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What changed in Udemy, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Udemy, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+486 added−501 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in Udemy, Inc.'s 2023 10-K

486 paragraphs added · 501 removed · 389 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeConsumer Udemy’s direct-to-consumer business is built on our global marketplace, which is a destination for high-quality and relevant courses taught by expert instructors in their respective fields. Our platform is designed to meet the needs of our audience of 59 million learners and over 70,000 instructors that come to us for a wide variety of learning needs.
Biggest changeFor certain Udemy Business customers, we provide professional services that support the cohort learning experience, as well as learning architecture development and skills mapping. Consumer Udemy’s direct-to-consumer business is built on our global marketplace, which is a destination for high-quality and relevant courses taught by expert instructors in their respective fields.
We believe many of today's learning platforms have a number of shortcomings, including relevance, quality, breadth, scalability, and affordability of content. Udemy’s platform is designed to address these shortcomings by effectively connecting global learners with up-to-date knowledge from experts and practitioners around the world. Our global marketplace supports learners, instructors and enterprise customers to achieve their goals.
We believe many of today's learning platforms have a number of shortcomings, including relevance, quality, breadth, scalability, and affordability of content. Udemy’s platform is designed to address these shortcomings by effectively connecting global learners with up-to-date knowledge from experts and practitioners around the world. Our global platform supports learners, instructors and enterprise customers to achieve their goals.
We further curate our highest-quality content from our marketplace for Udemy’s enterprise SaaS platform, Udemy Business, which enables companies around the world to offer engaging, effective, on-demand learning for all employees, immersive laboratory-style learning for tech teams and cohort-based learning focused on leadership development.
We curate our highest-quality content from our marketplace for Udemy’s enterprise SaaS platform, Udemy Business, which enables companies around the world to offer engaging and effective on-demand learning for all employees, immersive laboratory-style learning for tech teams and cohort-based learning focused on leadership development.
Our proven land-and-expand strategy is an investment in building long-term, high ROI relationships with our customers. Our teams work closely with customers during onboarding to understand the company's business objectives and partner with the leaders in the organization to develop programs tied to driving business results.
Our land-and-expand strategy is an investment in building long-term, high ROI relationships with our customers. Our teams work closely with customers during onboarding to understand the company's business objectives and partner with the leaders in the organization to develop programs tied to driving business results.
As a result of these recognition practices, the quarter in which we generate the highest bookings may be different from the quarter in which we recognize the highest amount of net revenue, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year.
As a result of these recognition practices, the quarter in which we generate the highest bookings may be different from the quarter in which we recognize the highest amount of net revenue, and our sequential growth in remaining performance obligations has historically been highest in the fourth quarter of each year.
Item 1. Business Our mission Udemy’s mission is to improve lives through learning. About Udemy Udemy is a global learning company whose online platform empowers organizations and individuals with flexible and effective skill acquisition and development.
Item 1. Business Our mission Udemy’s mission is to improve lives through learning. About Udemy Udemy is a global learning company whose online platform empowers organizations and individuals with flexible and effective skill acquisition, development and validation.
Udemy uses a rigorous content curation process that considers enterprise customer demand, learner feedback and ratings, topic relevance, course quality, and instructor engagement on our platform, including frequency of updates and interaction with student Q&A. We regularly review courses in the Udemy Business catalog to ensure ratings consistently stay above a certain threshold and the topics are still relevant.
Udemy uses a rigorous content curation process that considers enterprise customer demand, learner feedback and ratings, topic relevance, course quality, and instructor engagement on our platform, including frequency of updates and interaction with student questions. We regularly review courses in the Udemy Business catalog to ensure ratings consistently stay above a certain threshold and the topics are still relevant.
We build deep, trusted customer relationships at all levels with a specific focus on the C-suite, and we have expanded our engagements to support upskilling and reskilling across hybrid workplaces. With our dynamic product portfolio from on-demand and immersive learning to a tailored cohort experience for leadership development, Udemy Business supports skill development at all levels of the organization.
We build deep, trusted customer relationships at all levels with a specific focus on the C-suite, and our engagements support upskilling and reskilling across hybrid workplaces. With our dynamic product portfolio from on-demand and immersive learning to a tailored cohort experience for leadership development, Udemy Business supports skill development at all levels of the organization.
Millions of people learn on the Udemy platform from real-world experts in topics ranging from technology, business and soft skills, to personal development. Learners can purchase lifetime access to individual courses or subscribe through monthly and annual plans, which offer unlimited access to more than 12,000 of Udemy’s top-rated courses.
Millions of people learn on the Udemy platform from real-world experts in topics ranging from technology, business and soft skills, to personal development. Learners can purchase lifetime access to individual courses or subscribe through monthly and annual plans, which offer unlimited access to more than 11,000 of Udemy’s top-rated courses.
In addition to our global focus, Udemy seeks to forge relationships that either extend our marketing reach or the capabilities and reach of our sales go-to-market. Through relationships with key brands and regional leaders that have reach and scale in their own right, we increase the awareness and adoption of our offerings.
In addition to our global focus, Udemy seeks to forge relationships that either extend our marketing reach or the capabilities and reach of our sales go-to-market. Through relationships with key brands and regional leaders that have reach and scale in their own right, we are able to increase the awareness and adoption of our offerings.
By leveraging Udemy’s integrated learning solutions and strategic customer success support, companies are equipped with the tools to reskill and upskill their workforce, increase employee engagement, and achieve critical business outcomes in an efficient and cost-effective manner.
By leveraging Udemy’s integrated learning solutions and strategic customer success support, businesses are equipped with the tools to reskill and upskill their workforce, increase employee engagement, and achieve critical business outcomes in an efficient and cost-effective manner.
Over time, we have been successful in retaining and expanding customer relationships. Customer success and expansion The success of our customers is a focal point for Udemy, as most global companies are currently experiencing massive organizational change and are looking for an experienced and knowledgeable partner to help them achieve their desired business outcomes.
Over time, we have been successful in retaining and expanding our customer relationships. 4 Table of Contents Customer success and expansion The success of our customers is a focal point for Udemy, as most global companies are currently experiencing massive organizational change and are looking for an experienced and knowledgeable partner to help them achieve their desired business outcomes.
