Q4 2021 Udemy Inc Earnings Call

Thank you for joining us today for <unk> fourth quarter and fiscal 2021 call.

Speaker 1: Thank you for joining us today for U of M's fourth quarter and fiscal 2021 call. I will now turn the call over to Taylor Giles.

I would now turn the call over to Taylor.

Thank you with me today are Greg Hakari year to me as CEO and Sarah Blanchard.

Speaker 2: Thank you. With me today are Greg Kokari, Udemy's CEO , and Sarah Blanchard.

CFO .

Before we begin during this conference call. We may make forward looking statements within the meaning of federal Securities laws.

Speaker 2: Before we begin, during this conference call, we may make forward-looking statements within the meeting of federal security.

Speaker 2: These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or in the

<unk> involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated.

For a complete discussion of risks associated with these forward looking statements. We encourage you to refer to our most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.

Speaker 2: For a complete discussion of risks associated with these forward-looking statements, we encourage you to refer to our most recent Form 10-K and Form 10-Q filings with the security...

Speaker 2: Our forward-looking statements are based upon information currently available.

Our forward looking statements are based upon information currently available to US we caution you not to place undue reliance on forward looking statements and we do not undertake and expressly disclaim any duty or obligation to update or alter our forward looking statements, except as required by applicable law.

Speaker 2: We caution you not to place undue reliance on forward looking statements and we do not undertake and expressly disclaim any duty or obligation to update or alter our forward looking statements, except as required by applicable.

In addition, during this call certain financial performance measures may be discussed that different from comparable measures contained in our financial statements prepared in accordance with the U S. Generally accepted accounting principles referred to by the Securities and Exchange Commission as non-GAAP financial measures. We believe that these non-GAAP financial measures.

Speaker 2: In addition, during this call, certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with the U.S. Generally Accepted Accounting Principles referred to by the Securities and Exchange Commission as non-GAAP financial.

Speaker 2: We believe that these non-GAAP financial measures assist management and investors in evaluating our performance and comparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our new website.

The system management and investors in evaluating our performance and comparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our earnings release.

Speaker 2: A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included.

A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release. These reconciliations together with additional supplemental information are available at the Investor Relations section of our website. A replay of today's call will also be posted on the website I will now turn the call over to Greg.

Speaker 2: These reconciliations together with additional supplemental information are available at the investor relations section of our webinar.

Speaker 2: A replay of today's call will also be posted on the website. I will now turn the call over to Greg.

Okay.

Thank you for joining us.

Speaker 3: We're very pleased with our performance in the quarter, which came in ahead of guidance.

Very pleased with our performance in the quarter, which came in ahead of guidance.

We experienced continued extraordinary growth and momentum in <unk> business.

Speaker 3: We experienced continued extraordinary growth and momentum in utility business, which grew 81%angs of received money from the private sector.

81% year over year.

Speaker 3: contributing to our overall top line growth of 25% versus 2020.

Shifting to our overall top line growth of 25% versus 2020.

In the quarter more than 32 million unique visitors per month visited our consumer marketplace and we reached over 10500 <unk> business customers.

Speaker 3: In the corner, more than 32 million unique visitors per month visited our consumer marketplace, and we reached over 10,500 unique business customers.

As we look to 2022.

Speaker 3: As we look to 2022, we see the tailwinds of upskilling and reskilling driving the Unity Businesses' strong ARR, which was $239 million exiting the fourth quarter.

See the tailwind so the upskilling and Reskilling driving unique businesses strong grrr.

Each was $239 million exiting the fourth quarter.

In Q4.

Speaker 3: In Q4, our consumer business returned to growth, and we believe it has stabilized at roughly 1.3x pre-pandemic revenue level.

Sewer business returned to growth and we believe it has stabilized at roughly one three X pre pandemic revenue levels.

Global traffic remained strong and we continue to see more than 5000, new courses published each month.

Speaker 3: Global traffic remains strong, and we continue to see more than 5,000 new courses published each month.

Okay Super marketplaces, the engine that provides high quality content to the <unk> business and helps generate leads driving its growth and success.

Speaker 3: Our consumer marketplace is the engine that provides high quality content for Udemy business and helps generate the leads driving its growth and success.

Our marketplace allows us to maintain our affordability and accessibility.

Speaker 3: Our marketplace allows us to maintain our affordability and accessibility, and it's where tens of millions of learners help us identify the fresh, high-quality, relevant content that is a true differentiator for us.

It's worth tens of millions of learners to help us identify the fresh high quality relevant content that is a true differentiator for us.

Speaker 3: With content in more than 75 languages, our consumer marketplace enables us to expand the reach of Udemy business to now include 13 language packages, most recently in Polish and Korean.

With content in more than 75 languages are consumer marketplace enables us to expand the reach of <unk> business to now include 13 language packages, most recently in Polish and Corinne.

In addition, we built the tools the Playbooks that we believe are unique business customers need to attract retain and engage their employees.

Speaker 3: In addition, we've built the tools and playbooks that we believe our Udemy business customers need to attract, retain, and engage their employees.

Driving phenomenal ROI and an impressive learner net promoter score of 61.

Speaker 3: driving phenomenal ROI and an impressive learner net promoter score of 61.

Our ability to provide broad deep array of high quality content to enterprises.

Speaker 3: Our ability to provide broad, deep array of high quality content to enterprises on a truly global scale is driven by our consumer marketplace.

On a truly global scale is driven by our consumer marketplace.

Speaker 3: And it's what puts Unimie business in a league of its own when it comes to supporting global organizations.

And that's what puts you at doing business in a league of its own when it comes to supporting global organizations.

We continue to see increasing traction in our second quarter as a public company in.

Speaker 3: We continue to see increasing traction in our second quarter as a public company. In the quarter, we had 440 Udemy business customers with over 100,000 ARR. In our first deal with a total contract value of over 5 million, as enterprise customers increasingly see the value of what we provide in the future of work. To illustrate, Jeff used consumer carry over at the

In the quarter, we had 440 <unk> business customers with over 100000 IRR.

And our first deal with a total contract value of over $5 million.

As enterprise customers increasingly see the value of what we provide in the future of work too.

To illustrate let me give you an example.

We're working with E Y one of the largest professional service networks in the world.

Speaker 3: We're working with EY, one of the largest professional service networks in the world.

<unk> 340000 employees 200000 are currently using unique business as they prioritize learning.

Speaker 3: Of EY's 340,000 employees, 200,000 are currently using Udemy Business as they prioritize learning.

<unk> goal is to enable employees to learn in a virtual world.

Speaker 3: EY's goal is to enable employees to learn in a virtual world.

Speaker 3: And using the Udemy platform, they're experiencing great success.

And using the <unk> platform they are experiencing great success.

Speaker 3: They hold an impressive employee learning satisfaction rate of 84%.

They hold an impressive employee learning satisfaction rate of 84%.

Speaker 3: Udemy Business is also collaborating with EY on their badges program as a key content provider.

<unk> business is also collaborating with <unk> on their bachelors program as a key content provider.

Speaker 3: This program enables employees to hone their digital and leadership capabilities and earn badges for future focused skills such as data science and AI, transformative leadership, inclusive intelligence, and more.

This program enables employees to hone their digital and leadership capabilities and earn badges for future focused skills, such as data science and AI.

It's 400 leadership inclusive intelligence and more.

<unk> business is also collaborating with <unk> on their three masters programs.

Speaker 3: Udemy Business is also collaborating with EY on their three masters program.

Speaker 3: which is offered in association with Hult International Business School. Our Kitt?

Which is offered in association with <unk> International business School.

Our content is crucial to the program.

Speaker 3: which is available to all EY employees free of charge.

Which is available to all <unk> employees free of charge.

Speaker 3: Learners are the reason we exist and their stories motivate us every day.

Learners are the recent weakness in their stories motivate us everyday.

Our social impact program is one of the many ways, we seek to fulfill our mission.

Speaker 3: Our social impact program is one of the many ways we seek to fulfill our mission.

On Veterans day, we announced the Sentinels of freedom as our latest social impact partner.

Speaker 3: On Veterans Day, we announced the Sentinels of Freedom as our latest social impact partner.

We partnered to help severely wounded post 911 veterans.

Speaker 3: We partnered to help severely wounded post 9-11 veterans who are referred to as...

Who are referred to as Central's <unk>.

Speaker 3: Identify and achieve the skills they need to build long-lasting and successful careers in the chosen disciplines.

Identify and achieve the skills they need to build long lasting and successful careers in the chosen disciplines.

Speaker 3: The program is designed to meet each veteran's individual needs.

The program is designed to meet each veterans individual needs.

Assisting them with their higher education offering ongoing mentorship.

Speaker 3: assisting them with their higher education, offering ongoing mentorship.

Speaker 3: life skills coaching, career development, networking, and financial assistance.

Life skills Kochi career development net.

Networking can financial assistance.

We also support upwardly global <unk>.

Speaker 3: We also support Upwardly Global, a nonprofit that aims to eliminate the employment barriers that skilled immigrants and refugees encounter when entering the U.S. workforce.

A nonprofit that aims to eliminate the employment barriers that skilled immigrants and refugees encounter when entering the U S workforce.

Speaker 3: Our partnership gives job seekers access to learning resources that prepare them to pass industry-recognized certifications and secure new jobs.

Our partnership gives job seekers access to learning resources to prepare them to past industry recognized certifications and secure new jobs.

Speaker 3: We have two amazing stories of upwardly global learners who changed their lives through the program.

We have two amazing stories of upwardly global learners, who changed their lives through the program.

Originally from Kazakhstan.

Speaker 3: Originally from Kazakhstan, you're along to Lubikov.

<unk>.

Speaker 3: had more than five years of experience in logistics, and was looking to pivot his career to IT.

And more than five years of experience in logistics and was looking to pivot as committed to it.

Yes.

Speaker 3: With no IT background, his upwardly global coach advised him to enroll in a CompTIA 8-plus course on...

With no background is upwardly global coach advised them to enroll in a comp T plus <unk> and <unk>.

With the skills they've learned on <unk> yearly landed a job as a help desk analyst at the world's largest home improvement specialty retailer.

Speaker 3: With the IT skills he learned on Udemy, he early landed a job as a help desk analyst at the world's largest home improvement specialty.

Likewise Mohamad added <unk> Ed.

Speaker 3: Likewise, Mohamed Abid Emmerzad, who was a project manager in Afghanistan, joined Upwardly Global to learn about the systems and technologies that are relevant in the U.S. job market.

Who was a project manager in Afghanistan.

Joined upwardly global to learn about the systems and technologies that are relevant in the U S job market.

Speaker 3: Mohammed began taking project management courses on Udemy business and honed his project management skills to become more competitive for US jobs.

We began taking project management courses on <unk> business and honed his project management skills to become more competitive for U S. Jobs. He has since successfully landed a job at the senior construction projects scheduled in consultant and the construction services company.

Speaker 3: He has since successfully landed a job as a senior construction project scheduling consultant and a construction services company.

Our structures are at the heart of <unk> success, and our learners engagement.

Speaker 3: Our instructors are at the heart of Udemy's success and our learners' engagement.

Speaker 3: During the year, we had 34 instructors who earned over $500,000 and 19 who earned over a million dollars. And in 2021,

During the year, we had 34 instructors who earned over $500000 and 19, who earned over $1 billion and then 2021.

Speaker 3: Our paid instructors earned $177 million from Udemy for their courses.

Our paid instructors earned $177 million from <unk> for their courses.

Speaker 3: Let me share a few examples of how our instructors create content that moves at the speed of market change.

Let me share a few examples of how our instructors create content that moves at the speed of market change.

In October <unk>.

Speaker 3: In October , U of M instructor Alan Rodriguez published a course on Azure Networking Solutions, a full month before the AZ-700 exam was updated.

The instructor Alan Rodriguez published a course on Azure networking solutions, a full month before the AZ 700 exam was updated.

How long then updated the course content again in December to ensure that is as relevant as possible to the azure networking exam.

Speaker 3: Allen then updated the course content again in December to ensure that it's as relevant as possible to the Azure Networking Assistant.

Speaker 3: Allen's commitment to fresh quality content has attracted more than 350,000 learners from around the world.

Alan's commitment to fresh quality content has attracted more than 350000 learners from around the world.

So many other instructors are also benefiting from the marketplace.

Speaker 3: So many other instructors are also benefiting from the Udemy marketplace.

This year, Chris <unk>, who teaches is it's in self improvement courses had its best year, yet on <unk> and <unk>.

Speaker 3: This year, Chris Arun, who teaches business and self-improvement courses, had his best year yet on Udemy and crossed the 1 million student milestone.

Crossed the 1 million students milestone.

Good Tau signals.

Speaker 3: Fital Sigmundba took one of Chris Udemy's classes a few years back.

Took one of chriss economies classes, a few years back.

Speaker 3: They became friends and eventually met in person at a Udemy event in 2019.

They became friends and eventually met in person event in 2019.

Then decided to combine their business acumen and engineering skills to build a school in Rwanda.

Speaker 3: then decided to combine their business acumen and engineering skills to build a school in Rwanda, near the village where Vrata was raised.

Neither village Umberto was raised.

Speaker 3: Now they plan to build schools in other geographies struggling with access to education.

Now they plan to build schools and other geographies are struggling with access to education.

Speaker 3: Constructors like Chris inspire us every day, and we believe our investment in their talent is key to our differentiation and social impact.

Constructors like Chris inspire us every day and we believe our investment in their talent is key to our differentiation and social impact.

We also have partners to help us maintain our place as the most global online education platform.

Speaker 3: We also have partners to help us maintain our place as the most global online education platform.

Last quarter, we announced new partnerships with would you think big in Korea <unk>.

Speaker 3: Last quarter, we announced new partnerships with Woojin Think Big in Korea, Sinjeke in China, and Multi-Choice Group in Sub-Saharan Africa.

Decade in China.

And multi choice group and sub Sahara Africa.

While it's still early we expect this to lead to the same kind of success, we are enjoying with our partnership with benefit in Japan.

Speaker 3: While it's still early, we expect these to lead to the same kind of success we're enjoying with our partnership with Bennessey in Japan, which is one of our fastest growing markets.

Which is one of our fastest growing markets.

We will continue to add partners as we systematically expand our presence internationally.

Speaker 3: We'll continue to add partners as we systematically expand our presence internationally. Our partners extend our reach in terms of creating content, understanding the local markets, and bolstering our sales force and brand.

<unk> extend our reach in terms of creating content understanding the local markets.

And bolstering our sales force and brands.

To keep pace with the demand for Upskilling and Reskilling.

Speaker 3: To keep pace with the demand for upskilling and reskilling, we track how our business customers and their employees use our platform.

We track, how our business customers and their employees use our platform.

Speaker 3: We recently published our 2022 workplace learning trends report in which we analyze trends based on what employees are learning across thousands of customers around the world. The range is broad...

We recently published our 2022 workplace learning trends report in which we analyzed trends based on what employees are learning across thousands of customers around the world.

The range is broad reflective of a changing workplace.

The top skills slowdown due to me in 2021 included power skills for leaders and management, where we've seen triple digit growth in categories like office productivity leadership and management and.

Speaker 3: The top skills sought on Udemy in 2021 included power skills for leaders in management, where we've seen triple digit growth in categories like office productivity, leadership and management, and personal growth over the past year.

Personal growth over the past year.

Employees are also seeking productivity and collaboration courses.

Speaker 3: Employees are also seeking productivity and collaboration courses, personal development, and wellness courses.

Development and wellness courses.

Speaker 3: and technical training courses such as Google Cloud, which was up 645 percent.

In technical training courses, such as Google Cloud, which was up 645%.

Speaker 3: and Microsoft AZ 500 up nearly 400% versus a year ago.

And Microsoft AZ, 500, up nearly 400% versus a year ago.

We are on the frontline of helping employees cope with evolving job requirements at a time of rapid change.

Speaker 3: We're on the front line of helping employees cope with evolving job requirements at a time of rapid change.

And we facilitate learning with more than 5000, new courses created each month.

Speaker 3: And we facilitate learning with more than 5000 new courses created each month. Over 40% of these are like.

We're 40% of these are languages other than English.

To ensure that the incredible depth and breadth of our marketplaces user friendly.

Speaker 3: to ensure that the incredible depth and breadth of our marketplace is user-friendly. We're continually improving our platform.

Continually improving our platform.

During the quarter, we rolled out support for eight local currencies across geographies, including Chile, Malaysia, Nigeria, bringing the total number of currencies, we support the 28.

Speaker 3: During the quarter, we rolled out support for eight new local currencies across geographies, including Chile, Malaysia, and Nigeria, bringing the total number of currencies we support to 28.

Speaker 3: Additionally, we released three new payment methods that provide learners in different countries with a more seamless checkout experience and buy now pay later capability.

Additionally, we released three new payment methods that provide learners in different countries with a more seamless checkout experience.

And buy now pay later capabilities.

Consistent with our commitment to being affordable accessible and localized.

Speaker 3: consistent with our commitment to being affordable, accessible, and localized.

As part of arguably pro offering we launched benchmark assessments, which showed learned as key metrics such as their score percentile rank and knowledge classification.

Speaker 3: As part of our Udemy Pro offering, we launched benchmark assessments which show learners key metrics such as their score, percentile rank, and knowledge classification.

Speaker 3: This is a critical stepping stone to providing organizations with insight into skills gaps they have and how either me is helping them fill those gaps.

This is a critical stepping stone to providing organizations with insight it skills gaps they have and how either me is helping to fill those gaps.

Speaker 3: Additionally, we have released 10 new software development labs within Udemy Business Pro.

Additionally, we have released new software development labs within year to meet business Pro.

