a lot of gasoline on that fire.

So maybe you could just talk to what the trend was to start with, and then how you guys are evolving, what you’re doing, in little bit more detail to meet this AI demand.

Hugo Sarzen, CEO, Udemy: Yeah. So at a macro level, the workforce is constantly evolving. There are new roles that are created, and we’ve been able to meet many of those needs with traditional online content. But with GenAI, we just saw an acceleration, just a huge, huge, huge acceleration and also an opportunity to do this very differently. Traditional online catalog was a wonderful innovation fifteen years ago of the changing the cost of distribution.

That’s it. It was great. You could now take a class any point in time, and it was much more, more affordable, but it didn’t change the learner’s experience. And with AI, you now have the ability to, you know, gather information, and that’s why I’m making a real big deal around, like, we’re a platform. We’re not a catalog.

We’re becoming a platform. A platform has a lot of data. It goes deeper in the technology stack. So if we take, for example, data from the HCM, your performance reviews, where it says here’s what you’re missing, and I use that to, in the flow of work, at the moment, not just in case, like traditional online learning is just in case learning. But if you move to just in time learning based on what you’re trying to accomplish at that specific moment and I bring you that knowledge in that context, you can transform the experience.

And then being an enterprise player, you have something else. Like, I’ll give you another example. If you’re wondering today how many employees at the ChatGPT search or Gemini search or are closed, that’s great. They will do that. But your CHR, you still don’t know what the skill of my organization is.

You know they’ve answered a bunch of questions, but if you’re truly trying to take a workforce and move it from a to b, you need a bunch of tools. You need dashboards. You have the ability to confirm mastery of a skill. You need to confirm relevancy of a skill. All those tools are missing.

And now if I can kind of come in and build the whole technology stack, I’ve got, like, staying power. I’ve got the ability to really deliver an ROI. I’ve got the ability to transform people’s life and help organization transform. And that’s the play on the b to b. I’ve got a different play on the b to c and we can come back to that.

But it is a completely different, and I’m so excited. We’re the first one who’s made this move. Nobody else in our space has done that. That’s why I’m literally comfortable saying we are exiting the online learning space, and we’re moving into a new category that doesn’t We’re an AI enabled skill acceleration platform. And I use the word skill because it’s more than content.

It is assessment. It’s role plays. It’s lab. It is demonstrating mastery, and again, it’s demonstrating relevancy. So when you learn something, the fact that you knew it one day doesn’t mean that it’s still valid.

So what can I create to constantly demonstrate the relevancy of the skills you’ve mastered? That is worth so much money for a large enterprise. They’ll pay for this, and it will pay a whole lot more than they pay for content. I wanna touch on a lot of

Jason Tilchin, Senior Research Analyst, CG: the different things that you’re doing from a strategic and product standpoint to sort of shape and build that platform. But I think maybe a lens that could be helpful to start to look at that is your recent results. You just reported Q2 results about two weeks ago. Yep. Maybe just talk to some of the different cross currents from there was about a year ago, an enterprise shifted the strategy there, how that’s impacting revenue today versus some of the initiatives that you’ve put in place already since you joined the company.

Hugo Sarzen, CEO, Udemy: Yeah. So listen. This is a this is a transition year that was set up as a transition year. I came in March as a transition year. There were a few things.

On the enterprise side, we had changed the go to market motion. We moved people from the commercial segment to the enterprise for a whole host of good reason. It takes time to do that. On the renewal, we were dealing with, you know, the COVID hangover where we got a whole lot of folks to buy a whole lot of licenses, and now three years later, they’re like revisiting that. So we have pressure on that.

On the consumer, you know, we’ll come to that. There was some organizational, you know, opportunities. And because of all of that, there was gonna be a tough, you know, a year of transition and a year where, you know, we’re gonna begin to see opportunity. And I’m super excited. The results, we had the largest number of 100 k deals, 40 plus.