Organizations looking to build leadership capabilities can separately purchase a subscription to our Cohort Learning development platform. 2 Table of Contents Our platform and product offerings Udemy’s platform allows individual learners and organizations all over the world to access high-quality and relevant content created by instructors across technology, business and soft skills, and personal development topics.
Organizations looking to build leadership capabilities can separately purchase a subscription to our cohort learning development platform. 2 Table of Contents Our platform and product offerings Udemy’s platform provides individual learners and organizations all over the world with access to high-quality and relevant content created by instructors across technology, business and soft skills, and personal development topics.
In addition, the Udemy Business SaaS-based platform provides personalized learning paths and rich analytics to further empower learners and administrators to map learning to their desired outcomes. Global learners are increasingly looking online to acquire new skills, while organizations are rapidly shifting from offline training of employees to online solutions for reskilling and upskilling of their workforce.
In addition, the Udemy Business platform provides personalized learning paths and rich analytics to further empower learners and administrators to map learning to their desired outcomes. Global learners are increasingly looking online to acquire new skills, while organizations are rapidly shifting from offline in-person training of employees to online solutions for reskilling and upskilling of their workforce.
Thus far, the team has built algorithmic and model-driven solutions at scale to provide the following capabilities: personalized and differentiated experiences for all learners, comprehensive instructor tools for content delivery and student engagement, and insights dashboards for enterprises to track employee progress. We continuously gather market research and leverage user data to optimize the content available on our platform.
Thus far, the team has built algorithmic and model-driven solutions at scale to provide the following capabilities: personalized and differentiated experiences for all learners, comprehensive instructor tools for content delivery and student engagement, and insights dashboards for enterprises to track employee progress. 9 Table of Contents We continuously gather market research and leverage user data to optimize the content available on our platform.
As of December 31, 2022, Udemy Business offers global companies annual or multi-year subscription access on a per-seat basis to a catalog of more than 20,000 courses in 14 local languages, in addition to English. Udemy Business provides access to its platform through Team and Enterprise subscription plans and offers the ability to add on Udemy Business Pro services.
As of December 31, 2023, Udemy Business offers global companies annual or multi-year subscription access on a per-seat basis to a catalog of more than 25,000 courses in 14 local languages, in addition to English. Udemy Business provides access to its platform through Team and Enterprise subscription plans and offers the ability to add on Udemy Business Pro services.
Udemy generates Udemy Business customer leads through its go-to-market sales team, lead generation marketing and from the direct-to-consumer marketplace. We have a proven land-and-expand strategy. Once Udemy has landed a customer, we work closely with the organization to understand their desired business outcomes and help them to achieve their goals.
Udemy generates Udemy Business customer leads through its go-to-market sales team, lead generation marketing, reselling and co-selling partnerships and from the direct-to-consumer marketplace. We have a proven land-and-expand strategy. Once Udemy has landed a customer, we work closely with the organization to understand their desired business outcomes and help them to achieve their goals.
Assigned by geography and business segment for Enterprise customers purchasing at least 100 seats where every customer success manager is assigned to fewer customers and is very hands-on throughout the customer journey. 5 Table of Contents In addition to each customer being assigned a Customer Success representative, we also provide specialized support for key customer needs. • Renewals.
Assigned by geography and business segment for Enterprise customers purchasing at least 100 seats where every customer success manager is assigned to fewer customers and is very hands-on throughout the customer journey. In addition to each customer being assigned a Customer Success representative, we also provide specialized support for key customer needs. • Renewals.
This exclusivity clause is effective for so long as an instructor’s content is included in the Udemy Business catalog, and we may continue to include content in the Udemy Business catalog for up to 12 months after an instructor elects to opt out.
This exclusivity clause remains in effect for so long as an instructor’s content is included in the Udemy Business catalog, and we may continue to include content in the Udemy Business catalog for up to 12 months after an instructor elects to opt out.
Udemy offers a clear advantage to instructors who want to ensure they offer the freshest, most relevant tech skills content. The ability to quickly build and post fresh content helps instructors attract more learners and generate more earnings. On average, courses are updated 6 times per year by top instructors on Udemy.
Udemy offers a clear advantage to instructors who want to ensure they offer the freshest, most relevant tech skills content. The ability to quickly create and post fresh content helps instructors attract more learners and generate more earnings. On average, courses are updated five times per year by top instructors on Udemy.
We will continue to invest in our machine-learning pricing algorithms to determine the optimal price we charge for our courses in our marketplace on a per-country basis, taking into account dozens of course characteristics, including category of content, hours of content, course rating and popularity. Pursue strategic acquisitions.
We are continuing to invest in our machine-learning pricing algorithms to determine the optimal price we charge for our courses in our marketplace on a per-country basis, taking into account dozens of course characteristics, including category of content, hours of content, course rating and popularity. Pursue strategic acquisitions.
We use advanced technology applications, such as personalized promotions, lifecycle marketing and content personalization, to help tailor our platform for our learners. Our technology and research and development Udemy’s technology features a modern architecture designed to support our continued growth at scale and to deliver on our mission.
We use advanced technology applications, such as personalized promotions, lifecycle marketing and content personalization, to help tailor our platform for our learners. 8 Table of Contents Our technology and research and development Udemy’s technology features a modern architecture designed to support our continued growth at scale and to deliver on our mission.
As the content catalog expands in each country, we start investing in additional growth levers such as local payment methods, local currency pricing and local marketing. These investments drive higher traffic, enrollments and revenue for our direct-to-consumer business, as well as leads for Udemy Business.
As the content catalog expands in each country, we typically invest in additional growth levers such as local payment methods, local currency pricing and local marketing. These investments drive higher traffic, enrollments and revenue for our direct-to-consumer business, as well as leads for Udemy Business.
Contracts are licensed on an annual or multi-year basis, and pricing is determined on a per seat basis, with volume discounts. Udemy Business offers subscription plans, including Team Plan, Enterprise Plan, and Cohort Learning, as well as the Udemy Business Pro add-on service. • Team Plan .