Speaker 3: Labs provide a hands-on learning experience that allows learners to apply their skills by completing real-world projects using interactive environments.

Labs provide a hands on learning experience that allows lenders to apply their skills by completing real world projects using interactive environments.

In the quarter, we also integrated better personalized lecture recommendation tools based on our machine learning algorithms.

Speaker 3: in the quarter. We also integrated better personalized lecture recommendation tools based on our machine learning algorithm.

This is all part of our commitment to improving the learner journey.

Speaker 3: This is all part of our commitment to improving the learner journey.

In Q4, we received a number of awards, recognizing our product innovation company culture and organizational leadership.

Speaker 3: In Q4, we received a number of awards recognizing our product innovation, company culture, and organizational leadership.

Key to a.

Speaker 3: G2, a leading global review site, ranked Udemy Business as a leader in 26 reports across several categories, including online learning platform based on high levels of customer satisfaction and likeness to recommend.

A leading global review site.

Business as leader in 26 reports across several categories, including online learning platform <unk>.

Just on high levels of customer satisfaction and likelihood to recommend.

Our Dublin office was officially certified as a great place to work in Ireland and ink magazine named <unk> as one of the best companies in America.

Speaker 3: Our Dublin office was officially certified as a great place to work in Ireland. And Inc. magazine named Udemy as one of the best-led companies in America.

<unk> was founded to make learning accessible and inclusive and we take the responsibility of serving our learners and structures very seriously.

Speaker 3: Udemy was founded to make learning accessible and inclusive, and we take the responsibility of serving our learners and instructors very seriously.

As we shared in our previous earnings call.

Speaker 3: We're incredibly proud to have been ranked by Sustainalytics in the first percentile for ESG risk ratings in the Internet software and services subindustry as of July 2021.

We're incredibly proud to have been ranked by sustained Olympics in the first percentile for ESG risk weightings, and the Internet software and services industry as of July 2021.

Speaker 3: In January , Sustain Olympics also awarded Udemy its ESG Industry Top Rated badge for 2022.

In January sustained Olympics also awarded you to meet its ESG industry top rated bags for 2022.

Speaker 3: We've barely scratched the surface in our 200 billion tasks.

We've barely scratched the surface and our 200 billion Tam.

And we believe <unk> business is the fastest growing enterprise learning platform.

Speaker 3: And we believe Udemy Business is the fastest growing enterprise learning platform.

With a compounded annual revenue growth rate over 100% since its inception in 2015.

Speaker 3: with a compounded annual revenue growth rate over 100% since its inception in 2015.

Speaker 3: We look forward to sharing our progress with you throughout the year as we help transform learning and the way we work with our vibrant consumer marketplace and exceptional Udemy business platform. With that, I'll turn it over to our panelists.

We look forward to sharing our progress with you throughout the year as we help transform learning in the way, we work with our vibrant consumer marketplace and exceptional unique business platform.

With that I'll turn the call over to Sarah.

Speaker 1: Thank you, Greg. The phenomenal growth of Udemy business, the progress in consumer subscriptions, personalization and immersive learning capabilities, our strategic partnerships in Africa, Korea and China. It was quite a quarter for us.

Thank you Greg the phenomenal growth of <unk> business, the progress in consumer subscription personalization and immersive learning capabilities, our strategic partnership with Africa, Korea and China.

A quarter for us.

Q4 revenue of $138 million was up 25% year over year and up 6% sequentially.

Speaker 1: Q4 revenue of $138 million was up 25% year over year and up 6% sequentially.

<unk> revenue was $59 up 81% from our prior year and exceptional growth rate at this scale.

Speaker 1: you'd leave business revenue with 58 million, up 81% from the prior year, an exceptional growth rate at this scale.

Speaker 1: our consumer business delivered 80 million, up 3% from the prior year.

Our consumer business delivered $80 million up 3% from the prior year.

The consumer segment has stabilized and is on a path of future growth as we return continue.

Speaker 1: The consumer segment has stabilized and is on a path to future growth as we return to the new normal.

We've seen significant traffic growth in certain geographies, which have a lower price point, but also lower CAC, allowing estimate half okay.

Speaker 1: we have seen significant traffic growth in certain geographies, which have a lower price point, but also lower CAC, allowing us to maintain our focus on unit economics.

Thanks.

Speaker 1: While we are really excited about the growth in these regions, it is harder to predict mix and retention as buying behavior differs by country.

While we are really excited about the growth in each region. It is harder to predict Mexican retention.

Behavior are different by country.

For that reason I think consumer revenue in the first half of the year to be flat to slightly down versus the first half of 2021 and we are.

Speaker 1: For that reason, we are expecting consumer revenue in the first half of the year to be flat to slightly down versus the first half of 2021. And we are continuing to prioritize consumer subscriptions which will provide increased visibility over time.

Continuing to prioritize consumer subscriptions, which will provide increased visibility over time.

For the remainder of this discussion all financial metrics are non-GAAP unless explicitly stated otherwise.

Speaker 1: For the remainder of this discussion, all financial metrics are non-GAAP unless explicitly stated otherwise.

Q4, gross profit was $75 million.

Speaker 1: Q4 gross profit was $75 million, up 38% year over year, driven by the strong results in the U to me business.

Up 38% year over year, driven by the strong results.

Gross margin was 54, 6% of revenue approximately 500 basis points higher than Q4 of 2020.

Speaker 1: Gross margin was 54.6% of revenue, approximately 500 basis points higher than Q4 of 2020.

The next step for you to meet that that combined with a softer December drove the increase in gross margin.

Speaker 1: The mixed shift toward Udemy business combined with a softer December drove the increase in gross margin.

As a reminder, we see gross margin suppression when we have spikes in Dnb and Winchester costs are recorded immediately but revenue is recognized over a four month period.

Speaker 1: As a reminder, we see gross margin suppression when we have spikes in GMB as instructor costs are recorded immediately but revenue is recognized over a four month period.

Speaker 1: For fiscal year 2021, gross profit was $285 million, up 29% versus fiscal year 2020, and gross margin was 55% of revenue, approximately 350 basis points higher than in 2020.

For fiscal year 2021, gross profit was 285 million up 29% versus fiscal year 2020 and.

Gross margin was 55% of revenue approximately 350 basis points higher than in 2020.

Speaker 1: Our cost of revenue consists primarily of content costs, which are payments to our instructors.

On a constant revenue consists primarily of capital cost, which are payments joint structure.

Speaker 1: As a reminder, content costs depend upon the mix between consumer courses and UWA business learners.

As a reminder, content cost depends on the mix between consumer courses and get any better flatter.

Speaker 1: We expect content costs as a percentage of revenue to decrease over time as Udemy business becomes a larger portion of overall revenue.

We expect content costs as a percentage of revenue to decrease overtime as E&P business becomes a larger portion of overall revenue.

Turning to Opex total operating expense was $102 million or 74% of revenue compared to 56% in Q4 of last year.

Speaker 1: Turning to AppX, total operating expense was $102 million, or 74% of revenue, compared to 66% in Q4 last year.

Sales and marketing expense represented 49% of total revenue compared to 44% in Q4 of 2020, driven by the shift towards <unk>.

Speaker 1: Sales and marketing expense represented 49% of total revenue compared to 44% in Q4 of 2020, driven by the shift toward Udemy business in our investment and our global go-to-market team.

And our investment in our global go to market team.

Either you business represented 42% of our revenue in Q4 up from 29% a year ago.

Speaker 1: U2E Business represented 42% of our revenue in Q4, up from 29% a year ago.

Research and development expense was 12% of revenue flat with a year ago period, as we continued to increase in vessel and immersive learning consumer subscriptions and further improve our personalization and machine learning capabilities.

Speaker 1: Research and development expense was 12% of revenue, flat with a year ago period, as we continue to increase investments in immersive learning, consumer subscriptions, and further improve our personalization and machine learning capabilities.

Speaker 1: all part of our efforts to drive learning outcomes and higher LTVs.

All part of our efforts to drive buying outcomes and higher Ltvs.

General and administrative expense was 13% of revenue versus 10% a year ago as we ramp for our public company readiness.

Speaker 1: General and administrative expense was 13% of revenue versus 10% a year ago as we ramped for public company readiness.

Speaker 1: Total objects in fiscal 2021 was $324 million, or 63% of revenue compared to 61% last year.

Total opex in fiscal 2021 was $324 million or 63% of revenue compared to 61% last year.

Sales and marketing expense represented 42% of total revenue compared to 43% in 2020.

Speaker 1: Sales and marketing expense represented 42% of total revenue, compared to 43% in 2020.

Research and development expense was 11% of revenue consistent with the year ago period.

Speaker 1: Research and development expense was 11% of revenue consistent with the year-ago period.

General and administrative expense was 9% of revenue versus 8% a year ago.

Speaker 1: general and administrative expense was 9% of revenue versus 8% a year ago.

Sure.

Net loss and acquire with negative $26 8 million or <unk>.

Speaker 1: Net loss in the quarter was negative $26.8 million or negative 19% of revenue.

19% of revenue.

Adjusted EBITDA was negative $22 6 million or negative 16% of revenue.

Speaker 1: Adjusted EBITDA was negative 22.6 million or negative 16 percent of revenue.

In order to capture a huge Tam and continue the momentum.

Speaker 1: In order to capture our huge TAM and continue the momentum in U to E business, we will continue to incur short-term losses while incrementally gaining leverage for longer-term profitability.

We will continue to incur short term losses, while incrementally gaining leverage for longer term profitability.

Free cash flow was negative $1 6 million versus positive $13 4 million.

Speaker 1: free cash flow was negative 1.6 million versus positive 15.4 million a year ago.

A year ago.

Yes.

Speaker 1: Net loss in the fiscal year was $41.3 million or negative 8% of revenue. Adjusted EVA-DOG was negative $25.4 million or negative 5% of revenue versus negative $30.7 million or negative 7% of revenue a year ago.

Yes, it was $41 3 million or negative 8% of revenue and.

Adjusted EBITDA was negative $25 4 million or negative, 5% revenue versus negative $37 million or 97% of revenue a year ago.

Free cash flow was negative $25 3 million versus negative $4 9 million a year ago.

Speaker 1: free cash flow was negative 25.3 million versus negative 4.9 million a year ago.

Adjusted EBITDA and free cash flow were impacted by public company related costs and a softer than expected December which is a key month for us due to the holidays.

Speaker 1: Adjusted EBITDA and free cash flow were impacted by public company related costs and is softer than expected December , which is a key month for us due to the holidays.

Moving onto the balance sheet.

We ended the quarter end the year with $534 million of unrestricted cash cash equivalents and marketable securities.

Speaker 1: We ended the quarter and the year with $534 million of unrestricted cash, cash equivalents, and marketable securities.

Looking at the consumer and business segments individually consumer revenue in Q4 was $80 million up 3% versus a year ago.

Speaker 1: Looking at the consumer and UWA business segments individually, consumer revenue in Q4 was 80 million, up 3% versus a year ago. In the quarter, we had approximately 1.4 million monthly active buyers, up 1% year over year.

In the quarter, we had approximately $1 4 million monthly active buyers up 1% year over year.

Consumer gross profit was $39 4 million operating nine 2% of consumer revenue approximately 300 basis points higher than in Q4 of 2020.

Speaker 1: Consumer gross profit was $39.4 million, or 49.2% of consumer revenue, approximately 300 basis points higher than in Q4 2020.

During the quarter, we added $2 5 million, new consumer and business partners, bringing our total to $49 million.

Speaker 1: During the quarter, we had 2.5 million new consumer and business learners, bringing our total learner base to 49 million.

As Greg mentioned, our consumer business is the engine that feeds broad high quality content and the CW business.

Speaker 1: As Greg mentioned, our consumer business is the engine that feeds broad, high quality content and leads to UW Business and is a huge differentiator for us.

And as a huge differentiator for us.

While we are pleased to see it stabilize at a significantly higher level of pre pandemic. What's most important is that the marketplace remains healthy that our instructors continue publishing high quality content and then we can access the local content that fuels desktop.

Speaker 1: While we are pleased to see it stabilized at a significantly higher level than pre-pandemic, what's most important is that the marketplace remains healthy, that our instructors continue publishing high quality content, and that we can access the local content that fuels Udemy business.

The marketplace continues to provide more than 5000 versus a month across an extremely wide variety of topics, which we are able to carry into a very compelling offering for organization.

Speaker 1: The marketplace continues to provide more than 5,000 courses a month across an extremely wide variety of topics.

Speaker 1: which we are able to curate into a very compelling offering for organizations.

To that point the exceptional growth in the <unk> business continues with Q4 revenue of $58 million up 81% year over year.

Speaker 1: To that point, the exceptional growth in U2E business continues with Q4 revenue of $58 million, up 81% year over year. We exited the quarter with over 10,500 U2E business customers, up 44% year over year.

We exited the quarter with over 10500 customers.

<unk>, 4% per year.

Ketamine business net dollar retention rate was 118%.

Speaker 1: U to B business net dollar retention rate was 118% and ending ARR of $239 million was up 74% as compared to the prior year.

<unk> of $239 million was up 74% as compared to the prior year.

Okay.

Speaker 1: Going forward, U to E business should continue to grow rapidly, with revenue expected to exceed consumer revenue before the end of the year.

Going forward, you didn't but that should continue to grow rapidly with revenue expected to exceed consumer revenue before the end of the year.

Speaker 1: We are really excited about this. Our ARR is best in class, as is our growth at scale, and the continued revenue shift toward unitary business increases our top line visibility.

We're really excited about that.

<unk> is best in class as if our growth at scale and the continued revenue shift forgive me, but increases our top line visibility.

You mean business gross profit was $38 6 million or 66, 9% of <unk> business revenue, which represents a roughly 200 basis point increase year over year.

Speaker 1: Udemy Business gross profit was $38.6 million, or 66.9% of Udemy Business revenue, which represents a roughly 200 basis point increase year over year.

Speaker 1: This increase was largely due to revenue from our partnerships, such as Benase, which have lower support costs than our direct sales channel.

This increase was largely due to revenue from our partnerships such as Spotify, which have lower support costs and our direct sales channel.

For fiscal 2021.

Speaker 1: For fiscal 2021, consumer revenue was $331 million, up 1% versus a year ago.

<unk> revenue was $341 million up 1% versus a year ago.

We had approximately $1 3 million monthly active buyers down 7% year over year as we dealt with Covid counts.

Speaker 1: We had approximately 1.3 million monthly active buyers, down 7% year-over-year as we dealt with COVID-19.

Consumer gross profit for the fiscal year was $172 million or 51, 9% of consumer revenue.

Speaker 1: Consumer gross profit for the fiscal year was 172 million, or 51.9% of consumer revenue.

Fiscal 2021, <unk> business revenue was 187 million up 81% year over year <unk> business gross profit in 2021 was $123 million or 65, 8% of even meet that that's revenue.

Speaker 1: Fiscal 2021 Udemy business revenue was $187 million, up 81% year over year. Udemy business gross profit in 2021 was $123 million, or 65.8% of Udemy business revenue.

Looking to the first quarter of fiscal 2022, we expect revenue between 144, and $100 8 million with <unk> business expected to deliver year over year revenue growth over 70%.

Speaker 1: Looking to the first quarter of fiscal 2022, we expect revenue between $144 and $148 million, with Udemy Business expected to deliver year-over-year revenue growth over 70%. We expect an adjusted EBITDA margin of negative 11 to negative 9%.

We expect an adjusted EBITDA margin of negative 11 to negative 9%.

For fiscal year 2022, we expect revenue between 610000 $640 million with you to meet business revenue between $300 million to $310 million representing growth of 60% to 66% year over year.

Speaker 1: For fiscal year 2022, we expect revenue between $610 and $640 million, with U2E business revenue between $300 and $310 million, representing growth of 60 to 66% year-over-year, and consumer revenue between $310 and $330 million, down 6% to flat year-over-year.

Consumer revenues between 303 hundred $30 million down 6% to flat year over year.

Speaker 1: While we won't provide annual guidance by segment going forward, the nature of the current consumer market provides us with less visibility into full-year consumer revenue, so we are sharing a wider range. In contrast, the SAS model of our Udemy Business segment provides greater revenue predictability, and we are confident with our forecast here.

While we won't provide annual guidance by segment going forward. The nature of the current consumer market provides us with less visibility into full year consumer revenue. So we are sharing a wider range in.

In contrast, the SaaS model of our <unk> business segment provides greater revenue predictability and we are confident that our forecast here.

We expect an adjusted EBITDA margin of negative 12 Canadian at 10%.

Speaker 1: We expect an adjusted EBITDA margin of negative 12 to negative 10 percent.

While we are still experiencing some volatility in the consumer business with certain countries up and others down year over year, our <unk> business segment is even stronger than we expected.

Speaker 1: While we are still experiencing some volatility in the consumer business, with certain countries up and others down year over year, our Udemy Business segment is even stronger than we expected.

Our customer satisfaction as Greg mentioned is exceptional and we are continuing to build and improve our offerings to ensure we provide the very best learning experience.

Speaker 1: Our customer satisfaction, as Greg mentioned, is exceptional, and we are continuing to build and improve our offering to ensure we provide the very best learning experience.

Speaker 1: We have a unique vantage point. We can see the consumer business country by country and are able to manage our consumer marketing spend accordingly as we work through this pandemic.

We have a unique vantage point, we can see the consumer business country by country and are able to manage our consumer marketing and accordingly, as we work through this pandemic.

At the same time, you to me business is growing rapidly across the globe, which increases our visibility.