Really cool. We have a pipeline of 100 k deal that has never been this big since COVID. We’re, you know, seeing lot of really, really good progress on the consumer side. We’ll come back to that. Subscription growth, which was a shift we did, has been a blockbuster.

I mean, July was 60% year over year growth. We’ve never seen that. So there’s a lot of, you know, excitement in in just the underlying foundation of the business, and I’m leaving alone the fact that we’ve got new players, and we have a new product road map and new capabilities. The last thing I’ll say to the the part of your question of what did we change, I mean, very quickly, as I got here, I saw the opportunity to merchandise differently. We had a big catalog, a very big catalog, and that’s what we were selling to everybody.

So the team was saying, hey. We only get 10% penetration in the enterprise. Well, yeah, that’s not surprising. You’re selling the big catalog, and the people who can afford the big catalog or the employees who need that will pay for that. But what about willingness to pay and adapting it to different groups?

So now we’re beginning to create more SKUs, so we double the number of SKUs, and we went after the AI SKUs. And the AI SKUs, are really in demand right now, and I’m pretty sure by the end of the year, 30% of our pipeline will be these AI SKUs. Like, I’ve doubled the number of SKUs in, like, no time. No time. And there are more SKUs to be created, and there’s also more partnerships.

We’re beginning to announce a number of partnership. You saw the Indeed one. Super exciting. The the conversion rate, like, we’re delivering our product at the moment where people are searching for jobs. I mean, the conversion rate is higher than a Google keyword search.

We’ve got that rolled out. We have partnerships now, with Glean. Think about like a player who’s consuming all the internal constant and then putting it in context, And I’m, like, in the back delivering in the flow of work, this these amazing reskilling, experiences, partnership with Workera, where we are winning deals with customers where we’re doing assessment, you know, providing enablement and reskilling, and then confirming The feedback loop. If we got the feedback loop. So, I mean, it’s a different business that is beginning to get assembled, and it’s gonna be I mean, we’re not again, I keep saying we’re not an online content player.

We’re gonna be an enterprise player and a b to c subscription player. And on the point about merchandising, you sort of identified that as some of the low hanging fruit.

Jason Tilchin, Senior Research Analyst, CG: On the last earnings call, you shared some really interesting anecdotes about some of the early customer wins you’re seeing so far just a few months after introducing some of those changes. Maybe you could share one or two of those.

Hugo Sarzen, CEO, Udemy: I’ll tell you one for this week. I was involved. It’s one of the largest technology player. We had 8,000, you know, license traditional license, the big license. We’re having conversation with the CHRO, not this L and D leader, the CHRO and the chief technology officer.

They wanna have an AI fluency wall to wall, 25,000 employees. So it’s 17,000 new licenses we’re gonna end up selling. That would not have been possible before that because it makes no sense to offer, you know, somebody in marketing the big the big catalog. Now if you kinda come back and say, I’ve got something tailor made for people in marketing, tailor made for people in finance, then and, obviously, AI is a pretty good one. So that’s an example just from this week, and there’s more.

And then the other one I’ll give you, we didn’t touch on this, but, you know, we’ve introduced the MCP server. We’re the first one to to do so. The MCP server, I’ll describe it very briefly, and then I’ll give you another example. The MCP server is the ability to not only share with API the table of content of what we have, but the actual course inside. What’s inside?

It’s context. If we can now bring that into the LLM that large enterprises are building for themselves, like, you know, we’re talking to lot you know, we are really big in the professional service space. Every professional service organization has their own version of a LLM that is trained on their proprietary data, and they wanna have access to our content just in time. So now my second example to get back to that, we had a deal go from zero to sign more than a million, three weeks, ELA because of the MCP.

Jason Tilchin, Senior Research Analyst, CG: There you go. And that’s just one of a number of different things we’re doing products.

Hugo Sarzen, CEO, Udemy: I mean, we’re gonna have plenty, but this one, we announced it literally, like, I mean, we’ve been talking to our customer in advance. We we launched a beta, I think it’s three weeks or maybe four weeks. It’s fully packed up. Everywhere we go and we talk about MCP, we’re the only one because, again, we’re not a content player. We’re a platform player.