Contracts are licensed on an annual or multi-year basis, and pricing is determined on a per seat basis, with volume discounts. Udemy Business offers subscription plans, including Team Plan, Enterprise Plan, and Leadership Academy, as well as the Udemy Business Pro add-on service. • Team Plan .
Udemy has a network of more than 70,000 global instructors. Instructors come to Udemy because of our scale. Our massive audience provides us with a significant amount of learner data and incentive for instructors to come to our platform. Tens of thousands of instructors have created hundreds of thousands of courses to serve tens of millions of global learners.
Udemy has a network of 75,000 global instructors. Instructors come to Udemy because of our scale. Our massive audience provides us with a significant amount of learner data and incentive for instructors to come to our platform. Tens of thousands of instructors have created hundreds of thousands of courses to serve tens of millions of global learners.
Historically, we have expanded from individual to department to multi-department and company-wide sales as Udemy Business’s value is proven and customers identify additional use cases. With roughly 10% of total available seats contracted in our customer base as of the end of 2022, we see a large opportunity for growth.
Historically, we have expanded from individual to team to multi-department and company-wide sales as Udemy Business’s value is proven and customers identify additional use cases. With under 10% of total available seats contracted in our customer base as of the end of 2023, we see a large opportunity for growth.
We have developed a strong outbound lead-generation process with effective account-based marketing operations, allowing us to target, develop and nurture key accounts in large organizations. 6 Table of Contents Continue international expansion and localization. Udemy is accessible in more than 180 countries with courses in nearly 75 languages.
We have developed a strong outbound lead-generation process with effective account-based marketing operations, allowing us to target, develop and nurture key accounts in large organizations. Continue international expansion and localization. Udemy is accessible in more than 180 countries with courses in 75 languages.
Organizations looking to build leadership capabilities can purchase our cohort-based leadership development platform, which enables teams to learn together in a hybrid, scalable experience that can be tailored for each customer’s organizational needs. Subscription pricing for this offering is based on cohort volume and functionality.
Organizations looking to build leadership capabilities can purchase our cohort-based leadership development platform, which enables teams to learn together through an instructor-led learning experience in a hybrid, scalable experience that can be tailored for each customer’s organizational needs. Subscription pricing for this offering is based on cohort volume and functionality.
For Udemy Business, we have courses in English 8 Table of Contents and 14 other local languages. Having local language experts creating locally relevant content is a key differentiator for Udemy. Powerful network effects. Udemy is one symbiotic, data-centric platform.
For Udemy Business, we have courses in English and 14 other local languages. Having local language experts creating locally relevant content is a key differentiator for Udemy. Powerful network effects. Udemy is one symbiotic, data-centric platform.
We ensure that all of those programs drive towards the right learning outcomes and then we focus on driving adoption. Our Customer Success organization is structured to support our customer base as it scales. Based on the nature of our customers, we support them using one of the following three models: • Self-serve.
We ensure that all of those programs support the right learning outcomes and then we focus on driving seat expansion. Our Customer Success organization is structured to support our customer base as it scales. Based on the nature of our customers, we support them using one of the following three models: • Self-serve.
Available as an add-on to any Udemy Business enterprise license, Udemy Business Pro provides a deeper, immersive learning experience with assessments, labs and workspaces that accelerate skill development across key roles in information technology, software engineering, and data & analytics. Pricing is based on contract length and number of seats. • Cohort Learning.
Available as an add-on to any Udemy Business enterprise license, Udemy Business Pro provides a deeper, immersive learning experience with assessments, labs and workspaces and pre-built learning paths that accelerate skill development across key roles in information technology, software engineering, and data & analytics. Pricing is based on contract length and number of seats. • Leadership Academy.
We believe that online education is well positioned to address the scalability and affordability limitations that offline education presents. Based on data from Arizton, the market opportunity in online learning was estimated to be $166 billion in 2021.
We believe that online education is well-positioned to address the scalability and affordability limitations that offline education presents. Based on data from Arizton, the market opportunity in online learning was estimated to be $180 billion in 2022.
Udemy enables users to gain the knowledge and skills they need to attain in-demand jobs, further their career, and improve their well-being. Our library of more than 200,000 free and paid courses is created by more than 70,000 instructors and covers a wide range of topics, including technology, business and soft skills, and personal development.
Udemy enables learners to gain the knowledge and skills they need to attain in-demand jobs, further their career, and improve their well-being. Our library of more than 220,000 free and paid courses is created by 75,000 instructors and covers a wide range of topics, including technology, business and soft skills, and personal development.
Our platform is purpose-built to empower instructors with data insights and innovative technology to meet the specific needs of learners and organizations in order to help them achieve their goals and desired outcomes. Our products are designed to deliver measurable incremental value, which ultimately creates upselling or expansion opportunities. Udemy’s product offerings include: • Per Course .
Our platform is purpose-built to empower instructors with data insights and innovative technology to meet the specific needs of learners and organizations in order to help them achieve their goals and desired outcomes. Our products are designed to deliver measurable incremental value, which ultimately creates upselling or expansion opportunities.
We leverage machine learning to increase learner conversion and retention using enhanced personalization. Our global distribution platform enables learners, instructors and organizations around the world to achieve their goals and desired outcomes. We aim to provide world-class experiences for all learners by focusing on the following pillars: Scaled integrated platform.
We leverage AI and machine learning to enhance learner personalization, increase conversion and support customer retention. Our global distribution platform enables learners, instructors and organizations around the world to achieve their goals and desired outcomes. We aim to provide world-class experiences for all learners by focusing on the following pillars: Scaled integrated platform.
We have effectively built a creator platform that allows instructors to develop content on virtually any topic, while having the flexibility to update courses as they incorporate feedback from millions of learners around the world. On average, instructors publish more than 4,700 courses a month on our platform. High-quality, relevant and up-to-date content.
We have effectively built a creator platform that allows instructors to develop content on virtually any topic, while having the flexibility to update courses as they incorporate feedback from millions of learners around the world. On average, our instructors publish more than 5,000 courses a month on our platform. 7 Table of Contents High-quality, relevant and up-to-date content.
Udemy Business features collections in 14 local languages other than English, accounting for more than 50% of the Udemy Business course collection. Local language courses are taught by native speakers with local context, making the content and learning experience more relevant and effective.