Speaker 1: At the same time, U2E business is growing rapidly across the globe, which increases our visibility. In R&D, we are investing in areas that we think will have the most impact on driving learner outcomes, increasing GMV over time, and delivering better unit economics through consumer subscriptions and increased retention.

In R&D, we are investing in areas that we think will happen most impact and driving learner outcome, increasing GMB overtime and delivering better unit economics through consumer subscriptions and increase retention.

Speaker 1: We remain focused on executing against our long-term strategy, and while we are increasing our investment for the year, given the outside success of U2B business, we expect to see much less of an impact on cash flow with just a modest increase in cash burn for the year. And with that, operator, please...

We remain focused on executing against our long term strategy and while we are increasing our investment for the year given the outsized success, if you'd repeat business.

We expect to see much less of an impact on cash flow with just a modest increase in cash burn for the year.

And with that operator, please open the call for questions.

Thank you, ladies and gentlemen, if you'd like to ask a question. Please press Star then one on your touch tone telephone again, if he would like to ask a question. Please press Star then one.

Speaker 4: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star then one on your touchtone telephone. Again, if you would like to ask a question, please press star then one. One moment for our first question. Our first question comes from Rob Oliver Baird. Your line is open.

One moment for our first question.

Our first question comes from Rob Oliver of Baird. Your line is open.

Great. Thank you guys very much good afternoon can you hear me okay.

Speaker 2: Yes, on clear. Bye, Rob. Great, great. Thanks. Appreciate it.

Unclear.

Great great. Thanks, I appreciate it.

Speaker 5: Sorry, a little background noise here. Greg, one for you, and then I had a follow-up for you, Sarah. So, Greg, clearly you guys are firing on all cylinders here on the Unimie for Business.

Sorry, you're a little background noise here.

Greg One for you and then I had a follow up for you Sarah So.

Greg.

Clearly you guys are firing on all cylinders here on the <unk>.

For business.

<unk> business.

Some really strong logos, new lands really great logos on expansion Im curious you guys mentioned.

The curation of some of the courses around you'd be and I'm wondering if you could just help us understand on those expansions because NR is like stabilizing nicely now.

Speaker 5: And I'm wondering if you could just help us understand on those expansions, because NRR is like stabilizing nicely now, on those expansion deals you're seeing for UB, is it still predominantly IT or are you seeing more of an HR driven buy? A little bit more color around those deals would be great. And then I had a quick follow up for Sarah. Yeah, Rob, it's actually a very broad base. So it's way, you know, we come in both sides of the house. We come into the HR side and we're starting to successfully...

Those expansion deals youre seeing for U b.

It still predominantly it or are you seeing more of an HR driven by.

Little bit more color around those deals would be great and then I had a quick follow up for Sarah.

Yes, Rob it's actually very broad based so its way.

Speaker 3: Yeah, Rob, it's actually a very broad base. So it's way, you know, we come in both sides of the house, we come into the HR side, and we're selling successfully in there and we come into the tech side. And so it's very broad based both sides of the companies. So the expansions are impact teams, but they're also much broader than that. Our content

We come in both sides of the house, we come into the HR side, and we're selling successfully in there and we come into the tech side and so it's very broad based both sides of the company. So the expansions are in tech teams, but they are also much broader than that our content tends to be very broad we have all kinds of learning content and leadership con.

Speaker 3: tends to be very broad. You know, we have all kinds of learning content and leadership content and communication content. So it works for almost every person in the corporation. So it's a broad basis there.

Tenant communication and content. So it works for almost every person in the corporation itself. So it's a broad based expansion.

Speaker 5: Okay, great. That's great to hear. And then Sarah, one for you. Just on the consumer business, and I don't want to distract from the obvious here, which is the UB business just getting really, really strong and going to be the majority of your

Okay, Great that's great to hear and then Sarah one for you.

Just on the consumer business and I don't want to distract from the obvious here, which is to Ub business, just getting really really strong and going to be the majority of your revenue this year, but on the consumer side.

Some caution I think in the guidance I wanted to just drill down on the personal plan. The subscription you mentioned thats going to be an increasing focus in an uncertain environment.

Just from my own navigation and being a customer you guys I would not offer the personal plan. But then also now I am being offered so just wondering if you guys are expanding out the personal plan.

Speaker 5: own navigation and being a customer of you guys. I was not offered the personal plan, but then all of a sudden now I am being offered. So just wondering if you guys are expanding out the personal plan in any early wreath and traction and whether that $29 price point is, it feels right at any update, that would be great. Thank you guys very much. Awesome, Rob. You know, I would say you're a lucky Udemy learner because not many people are seeing the personal plan yet. We are still in testing mode as we spoke about. So we plan to move into the next topic.

And any early reads and traction and whether you're at $29 price point.

Is it still feels right at any update there would be great. Thank you guys very much.

Often Rob I would say Youre lucky year to me about it because not many people are seeing the personal plan yet.

Speaker 1: Awesome, Rob, you know, I would say you're, you're a lucky Udemy learner because not many people are seeing the personal plan yet. We are still in testing mode as we spoke about. So we plan to be in beta mode for the 1st, half of the year. Our investments are not just in the subscription platform, which we built out from a pricing and packaging perspective, and we're doing testing there. So you saw 1 price, but there's different prices for testing.

So in testing mode.

As we spoke about.

<unk> planted in beta mode for the first half of the year. Our investments are not just in the subscription platform, which we built up from a pricing and packaging perspective, and we're doing testing there and so you start with Brexit there is different prices for testing, but really what we're focused on is the learning outcomes.

Speaker 1: But really what we're focused on is the learning outcomes, building and learning paths, and really making it a very compelling subscription offering. We see successful subscription offerings in the market. We have great content. And so just rounding out that offering so that it's the subscription we want to roll out to the masses is what we're focused on. And we don't expect the rollout to be until the second half.

Building and learning paths and really making it a very compelling subscription offering we see.

Successful subscription offerings in the market, we have great content and so just rounding out that offering so that it is.

The subscription we want to rollout some assets into what we're focused on and we don't expect the rollout to be until the second half.

Got it very helpful. Thank you guys very much.

Thank you. Our next question comes from Terry Tillman Choi Your line is open.

Speaker 4: Thank you. Our next question comes from Terry Tillman-Truist. Your line is open.

Speaker 6: Hey guys, this is Joe Meers-Ompertari. Thanks so much for taking the question. I think last quarter, you mentioned that you'd incorporated some new machine learning capabilities to enhance functionality around conversion and retention in the consumer business. Just wondering if you're seeing any traction there, kind of helps stabilize this business.

Hey, guys. This is Joe Meares on for Terry. Thanks, So much for taking the question.

I think last quarter, you mentioned that you had incorporated some new machine learning capabilities to enhance.

Functionality around conversion and retention of the consumer business I'm, just wondering if youre seeing any traction there.

To help stabilize this business.

Yes, so we've invested a lot in it and AI and machine learning, it's something that we're doing across our business. So we use it in our pricing engine, we use it in our in matching and recommendations and we're using it.

Speaker 3: Yes, so we've invested a lot in AI and machine learning. It's something that we're doing across our business. So we use it in our pricing engine, we use it in our in matching and recommendations, and we're using it so numerous.

Numerous places so we're actually seeing some wins there though.

Speaker 3: So we're actually seeing some wins there though. You know, in the matching and recommendations, we actually did have a nice win in the fourth quarter. We saw the ability to increase conversion rates by just doing a better match on the types of courses people were looking for.

Matching and recommendations, we actually did have a nice win in the fourth quarter. We saw we saw the ability to increase conversion rates by just doing a better match.

On the types of courses people were looking for.

Speaker 6: Okay, that's great to hear. And then just as a follow up, I think last quarter you mentioned that the go-to-market team was at about 400 people. I'm just wondering if that increased sequentially and then just like in a broader level, how's the overall hiring environment for Udemy and what should we think about the headcount being as you age at 2022? Thanks so much.

Okay. That's great to hear and then just as a follow up I think last quarter, you mentioned that the go to market team was at about 400 people I'm just.

Just wondering if that increase sequentially and then just like on a broader level. How is the hiring environment for you I mean, what should we think about the head count being as you exit 2022. Thanks, so much.

Speaker 3: Yeah, the go-to-market team, that's go-to-market plus customer successes was the 400 number. We've grown our go-to-market team about 50% last year and our plans are to grow it again.

The go to market team, that's going to work at plus customer successes that was the 400 number.

<unk> grown our go to market team about 50% last year and our plans are to grow again.

Speaker 3: about 50%, maybe a little bit more than that. We are finding it is a difficult hiring environment, but we ended up doing very well. You know, we're the kind of company that people like to work for. We're a mission-based company. We're doing well in the marketplace.

<unk>, 50%, maybe a little bit more than that.

It is difficult hiring environment, but but we ended up we ended up doing very well.

The kind of company that people like to work for we're a mission based company, we're doing well in the marketplace. We have a very nice culture. So we've been hiring actually I think December was our biggest hiring month in the history of UA business.

Speaker 3: We have a very nice culture. So we've been hiring, you know, actually, I think December was our biggest hiring month in the history of Unilever Business. And we've had with, you know, in two weeks you'll have to come in

Yes, Joe just to give you a little a little color on that we were able to hire 50 people need any business in December which was well above what we were expecting especially given its really tough to hire salespeople in the fourth quarter of and Theyre getting their accelerators.

Speaker 1: on that, we were able to hire 50 people new to me business in December , which was well above what we were expecting, especially given it's really tough to hire salespeople.

Speaker 1: in the fourth quarter when they're getting in their accelerator. So, you know, we're pleased with what we see. We continue to see a lot of traction in hiring both across even the business and within our R&D team. So I think Greg's right. I think it's the culture, it's the mission, I think, and the belief in where this company is going. That really helps us out.... nuts and bolts for small business and low- Lorenzo management...

We're pleased with what we see we continue to see a lot of traction in hiring both across even the business and within our R&D team. So I think right right I think it's the culture permission I think and the belief in where this company is going to really helps us out.

Really helpful quantitative color I appreciate it.

Thanks for the question Jeff.

Thank you. Our next question comes from Sterling Auty of Jpmorgan. Your line is open.

Speaker 4: Thank you. Our next question comes from Sterling Ady of J.P. Morgan.

Speaker 7: Hey, this is Drew on First Starling. You referenced the softer than expected December months. Could you provide some more color on what occurred there and any impacts from seasonality that you're seeing currently?

Hey, this is Joe on for Sterling you referenced the softer than expected December months could you provide some more color on what occurred Darrin any impact from seasonality that youre seeing currently.

Speaker 3: Yes, the consumer market is volatile. And in other words, some countries are, the traffic is growing quite rapidly and some of it's going down.

Yes, the consumer market is volatile.

In other words some some some countries are the traffic is growing quite rapidly and solve it is going down and and so in December we just saw a little volatility. It actually came back in January So January stabilized again, but it is a volatile it's a volatile consumer market.

Speaker 3: And so in December , we just saw a little volatility. It actually came back in January . So January , you know, it stabilized again. But it's a volatile consumer market as they're closing down countries. It's still pandemic, you know, related where certain countries are closing down, certain are opening up. So we're just having to weather that type of environment. But we were very happy with our traffic. I mean, our overall traffic has remained over 30 million unique visitors. We came into the pandemic at about 16 to 18 million unique visitors. So, you know, we've stabilized at a much higher.

Closing down countries, it's still pandemic related with certain countries closing down certain are opening up. So we're just having to weather that type of environment, but we're very happy with our traffic I mean, our overall traffic has remained over 30 million unique visitors.

Came into the pandemic and about 16 to 18 million unique visitors. So we've stabilized.

And a much higher.

Speaker 3: bigger business than we had before.

Bigger business than we had before but yet it is still volatile given that we're going into a nursery in the pandemic.

Speaker 3: But yet it is still volatile given that we're going into a year three of the pandemic.

Speaker 1: I think for us to add to that is, you know, we are, as Greg said, you know, we were very diversified globally. So we see countries that are going up. We see countries that are stable countries that declined a bit.

I think for us to add to that.

We are as Greg said.

We are very diversified globally. So we see countries that are going up we see countries that are stable countries.

Declined a bit.

Speaker 1: A lot of the growth we're seeing are in some of the lower LTV or lower kind of purchasing power countries, but we're able to allocate our spend and we can lean in where we're seeing good conversions. We can pull back where we're seeing the conversions not as good. So we're managing our direct marketing spend accordingly as we continue to sort of work through this.

There are a lot of the growth we are seeing are in some of the.

Lower LTV on lower purchasing power countries, but we're able to allocate our spend and we can.

Leanne and where we're seeing good conversions, we can pull back where were seeing the conversion is not as debt. So we're managing our direct marketing spend accordingly, as we continue to sort of work through that.

Okay got it thank you.

Thanks.

Thank you next question comes from Stephen Sheldon of William Blair. Your line is open.

Speaker 4: Thank you. My name is

Hey, thanks.

Speaker 2: Hey, thanks. Congrats on the strength in the business segment. Curious.

Congrats on the strength in the business segment.

Curious.

Speaker 6: what the labor and talent shortage across industries is maybe meant for demand for your enterprise solutions. Like it's what trends have you seen in corporate learning budgets? Are they going up? And what's their level of urgency to provide upskilling opportunities to existing employees in this environment where maybe they can't hire as much as they'd like externally.

What the labor and talent shortage across industries that may be met or demand for your for your enterprise.

Solutions I guess, what trends have you seen in corporate learning budgets.

Are they going up and what's their level of urgency to provide upscaling opportunities to exist.

Existing employees in this environment, where maybe they can't hire as much as they'd like externally.

We are seeing.

Speaker 3: We are seeing a very good enterprise business. The market is expanding right now. People, they send everybody home. Everybody's working from home. A lot of the trading was in person. So the digital transformation is accelerating across all the enterprises.

Good enterprise business. The market is expanding right now people may send everybody home everybody is working from home a lot of the training within person.

So the digital transformation.

Celebrating across all the enterprises and so it's a very very good market right now so the budgets are getting bigger and there is a sense of urgency.

Speaker 3: And so it's a very, very good market right now. So the budgets are getting bigger and there is a sense of urgency. You know, there's people are leaving. There's a great resignation. People are worried about retention and worried about employee engagement. And so, you know, it's a particularly good time. We think we have a great solution. We think we have a we're at the right place at the right time with the right solution in the enterprise business. But the market is particularly good.

Our leading is a great resignation people are worried about retention.

Worried about employee engagement.

And so it's a particularly good time, we think we have a great solution. We think we have a we are at the right place at the right time with the right solution in the enterprise business.

But the market is particularly good.

Great. Thank you.

Thank you. Our next question comes from Ryan Macdonald Needham <unk> Company. Your line is open.

Speaker 4: Thank you. Our next question comes from Ron McDonald. Need them in the company.

Speaker 8: Hi, thanks for taking my questions. Craig, you've talked about quite a bit in the past about international expansion remaining a top priority for you to me over the next few years here. Given, I'd be curious how you're prioritizing and focusing on which countries to drive incremental investment and how that maybe differs based on what you're seeing in the consumer side versus what you're seeing in the enterprise.

Alright, Thanks for taking my questions, Craig you've talked about quite a bit in the past about international expansion remaining a top priority for you to me over the next few years here.

Kevin I'd be curious, how higher prioritizing and focusing on which countries to drive an incremental investment and how that may be different consumer based on what youre seeing in the consumer side versus what youre seeing in the enterprise side.

Yes. Thanks for the question, we've always been the most global AD Tech company.

Speaker 3: Thanks for the question. We've always been the most global and tech company. More than 70% of our consumer revenue is outside the US. And we have a playbook that we look where there's obviously large populations, but where our English content is being consumed very high. And so then we start working on our playbook, which is we put somebody into the market and start developing local content. Then we do local currencies and then we do local payments.

More than 70% of our consumer revenue was outside the U S and we have a playbook.

We look where we are there.

There is obviously large populations.

But where our content is being consumed very high and so that we start working on our playbook, which is we put somebody into the market and started developing local content that we do local currencies and then we do local payments and then we do we do local marketing and then we bring in go to market teams. So so.

Speaker 3: And then we do we do local marketing and then we bring and go to market.

Speaker 3: So that's a playbook that we've been running and we're running across the globe. And there are various different investments depending on the country. But right now, for example,

That's a playbook that we've been we've been running and we're running across the globe and.

Various different investments depending on the on the call.

But right now for example.

Speaker 3: You know, we're working in Indonesia. We're building our business there. You know, we're investing heavily in there. In Asia, we moved into Korea and China through partnerships, so we're expanding in the hair. And we're working in Sub-Saharan Africa with multi-choice, with a partner there. So we're expanding in a lot of different directions.

We're working in Indonesia.

We're building a business there we're investing heavily in there in Asia.

Moved into Korea, and China, some partnerships so we're expanding in there.

And we're working at sub Sahara Africa.

With multi choice with a partner there. So so we're expanding a lot of different directions.

And as far as the business we are expanding.

Speaker 3: And as far as Udemy business, we are expanding across the globe and it's very broad based. So we are building our go to market teams. We started in North America, we built out of Nia Next, but we're continuing to build out that. Then we built out of APAC and now we're building out Latin America. So we are building out a global go to market team.

Across the globe and it's very broad based so we are building our go to market teams. We started in North America, we built out of EMEA next.

<unk> has built out that that we built out APAC and now we're building out Latin America. So so we are building out a global go to market team.

That's helpful and maybe just as a follow up and this is for.

Speaker 8: That's helpful. Maybe just as a follow up, and this is for, I think, Sarah as well, is I think you mentioned in your prepared remarks, Sarah, that you get a slight gross margin benefit on Udemy business, from a mix of sales coming from partnerships there. So as you think about continued expansion of Udemy business into new countries, is there a preference or prioritization to try to go to market with partners in UB or go directly being the preferred choice?