They they see the value. They were like, oh my god. This is gonna help me achieve my goals. And, yeah, we’re we’re we’re gonna ride this wave. And that’s why, you know, for those investors who are interested in getting exposure to an AI player in the application stack, we’re not a frontier model.

We’re above that. I mean, this is a good play.

Jason Tilchin, Senior Research Analyst, CG: And you mentioned expanding that platform beyond just the content, is a key part of what you’re doing. But you’ve introduced a number of new things over the past year or so, role play simulations, things to help with soft skills. You made an acquisition recently. Just wondering if you could share what you’re most excited about from a product standpoint going forward.

Hugo Sarzen, CEO, Udemy: Yeah. So the MCP server, clearly a game changer because now we’re having, you know, a very different type of conversation, how we augment the traditional LLMs. The role play you touched on, we rolled out maybe eight weeks ago. A role play, essentially, you can creators in our marketplace can create a role play. So we created 7,000 of them.

We have more than the entire industry combined. It’s pretty pretty wild. And these role plays allow you to to do different things. I’ll give you an example. If you’re a new manager, if you’ve never done a performance review, you can practice your performance review before you do your first performance review.

Wouldn’t that be great? Well, let’s make it even better. You can consume the HR policy of your company and now know in context what is the right performance dialogue you should have. That’s cool. We can take the same role play capability, and now we can point it at a sales team.

And that’s like, okay. Here are the when you do the onboarding of a new account executive, here’s the, you know, the product description practice of selling motion. Well, now I can, you know, accelerate the the time to ramp of an AE. That’s worth huge amount of money for a leader of a go to market organization. Even better, I’m not going after the L and D budget anymore.

I’m going after the sales ops budget. I had a conversation with a a call center. The guy the the CEO operates the largest outsourced call center. He trains 20,000 agents every month, and he’s like, can I use your role play to accelerate the speed at which I onboard these 20,000 people who are trained in one way for one client and trained another way for another one? So the opportunities around this are fabulous.

Now let me do the last one just to kinda complete the the play. We have a marketplace. It’s a wonderful thing. It’s a competitive advantage. It allows us to be super dynamic.

Great. We still do that in AI. In AI, it’s super important to be able to move fast, and everybody else who’s in a publishing model go slow. But now what’s really, really, really interesting is we created tools for the learners. We’re now putting AI tools for the learner.

We had tools for the creators, the instructor. We’re putting AI tools for the instructor. And now we’re taking the same AI tools for the instructor, and we’re creating a new product. Didn’t exist. And so I don’t know why we never did this, but we never.

We can offer the enterprise a creator edition of the platform. They get access to the same tool to instructors. So now they can create some very custom Content for their own company. For their own organization. And guess what?

Once you have your own content in there, you have agency over the outcome. Create stickiness. You create stickiness. So I’m so excited about, like, what we are now creating and the optionality that’s embedded in there. It’s a very, very different company even in, you know, you know, the short five months I’ve been here.

Jason Tilchin, Senior Research Analyst, CG: Yeah. Absolutely. Maybe before jumping to the consumer, side, one way to wrap up the conversation around enterprise. You’ve guided to roughly sort of mid single digit growth for the enterprise business in fiscal twenty five. You’re not gonna give guidance for next year today, but maybe you could just talk to the progression that you’re seeing as you introduce these as the conversations, the pipeline’s building, how you expect that enterprise growth trajectory to sort of evolve as you exit this year and go to ’26.

Hugo Sarzen, CEO, Udemy: Yeah. I there there’s a few things. One, we’re getting through the COVID cohort. So the downward I mean, this year is the largest year of renewal in our history. Absolute dollar, percent dollar, so that puts a lot of pressure.

Every time you have a renewal conversation, there’s always a risk. And then the cohort from COVID, it was sold in a different way. It was benefits. So that that goes away and that pressure goes away. So we’re gonna see net ARR for the second half of the year be substantially higher.