Udemy Business features collections in 14 local languages, in addition to English. Non-English content accounts for more than 50% of the Udemy Business course collection. Local language courses are taught by native speakers with local context, making the content and learning experience more relevant and effective.
We compete for individual learners, enterprise customers and instructors on the following basis: Learners: We compete for learners based on our course catalog, instructors, learning tools and localization. We believe that we are positioned favorably because of our ability to attract instructors and support them with data and insights to create and refresh high-quality content.
We compete for individual learners, Udemy Business customers and instructors on the following basis: Learners: We compete for learners based on our course catalog, instructors, learning tools and localization. We believe that we are positioned favorably because of our ability to attract instructors and support them with data and insights to create new, and regularly refreshed high-quality content.
When an instructor’s course is added to the Udemy Business catalog, instructors are subject to an exclusivity clause for the use of their content on our platform, pursuant to which instructors agree, subject to limited exceptions, not to offer any on-demand content, such as pre-recorded courses, on any competing platform in a way that directly competes with or impairs the sales of such content on our platform.
When an instructor’s course is added to the Udemy Business catalog, instructors are required to agree, subject to limited exceptions, not to offer any on-demand content, such as pre-recorded courses, on any competing platform in a way that directly competes with or impairs the sales of such content on our platform.
These collections are a key competitive differentiator which we believe position us well to become a premier provider for many global organizations that are looking to standardize on one platform.
These collections are a key competitive differentiator which we believe position us well as a premier learning and development provider for many global organizations that are looking to standardize on one platform.
Blended customer experience for Enterprise customers with less than 100 seats where we leverage technology and automation to create a personalized feel for the customer journey, and we have teams of customer success team members that will engage with our customers in moments of risk or opportunity throughout the customer journey. • High touch.
Blended customer experience for Enterprise customers with less than 100 seats where we leverage technology and automation to create a personalized customer journey, and we have teams of customer success members that will engage with our customers throughout the customer journey. • High touch.
With an average of nearly 34 million monthly unique visitors during 2022, over 125 million cumulative course enrollments, and more than 12 billion cumulative minutes of learning, we believe that the volume of the data our platform collects provides meaningful insights into the behaviors and evolving needs of learners and instructors.
With an average of 34 million monthly unique visitors during 2023, over 137 million cumulative course enrollments, and more than 13 billion cumulative minutes of learning, we believe that the volume of the data our platform collects provides meaningful insights into the behaviors and evolving needs of organizations, learners and instructors.
As of December 31, 2022, Udemy Business NDRR was 115%, and NDRR for UB customers with at least 1,000 employees, or UB Large Customer NDRR, was 123%. This level of retention demonstrates the potential for consistent expanded growth within the existing Udemy Business customer base.
As of December 31, 2023, Udemy Business NDRR was 106%, and NDRR for Udemy Business customers with at least 1,000 employees, or Udemy Business Large Customer NDRR, was 113%. This level of retention demonstrates the potential for consistent expanded growth within the existing Udemy Business customer base.
In 2022, more than 50% of UB revenue in the Asia Pacific region was driven by partnerships with Benesse in Japan, Woongjin ThinkBig in South Korea, Sanjieke in China and FUNiX in Vietnam. These highly selective partnerships must meet stringent criteria.
In 2023, more than 60% of Udemy Business revenue in the Asia Pacific region was driven by partnerships with Benesse in Japan, Woongjin ThinkBig in South Korea, Sanjieke in China and FUNiX in Vietnam. These highly selective partnerships must meet stringent criteria.
Brand marketing increases awareness while performance marketing drives incremental traffic among potential learners. The strength of our community and brand drives significant organic acquisition, with the majority of our customers coming from unpaid channels. Finally, lifecycle marketing and monetization focuses on building personalization at scale, increasing learner retention and long-term value, optimizing prices and promotions, and testing new monetization models.
The strength of our community and brand drives significant organic acquisition, with the majority of our customers coming from unpaid channels. Finally, lifecycle marketing and monetization focuses on building personalization at scale, increasing learner retention and long-term value, optimizing prices and promotions, and testing new monetization models.
To date, customer expansion has been primarily driven by seat expansion, although new product adoption, i.e. Cohort Learning and Udemy Business Pro, is becoming a more meaningful driver. Partnerships Partnerships are a key element of Udemy’s long-term growth strategy.
To date, customer expansion has been primarily driven by seat expansion, although new product adoption, such as Leadership Academy and Udemy Business Pro, is becoming a more meaningful driver. Partnerships Partnerships are a key element of Udemy’s long-term growth strategy.
We rely on a combination of intellectual property rights, including patents, trade secrets, trade dress, domain names, copyrights and trademarks to protect our competitive advantage. 11 Table of Contents As of December 31, 2022, we held 14 registered trademarks in the United States and 34 registered trademarks in foreign jurisdictions, which have various expiration dates between 2024 and 2032.
We rely on a combination of intellectual property rights, including patents, trade secrets, trade dress, domain names, copyrights and trademarks to protect our competitive advantage. As of December 31, 2023, we held 16 registered trademarks in the United States and 39 registered trademarks in foreign jurisdictions, which have various expiration dates between 2024 and 2033.
In 2022, 59% of our revenue was generated outside of North America, and 84% of all user traffic originated from outside of the United States. We have courses in nearly 75 languages on our marketplace and have Udemy Business customers in more than 150 countries.
In 2023, 60% of our revenue was generated outside of North America, and more than 85% of marketplace traffic originated from outside of the United States. We have courses in 75 languages on our marketplace and have Udemy Business customers in more than 150 countries.
Udemy’s partnerships aim to drive growth across both our consumer and Udemy Business offerings, and we center our efforts on three key pillars: global expansion, extending reach and meeting our business customers in their flow of work. Udemy has a global focus in all partnerships. We have a differentiated localized content catalog across a wide set of regions.
Udemy’s partnerships aim to drive growth across both our consumer and Udemy Business offerings, and we center our efforts on three key pillars: global expansion, extending reach and meeting our business customers in their flow of work. 5 Table of Contents Udemy has a global focus in all partnerships.