I think Sarah as well thank.

I think you mentioned in your prepared remarks here that you get a slight gross margin benefit on your business from.

The mix of sales coming from partnerships. There. So as you think about continued expansion of <unk> business into new countries.

They're a preference our prioritization to try to go to market with partners.

Uba or go directly being the preferred choice deal. Thanks.

Speaker 1: That's a great question, Ryan. You know, it's a very minor, very minor benefit in comparison to us really making the right decision for that country, whether we can do it ourselves, and we know we can bring the oxygen back in the ocean.

That's a great question Ryan.

It's a very minor.

Very minor benefit in comparison to us really making the right decision for that country, whether we can do it ourselves and we know we can bring the best.

Sort of go.

Speaker 1: sort of go to market strategy or whether a partner is the best. So I think that supersedes the small benefit we get in gross margin.

Go to market strategy or what our partner is the boss. So I think that supersedes the small benefit we get in gross margin.

Super helpful. Thank you Ken.

Thank you.

Okay.

Speaker 4: Thank you. Our next question comes from Brent Phil of Jeffries, Atlanta.

Thank you. Our next question comes from Brent Thill.

Jefferies. Your line is open.

Hi, guys. This is David lost Berg on for Brian . Thanks for taking the questions I'll start with one.

Speaker 6: Hi guys, this is David Lusberg on for Brent. Thanks for taking the questions. I'll start with one and then have a follow-up and sorry if I already missed this, but just curious if you could talk on the consumer side. With what we're seeing, is this a competitive thing at all? Or is this really just, you know, lapping super tough COVID comps and you know, people are going back outside? Just curious if you could talk to, you know, is it a competitive dynamic or rather consumer behavior?

Follow up and sorry, if I missed this but just curious if you could talk on the consumer side.

With what we're seeing is this a competitive thing at all or is it really just lapping super tough comps and people are going back outside just curious if you could talk to.

Positive dynamic or rather consumer behavior.

It's consumer behavior, we're seeing in certain markets. We are seeing the overall traffic for online learning going down certain theres certain markets, we call them fatigue markets that have been that have been benign Zhu for two years and we're seeing that in some markets, but then.

Speaker 3: It's consumer behavior. You know we're seeing in certain markets we're seeing the overall traffic for online learning going down. In a certain there are certain markets we call them fatigue marks.

Speaker 3: that have been on Zoom for two years. And we're seeing that in some markets.

Speaker 3: Conversely, on other markets, the traffic is growing rapidly. So it is not a competitive issue. It is a total, we have the most traffic of any edtech website in the world with over 30 million unique visitors. So we see more data than anybody else, and we're more global than everybody else. And it's really, it's absolutely a pandemic issue versus a competitive issue.

Conversely on other markets. The traffic is growing rapidly. So so it is not a competitive issue. It is a total we have the most traffic of any of Ed Tech website in the world with over 30 million unique visitors. So we see more data than anybody else with more global than everybody else and it's really it's absolutely.

Pandemic issue versus a competitive issue.

Got it thanks for that color and then as a follow up on.

Speaker 6: Got it. Thanks for that color. And then as a follow up on.

Speaker 6: on just leave it to guidance came in below the street. I'm curious, is that, was that the street being too high or is there, you know, areas that you guys are focusing on prioritizing investments in? Just curious, you could provide some color on that end.

Adjusted EBITDA guidance came in below the street I'm curious is that was that that should be being too high right.

And then you guys are focusing on prioritizing investments and just curious you could provide some color on that.

Yeah. So I think you've seen our <unk> business performance. It continues to exceed our expectations and continues to outperform and so we are further accelerating the expansion of our global go to market team we have at <unk>.

Speaker 1: Yeah, so I think you've seen our Udemy business performance. It continues to exceed our expectations and continues to outperform. And so we're further accelerating the expansion of our global go-to-market team. We have an unheard of learner NPS of 61 in the space. We've got 80% growth at scale. And we're not feeling that we're getting anywhere close to the edges of that.

<unk>.

<unk> NPS of 61 in the space, we've got 80% growth at scale and we are not feeling that we're getting anywhere close to the edges of that so and frankly, the hiring has gone much better than we expected. So we're leaning in hard on.

Speaker 1: So, and frankly, the hiring has gone much better than we expected. So we're leaning in hard on Udemy business. And in general, when you think about our business as a whole, you know, the enterprise business is growing really fast. It does have a lower EBITDA margin really than the consumer business. And so I think with the consumer guidance thing down a little bit, that's what we're experiencing.

And in general when you think about our business as a whole enterprise business is growing really fast. It does have a lower EBITDA margin really than the consumer business and so I think with the consumer guidance being down a little bit that's what yes, that's what we're experiencing.

Great. Thanks, guys appreciate it.

Speaker 4: Thank you. Our next question comes from Jason Salina of KeyBank. Your line is open. Great. Thanks. Hey, Craig. Hey, Sarah. Can you hear me all right?

Thank you. Our next question comes from Jason Salina of Keybanc. Your line is open.

Great. Thanks, Hey, Greg can you hear me alright.

Okay.

Perfect. So it's nice.

To hear that the stats on the instructors learn.

Half a million and a $1 million last year, but when we think about attracting the best and structures.

Instructors.

How does that position for growth for the upcoming years.

You broke up I didn't hear that question.

Speaker 2: So I wanted to ask about the attracting, you know, the top instructors to Udemy.

So I wanted to ask about the attracting.

Attracting top instructors to you to me it.

It seems like.

Speaker 9: Seems like it's a tough hiring environment, but how is it from instructor attraction standpoint? Yes.

It's a tough hiring environment.

But how is it from instructor.

Attraction standpoint.

Yes, so we're finding that.

Speaker 3: Our publishing is at record levels. We're publishing over 5,000 new courses a month.

Our publishing is at record levels, we're publishing over 5000, new courses of months, we're bringing in top people. In fact, we just brought in two top instructors from a competitor in the last couple of months and so we're finding that debt because we monetize very well for the instructors are instructed payments. This year are going to be over $200 million.

Speaker 3: We're bringing in top people. In fact, we just brought in two top instructors from a competitor in the last couple months.

Speaker 3: And so we're finding that because we monetized very well for the instructors, our instructor payments this year are going to be over $200 million, that we're having no trouble at all of getting the instructors we want and getting the publishing that they want. In fact, this is the new creator economy. And we are a place where they know they can come and they can make money and we're partners. And so we work very well with them. So that has not changed at all. It's been very robust. OK.

<unk>.

Having no trouble at all of getting instruct everyone in <unk> and getting the published that they want in fact this is the new creator economy and we are placed.

They know they can come in and they can make money and with partners and so we work very well with them. So that has not changed at all it's been very robust.

Okay perfect.

And then when we think about the consumer business.

Conversion between the monthly average buyers in the top of the funnel.

It looks like it's stabilized a little bit at least for Q4.

But with the guidance for 'twenty, two maybe can you speak.

As implied.

Directionally for that.

For this year.

Yes, so I think Jason.

Speaker 1: Yeah, so I think Jason, you know, I think in the first half, we're not expecting a lot of growth and monthly average buyers. I think in the back half, really what we're looking to do is drive more LTV from our buyers through subscriptions over time and through personalization and retention efforts versus trying to

I think in the first half, we're not expecting a lot of growth in monthly average buyers.

I think in the back half really what we're looking at deals and strike more LTV from a biased towards subscriptions over time.

Personalization and retention offer it to persist trying to.

Speaker 1: get more back to growth coming from the monthly average buyers.

Get more back to growth coming from the monthly average virus.

Okay excellent.

That's quite helpful. Thank you.

Thanks Nathan.

Thank you. Our next question comes from Josh <unk> Morgan Stanley . Your line is open.

Speaker 4: Thank you. Our next question comes from Josh Baer. Morgan Stanley , your line is open.

Speaker 5: Great, thanks for the question. And it's great to hear about the progress on in Udemy business and Udemy Pro features, specifically benchmark assessments and labs. I'm just wondering, what else are you working on around Udemy Pro? What else are enterprises asking for?

Great. Thanks for the question.

And it's great to hear about the progress on.

<unk> <unk> business and <unk> Pro features specifically benchmark assessments in labs and I'm just wondering what else are you working on.

Around you to me pro what else are enterprises asking for and.

Speaker 5: how does this tie into the EBITDA guidance and some of the investments that you're making?

How does this tie into the the EBIT guidance and some of the investments that youre, making.

Yes. Thank you for the question.

Speaker 3: Thank you for the question. You know, you're gonna be pro we're building out multiple verticals, you know, so we started with AWS and web development and we're building out a global cloud and Azure. So you know, those are things that we're being asked.

<unk> Pro we are building out multiple verticals. So we started with AWS and web development and we're building out a global cloud and Azure.

Those are things that were being asked to build.

Speaker 3: to build, you know, from the various verticals in the different companies.

From the various verticals.

And the different companies.

Speaker 3: On the other side we're being asked for leadership training and the reason why we brought Corp.U was that we were being asked for more leadership training. It's something that every company needs more of.

On the other side, we're being asked for leadership training and the reason why we bought core view towards what we're being asked for more leadership training is something that every company needs more of.

Speaker 3: And so and cohort based. So so we're building out, you know, we're building up a core view. We're starting with leadership. We're we're.

So and cohort base. So so we're building up we're building.

Core view, we're starting with leadership.

<unk>.

Speaker 3: wrapping that up, and then we're going to build out other verticals, other verticals in cohort-based learning.

Ramping that up and then we're going to build out other verticals other verticals in cohort based learning.

And just that's from <unk>.

Speaker 1: And just just from an investment perspective, our investment on the side is is what we were expecting. It's really the sales and marketing on the side that we're accelerating this year because we continue to see that traction and we're taking our expectations for you to meet business revenue up.

An investment perspective, our investment on the R&D side. It is what we were expecting it's really the sales and marketing on the <unk> side that we are accelerating this year, because we continue to see that traction and we're taking our expectations for you to meet business revenue up.

Okay. That's great. Thank you.

Thank you.

Speaker 4: Thank you. Our next question comes from Matt Schindler of Bank of America. Your line is open.

Thank you. Our next question comes from Nat Schindler of Bank of America. Your line is open.

Yes, hi, guys. Thank you for taking my question.

Speaker 10: Yes. Hi, guys. Thank you for taking my question. So I just wanted to talk a little bit about you to me business and its seasonality and what you're seeing in kind of your guidance. I mean, this is you basically having a layering effect and you've been adding the last two quarter this quarter about seven point four million over Q3. Q3 is a little over eight million and it's kind of been layering up.

So I just wanted to talk a little bit about <unk>.

<unk> business and its seasonality.

<unk>.

And what Youre seeing and kind of your guidance remember. This is you basically had been a layering effect that you've been adding the last two quarters. This quarter about $7 4 million over Q3, Q3 is a little over $8 million.

Been layering up you've been cycling up from earlier in the year and from last year.

Speaker 10: cycling up from earlier in the year and from last year. But in your guide, and I know you said 70 plus percent and you didn't fully break it out. So that might mean it. But at 70 percent, it means a pretty big step down in that layering. Is there any sort of seasonality that we should be aware of on one cue or how this business should work on when you win customers and when the revenue flows through?

But in your guide and I know you said 70 plus percent you did fully break it out so that might mean, it but it's 70% it means a pretty big step down in Matt layering here any sort of seasonality that we should be aware of.

On <unk> or how this business should work on when you win customers and when the revenue flow through.

Great question Matt.

Speaker 1: Great question, Nat. Yes, there is seasonality in our business. Like many enterprise staff.

Yes, there is seasonality in our business like many enterprise SaaS companies. We do tend to have our biggest quarter is Q4, we had a great Q4, great amount of focus in December .

Speaker 1: companies, we do tend to have our biggest quarter is Q4. We had a great Q4, we had great amount of closes in December and you do tend to see that the stabilization kind of happens again in Q1 and then you continue to grow throughout the year. So I mean, nothing has normal, the buying cycle really is in Q4 for many enterprises. We work as hard as we can to even it out throughout the year but I think that's a secret sauce that most enterprise-class businesses haven't figured out.

You tend to see that the stabilization kind of happens again in Q1, and then you continue to grow throughout the year. So I think nothing abnormal the buying cycle really is in Q4 from any of our prices we work as hard as we can to even it out throughout the year.

But I think that's the secret sauce that most enterprise SAS businesses haven't figured out.

But wouldn't that layering on a lot of new customers in Q4 being real growth in Q1, because those customers didn't come in the beginning of October in Q4. They came throughout Q4 and that they are now a full quarters worth of revenue.

Speaker 10: But wouldn't that layering on a lot of new customers in Q4 mean real growth in Q1? Because those customers didn't come in the beginning of October in Q4. They came throughout Q4 and thus they are now a full quarter's worth of revenue.

In Q1.

Yes, so we layered on a lot of customers I think customer size is also something we have a lot of people are just coming into team plan on their own.

Speaker 1: Yeah, so, you know, we, we layered on a lot of customers. I think customer size is also something we have a lot of people are just coming into team plan on their own. And so that growth rate of the customers. Can also be attributed to different size customers. I will say our average deal size is growing every quarter that, you know, per logo is going up and we do expect that trend to continue.

And so that growth rate.

Customers can also be.

Attributed to different type customers I will say our average deal size is growing every quarter that IRR per logo.

<unk> is going up and we do expect that trend to continue.

Okay.

Speaker 10: OK, totally different than on still asking about you to me business and just going on a longer term basis and kind of more what's going on strategically. Heid

Totally different than on still asking about <unk> business, and just growing on a longer term basis and kind of more.

What's going on strategically how do you.

Why are customers left that have left or cut down their spend on <unk> cut down on this but what is really what happens is it do they look for competitive offerings. Sometimes are good. They just say they don't need as much if that's happened.

Speaker 10: Why have customers left that have left or cut down their spend on you to me doesn't cut down. What is a really what what happens is it? Do they look for competitive offering sometimes or did they just say they don't need it as much if this happened?

So.

Speaker 3: Our retention is much higher on corporations that are over 1000 employees. So the bigger the corporations, the longer they stay and the higher the net retention. You know, there's lots of reasons why people leave. There's, we have a huge small business segment. And so there's a lot of churn that happens in that we have a team plan. So we get all these customers that come in and they're small, 5 to 20 seats.

Our retention is much higher.

On corporations that are over 1000 employees some of the bigger corporations the longer they stay and the higher the net retention.

There's lots of reasons why people leave.

A huge.

Mall business segment, and so and there's a lot of churn that happens and that we have a team plan. So we get all these customers that come in and Theyre small five to 20 seats.

Speaker 3: And there's more churn going on there than would be normal. Managed accounts have much lower churn. But there's just a wide variety of reasons.

There is more churn going on there that would be normal managed accounts have much lower churn, but there's just a very.

Wide variety of reasons.

Speaker 3: Competition is always part of it, but not the biggest part. Its businesses either are doing well or have decided to do other things. So it's not, Sarah, what's your...

Competition is always part of it but not the biggest part.

Businesses, either are doing well or have decided to do other things. So it's not.

Is there what's your.

Speaker 1: Yeah, I mean, we will see some with it with budget issues.

Yes, I mean, we will see some with it with budget issues. The one thing I do want to mention is our net dollar retention of 118% across all of our customer segments, but for our larger customers as well above 120%. So we tend not to see the larger customers that we're supporting with our customer success teams.

Speaker 1: The one thing I do want to mention is our net dollar retention is 118% across all of our

Speaker 1: customer segments, but for our larger customers, it's well above 120%. So we tend not to see the larger customers that we're supporting with our customer success teams and aligning with them on what their business goals are in partnering with Udemy. We tend not to have much turn there, but once in a while, competition, not as often, and sometimes just budget reasons. Makes sense, and just...

Aligning with them on on what their business goals are and partnering with you to me.

We tend not to have.

Much trend there but.

Once in a while competition not not as often and sometimes just budget reasons.

Makes sense and then just.

To clarify one last thing.

What percentage of the <unk> business revenue was from customers over 1000.

Speaker 10: What percentage of the Udemy business revenue is from customers over 1,000 employees.

Employees versus the smaller customers.

Speaker 10: in just round figures if you don't want to give out total.

And just round figures if you don't want me Hey, Rob the total book.

Speaker 1: It's a pretty good portion. I don't want to give out an exact number, but we have a lot of really large customers more and more. I think you probably heard in our in our prepared remarks that we signed our first deal that's over five million dollars. So the amount of error coming from enterprise sized customers is growing faster.

It's a pretty good portion I don't want to give out an exact number but we have a lot of really large customers are more and more I think you probably heard in our in.

In our prepared remarks that we signed our first deal that's over $5 million. So the amount of ore coming from enterprise customers is growing faster.

Makes sense. Thank you.

Okay.

Thank you I'm showing no further questions at this time I'd like to turn the call back over to Greg a car to close the call.

Speaker 4: Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Greg Kakarz to close the call.

I just wanted to thank everybody for their time and asking very nice questions. I appreciate you're looking at year to date, we're very excited about our business. We think we have an extraordinary opportunity in the marketplace and I hope that youll be seeing that over the next few quarters.

Speaker 3: I just want to thank everybody for their time and asking very nice questions. I appreciate you looking at you to me. We're very excited about our business. We think we have an extraordinary opportunity in the marketplace, and I hope that you'll be seeing that over the next few quarters.

Thank you.

Speaker 4: Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day. Goodbye. address

Ladies and gentlemen, this does conclude today's conference. Thank you all for participating you may now disconnect have a great day goodbye.

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Yes.

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Yes.

Okay.