We’re gonna see the NDRR stabilize and start to pick up, and in 2026, it will it will kinda go into the areas that you expect for an enterprise buyer. Okay. Very helpful. The company’s DNA is

Jason Tilchin, Senior Research Analyst, CG: in that consumer marketplace Correct. And content to individuals. It’s an important part of what you do in the enterprise side as well. But that business has sort of

Hugo Sarzen, CEO, Udemy: been a little bit of

Jason Tilchin, Senior Research Analyst, CG: a structural decline as you focus on enterprise over the last few years. So maybe you could just talk to, a, what are some of the overarching trends on the consumer side? You mentioned subscriptions being an important part of what you’re doing. I think you maybe teased in our prior discussion that you made a press release just as we were starting our conversation. So Maybe you could talk about that as well.

Hugo Sarzen, CEO, Udemy: Yeah. So, I mean, the simple story, our history is consumer. We got into the b to b, and we made a lot of focus. It’s now 500 of our $800,000,000 of revenue. Internally, we had a student body shift left.

You know, when everybody says this is the shiny thing, everybody goes there, and we lost our way on the consumer. We didn’t pay attention. And when I showed up, I couldn’t find anybody who was responsible for consumer. There were six people, and they were always doing this part time. So one of the things we’ve done is we created now a team that’s dedicated on consumer so that we can stop the self inflicted decline.

We announced this morning that we have a new president for consumer who, you know, is one throat to choke on that. He has tons of experience driving subscription businesses across media, ecommerce, marketplace, the perfect guy. I’m really, really excited, and he’s he’s gonna make a big, big difference. So that’s that’s kind of one big change, like a really a focused organization on this with transparency of data and focus on execution. Second is we were trying to monetize for a bunch of good historical reason at a very, very low price, and we ended up with an LTV to CAC that was a bit challenging.

It had been challenging for many, many years, and therefore, you know, one of the things I thought would be prudent is to kind of make an emphasis towards subscription where the LTV is substantially higher. And we now have a focus on that, and we’ve grown our subscription business incredibly well. We announced at the ’2 we had 200,000 subscript subscriber. We grew it in July at 60% year over year, and we said we would hit 250 by the end of the year. I am gonna blow through that number.

Blow through that number. Watch out. The press release will come at the right time, but this is I am not nervous at all, and we we, you know, gave some gave some guidance of 500 for next year. We’re we’re also gonna hit that. So that’s working really, really well.

And the quality of the subscriber product today is at its lowest point it will ever be because we’re going to start to layer a bunch of additional capabilities and monetization opportunity so the subscription product is only going to get better and the ASP that you have for that product going up.

Jason Tilchin, Senior Research Analyst, CG: Interesting. Well, we’ll be keeping a close eye on Mhmm. The developments there. The company had put out a margin target for fiscal twenty seven of 20%. Two questions related to that.

One, can you just share a little bit about what the sort of building blocks are to get you from where you are this year to that 20% target? And also maybe how you think the trajectory may change a little bit as you invest in all these different product and strategic initiatives that we’ve talked about so far today?

Hugo Sarzen, CEO, Udemy: Yeah. So we we’ve delivered 14 quarters in a row above or on our EBITDA target. So I think from an operation point of view, our ability to hit the EBITDA number is is really, really, really strong. Year to date, 50,000,000, and we’re guiding to almost 90. I mean, we’re gonna do that.

So this is this is a this is, you know, in our DNA, and we can do that very well. We’ve got some additional improvement that we can do in the business, and we’re gonna pursue that. But, you know, it’s a bit premature to guide for next year, but you’re probably getting a sense from the way I’m talking that there’s gonna be, you know, maybe a new focus around, you know, making sure we capture the growth that’s available to us in the AI space and in the subscription space. So we’re going to come up with a, you know, the right plan for 2026 that balances, you know, growth and profitability, and we’ll have an opportunity. You know, we haven’t landed on a date, but we’ll have an investor date, and we’ll we’ll share the overall plan.