Increase overall Udemy brand awareness. We will continue to invest in growing brand awareness globally. Udemy’s brand awareness is relatively low, representing a massive opportunity, and this is consistent with the EdTech category as a whole. Our brand marketing increases awareness of Udemy through online and offline campaigns that drive press, social sharing and more word-of-mouth virality.
We are continuing to invest in growing brand awareness globally. Udemy’s brand awareness is relatively low, representing a significant opportunity, and this is consistent with the category as a whole. Our brand marketing is designed to increase awareness of Udemy through online and offline campaigns that drive media coverage, social sharing and more word-of-mouth virality.
Udemy’s platform is designed to support learners throughout their journey as they develop skills needed to achieve their professional goals. We provide personalized and guided skill-based learning experiences, including videos, reading tutorials, hands-on practice and assessments. Learners can focus on career and occupational areas of their choice. Udemy produces curated learning paths focused on key domains and skill sets.
Udemy’s platform is designed to support learners throughout their journey as they develop skills needed to achieve their professional goals and receive validation of skills proficiency through badges and certification. We provide personalized and guided skill-based learning experiences, including videos, reading tutorials, hands-on practice and assessments. Learners can focus on career and occupational areas of their choice.
In addition, the study found organizations that embed a skills-based approach are 63% more likely to achieve results than those that have not, including, but not limited to, meeting or exceeding financial targets; anticipating and responding effectively and efficiently to change; innovating; achieving high levels of customer satisfaction and retaining high performers.
Therefore, organizations that embed a skills-based approach are more likely to achieve results than those that have not, including, among others: • meeting or exceeding financial targets; • anticipating and responding effectively and efficiently to change; • innovating; and • achieving high levels of customer satisfaction, increasing productivity and retaining high performers.
While many individuals and businesses had already embraced online learning prior to COVID-19, the increase in work-from-home flexibility during the pandemic accelerated a corporate shift to digital training solutions worldwide. Udemy’s highly-effective and cost-efficient method of online learning across a variety of disciplines is designed to meet the corporate learning needs within today’s hybrid and remote work cultures.
The increase in work-from-home flexibility has accelerated a corporate shift to digital training solutions worldwide. Udemy’s highly-effective and cost-efficient method of online learning across a variety of disciplines is designed to meet the corporate learning needs within today’s hybrid and remote work cultures.
Our marketplace encourages engagement between learners and instructors, including course enrollment, consumption and Q&A. The volume and frequency of this engagement allows us to generate meaningful insights and provide real-time feedback and analytics for our instructors.
Our marketplace encourages engagement between learners and instructors, including course enrollment, consumption and Q&As. The volume and frequency of this engagement allows us to generate meaningful insights and provide real-time feedback and analytics for our instructors and enterprise customers. Udemy leverages AI and machine learning throughout our platform.
Investments in our brand enable us to drive long-term growth by attracting new learners to our platform and keeping existing learners engaged. Optimize business model and pricing . Our pricing optimization approach fuels the local supply by making it easy and accessible for learners to purchase courses, which drives instructor earnings and in return more supply.
Investments in our brand enable us to drive long-term growth by attracting new learners to our platform and keeping existing learners engaged. Optimize business model and pricing . Our machine-learning pricing optimization approach is designed to make it easy and accessible for learners to purchase courses, which drives instructor earnings, thereby increasing incentives for instructors to supply more courses.
Combined with our go-to-market and Customer Success approach, we increase our speed to market and local penetration by partnering with regional resell and co-sell partners to connect customers with Udemy Business in their local language.
We have a differentiated localized content catalog across a wide set of regions. Combined with our go-to-market and Customer Success approach, we increase our speed to market and local penetration by partnering with regional resell and co-sell partners to connect customers with Udemy Business in their local language.
Expand learning experiences to new modalities and more active learning that reaches a broader audience. Our platform currently offers powerful learning experiences including practice tests, coding exercises and quizzes, which permit learners to prepare for certification exams and better retain learnings. We intend to further expand our offerings to include more immersive skills assessments, labs and cohort-based learning.
Our platform currently offers powerful learning experiences including practice tests, coding exercises and quizzes, which permit learners to prepare for certification exams and better retain learnings. We intend to further expand our offerings to include more immersive skills assessments, labs and cohort-based learning. Launch innovative products that drive measurable learning outcomes and increased retention.
We calculate this estimate by aggregating the global corporate opportunity of $69 billion and the global e-learning opportunity of $97 billion, including government, vocation and higher-education. We believe that market opportunity could grow to nearly $476 billion by 2027, including K-12.
We calculate this estimate by aggregating the global corporate opportunity of $78 billion and the global e-learning opportunity of $102 billion, including government, vocation and higher-education. We believe that market opportunity could grow to $380 billion by 2028.
Most instructors on our marketplace opt into our promotional pricing program in which Udemy programmatically controls list and promotional prices, based on certain characteristics such as course content, length, and rating, which helps drive more enrollments for our instructors.
Most instructors on our marketplace opt into our promotional pricing program in which Udemy programmatically controls list and promotional prices, based on certain characteristics such as course content, length, and rating, which helps drive more enrollments for our instructors. Udemy’s marketplace has 24,000 free courses, which are an important source of conversion to paid enrollments.
“Always Learning” is a key value for our company. We hold regular “Drop Everything and Learn” hours to provide employees with dedicated time they can use to learn professional or personal skills offered on our platform.
“Always Learning” is a key value for our company. We hold regular “Drop Everything and Learn” hours to provide employees with dedicated time they can use to learn professional or personal skills offered on our platform. Due to these efforts, 95% of employees spent time learning on our platform during the fiscal year ended December 31, 2023.
Our differentiated learner feedback loops help improve instructor outcomes by sharing insights on where the market opportunities are and how they can enhance their teaching capabilities. For learners, our marketplace unlocks valuable data for personalized recommendations. This helps learners know the skills needed to achieve their goals and how they can acquire those skills.
We leverage a wealth of data to drive customer outcomes. Our differentiated learner feedback loops help improve instructor outcomes by sharing insights on where the market opportunities are and how they can enhance their teaching capabilities. For learners, our marketplace unlocks valuable data for personalized recommendations.