Speaker 11: you

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Speaker 11: I.

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Speaker 11: you

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Thank you for joining us today for Germany fourth quarter and fiscal 2021 call.

Speaker 4: Thank you for joining us today for U of M's fourth quarter and fiscal 2021 call. I will now turn the call over to Taylor Giles.

I'll now turn the call over to Taylor Giles.

Thank you with me today are graco carry year to me as CEO and Sarah Blanchard.

Speaker 2: Thank you. With me today are Greg Kokari, Udemy CEO , and Sarah Blanchard.

Yes.

Before we begin during this conference call. We may make forward looking statements within the meaning of federal Securities laws.

Speaker 2: Before we begin, during this conference call, we may make forward-looking statements within the meeting of federal security.

Speaker 2: These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or intended.

These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated.

For a complete discussion of risks associated with these forward looking statements. We encourage you to refer to our most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.

Speaker 2: For a complete discussion of risks associated with these forward-looking statements, we encourage you to refer to our most recent Form 10-K and Form 10-Q filings with the security information.

Speaker 2: Our forward-looking statements are based upon information currently available.

Our forward looking statements are based upon information currently available to US we caution you not to place undue reliance on forward looking statements and we do not undertake and expressly disclaim any duty or obligation to update or alter our forward looking statements, except as required by applicable law.

Speaker 2: We caution you not to place undue reliance on forward looking statements and we do not undertake and expressly disclaim any duty or obligation to update or alter our forward looking statements, except as required by applicable.

In addition, during this call certain financial performance measures may be discussed that different from comparable measures contained in our financial statements prepared in accordance with the U S. Generally accepted accounting principles referred to by the Securities and Exchange Commission as non-GAAP financial measures. We believe that these non-GAAP financial measures.

Speaker 2: In addition, during this call, certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with the U.S. Generally Accepted Accounting Principles referred to by the Securities and Exchange Commission as non-GAAP financial.

Speaker 2: We believe that these non-GAAP financial measures assist the management and investors in evaluating our performance and comparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our

The system management and investors in evaluating our performance and comparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our earnings release.

Speaker 2: A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included.

Reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release. These reconciliations together with additional supplemental information are available at the Investor Relations section of our website. A replay of today's call will also be posted on the website I will now turn the call over to Greg.

Speaker 2: These reconciliations together with additional supplemental information are available at the investor relations section of our...

Speaker 2: A replay of today's call will also be posted on the website. I will now turn the call over to Greg.

Thank you for joining us.

Speaker 3: We're very pleased with our performance in the quarter, which came in ahead of guidance.

Very pleased with our performance in the quarter, which came in ahead of guidance.

Speaker 3: We experienced continued extraordinary growth and momentum in you to meet business. Which grew 81%

We experienced continued extraordinary growth and momentum in <unk> business.

Which grew 81% year over year.

Speaker 3: contributing to our overall top line growth of 25% versus 2020.

Contributing to our overall top line growth of 25% versus 2020.

In the quarter more than 32 million unique visitors per month visited our consumer marketplace and we reached over 10500 <unk> business customers.

Speaker 3: In the quarter, more than 32 million unique visitors per month visited our consumer marketplace, and we reached over 10,500 Udemy business customers.

As we look to 2022, we'd see the tail winds of Upskilling and Reskilling driving unique businesses strong grrr.

Speaker 3: As we look to 2022, we see the tailwinds of upskilling and reskilling driving the Unity Businesses' strong ARR, which was $239 million exiting the fourth quarter.

Which was $239 million exiting the fourth quarter.

In Q4, our consumer business returned to growth and we believe it has stabilized at roughly one three X pre pandemic revenue levels.

Speaker 3: In Q4, our consumer business returned to growth, and we believe it has stabilized at roughly 1.3x pre-pandemic revenue level.

Global traffic remained strong and we continue to see more than 5000, new courses published each month.

Speaker 3: Global traffic remains strong, and we continue to see more than 5,000 new courses published each month.

Okay Super marketplaces be engine that provides high quality content to the <unk> business and helps generate leads driving its growth and success.

Speaker 3: Our consumer marketplace is the engine that provides high quality content for Udemy business and helps generate the leads driving its growth and success.

Our marketplace allows us to maintain our affordability and accessibility and its worth tens of millions of learners help us identify the fresh high quality relevant content that is a true differentiator for us.

Speaker 3: Our marketplace allows us to maintain our affordability and accessibility, and it's where tens of millions of learners help us identify the fresh, high-quality, relevant content that is a true differentiator for us.

Speaker 3: With content in more than 75 languages, our consumer marketplace enables us to expand the reach of Udemy business to now include 13 language packages, most recently in Polish and Korean.

With content and more than 75 languages are consumer marketplace enables us to expand the reach of <unk> business to now include 13 language packages, most recently in Polish and Corinne.

In addition, we built the tool so playbooks that we believe our <unk> business customers need to attract retain and engage their employees.

Speaker 3: In addition, we've built the tools and playbooks that we believe our Udemy business customers need to attract, retain, and engage their employees.

Driving phenomenal ROI and an impressive lender net promoter score of 61.

Speaker 3: driving phenomenal ROI and an impressive learner net promoter score of 61.

Our ability to provide broad deeper range of high quality content to enterprises.

Speaker 3: Our ability to provide broad, deep array of high quality content to enterprises on a truly global scale is driven by our consumer marketplace.

Truly global scale is driven by our consumer marketplace.

Speaker 3: And it's what puts Unity Business in a league of its own when it comes to supporting global organizations.

And Thats, what puts <unk> business in a league of its own when it comes to supporting global organizations.

We continue to see increasing traction in our second quarter as a public company in.

Speaker 3: We continue to see increasing traction in our second quarter as a public company. In the quarter, we had 440 Udemy business customers with over 100,000 ARR in our first field with a total contract value of over 5 million. As enterprise customers increasingly see the value of what we provide in the future of work. To illustrate...

In the quarter, we had 440 <unk> business customers with over 100000 IRR.

And our first deal with a total contract value of over $5 million.

As enterprise customers increasingly see the value of what we provide in the future of work too.

To illustrate let me give you an example.

We are working with E Y one of the largest professional service networks in the world.

Speaker 3: We're working with EY, one of the largest professional service networks in the world.

<unk> 340000 employees 200000 are currently using <unk> business as they prioritize learning.

Speaker 3: Of EY's 340,000 employees, 200,000 are currently using Udemy Business as a prioritized learning.

<unk> goal is to enable employees to learn in a virtual world.

Speaker 3: EY's goal is to enable employees to learn in a virtual world.

Speaker 3: And using the Udemy platform, they're experiencing great success.

And using the <unk> platform they are experiencing great success.

Speaker 3: They hold an impressive employee learning satisfaction rate of 84%.

They hold an impressive employee learning satisfaction rate of 84%.

Speaker 3: Udemy Business is also collaborating with EY on their badges program as a key content provider.

<unk> business is also collaborating with <unk> on their bachelors program as a key content provider.

Speaker 3: This program enables employees to hone their digital and leadership capabilities and earn badges for future focused skills such as data science and AI, transformative leadership, inclusive intelligence, and more.

This program enables employees to hone their digital and leadership capabilities and earn badges for future focused skills, such as data science and AI.

As Florida leadership inclusive intelligence and more.

<unk> business is also collaborating with <unk> on their three masters programs.

Speaker 3: Udemy Business is also collaborating with EY on their three masters program.

Speaker 3: which is offered in association with Hult International Business School....

Which is offered in association with Hope International business School.

Our content is crucial to the program.

Speaker 3: Which is available to all employees free of charge.

Which is available to all <unk> employees free of charge.

Learners are the reason we exist in their stories motivate us everyday.

Speaker 3: Learners are the reason we exist and their stories motivate us every day.

Our social impact program is one of the many ways, we seek to fulfill our mission.

Speaker 3: Our social impact program is one of the many ways we seek to fulfill our mission.

On Veterans day, we announced the Sentinels of freedom as our latest social impact partner.

Speaker 3: On Veterans Day, we announced the Sentinels of Freedom as our latest social impact partner.

We partnered to help severely wounded post 911 veterans.

Speaker 3: We partnered to help severely wounded post 9-11 veterans who are referred to as sentinels.

Who are referred to as Sentinels.

Speaker 3: Identify and achieve the skills they need to build long-lasting and successful careers in their chosen disciplines.

Identify and achieve the skills they need to build long lasting and successful careers in the chosen disciplines.

Speaker 3: The program is designed to meet each veteran's individual needs.

The program is designed to meet each veterans individual needs.

Speaker 3: assisting them with their higher education, offering ongoing mentorship.

Listing them with their higher education.

Offering ongoing mentorship.

Speaker 3: life skills coaching, career development, networking, and financial assistance.

Life skills Kochi career development net.

Networking can financial assistance.

We will also support upwardly global <unk>.

Speaker 3: We also support Upwardly Global, a nonprofit that aims to eliminate the employment barriers that skilled immigrants and refugees encounter when entering the U.S. workforce.

A nonprofit that aims to eliminate the inflow and barriers that skilled immigrants and refugees encountered when entering the U S workforce.

Speaker 3: Our partnership gives job seekers access to learning resources that prepare them to pass industry-recognized certifications and secure new jobs.

Our partnership gives job seekers access to learning new sources to prepare them to past industry recognized certifications and secure new jobs.

Speaker 3: We have two amazing stories of upwardly global learners who changed their lives through the program.

We have two amazing stories of upwardly global learners, who changed their lives through the program.

Originally from Kazakhstan.

Speaker 3: Originally from Kazakhstan, you're along to Lubikov.

<unk>.

Speaker 3: had more than five years of experience in logistics and was looking to pivot his career to IT.

And more than five years of experience in logistics and was looking to pivot as Korea to IP.

Speaker 3: With no IT background, his upwardly global coach advised him to enroll in a CompTIA 8 plus course on Udemy.

With no background is upwardly global coach advise them to enroll in a comp T plus <unk> and <unk>.

With the skills. He learned on you to me earlier landed a job as it help desk analyst at the world's largest home improvement specialty retailer.

Speaker 3: With the IT skills he learned on Udemy, he early landed a job as a help desk analyst at the world's largest home improvement specialty.

Likewise Mohamad added Andrews Ed.

Speaker 3: Likewise, Mohamed Abid Emmerzad, who was a project manager in Afghanistan, joined Upwardly Global to learn about the systems and technologies that are relevant in the U.S. job market.

Who was a project manager in Afghanistan.

Joining upwardly global to learn about the systems and technologies that are relevant in the U S job market.

Speaker 3: Muhammad began taking project management courses on Udemy business and honed his project management skills to become more competitive for US jobs.

We began taking project management courses on <unk> business and honed his project management skills to become more competitive for U S. Jobs. He has since successfully landed a job at the senior construction projects scheduled in consulting and a construction services company.

Speaker 3: He has since successfully landed a job as a senior construction project scheduling consultant and a construction services company.

Our structures are at the heart of <unk> success, and our learners engagement.

Speaker 3: Our instructors are at the heart of Udemy's success and our learners' engagement.

Speaker 3: During the year, we had 34 instructors who earned over $500,000 and 19 who earned over a million dollars. And in 2021,

During the year, we had 34 instructors who earned over $500000 in 19th who earned over $1 billion and then 2021.

Speaker 3: Our paid instructors earned $177 million from Udemy for their courses.

Paid instructors earned $177 million from <unk> for their courses.

Speaker 3: Let me share a few examples of how our instructors create content that moves at the speed of market change.

Let me share a few examples of how our instructors create content that moves at the speed of market change.

In October <unk>.

Speaker 3: In October , Udemy instructor Alan Rodriguez published a course on Azure Networking Solutions, a full month before the AZ-700 exam was updated.

<unk> the instructor Alan Rodriguez published a course on Azure networking solutions, a full month before the ASC 700 exam was updated.

Hello, and then updated the course content again in December to ensure that it's as relevant as possible to the azure networking exam.

Speaker 3: Helen then updated the course content again in December to ensure that it's as relevant as possible to the Azure Networking Assistant.

Speaker 3: Allen's commitment to fresh quality content has attracted more than 350,000 learners from around the world.

<unk> commitment to fresh quality content has attracted more than 350000 learners from around the world.

So many other instructors are also benefiting from the marketplace.

Speaker 3: So many other instructors are also benefiting from the Udemy Marketplace.

This year, Chris <unk>, who teaches business and self improvement courses had its best year, yet on <unk> and crossed the 1 million student milestone.

Speaker 3: This year, Chris Haroon, who teaches business and self-improvement courses, had his best year yet on Udemy and crossed the 1 million student milestone.

Good call Seguin, Bob too.

Speaker 3: Ditao Sigmunba took one of Chris Udemy's classes a few years back.

Corner, Chris even in these classes a few years back.

Speaker 3: They became friends and eventually met in person at a Udemy event in 2019.

We became friends and eventually met in person out of the <unk> event in 2019.

Then decided to combine their business acumen and engineering skills to build a school in Rwanda.

Speaker 3: then decided to combine their business acumen and engineering skills to build a school in Rwanda near the village where Vrata was raised

Neither village with Vitol was raised.

Speaker 3: Now they plan to build schools in other geographies struggling with access to education.

Now they plan to build schools and other geographies are struggling with access to education.

Speaker 3: Constructors like Chris inspire us every day, and we believe our investment in their talent is key to our differentiation and social impact.

Constructors like Chris inspire us every day and we believe our investment in their talent is key to our differentiation and social impact.

We also have partners to help us maintain our place as the most global online education platform.

Speaker 3: We also have partners to help us maintain our place as the most global online education platform.

Last quarter, we announced new partnerships with would you think big in Korea <unk> in China.

Speaker 3: Last quarter, we announced new partnerships with Woojin Think Big in Korea, Sinjeke in China, and Multi-Choice Group in Sub-Saharan Africa.

And multi choice group and sub Sahara Africa.

While it's still early we expect this to lead to the same kind of success, we are enjoying with our partnership with <unk> in Japan.

Speaker 3: While it's still early, we expect these to lead to the same kind of success we're enjoying with our partnership with Bennessey in Japan, which is one of our fastest growing markets.

Which is one of our fastest growing markets.

We will continue to add partners as we systematically expand our presence internationally our partners to extend our reach in terms of creating content understanding the local markets.

Speaker 3: We'll continue to add partners as we systematically expand our presence internationally. Our partners extend our reach in terms of creating content, understanding the local markets, and bolstering our sales force and brand.

And bolstering our sales force and brands.

To keep pace with the demand for Upskilling and Reskilling.

Speaker 3: To keep pace with the demand for upskilling and reskilling, we track how our business customers and their employees use our platform.

We track, how our business customers and their employees use our platform.

Speaker 3: We recently published our 2022 workplace learning trends report in which we analyze trends based on what employees are learning across thousands of customers around the world. The range is broad...

We recently published our 2022 workplace learning trends report.

We analyzed trends based on where employees are learning across thousands of customers around the world.

The range is broad, but reflective of the changing workplace.

Speaker 3: The top skills sought on you to me in 2021 included power skills for leaders in management, where we've seen triple digit growth in categories like office productivity, leadership and management, and personal growth over the past year.

The top skills, so not new to me in 2021 included power skills for leaders and management, where we've seen triple digit growth in categories like office productivity leadership and management and personal growth over the past year.

Employees are also seeking productivity and collaboration courses.

Speaker 3: Employees are also seeking productivity and collaboration courses, personal development and wellness courses.

Development and wellness courses.

Speaker 3: and technical training courses such as Google Cloud, which was up 645 percent.

Technical training courses, such as Google Cloud, which was up 645%.

Speaker 3: and Microsoft AZ 500 up nearly 400% versus a year ago.

And Microsoft AZ, 500, up nearly 400% versus a year ago.

We are on the frontline of helping employees cope with evolving job requirements at a time of rapid change.

Speaker 3: We're on the front line of helping employees cope with evolving job requirements at a time of rapid change.

And we facilitate learning with more than 5000, new courses created each month.

Speaker 3: And we facilitate learning with more than 5000 new courses created each month. Over 40% of these are.

Over 40% of these are languages other than English.

To ensure that the incredible depth and breadth of our marketplaces user friendly we're continually improving our platform.

Speaker 3: to ensure that the incredible depth and breadth of our marketplace is user-friendly. We're continually improving our platform.

Speaker 3: During the quarter, we rolled out support for eight new local currencies across geographies, including Chile, Malaysia and Nigeria, bringing the total number of currencies we support to 28.

During the quarter, we rolled out support for eight new local currencies across geographies, including Chile, Malaysia in Nigeria, bringing the total number of currencies, we support the 28.

Speaker 3: Additionally, we released three new payment methods that provide learners in different countries with a more seamless checkout experience and buy now pay later capability.

Additionally, we released three new payment methods that provide learners in different countries with a more seamless checkout experience and buy now pay later capabilities.

Speaker 3: consistent with our commitment to being affordable, accessible, and localized.

Consistent with our commitment to being affordable accessible and localized.

As part of our <unk> pro offering we launched benchmark assessments, which show learned as key metrics such as their score percentile rank and knowledge classification.

Speaker 3: As part of our Udemy Pro offering, we launched benchmark assessments, which show learners key metrics such as their score, percentile rank, and knowledge classification.

Speaker 3: This is a critical stepping stone to providing organizations with insight into skills gaps they have and how either me is helping them fill those gaps.

This is a critical stepping stone to providing organizations with inside it skills gaps they have and how <unk> is helping them fill those gaps.

Additionally, we have released 10, new software development labs within <unk> business Pro.

Speaker 3: Additionally, we have released 10 new software development labs within Udemy Business Pro.