Jason Tilchin, Senior Research Analyst, CG: Okay. Very helpful. We just have a few more minutes. Just wanna first check with the audience and see if there’s any questions from anyone for Hugo, But I’ve got plenty if not. One thing I’m curious about, you ended last quarter with about 400,000,000 of cash on the balance

Hugo Sarzen, CEO, Udemy: sheet.

Jason Tilchin, Senior Research Analyst, CG: Can you just talk to your capital allocation strategy? Are there any other sort of deals maybe on the horizon? What your philosophy is around? What you would be interested in buying if there was something?

Hugo Sarzen, CEO, Udemy: Yeah. So we we have almost 400. You also may have noticed we added a 200,000,000 revolver to give us a lot of flexibility. I have quite a lot of experience in m and a. At UKG, we did, you know, six while I was there.

And then, you know, while at McKinsey, a third of my time in the last decade or so was with private equity buying things in and around technology. So very comfortable with this. And, you know, in terms of how we’re thinking about this, we’re gonna be prudent. We need to find opportunities that are accretive to our strategy, that help us accelerate becoming an AI enabled platform to rescale the workforce of the future. So there’s some technology capabilities that may be helpful and, you know, that may lead us down the path of acquihire.

There are some geographies where, maybe we didn’t touch on this, but, like, there are places like Japan right now with double digit growth Japan. Mhmm. And we’re the unquestionable market leader. Can we recreate the dynamic in a few other markets? You know, that would be uninteresting because when you are such a leader, you have return to scale that are pretty attractive, and there are some markets where we’re pretty pretty close, so that could be an interesting play.

There are some adjacent categories that, we’re not that may be, you know, different, frontline workers where there’s some natural subscription and and recurring revenues that we could add to the to the mix. And then there’s always some industry plays that we we can look at. But, the most important

Jason Tilchin, Senior Research Analyst, CG: thing is we’re gonna look at this, you know, in a way that is holistic and, you know, make sure that it really supports the strategy we’re trying to do. Yeah. All these demand trends are global trends. They’re not just exclusive to The US, so certainly a huge opportunity elsewhere to attack them and, and find solutions for companies. I’m curious if there’s one thing we touched on so much today about the business, about the consumer side, about the enterprise.

If there’s one thing that you want people to take away from this discussion, what would it be?

Hugo Sarzen, CEO, Udemy: Yeah. It won’t be a surprise. I’m gonna you know, we’re we’re pivoting away from being an online catalog to being an AI enable reskilling, skilling acceleration platform. That’s that’s the the number one thing. And with that comes all sorts of new capability and all sorts of new opportunity.

I would give you a second one. And if you want to think about how to measure our progress moving forward, you know, I’ll I’ll give you a simple way, and it’s the way internally we’re looking at it. You have the enterprise business, its growth. What growth are we delivering there, and can we bring it back to double digit growth? Second, subscriber growth.

The sum of those two today is almost 10% today. So it’s a different way of looking. There’s a drag on the transactional consumer business, and we’re gonna keep that drag because we’re trying to reposition the business away. So focusing on enterprise growth, subscription growth, and then we didn’t touch on we’ve got a bunch of ancillary revenues that we’re layering in, the ad business, and then the other one, I mean, the voucher one. Think of this one.

The voucher, 1,400,000 people are taking certification training on CompTIA alone. And the ASP of that is anywhere between twenty and thirty. And then when we add the the train the the voucher, three x.

Jason Tilchin, Senior Research Analyst, CG: Much higher margin.

Hugo Sarzen, CEO, Udemy: Three x. It’s amazing. And we just launched that last week, so it’s gonna roll it through. Flow through. We got 60 different plays like this.

CompTIA is the first one.

Jason Tilchin, Senior Research Analyst, CG: Okay. Lot of exciting stuff to keep track of. Hugo, thanks so much for joining us today, and good luck in the second half of

Hugo Sarzen, CEO, Udemy: Thank you. Appreciate it. Yeah. Bye. Thanks.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.