Other niche marketplace models cannot serve the enterprise learner who needs to develop both hard and soft skills. Udemy’s platform, in contrast, offers a comprehensive suite of skills development required to support learners and organizations in achieving their goals and outcomes.
Our competitive advantages The traditional publisher model used by some competitors can be slow moving and reactive. Other niche marketplace models cannot effectively serve the enterprise learner who needs to develop both hard and soft skills. Udemy’s platform, in contrast, offers a comprehensive suite of skills development content required to support learners and organizations in achieving their goals and outcomes.
In a recent survey by Deloitte, 71% of CEOs said they are preparing for a talent and workforce transformation, which is the process of developing the employees’ skill set to keep up with the ever-changing needs of the business.
Companies around the world are preparing for a talent and workforce transformation, which is the process of developing the employees’ skill set to keep up with the ever-changing needs of the business.
Udemy’s learning marketplace platform enables tens of thousands of subject matter experts to develop, distribute and enhance content that reaches Udemy’s broad global audience of 59 million learners. Udemy leverages technology, data and insights to deliver personalized and effective learning experiences.
Udemy’s learning marketplace enables tens of thousands of instructors to develop, distribute and enhance content that reaches Udemy’s broad global audience of 69 million learners. Udemy leverages technology, including artificial intelligence (“AI”), as well as data and insights, to deliver personalized, immersive and effective learning experiences.
Once an organization signs on, our Customer Success team partners closely with that organization to track progress toward business outcomes and determine opportunities for expanding usage.
Our Customer Success team engages pre-sale, ensuring that we understand the business objectives of that potential customer. Once an organization signs on, our Customer Success team partners closely with that organization to track progress toward business outcomes and determine opportunities for increasing adoption and usage.
Udemy Business enables organizations around the world to offer on-demand learning for all employees, immersive learning for technology teams, and cohort learning for business leaders. Built for businesses striving to be at the forefront of innovation and those utilizing the latest technologies, Udemy Business offers fresh, relevant learning that can be accessed around the world at anytime.
Built for businesses striving to be at the forefront of innovation and those utilizing the latest technologies, Udemy Business offers fresh, relevant learning that can be accessed around the world at any time.
Finally, a critical part of Udemy’s success requires that we work with partners to enable our users to access Udemy Business content in their flow of work. We aim to integrate Udemy Business where employees are already learning, for example, in Learning Management Systems and Learning Experience Platforms.
Finally, a critical part of Udemy’s success requires that we work with partners to enable our users to access Udemy Business content in their flow of work. To support this, Udemy Business can be integrated into various Learning Management Systems (“LMS”) and Learning Experience Platforms (“LXP”).
Our customer success teams partner with leaders of organizations to develop learning strategies to achieve their corporate objectives and to give learners guidance to help them understand why they should be continuously learning and to help them make time for learning. With roughly 10% penetration of Udemy Business’ nearly 14,000 customers, our opportunity within our existing customer base is significant.
Our customer success teams partner with leaders of organizations to develop learning strategies to achieve their corporate objectives and to give learners guidance to help them develop and foster a culture of continuous learning. With under 10% penetration of total available seats for Udemy Business’ customers, our opportunity within our existing customer base is significant.
Hybrid work, distributed teams and the rapid pace of change mean organizations can no longer rely on face to face training alone. Organizations must leverage digital and hybrid learning experiences to scale skills acquisition. Our go-to-market approach is focused on understanding our customers’ businesses and developing learning strategies so they can achieve organizational goals.
As a result, organizations must leverage digital and hybrid learning experiences to scale skills acquisition. Our go-to-market approach is focused on understanding our customers’ businesses and developing learning strategies so they can achieve organizational goals.
Launch innovative products that drive measurable learning outcomes and increased retention. We are investing in the platform to drive increased measurable learner outcomes; improve our instructors’ ability to create additional modalities and hands-on learning experiences; improve our ability to support organizations and their need to upskill and reskill their workforces efficiently, including leadership needs and cohort-based offerings.
We are investing in the platform and leveraging technology such as generative AI to: • drive increased measurable learner outcomes; • deliver more personalized learning experiences; • improve our instructors’ ability to create additional modalities and hands-on learning experiences; and • improve our ability to support organizations and their need to upskill and reskill their workforces efficiently, including leadership needs and cohort-based offerings. 6 Table of Contents Increase overall Udemy brand awareness.
Our business model Udemy has two symbiotic operating segments: Enterprise, or Udemy Business (50% of 2022 revenue), and Consumer (50% of 2022 revenue), or our direct-to-consumer marketplace. Udemy’s differentiated business model attracts instructors from around the world with our attractive revenue share incentive model and access to 59 million learners.
Our business model Udemy has two symbiotic operating segments: Enterprise, or Udemy Business (58% of 2023 revenue), and Consumer, or our direct-to-consumer marketplace (42% of 2023 revenue). Udemy’s differentiated business model, compelling revenue share incentive and access to 69 million learners attracts instructors from around the world. The Udemy Consumer marketplace consists of more than 220,000 courses in 75 languages.
Competition The market for developing skills is rapidly growing and highly fragmented, but is not well-suited to address the growing need for people to develop skills, reskill and upskill since the landscape is continuously evolving.
Competition The market for developing skills is rapidly growing and highly fragmented, but is not well-suited to address the growing need for people to develop skills, reskill and upskill since the landscape is continuously evolving. Participants in this market can include corporate training offerings, direct-to-consumer training offerings, specialized content training offerings, and providers of online free resources.
We believe that we are positioned favorably because of the synergies between our consumer and enterprise businesses, and the strategic partnerships we form with our enterprise customers that help them drive engagement in their learning programs and, in turn, business outcomes like employee retention and corporate productivity. 7 Table of Contents Instructors: We compete for instructors based on our ability to provide monetization opportunities and tools to enable instructors to create differentiated content to delight global learners.
We believe that we are positioned favorably because of the synergies between our consumer and enterprise businesses, and the strategic relationships we form with our enterprise customers that help them drive engagement in their learning programs and, in turn, business outcomes like employee retention and corporate productivity.