Speaker 3: Labs provide a hands-on learning experience that allows learners to apply their skills by completing real-world projects using interactive environments.

Labs provide a hands on learning experience that allows lenders to apply their skills by completing real world projects using interactive environments.

In the quarter, we also integrated better personalized lecture recommendation tools based on our machine learning algorithm.

Speaker 3: in the quarter. We also integrated better personalized lecture recommendation tools based on our machine learning algorithm.

This is all part of our commitment to improving the learner journey.

Speaker 3: This is all part of our commitment to improving the learner journey.

In Q4, we received a number of awards, recognizing our product innovation company culture and organizational leadership.

Speaker 3: In Q4, we received a number of awards recognizing our product innovation, company culture, and organizational leadership.

Key too.

Speaker 3: G2, a leading global review site, ranked Udemy Business as a leader in 26 reports across several categories, including online learning platform based on high levels of customer satisfaction and likeliness to recommend.

A leading global review site <unk> business as a leader in 26 reports across several categories, including online learning platform based on high levels of customer satisfaction and likelihood to recommend.

Our Dublin office was officially certified as a great place to work in Ireland and ink magazine.

Speaker 3: Our Dublin office was officially certified as a great place to work in Ireland and Inc. magazine named Udemy as one of the best-laid companies in America.

<unk> is one of the best led companies in America.

<unk> was founded to make learning accessible and inclusive and we take the responsibility of serving our learners and structures very seriously.

Speaker 3: Udemy was founded to make learning accessible and inclusive, and we take the responsibility of serving our learners and instructors very seriously.

As we shared in our previous earnings call.

Speaker 3: We're incredibly proud to have been ranked by Sustainalytics in the first percentile for ESG risk ratings in the internet software and services subindustry as of July 2021.

We're incredibly proud to have been ranked by sustained Olympics in the first percentile for ESG risk ratings and the Internet software and services sub industry as of July 2021.

Speaker 3: In January , Sustainalytics also awarded Udemy its ESG Industry Top Rated badge for 2022.

In January sustain Olympics also awarded <unk> to meet its ESG industry top rated bags for 2022.

Speaker 3: We've barely scratched the surface in our 200 billion tasks.

We've barely scratched the surface and our 200 billion Tam.

And we believe <unk> business is the fastest growing enterprise learning platform.

Speaker 3: And we believe Udemy Business is the fastest growing enterprise learning platform.

With a compounded annual revenue growth rate over 100% since its inception in 2015.

Speaker 3: with a compounded annual revenue growth rate over 100% since its inception in 2015.

Speaker 3: We look forward to sharing our progress with you throughout the year as we help transform learning and the way we work with our vibrant consumer marketplace and exceptional Udemy business platform. With that, we'll move our forthcoming guest conversation to a separate webinar today.

We look forward to sharing our progress with you throughout the year as we help transform learning and the way we work with our vibrant consumer marketplace and exceptional you to meet business platform.

With that I will turn the call over to Sarah.

Thank you Greg the phenomenal growth of <unk> business, the progress in consumer subscription personalization and immersive learning capabilities, our strategic partnerships in Africa Korea and China.

Speaker 1: Thank you, Greg. The phenomenal growth of U to me business, the progress and consumer subscriptions, personalization and immersive learning capabilities are strategic partnerships in Africa, Korea and China. It was quite a quarter for us.

A quarter for us.

Q4 revenue of $138 million was up 25% year over year and up 6% sequentially.

Speaker 1: Q4 revenue of $138 million was up 25% year over year and up 6% sequentially.

<unk> business revenue was 58 million up 81% from our prior year and exceptional growth rate at this scale.

Speaker 1: you'd leave business revenue with $58 million, up 81% from the prior year, an exceptional growth rate at this scale.

Speaker 1: our consumer business delivered 80 million, up 3% from the prior year.

Our consumer business delivered 80 million up 3% from the prior year.

The consumer segment has stabilized and is on a path to future growth as we return to normal.

Speaker 1: The consumer segment has stabilized and is on a path to future growth as we return to the new normal.

We have seen significant traffic growth in certain geographies, which have a lower price point, but also lower cap, allowing estimate here okay.

Speaker 1: we have seen significant traffic growth in certain geographies, which have a lower price point, but also lower CAC, allowing us to maintain our focus on unit economics.

Alex.

Speaker 1: While we are really excited about the growth in these regions, it is harder to predict mix and retention as bind behavior differs by country.

While we are really excited about the growth in these regions. It is harder to predict maxim retention as buying behavior different by country.

For that reason, we are expecting consumer revenue in the first half of the year to be flat to slightly down versus the first half of 2021 and.

Speaker 1: For that reason, we are expecting consumer revenue in the first half of the year to be flat to slightly down versus the first half of 2021. And we are continuing to prioritize consumer subscriptions, which will provide increased visibility over time.

And we are continuing to prioritize consumer subscriptions, which will provide increased visibility over time.

For the remainder of this discussion all financial metrics are non-GAAP unless explicitly stated otherwise.

Speaker 1: For the remainder of this discussion, all financial metrics are non-GAAP unless explicitly stated otherwise.

Q4, gross profit was $75 million.

Speaker 1: Q4 gross profit was $75 million, up 38% year over year, driven by the strong results in Udemy business.

Up 38% year over year, driven by the strong results.

Gross margin was 54, 6% of revenue approximately 500 basis points higher than Q4 of 2020.

Speaker 1: Gross margin was 54.6% of revenue, approximately 500 basis points higher than Q4 of 2020.

The mix shift towards business combined with a softer December drove the increase in gross margin.

Speaker 1: The mixed shift toward Udemy business combined with a softer December drove the increase in gross margin.

As a reminder, we see gross margin depression, where we have spikes in dnb and instructor costs are recorded immediately but revenue is recognized over a four month period.

Speaker 1: As a reminder, we see gross margin suppression when we have spikes in GMB as instructor costs are recorded immediately, but revenue is recognized over a four month period.

Speaker 1: For fiscal year 2021, gross profit was $285 million, up 29% versus fiscal year 2020, and gross margin was 55% of revenue, approximately 350 basis points higher than in 2020.

For fiscal year 2021, gross profit was 285 million up 29% versus fiscal year 2020, and gross margin was 55% of revenue approximately 350 basis points higher than in 2020.

Speaker 1: Our cost of revenue consists primarily of content costs, which are payments to our instructors.

Our cost of revenue consists primarily of capital cost, which are payments to our instructors.

Speaker 1: As a reminder, content costs depend upon the mix between consumer courses and UWA business learners.

As a reminder, content cost depends upon the mix between consumer question.

That's a flatter.

Speaker 1: we expect content costs as a percentage of revenue to decrease over time as Udemy business becomes a larger portion of overall revenue.

We expect content costs as a percentage of revenue to decrease over time and Ele me business becomes a larger portion of overall revenue.

Turning to Opex total operating expense was $102 million or 74% of revenue compared to 56% in Q4 of last year.

Speaker 1: Turning to OPEX, total operating expense was $102 million, or 74% of revenue, compared to 66% in Q4 last year.

Sales and marketing expense represented 49% of total revenue.

Speaker 1: Sales and marketing expense represented 49% of total revenue compared to 44% in Q4 of 2020, driven by the shift toward Udemy business in our investment and our global go-to-market team.

<unk> to 44% in Q4 of 2020, driven by the shift towards <unk>.

And our investment in our global go to market team.

Your business represented 42% of our revenue in Q4 up from 29% a year ago.

Speaker 1: U2E Business represented 42% of our revenue in Q4, up from 29% a year ago.

Research and development expense was 12% of revenue flat with a year ago period, as we continue to increase in vessels and immersive learning consumer subscriptions and further improve our personalization and machine learning capabilities.

Speaker 1: Research and development expense was 12% of revenue, flat with a year ago period, as we continue to increase investments in immersive learning, consumer subscriptions, and further improve our personalization and machine learning capabilities.

Speaker 1: all part of our efforts to drive learning outcomes and higher LTVs.

All part of our efforts to drive outcomes and higher Ltvs.

General and administrative expense was 13% of revenue versus 10% a year ago as we ramp for our public company readiness.

Speaker 1: General and administrative expense was 13% of revenue versus 10% a year ago as we ramped for public company readiness.

Okay.

Speaker 1: Total effects in fiscal 2021 was $324 million, or 63% of revenue compared to 61% last year.

Total opex in fiscal 2021 was 324 million or 63% of revenue compared to 61% last year.

Sales and marketing expense represented 42% of total revenue compared to 43% in 2020.

Speaker 1: Sales and marketing expense represented 42% of total revenue compared to 43% in 2020.

Research and development expense was 11% of revenue consistent with the year ago period.

Speaker 1: Research and development expense was 11% of revenue consistent with the year-ago period.

Speaker 1: general and administrative expense was 9% of revenue versus 8% a year ago.

General and administrative expense was 9% of revenue versus 8% a year ago.

Net loss in the quarter was negative $26 8 million.

Speaker 1: Net loss in the quarter was negative $26.8 million or negative 19% of revenue.

Our negative 19% of revenue.

Adjusted EBITDA was negative $22 6 million or negative 16% of revenue.

Speaker 1: Adjusted EBITDA was negative 22.6 million or negative 16% of revenue.

In order to capture a huge Tam and continue the momentum and get to meet that.

Speaker 1: In order to capture our huge TAM and continue the momentum in Udemy business, we will continue to incur short-term losses while incrementally gaining leverage for longer-term profitability.

We will continue to incur short term losses, while incrementally gaining leverage for longer term profitability.

Free cash flow was negative $1 6 million versus positive $13 4 million a year ago.

Speaker 1: free cash flow was negative 1.6 million versus positive 15.4 million a year ago.

Net loss in the fiscal year were $41 3 million or negative 8% of revenue.

Speaker 1: Net loss in the fiscal year was $41.3 million or negative 8% of revenue. Adjusted EVA-DOG was negative $25.4 million or negative 5% of revenue versus negative $30.7 million or negative 7% of revenue a year ago.

Adjusted EBITDA was negative $25 4 million or negative 5% of revenue versus negative $30 7 million or negative 7% of revenue a year ago.

Free cash flow was negative $25 3 million.

Speaker 1: free cash flow was negative 25.3 million versus negative 4.9 million a year ago.

It was negative $4 9 million a year ago.

Adjusted EBITDA and free cash flow were impacted by public company related costs and a softer than expected December which is a key month for us due to the holidays.

Speaker 1: Adjusted EBITDA and free cash flow were impacted by public company related costs and is softer than expected December , which is a key month for us due to the holidays.

Moving onto the balance sheet.

Speaker 1: We ended the quarter and the year with $534 million of unrestricted cash, cash equivalents, and marketable securities.

We ended the quarter and the year with $534 million.

<unk> cash cash equivalents and marketable securities.

Looking at the consumer and business segments individually consumer revenue in Q4 was $80 million up 3% versus a year ago in the quarter, we had approximately $1 4 million monthly active buyers up 1% year over year.

Speaker 1: Looking at the consumer and UWA business segments individually, consumer revenue in Q4 was 80 million, up 3% versus a year ago. In the quarter, we had approximately 1.4 million monthly active buyers, up 1% year over year.

Consumer gross profit was $39 4 million operating nine 2% of consumer revenue approximately 300 basis points higher than in Q4 of 2020.

Speaker 1: Consumer gross profit was $39.4 million, or 49.2% of consumer revenue, approximately 300 basis points higher than in Q4 2020.

Speaker 1: During the quarter, we had 2.5 million new consumer and business learners, bringing our total learner base to 49 million.

During the quarter, we added $2 5 million, new consumer finance, bringing our total learner base to $49 million.

As Greg mentioned, our consumer business is the engine that peaks broad high quality content and leads tw.

Speaker 1: As Greg mentioned, our consumer business is the engine that feeds broad, high quality content and leads to UWA business, and is a huge differentiator for us.

And as a huge differentiator for us.

While we are pleased to see it stabilize at a significantly higher level of pre pandemic. What's most important is that the marketplace remains healthy that our instructors continue publishing high quality content and then we can access the local content that fuels the enemy desktop.

Speaker 1: While we are pleased to see it stabilized at a significantly higher level than pre-pandemic, what's most important is that the marketplace remains healthy, that our instructors continue publishing high quality content, and that we can access the local content that fuels Udemy business.

The marketplace continues to provide more than 5000 questions per month across an extremely wide variety of topics, which we are able to carry into a very compelling offering for organization.

Speaker 1: The marketplace continues to provide more than 5,000 courses a month across an extremely wide variety of topics.

Speaker 1: which we are able to curate into a very compelling offering for organizations.

To that point the exceptional growth in the <unk> business continues with Q4 revenue of $58 million up 81% year over year.

Speaker 1: To that point, the exceptional growth in U2E business continues with Q4 revenue of $58 million, up 81% year over year. We exited the quarter with over 10,500 U2E business customers, up 44% year over year.

We exited the quarter with over 10500 unit business customers up 44% year over year.

<unk> business net dollar retention rate was 118%.

Speaker 1: U to B business net dollar retention rate was 118% and ending ARR of $239 million was up 74% as compared to the prior year.

<unk> era of $239 million was up 74% as compared to the prior year.

Okay.

Speaker 1: Going forward, Udemy's position should continue to grow rapidly, with revenue expected to exceed consumer revenue before the end of the year.

Going forward you had any business should continue to grow rapidly with revenue expected to exceed consumer revenue before the end of the year.

We are really excited about this.

Speaker 1: We are really excited about this. Our ARR is best in class, as is our growth at scale, and the continued revenue shift toward new business increases our top line visibility.

<unk> is best in class and with our growth at scale and the continued revenue shift toward give me pause as increases our top line visibility.

EBIT business gross profit was $38 6 million or 66, 9% of <unk> business revenue, which represents a roughly 200 basis point increase year over year.

Speaker 1: U2E Business gross profit was $38.6 million, or 66.9% of U2E Business revenue, which represents a roughly 200 basis point increase year over year.

This increase was largely due to revenue from our partnerships such as Spotify, which have lower support costs and our direct sales channel.

Speaker 1: This increase was largely due to revenue from our partnerships, such as Benase, which have lower support costs than our direct sales channel.

For fiscal 2021 consumer revenue was $331 million up 1% personal thank you Eric.

Speaker 1: For fiscal 2021, consumer revenue was $331 million, up 1% versus a year ago.

We had approximately $1 3 million monthly active buyers down 7% year over year as we dealt with Covid comps.

Speaker 1: We had approximately 1.3 million monthly active buyers, down 7% year over year as we dealt with COVID-19.

Consumer gross profit for the fiscal year was $172 million or 51, 9% of consumer revenue.

Speaker 1: Consumer gross profit for the fiscal year was 172 million, or 51.9% of consumer revenue.

Speaker 1: Fiscal 2021 Udemy business revenue was $187 million, up 81% year over year. Udemy business gross profit in 2021 was $123 million, or 65.8% of Udemy business revenue.

Fiscal 2021 year to meet business revenue was 187 million up 81% year over year.

The business gross profit in 2021 was $123 million or 65, 8% of EMEA business revenue.

Looking to the first quarter of fiscal 2022, we expect revenue between 144 and $148 million with the <unk> business expected to deliver year over year revenue growth over 70% we.

Speaker 1: Looking to the first quarter of fiscal 2022, we expect revenue between $144 and $148 million, with Udemy Business expected to deliver year-over-year revenue growth over 70%. We expect an adjusted EBITDA margin of negative 11 to negative 9%.

We expect an adjusted EBITDA margin of negative 11 to negative 9%.

For fiscal year 2022, we expect revenue between $6 10, and $640 million with EMEA business revenue between 303 hundred $10 million representing growth of 60% to 66% year over year.

Speaker 1: For fiscal year 2022, we expect revenue between 610 and 640 million, with UWA business revenue between 300 and 310 million, representing growth of 60 to 66% year over year, and consumer revenue between 310 and 330 million, down 6% to flat year over year.

And consumer revenue of between 303 hundred $30 million down 6% to flat year over year.

Speaker 1: While we won't provide annual guidance by segment going forward, the nature of the current consumer market provides us with less visibility into full year consumer revenue, so we are sharing a wider range. In contrast, the SaaS model of our Udemy business segment provides greater revenue predictability, and we are confident with our forecast here.

While we won't provide annual guidance by segment going forward. The nature of the current consumer market provides us with less visibility into full year consumer revenue. So we are sharing a wider range.

In contrast, the SaaS model of our <unk> business segment provides greater revenue predictability and we are confident that our forecast here.

We expect an adjusted EBITDA margin of negative 12 Canadian 10%.

Speaker 1: We expect an adjusted EBITDA margin of negative 12 to negative 10 percent.

While we are still experiencing some volatility in the consumer business with certain countries up and others down year over year, our <unk> business segment is even stronger than we expected.

Speaker 1: While we are still experiencing some volatility in the consumer business, with certain countries up and others down year over year, our Udemy Business Segment is even stronger than we expected.

Our customer satisfaction as Greg mentioned is exceptional and we are continuing to build and improve our offerings to ensure we provide the very best learning experience.

Speaker 1: Our customer satisfaction, as Greg mentioned, is exceptional, and we are continuing to build and improve our offering to ensure we provide the very best learning experience.

Speaker 1: We have a unique vantage point. We can see the consumer business country by country and are able to manage our consumer marketing spend accordingly as we work through this pandemic.

We have a unique vantage point, we can see the consumer business country by country and are able to manage our consumer marketing spend accordingly, as we work through this pandemic.

Speaker 1: At the same time, U2E business is growing rapidly across the globe, which increases our visibility. In R&D, we are investing in areas that we think will have the most impact on driving learner outcomes, increasing GMV over time, and delivering better unit economics through consumer subscriptions and increased retention.