The range and volume of our course catalog enables employees to build their career path with the most relevant and effective courses and real-world skills development, and organizations across the globe to reskill and upskill their workforce.
Udemy Business offers organizations access to more than 25,000 of the highest rated courses from our marketplace across 15 languages. The range and volume of our course catalog enables employees to support their career growth with the most relevant and effective courses and real-world skills development, and organizations across the globe to reskill and upskill their workforce.
Once we reach a steady volume of leads to Udemy Business, we build in-country go-to-market sales teams to grow and expand our customer base. We also may partner with local companies. This international playbook will continue to allow us to build a targeted list of countries in which we anticipate we will expand with a high likelihood of success.
Once we reach a steady volume of leads to Udemy Business, we build local go-to-market sales teams to help grow and expand our customer base. We also may partner with local companies.
Learners benefit from the local context provided by local instructors, further enhancing the learner experience. Udemy’s differentiated feedback loops enable instructors to gain insights directly from learners that help to improve the quality and relevance of content, and our platform is designed to facilitate instructors making frequent, fast updates to their courses.
Udemy’s differentiated feedback loops enable instructors to gain insights directly from learners that help to improve the quality and relevance of content, and our platform is designed to facilitate instructors making frequent, real-time updates to their courses. On average, courses were updated five times by top instructors on Udemy in 2023.
We will consider acquisitions that expand our international footprint and/or to acquire innovative technology that expands the immersive learning experiences we offer, with a goal of improving learner outcomes and ultimately increasing retention. For example, in August 2021, we announced our acquisition of CorpU, an online leadership development platform, which is now our cohort-based leadership solution.
We will consider acquisitions that expand our international footprint and/or to acquire innovative technology that expands the immersive learning experiences we offer, with the goal of improving learner outcomes and ultimately increasing new customer acquisition and retention.
Global instructors learn about Udemy in a variety of ways including awareness campaigns and by coming to the platform as learners. We have more than 20,000 free courses available on our consumer marketplace.
Global instructors learn about Udemy in a variety of ways including awareness campaigns and by coming to the platform as learners. We have 24,000 free courses available on our consumer marketplace. These free courses represent an important entry point for learners to experience our platform, driving cost-effective top of the funnel engagement for both consumer and Udemy Business leads.
As automation and technological innovation spurs changes in the workforce, there is a growing need to offer more flexible training to continuously re-skill and upskill workforces to keep up with the pace of change.
We believe that our dual focus on organizational and individual skills development places us at the forefront of addressing the evolving needs of the modern workplace. As automation and technological innovation accelerates changes in the workforce, there is a growing need to offer more flexible training to continuously re-skill and upskill workforces to keep up with the pace of change.
We also allow organizations to author their own custom learning paths. These are customized to the organization-specific upskilling and reskilling objectives. Extensive integrations. We are evolving our comprehensive learning platform using an API-first approach. This starts by looking at our business as a set of key entities and capabilities, and we define modular, interoperable APIs to represent them.
Udemy produces curated learning paths focused on key domains and skill sets. We also allow organizations to author their own custom learning paths. These are customized to the organization-specific upskilling and reskilling objectives. Extensive integrations. We are evolving our comprehensive learning platform using an API-first approach.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe believe that our ability to successfully compete depends on a range of factors, both within and beyond our control, including: • the availability or development of alternative online learning platforms that are more compelling to learners, instructors, or organizations than ours; • changes in pricing policies and terms offered by our competitors or by us; • the ability to adapt to or compete with new technologies and changes in requirements of our learners, instructors, and UB customers; • costs associated with acquiring and retaining learners, instructors, and UB customers; • the ability of our current and future competitors to establish relationships with customers; and • industry consolidation and the number and rate of new entrants.
Biggest changeWe believe that our ability to successfully compete depends on a range of factors, both within and beyond our control, including: • the availability or development of alternative online learning platforms that are more compelling to learners, instructors, or organizations than ours; • changes in pricing policies and terms offered by our competitors or by us, including for example the change in our revenue share with instructors that became effective at the beginning of 2024; • the ability to adapt to or compete with new technologies and changes in requirements of our learners, instructors, and UB customers; • the ability to adapt to disruptive innovation that may significantly alter or transform the competitive landscape, such as natural language processing, artificial intelligence and machine learning; • costs associated with acquiring and retaining learners, instructors, and UB customers; • the ability of our current and future competitors to establish relationships with customers; • industry consolidation and the number and rate of new entrants; • difficulties with software development that could delay or prevent the development, introduction or implementation of platform modifications and enhancements; and • costs associated with improving and maintaining our platform.
We believe the increase in the number of instructors increases the quality and quantity of the content available on our platform, in turn making our platform more appealing and engaging to learners in both our Consumer and Enterprise segments. This increase in learners then attracts more instructors to our platform.
We believe the increase in the number of instructors increases the quality and quantity of the content available on our platform, in turn making our platform more appealing and engaging to learners in both our Enterprise and Consumer segments. This increase in learners then attracts more instructors to our platform.
We operate in a highly competitive market, and we may not be able to compete successfully against current and future competitors. We operate in a highly competitive environment, as the market for online learning is relatively new, highly fragmented, and rapidly evolving, with limited barriers to entry.
We operate in a highly competitive market, and we may not be able to compete successfully against current and future competitors. We operate in a highly competitive environment, as the market for online learning is relatively new, fragmented, and rapidly evolving, with limited barriers to entry.
A cybersecurity attack or other security breach or incident could delay or interrupt service to our learners, instructors, and UB customers, harm our reputation or subject us to significant liability. Our platform involves the processing of significant amounts of data relating to the learners, instructors, and UB customers interacting with our platform, including personal data and personal information.
A cybersecurity attack or other security breach or incident could delay or interrupt service to our learners, instructors, and UB customers, harm our reputation or subject us to significant liability. Our platform involves the processing of significant amounts of data relating to learners, instructors, and UB customers interacting with our platform, including personal data and personal information.
More generally, we cannot guarantee that applicable recovery systems, security protocols, network protection mechanisms, and other procedures of ourselves of our third-party service providers are or will be adequate to prevent network and service interruption, system failure or loss, corruption, or unauthorized access to, or disclosure, acquisition, unavailability, destruction, or other processing of, data, including personal data, personal information, and other sensitive information that we or they process or maintain.