At the same time near to me business is growing rapidly across the globe, which increases our visibility.

In R&D, we are investing in areas that we think will happen most impact and driving learner outcome, increasing <unk> over time, and delivering better unit economics through consumer subscriptions and increase retention.

We remain focused on executing against our long term strategy and while we are increasing our investment for the year given the outside success, if you'd read business we.

Speaker 1: We remain focused on executing against our long-term strategy, and while we are increasing our investment for the year, given the outside success of U2B business, we expect to see much less of an impact on cash flow with just a modest increase in cash burn for the year. And with that, operator, please...

We expect to see much less of an impact on cash flow with just a modest increase in cash burn for the year.

And with that operator, please open the call for questions.

Thank you, ladies and gentlemen, if you'd like to ask a question. Please press Star then one on your touch tone telephone again, if he would like to ask a question. Please press Star then one.

Speaker 4: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star then one on your touchtone telephone. Again, if you would like to ask a question, please press star then one. One moment for our first question. Our first question comes from Rob Oliver Baird. Your line is open.

One moment for our first question.

Our first question comes from Rob Oliver of Baird. Your line is open.

Great. Thank you guys very much good afternoon can you hear me okay.

Speaker 5: This was all unclear. Bye, Rob. Great. Great. Thanks.

Unclear.

Great great. Thanks, I appreciate it yes.

Speaker 5: Sorry, a little background noise here. Greg, one for you, and then I had a follow-up for you, Sarah. So, Greg, clearly you guys are firing on all cylinders here on the Unimie for Business.

Sorry, you're a little background noise here.

Greg One for you and then I had a follow up for you Sarah So.

Greg.

Clearly you guys are firing on all cylinders here on the year to me.

For business.

<unk> business.

Some really strong logos, new lands really great logos on expansion Im curious you guys mentioned.

The curation of some of the courses around you'd be and I'm wondering if you could just help us understand on those expansions because <unk> is like stabilizing nicely now.

Speaker 5: stabilizing nicely now. On those expansion deals you're seeing for UB, is it still predominantly IT? Are you seeing more of an HR driven by, a little bit more color around those deals would be great. And then I had a quick follow up for Sarah. Yeah, Rob, it's actually a very broad base. So it's way, you know, we come in both sides of the house. We come into the HR side and we're selling successfully in there and we come into the tech side. And so it's very broad based both sides.

Those expansion deals youre seeing for you be.

Is it still predominantly <unk> are you seeing more of it and HR driven by a little bit more color around those deals would be great and then I had a quick follow up for Sarah.

Yes, Rob it's actually very broad based so it's where we come in both sides of the house, we come into the HR side and we saw it successfully in there and we come into the into the tech side and so it's very broad based both sides of the company. So the expansions are in tech teams, but they are also much.

Speaker 3: Yeah, it's actually a very broad base. So it's way you know, we come in both sides of the house, we come into HR side, and we're selling successfully in there and we come into the into the tech side. And so it's so it's very broad based both sides of the company. So the expansions are in tech teams, but they're also much broader than that our content

Broadening our content tends to be very broad, we have all kinds of learning content and leadership content and communication and content. So it works for almost every person in the corporations. So it's a broad based expansion.

Speaker 3: tends to be very broad. You know, we have all kinds of learning content and leadership content and communication content. So it works for almost every person in the corporation. So it's a broad-based experience.

Speaker 5: Okay, great. That's great to hear. And then Sarah, one for you. Just on the consumer business, and I don't want to distract from the obvious here, which is the UB business just getting really, really strong and going to be the majority of your

Okay, Great that's great to hear and then one for you.

Just on the consumer business and I don't want to distract from the obviously, which is UV business, just getting really really strong and going to be the majority of your revenue this year, but on the consumer side. Some caution I think in the guidance I wanted to just drill down on the personal plan. The subscription you mentioned thats going to be an increasing focus in an uncertain environment.

Sure.

Just from my own navigation and being your customer you guys I would not offer the personal plan. But then also had now I am being offered so just wondering if you guys are expanding out the personal plan and any early reads and traction and whether that $29 price point.

Speaker 5: own navigation and being a customer of you guys, I was not offered the personal plan, but then all of a sudden now I am being offered. So just wondering if you guys are expanding out the personal plan in any early wreath and traction and whether that $29 price point is, it feels right at any update, that would be great. Thank you guys very much. Awesome, Rob. You know, I would say you're a lucky Udemy learner because not many people are seeing the personal plan yet. We are still in testing mode as we spoke about. So we plan to be in.

Is it still feels right at any update there would be great. Thank you guys very much.

Also Rob I would say Youre Lucky year to me about are because not many people are seeing the personal plan yet.

Speaker 1: Awesome, Rob, you know, I would say you're a lucky Udemy learner because not many people are seeing the personal plan yet. We are still in testing mode as we spoke about. So we plan to be in beta mode for the first half of the year. Our investments are not just in the subscription platform, which we built out from a pricing and packaging perspective, and we're doing testing there. So you saw one price, but there's different prices for testing.

So in testing mode at.

We spoke about we planted in beta mode for the first half of the year. Our investments are not just in the subscription platform, which we built up from a pricing and packaging perspective, but we're doing testing there and so you saw unprecedented different prices, we're testing, but really what we're focused on it.

Speaker 1: But really what we're focused on is the learning outcomes, building and learning paths, and really making it a very compelling subscription offering. We see successful subscription offerings in the market. We have great content and so just rounding out that offering so that it's the subscription we want to roll out to the masses is what we're focused on and we don't expect the rollout to be until the second half.

Is the learning outcomes building and learning paths and really making it a very compelling subscription offering we see.

Successful subscription offerings in the market, we have great content and so just rounding out that offering so that it is.

The subscription with a lot of roll ups them assets into what we're focused on and we don't expect the rollout to be until the second half.

Got it very helpful. Thank you guys very much.

Thank you. Our next question comes from Terry Tillman Choi Your line is open.

Speaker 4: Thank you. Our next question comes from Terry Tillman-Truist. Your line is open.

Speaker 12: Hey guys, this is Joe Mirzon for Terri. Thanks so much for taking the question. I think last quarter you mentioned that you'd incorporated some new machine learning capabilities to enhance functionality around conversion and retention in the consumer business. Just wondering if you're seeing any traction there to help stabilize this business.

Hey, guys. This is Joe Meares on for Terry. Thanks, So much for taking the question.

I think last quarter, you mentioned that you had incorporated some new machine learning capabilities to enhance.

Our functionality around conversion and retention of the consumer business I'm, just wondering if youre seeing any traction there.

To help stabilize this business.

Yes, so we've invested a lot in it.

Speaker 3: Yes, so we've invested a lot in AI and machine learning. It's something that we're doing across our business. So we use it in our pricing engine, we use it in matching and recommendations, and we're using it so a numerous...

And AI and machine learning, it's something that we're doing across our business. So we use it in our pricing engine, we use it in our in matching and recommendations and we're using it.

Numerous places so we're actually seeing some wins there though.

Speaker 3: So we're actually seeing some wins there though. You know, in the matching and recommendations, we actually did have a nice win in the fourth quarter. We saw the ability to increase conversion rates by just doing a better match on the types of courses people were looking for.

They're matching and recommendations we actually did have a nice win in the fourth quarter. We saw we saw the ability to increase conversion rates by just doing a better match.

On the types of courses people were looking for.

Yes.

Speaker 12: Okay, that's great to hear. And then just as a follow up, I think last quarter you mentioned that the go to market team was at about 400 people. I just want to get that increased sequentially. And then just like in a broader level, how's the the overall hiring environment for Udemy? And what should we think about the headcount being as you exit 2022? Thanks so much.

Okay. That's great to hear and then just as a follow up I think last quarter, you mentioned that the go to market team was at about 400 people I'm just wondering if that increase sequentially and then just like on a broader level. How is the hiring environment for you to weigh in.

Should we think about the head count being as you exit 2022, thanks, so much.

Speaker 3: Yeah, the go to market team, that's go to market plus customer successes that was the 400 number. We've grown our go to market team about 50% last year and our plans are to grow it again.

The go to market team that's go to market plus customer successes that was the 400 number.

We've grown our go to market team of about 50% last year and our plans are to grow again.

About 50%, maybe a little bit more than that.

Speaker 3: about 50%, maybe a little bit more than that. We are finding it is a difficult hiring environment, but we ended up doing very well. You know, we're the kind of company that people like to work for. We're a mission-based company. We're doing well in the marketplace.

We are finding it is a difficult hiring environment, but but we ended up lenders do very well, where the kind of company that people like to work for where our mission based company, we're doing well in the marketplace.

Speaker 3: We have a very nice culture. So we've been hiring, you know, actually, I think December was our biggest hiring month in the history of U of A business. The trouble we were in in the process of getting the phrase

Very nice culture. So we've been hiring actually I think December was our biggest hiring month in the history of United business.

Yes, Joe just to give you a little a little color.

Speaker 1: on that, we were able to hire 50 people in Udemy business in December , which was well above what we were expecting, especially given it's really tough to hire salespeople in the fourth quarter when they're getting in their accelerator. So, you know, we're pleased with what we see. We continue to see a lot of traction in hiring both across Udemy business and within our R&D team. So I think Greg's right. I think it's the culture, it's the mission, I think, and the belief in where this company is going that really helps us out.

And that we were able to hire 50 people need any business in December which was well above what we were expecting especially given its really tough to hire salespeople in the fourth quarter of and Theyre getting their accelerator. So.

We're pleased with what we see we continue to see a lot of traction in hiring both across Ethernet business and within our R&D team. So I think right right I think it's the culture. The mission I think and the belief in where this company is going really helps us out.

Really helpful quantitative color I appreciate it.

Thanks for the question Joe.

Speaker 13: Thanks for the question, Joe.

Thank you. Our next question comes from Sterling Auty of Jpmorgan. Your line is open.

Speaker 4: Thank you. Our next question comes from Sterling Ady of J.P. Morgan.

Speaker 7: Hey, this is Drew on First Starling. You referenced the softer than expected December months. Could you provide some more color on what occurred there and any impacts from seasonality that you're seeing currently?

Hey, This is drew on for Sterling you referenced the softer than expected December months could you provide some more color on what occurred there and any impact from seasonality that youre seeing currently.

Speaker 3: Yes, the consumer market is volatile. And in other words, some countries are, the traffic is growing quite rapidly and some of it's going down.

Yes, the consumer market is volatile and it.

In other words some some some countries are the traffic is growing quite rapidly and solve it is going down.

Speaker 3: And so in December , we just saw a little volatility. It actually came back in January . So January , you know, it stabilized again. But it's a volatile consumer market as they're closing down countries. It's still pandemic related where certain countries are closing down. Certain are opening up. So we're just having to weather that type of environment. But we were very happy with our traffic. I mean, our overall traffic is remained over 30 million unique visitors. We came into the pandemic in about 16 to 18 million unique visitors. So, you know, we've stabilized at a much higher.

And so in December we just saw a little volatility it actually came back in January So January it stabilized again, but it is a volatile it's a volatile consumer market as theyre closing down countries. It's still pandemic interrelated with certain countries closing down certain are opening up so we're just having to wear.

That type of environment, but we're very happy with our traffic I mean, our overall traffic has remained over 30 million unique visitors we came into the pandemic and about 16 to 18 million unique visitors. So we've stabilized.

Much higher.

Speaker 3: bigger business than we had before.

Bigger business than we had before but yet it is still volatile given that we're going into year three of the pandemic.

Speaker 3: But yet it is still volatile given that we're going into year three of the pandemic.

Speaker 1: I think for us to add to that is, you know, we are, as Greg said, you know, we were very diversified globally. So we see countries that are going up. We see countries that are stable countries that declined a bit.

I think for us to add to that.

Is we are as Greg said.

We're very diversified globally. So we see countries that are going up we see countries that are stable content.

Declined Tibet.

Speaker 1: A lot of the growth we're seeing are in some of the lower LTV or lower kind of purchasing power countries, but we're able to allocate our spend and we can lean in where we're seeing good conversions. We can pull back where we're seeing the conversions not as good. So we're managing our direct marketing spend accordingly as we continue to sort of work through this.

A lot of the growth we are seeing are in some of the.

Lower LTV are lower purchasing power countries, but we're able to allocate our spend and we can.

Leanne and where we're seeing good conversions, we can pull back where we're seeing the conversion is not as debt. So we're managing our direct marketing spend accordingly, as we continue to sort of work through this.

Okay got it thank you.

Thanks.

Thank you next question comes from Stephen Sheldon with William Blair. Your line is open.

Speaker 4: Thank you. My question comes from Steven Sheldon of William Blair Yolanda's.

Hey, Thanks Congrats.

Speaker 2: Hey, thanks. Congrats on the strength in the business segment. Curious.

Congrats on the strength in the business segment.

I'm curious.

Speaker 12: what the labor and talent shortage across industries is maybe meant for demand for your enterprise solutions. I guess what trends have you seen in corporate learning budgets? Are they going up? And what's their level of urgency to provide upskilling opportunities to existing employees in this environment where maybe they can't hire as much as they'd like externally.

What the.

Labor and talent shortage across industries that may be met or demand for your for your <unk>.

Enterprise solutions, I guess, what trends have you seen in corporate learning budgets.

Are they going up and what's the level the level of urgency to provide upscaling opportunities to exist.

Existing employees in this environment, where maybe they can't hire as much as they'd like externally.

We are seeing.

Speaker 3: We are seeing a very good enterprise business. The market is expanding right now. People, they send everybody home, everybody's working from home, a lot of the trading was in person. So the digital transformation is accelerating across all the enterprise.

Very good enterprise business. The market is expanding right now people based on everybody home everybody is working from home a lot of the training within person.

So the digital transformation.

Celebrating across all the enterprises and so it is a very very good market right. Now so the budgets are getting bigger and there is a sense of urgency there as people are leaving us a great resignation people are worried about retention.

Speaker 3: And so it's a very, very good market right now. So the budgets are getting bigger, and there is a sense of urgency. You know, there's people are leaving, there's a great resignation. People are worried about retention and worried about employee engagement. And so, you know, it's a particularly good time. We think we have a great solution. We think we have a, we're at the right place at the right time with the right solution in the enterprise business, but the market is particularly good.

Read about employee engagement.

And so.

It is a particularly good time, we think we have a great solution. We think we have a we are at the right place at the right time with the right solution in the enterprise business.

But the market is particularly good.

Great. Thank you.

Thank you. Our next question comes from Ryan Macdonald Needham <unk> Company. Your line is open.

Speaker 4: Thank you. Our next question comes from Ron McDonald. Do you still need them in a company?

Speaker 8: Hi, thanks for taking my questions. Craig, you've talked about quite a bit in the past about international expansion remaining a top priority for you to me over the next few years here. You know, given I'd be curious how how you're prioritizing and focusing on which countries to to drive incremental investment and and how that maybe differs consumed based on what you're seeing in the consumer side versus what you're seeing in the enterprise.

Alright, Thanks for taking my questions, Greg you've talked about quite a bit in the past about international expansion remains a top priority for you to me over the next few years here.

Given I'd be curious, how higher prioritizing and focusing on which countries to drive an incremental investment and how that may be different consumer based on what youre seeing in the consumer side versus what youre seeing in the enterprise side.

Yes. Thanks for the question, we have always been the most global AD Tech company.

Speaker 3: Thanks for the question. We've always been the most global and tech company. More than 70% of our consumer revenue is outside the US. And we have a playbook that we look where there's obviously large populations, but where our English content is being consumed very high. And so then we start working on our playbook, which is we put somebody into the market and start developing local content. Then we do local currencies and then we do local payments.

More than 70% of our consumer revenue was outside the U S and we have a playbook that we look where where there is obviously large populations.

Where our content is being consumed very high and so then we start working on our playbook, which is.

We put somebody into the market and start developing local content that we do local currencies and then we do local payments and then we do we do local marketing and then we bring in go to market teams. So so that's a playbook that we've been we've been running and we're running across the globe and.

Speaker 3: And then we do we do local marketing and then we bring and go to market.

Speaker 3: So that's a playbook that we've been running, and we're running across the globe. And there are various different investments depending on the country. But right now, for example,

And there are various different investments depending on the car.

Country, but right now for example.

Speaker 3: You know, we're working in Indonesia. We're building our business there. You know, we're investing heavily in there. In Asia, we moved into Korea and China through partnerships, so we're expanding in there. And we're working in sub-Saharan Africa with multi-choice, with a partner there. So we're expanding in a lot of different directions.

We're working in Indonesia, We're building our business there we're investing heavily in there in Asia.

Moving into Korea, and China and partnership so we're expanding in there and we're working itself Sahara Africa with.

With multi choice with a partner there so and so.

We're expanding a lot of different directions.

And as far as <unk> business, we are expanding.

Speaker 3: And as far as Udemy business, we are expanding across the globe and it's very broad based. So we are building our go to market teams. We started in North America, we built out of NIA next, but we're continuing to build out that. Then we built out of APAC and now we're building out Latin America. So we are building out a global go to market team.

Across the globe and it's very broad based so we are building our go to market teams. We started in North America with both out of EMEA next but we continue to build out that that we built out APAC and now we're building out Latin America. So so we are building out a global go to market team.

That's helpful. Maybe just as a follow up and this is for I think Sarah as well thank.

Speaker 8: That's helpful. Maybe just as a follow up, and this is for, I think, Sarah as well, is I think you mentioned in your prepared remarks, Sarah, that you get a slight gross margin benefit on Udemy business from a mix of sales coming from partnerships there. So as you think about continued expansion of Udemy business into new countries, is there a preference or prioritization to try to go to market with partners in UB or go directly being the preferred choice?

I think you mentioned in your prepared remarks, there that you get a slight gross margin benefit on your business.

From a mix of sales coming from partnerships. There. So as you think about continued expansion of <unk> business into new countries is there a preference our prioritization to try to go to market with partners.

And Upa or go directly being the preferred choice Don Thanks.

Speaker 1: That's a great question, Ryan. You know, it's a very minor, very minor benefit in comparison to us really making the right decision for that country, whether we can do it ourselves, and we know we can bring the best.

That's a great question Ryan.

Very minor.

Very minor benefit in comparison to us really making the right decision for that country, whether we can do it ourselves and we know we can bring the best.

Sort of Banco.

Speaker 1: Sort of go to market strategy, or whether a partner is the best. So I think that supersedes the small benefit we get in gross margin.

Go to market strategy or whether a partner is the boss. So I think that supersedes the small benefit we get in gross margin.

Super helpful. Thanks again.

Thank you.

Okay.

Speaker 4: Thank you. Our next question comes from Brent Phil of Jeffries, Atlanta.

Thank you. Our next question comes from Brent Thill of Jefferies. Your line is open.

Hi, guys. This is David lost Bert on for Brian . Thanks for taking the questions I'll start with one of them.

Speaker 6: Hi guys, this is David Lusberg on for Brent. Thanks for taking the questions. I'll start with one and then have a follow up and sorry if I had already missed this, but just curious if you could talk on the consumer side. With what we're seeing, is this a competitive thing at all or is this really just wrapping super tough COVID comps and people are going back outside? Just curious if you could talk to, you know, is it a competitive dynamic or rather consumer behavior?

Follow up and sorry, if I missed this but just curious if you could talk on the consumer side.

With what we're seeing is this.

Imperative thing at all or is this really just lapping super tough comps and people are going back out side. Just curious if you could talk to.

Relative dynamic or rather consumer behavior.

It's consumer behavior, we're seeing in certain markets. We are seeing the overall traffic for online learning going down at a certain theres certain markets, we call them for key markets that have been that have been benign Zhu for two years and we're seeing that in some markets, but then.

Speaker 3: It's consumer behavior. You know, we're seeing in certain markets, we're seeing the overall traffic for online learning going down in a certain there's certain markets. We call them fatigue marks.

Speaker 3: that have been on Zoom for two years. And we're seeing that in some markets.

Speaker 3: Conversely, on other markets, the traffic is growing rapidly. So it is not a competitive issue. It is a total, we have the most traffic of any edtech website in the world with over 39 million visitors. So we see more data than anybody else, and we're more global than everybody else. And it's really, it's absolutely a pandemic issue versus a competitive issue.

Conversely on other markets. The traffic is growing rapidly. So so it is not a competitive issue. It is a total loss.

Most traffic of any of Ed Tech website in the world with almost $30 million business. So we see more data than anybody else with more global than everybody else and it's really it's absolutely a.

Pandemic issue versus a competitive issue.

Okay.

Speaker 6: Got it. Thanks for that color. And then as a follow up on.

Got it thanks for that color and then as a follow up on.

Speaker 6: on just leave it to guidance came in below the street. I'm curious, is that, was that the street being too high or is there, you know, areas that you guys are focusing on prioritizing investments in? Just curious, you could provide some color on that end.

Adjusted EBITDA guidance came in below the street I'm curious is that was that that should be being too high.

But you guys are focusing on prioritizing investments and just.

Curious if you could provide some color on that.

Yes.

Speaker 1: Yeah, so I think you've seen our U2E business performance. It continues to exceed our expectations and continues to outperform. And so we're further accelerating the expansion of our global go-to-market team. We have an unheard of learner NPS of 61 in the space. We've got 80% growth at scale. And we're not feeling that we're getting anywhere close to the edges of that.

So I think you've seen our <unk> business performance. It continues to exceed our expectations and continues to outperform and so we are further accelerating the expansion of our global go to market team.

Unheard of learner NPS of 61 in the space, We've got 80% growth at scale and we are not feeling that we're getting anywhere close to the edge and so that so and frankly, the hiring has gone much better than we expected. So we're leaning in hard.

Speaker 1: So, and frankly, the hiring has gone much better than we expected. So we're leaning in hard on Udemy business. And in general, when you think about our business as a whole, you know, the enterprise business is growing really fast. It does have a lower EBITDA margin really than the consumer business. And so I think with the consumer guidance being down a little bit, that's what we're experiencing.

And <unk> business and in general when you think about our business as a whole enterprise business Thats growing really fast it does have a lower EBITDA margin really than the consumer business and so I think with the consumer guidance being down a little bit that's what yes, that's what we're experiencing.

Great. Thanks, guys appreciate it.

Speaker 4: Thank you. Our next question comes from Jason Salina of KeyBank. Your line is open. Great. Thanks. Hey, Greg. Hey, Sarah. Can you hear me all right? Yes. Perfect.

Thank you. Our next question comes from Jason Salina of Keybanc. Your line is open.

Great. Thanks, Hey, Greg is there can you hear me alright.

Hey, Jay.

Perfect.

It's nice to hear that the stats on the instructors learn over half a million dollars and $1 million.

Last year, but when we think about attracting the best cost structures.

Instructors.

How is that positioned for growth.

Coming here.

You broke up I didn't hear that question.

Speaker 9: So I wanted to ask about the attracting the top instructors to Udemy.

So I wanted to ask about the <unk>.

Tracking the top instructors to you what I mean.

It seems like.

Speaker 9: Seems like it's a tough hiring environment, but how is it from instructor attraction standpoint? Yeah!

It's a tough hiring environment.

But how is it from instructor.

Attraction standpoint.

Yes, so we're finding that.

Speaker 3: Our publishing is at record levels. We're publishing over 5,000 new courses a month.

Our publishing is at record levels, we're publishing over 5000, new courses of months, we're bringing in top people. In fact, we just brought in two top instructors from a competitor in the last couple of months and so we're finding that.

Speaker 3: We're bringing in top people. In fact, we just brought in two top instructors from a competitor in the last couple months.

Speaker 3: And so we're finding that because we monetize very well for the instructors, our instructor payments this year are going to be over $200 million, that we're having no trouble at all of getting the instructors we want and getting and getting the publishing that they want. In fact, that, you know, this is the new creator economy. And we are a place where they know they can come and they can make money and we're partners. And so we work very well with them. So that has not changed at all. It's been very robust.

Because we monetize very well for the instructors are instructed payments this year are going to be over $200 million.

That.

We're having no trouble at all of getting instruct everyone in <unk> and getting the publishers that they want in fact this was.

Of the new creator economy, and we are a place where they know they can come in and they can make money and with partners and so we work very well with them. So that has not changed at all it's been very robust.

Okay perfect.

And then when we think about the consumer business.

Conversion between the monthly average buyers in the top of the funnel.

It looks like it stabilized a little bit at least for Q4.

But with the guidance for 'twenty, two maybe can you speak.

As implied.

Directionally for that.

For this year.

Yes, so I think Jason.

Speaker 1: Yeah, so I think Jason, you know, I think in the first half, we're not expecting a lot of growth and monthly average buyers. I think in the back half, really what we're looking to do is drive more from our buyers through subscriptions over time and through personalization and retention efforts versus trying to.

I think in the first half, we're not expecting a lot of growth in monthly average buyers.

I think in the back half really what we're looking to do is drive more LTV from our buyers through subscriptions over time.

Personalization and retention effort to persist trying to.

Speaker 1: get more back to growth coming from the monthly average buyers.

Get more back to growth coming from the monthly average virus.

Yeah.

Okay excellent that's quite helpful. Thank you.

Thanks, Jason.

Thank you. Our next question comes from Josh <unk> Morgan Stanley . Your line is open.

Speaker 4: Thank you. Our next question comes from Josh Baer. Morgan Stanley , your line is open.

Speaker 5: Great, thanks for the question. And it's great to hear about the progress on in Udemy business and Udemy Pro features, specifically, benchmark assessments and labs. I'm just wondering, what else are you working on around Udemy Pro? What else are enterprises asking for? And

Great. Thanks for the question.

And it's great to hear about the progress on.

In business and year to date Pro features specifically benchmark assessments in lab and I'm just wondering what else are you working on.

Around <unk> pro what else are enterprises asking for and.

How does this tie into the the EBIT guidance and some of the investments that youre, making.

Speaker 5: how does this tie into the EBITDA guidance and some of the investments that you're making?

Yes. Thank you for the question.

Speaker 3: Thank you for the question. You know, you're gonna be pro we're building out multiple verticals, you know, so we started with AWS and web development and we're building out a Google Cloud and Azure. So you know, those are things that will be asked.

<unk> Pro we are building out multiple verticals. So we start with AWS and web development and we're building out a global cloud and Azure.

Those are things that were being asked to build.

Speaker 3: to build, you know, from the various verticals in the different companies.

The strength in the various verticals in different in the different companies.

Speaker 3: On the other side we're being asked for leadership training and the reason why we brought Corp.U was that we were being asked for more leadership training. It's something that every company needs more of.

The other side, we're being asked for leadership training and the reason why we bought core view towards.

We're being asked for more leadership training is something that every company needs more of it.

Speaker 3: And so and cohort based. So we're building out, you know, we're building out a core view. We're starting with leadership. But we're.

And cohort base. So so we're building up we're building out.

<unk>, we're starting with leadership.

Sure.

Speaker 3: wrapping that up and then we're going to build out other verticals, other verticals in cohort-based learning.

Wrapping that up and then we're going to build out other verticals other verticals in cohort based learning.

And Joseph from.

Speaker 1: And just just from an investment perspective, our investment on the R and D side is what we were expecting. It's really the sales and marketing on the side that we're accelerating this year because we continue to see that traction and we're taking our expectations for you to meet business revenue up.

An investment perspective, our investment on the R&D side. It is what we were expecting it's really the sales and marketing on the UV side that we're accelerating this year because we continue to see that traction and we're taking our expectations for you to meet business revenue up.

Okay. That's great. Thank you.

Thank you.

Speaker 4: Thank you. Our next question comes from Matt Schindler of Bank of America. Your line is open.

Thank you. Our next question comes from Nat Schindler of Bank of America. Your line is open.

Yes, hi, guys. Thank you for taking my question so.

Speaker 10: Yes. Hi guys. Thank you for taking my question. So I just wanted to talk a little bit about Udemy business and its seasonality and what you're seeing in kind of your guidance. What I mean by this is you're basically having a layering effect and you've been adding the last two quarter, this quarter about 7.4 million over Q3. Q3 is a little over 8 million and it's kind of been layering up.

So I just wanted to talk a little bit about.

Eating meat business and its seasonality.

And what Youre seeing and kind of your guidance remember this is you're basically having a layering effect and you've been adding in the last two quarters. This quarter about $7 4 million over Q3, Q3 is a little over $8 million and it's kind of been layering up you've been.

Speaker 10: cycling up from earlier in the year and from last year. But in your guide, and I know you said 70 plus percent and you did fully break it out. So that might mean it. But at 70 percent, it means a pretty big step down in that layering. Is there any sort of seasonality that we should be aware of on one cue or how this business should work on when you win customers and when the revenue flows through?

Cycling from earlier in the year and from last year.

But in your guide and I know you said 70 plus percent you did fully break it out so that might mean, it but it's 70%.

<unk>, a pretty big step down in that layering here any sort of seasonality that we should be aware of.

On <unk> or how this business should work on when you win customers and when the revenue flow through.

Great question.

Speaker 1: Great question, Nat. Yes, there is seasonality in our business. Like many enterprise staff.

Yes, there is seasonality in our business like many enterprise SaaS companies. We do tend to have our biggest quarter is Q4, we had a great Q4, we had a great amount of focus in December .

Speaker 1: companies, we do tend to have our biggest quarter Q4. We had a great Q4, we had great amount of closes in December and you do tend to see that the stabilization kind of happens again in Q1 and then you continue to grow throughout the year. So I think nothing has normal, the buying cycle really is in Q4 for many enterprises. We work as hard as we can to even it out throughout the year but I think that's a secret sauce that most enterprise-class businesses haven't figured out.

You tend to see that the stabilization kind of happens again in Q1, and then you continue to grow throughout the year. So I think nothing abnormal or the buying cycle really is in Q4 from any enterprises, we work as hard as we can to even that out throughout the year.

But I think that's the secret sauce that most enterprise SAS businesses haven't figured out.

But wouldn't that layering on a lot of new customers in Q4 mean real growth in Q1, because those customers didn't come in the beginning of October and Q4. They came throughout Q4 and thus they are now a full quarters worth of revenue.

Speaker 10: But wouldn't that layering on a lot of new customers in Q4 mean real growth in Q1? Because those customers didn't come in the beginning of October in Q4. They came throughout Q4 and thus they are now a full quarter's worth of revenue.

In Q1.

Yes, so we layered on a lot of customers I think customer signs is also something we have a lot of people are just coming into team plan on their own.

Speaker 1: Yeah, so, you know, we layered on a lot of customers. I think customer size is also something we have a lot of people who are just coming into team plan on their own. And so that growth rate of the customers can also be attributed to different size customers. I will say our average deal size is growing every quarter that, you know, ARR per logo is going up and we do expect that trend to continue.

And so that growth rate.

The customers can also be.

Attributed to different type customers I will say our average deal size is growing every quarter that our per logo.

It's going up and we do expect that trend to continue.

Okay.

Speaker 10: OK, totally different than on still asking about Udemy business and just going on a longer term basis and kind of more what's going on strategically. How to do

Totally different than on still asking about your business I'm, just going on a longer term basis and kind of more.

What's going on strategically how are you.

Why are customers left that have left or cut down their spend on <unk> cut.

Speaker 10: Why have customers left that have left or cut down their spend on Udemy business that have cut down the spend? What is a really, what, what happens is it, did they look for competitive offering sometimes, or did they just say they don't need it as much? If this happened?

Cut down, but what is really what happens is it do they look for competitive offerings, sometimes or did they just say they don't need it as much if this happens.

Yes so.

Speaker 3: Our retention is much higher on corporations that are over 1000 employees. So the bigger the corporations, the longer they stay and the higher the net retention. You know, there's lots of reasons why people leave. We have a huge small business segment. And so there's a lot of churn that happens in that we have a team plan. And so we get all these these customers that come in and they're small, 5 to 20 seats.

Our retention is much higher.

On corporations that are over 1000 employees. So it was on the biggest corporations the longer they stay in the higher the net retention.

Lots of reasons why people leave there is we have a huge small business segment.

And there is a lot of churn that happens and that we have a team plans when we get all these customers that come in and there are small 5% 20 seats and there is more churn going on there that would be normal managed accounts have much lower churn, but there's just a very wide variety of reasons.

Speaker 3: And there's more churn going on there than would be normal. Managed accounts have much lower churn. But there's just a wide variety of reasons.

Speaker 3: Competition is always part of it, but not the biggest part. It's businesses either are doing well or have decided to do other things. So it's not, Sarah, what's your?

Yes.

Competition is always part of it but not the biggest part.

Businesses are doing well or are have decided to do other things.

It's not.

Is there what's your.

Speaker 1: Yeah, I mean, we will see some with it with budget issues.

Yes, I mean, we will see some with it with budget issues. The one thing I do want to mention is our net dollar retention of 118% across all of our customer segments, but for our larger customers as well above a 120%. So we tend not to see the larger customers that we're supporting with our customer success teams.

Speaker 1: The 1 thing I do want to mention is our net dollar retention is 118% across all of our.

Speaker 1: customer segments, but for our larger customers, it's well above 120%. So we tend not to see the larger customers that we're supporting with our customer success teams and aligning with them on what their business goals are in partnering with Udemy. We tend not to have much churn there, but you know, once in a while, competition, not, not as often as sometimes just, you know, budget reasons. Makes sense. And just.

Aligning with them on what their business goals are and partnering with you to me.

We tend not to have.

<unk> churn there but.

Once in a while competition not not as often and sometimes just budget reasons.

Makes sense and then just.

To clarify one last thing.

Speaker 10: What percentage of the Udemy business revenue is from customers over a thousand employees?

What percentage of the <unk> business revenue was from customers over 1000.

Employees versus the smaller customers.

Speaker 10: in just round figures if you don't want to give out the total.

And just round figures, if you don't want me, Hey, Rob Paul but.

Speaker 1: It's a pretty good portion. I don't want to give out an exact number, but we have a lot of really large customers, more and more. I think you probably heard in our in our prepared remarks that we signed our first deal. That's over five million dollars. So the amount of error coming from enterprise sized customers is growing faster.

It's a pretty good portion I don't want to give out an exact number but we have a lot of really large customers are more and more I think you've probably heard in our.

In our prepared remarks that we signed our first deal that's over $5 million. So the amount of ore coming from enterprise type customers is growing faster.

Thank you.

Okay.

Thank you I'm showing no further questions at this time I'd like to turn the call back over to Greg a car to close the call.

Speaker 4: Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Greg Kakarz to close the call.

I just wanted to thank everybody.

Speaker 3: I just want to thank everybody for their time and asking very nice questions. I appreciate you looking at you to me. We're very excited about our business. We think we have an extraordinary opportunity in the marketplace, and I hope that you'll be seeing that over the next few quarters.

Their time and asking very nice questions I appreciate you'll be looking at <unk>. We're very excited about our business. We think we have an extraordinary opportunity in the marketplace and I hope that youll be seeing that over the next few quarters.

Thank you.

Speaker 4: Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day. Goodbye.

Ladies and gentlemen, this does conclude today's conference. Thank you all for participating you may now disconnect have a great day goodbye.