More generally, we cannot guarantee that applicable recovery systems, security protocols, network protection mechanisms, and other procedures of ourselves or our third-party service providers are or will be adequate to prevent network and service interruption, system failure or loss, corruption, or unauthorized access to, or disclosure, acquisition, unavailability, destruction, or other processing of, data, including personal data and other sensitive information that we or they process or maintain.
Additionally, under some open source licenses, if we combine our proprietary software with open source software in a certain manner, certain proprietary software (including our own software) or other intellectual property rights could become subject to obligations to be disclosed in source code form and licensed, including for the purpose of enabling further modification and distribution, and at no charge or for only a nominal fee.
Additionally, under some open source licenses, if we combine our proprietary software with certain open source software in a certain manner, certain proprietary software (including our own software) or other intellectual property rights could become subject to obligations to be disclosed in source code form and licensed, including for the purpose of enabling further modification and distribution, and at no charge or for only a nominal fee.
Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors.
Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under federal securities laws and the continuous scrutiny of securities analysts and investors.
Among other things, these provisions: • provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; • authorize our board of directors to issue shares of preferred stock and determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval; • provide that the authorized number of directors may be changed only by resolution of the board of directors; • provide that all vacancies on our board of directors and all newly created directorships may only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director, except as otherwise required by law, our governing documents or resolution of our board of directors, and subject to the rights of the holders of our preferred stock; • establish that our board of directors is divided into three classes, with each class serving staggered three-year terms; • provide that a director may only be removed from the board of directors by the stockholders for cause and only by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding capital stock entitled to vote in the election of directors; • prohibit cumulative voting (therefore allowing the holders of a plurality of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); • require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent; • require that stockholders give advance notice to nominate directors or submit proposals for consideration at stockholder meetings; • provide that special meetings of our stockholders may be called only by the board of directors acting pursuant to a resolution adopted by the majority of the entire board of directors, the Chairperson of the board of directors, our Chief Executive Officer or our President; 43 Table of Contents • provide that, unless we otherwise consent in writing, a state or federal court located within the State of Delaware shall be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation, and our amended and restated bylaws, or (4) any action asserting a claim against us governed by the internal affairs doctrine; • provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act; and • require a super-majority vote of stockholders to amend some of the provisions described above.
Among other things, these provisions: • provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; • authorize our board of directors to issue shares of preferred stock and determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval; • provide that the authorized number of directors may be changed only by resolution of the board of directors; • provide that all vacancies on our board of directors and all newly created directorships may only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director, except as otherwise required by law, our governing documents or resolution of our board of directors, and subject to the rights of the holders of our preferred stock; • establish that our board of directors is divided into three classes, with each class serving staggered three-year terms; • provide that a director may only be removed from the board of directors by the stockholders for cause and only by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding capital stock entitled to vote in the election of directors; 41 Table of Contents • prohibit cumulative voting (therefore allowing the holders of a plurality of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); • require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent; • require that stockholders give advance notice to nominate directors or submit proposals for consideration at stockholder meetings; • provide that special meetings of our stockholders may be called only by the board of directors acting pursuant to a resolution adopted by the majority of the entire board of directors, the Chairperson of the board of directors, our Chief Executive Officer or our President; • provide that, unless we otherwise consent in writing, a state or federal court located within the State of Delaware shall be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation, and our amended and restated bylaws, or (4) any action asserting a claim against us governed by the internal affairs doctrine; • provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act; and • require a super-majority vote of stockholders to amend some of the provisions described above.
For example: • we may choose to prohibit certain content from our platform that we believe is inconsistent with our values even though we could benefit financially from the sale of that content; • we may choose to revise our policies in ways that we believe will be beneficial to our learners, instructors, and UB customers in the long term even though the changes are perceived unfavorably among our existing learners, instructors, and customers; or • we may take actions, such as locating our servers in low-impact data centers, that reduce our environmental footprint even though these actions may be more costly than other alternatives.
For example: • we may choose to prohibit certain content from our platform that we believe is inconsistent with our values even though we could benefit financially from the sale of that content; • we may choose to revise our policies in ways that we believe will be beneficial to our learners, instructors, and UB customers in the long term even though the changes may be perceived unfavorably among our existing learners, instructors, and customers; or • we may take actions, such as locating our servers in low-impact data centers, that reduce our environmental footprint even though these actions may be more costly than other alternatives.
The willingness or ability of instructors to provide content for our platform could also be negatively impacted by other factors, such as: • complaints or negative publicity about us or our platform, even if factually incorrect or based on isolated incidents; • changes to our terms and policies that our instructors find, or even perceive, to be unpopular or that are not clearly articulated to them; or • our failure to enforce our policies fairly and transparently.
The willingness or ability of instructors to provide content for our platform could also be negatively impacted by other factors, such as: • complaints or negative publicity about us or our platform, even if factually incorrect or based on isolated incidents; • changes to our terms and policies that our instructors find, or even perceive, to be unpopular or that are not clearly articulated to them; or • our failure or perceived failure to enforce our policies fairly and transparently.
As a global platform with learners and instructors in over 180 countries, w e are subject to a wide range of laws and regulations regarding consumer protection, advertising, electronic marketing, privacy, data protection and cybersecurity, data localization requirements, online services, freedom of speech, labor, real estate, taxation, intellectual property ownership and infringement, export and national security, tariffs, anti-corruption and telecommunications, all of which are continuously evolving and developing. 24 Table of Contents The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly laws outside the U.S., and compliance with laws, regulations and similar requirements may be burdensome and expensive.
As a global platform with learners and instructors in over 180 countries, w e are subject to a wide range of laws and regulations regarding consumer protection, advertising, electronic marketing, privacy, data protection and cybersecurity, data localization requirements, online services, freedom of speech, labor, real estate, taxation, intellectual property ownership and infringement, export and national security, tariffs, anti-corruption and telecommunications, all of which are continuously evolving and developing. 23 Table of Contents The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly laws outside the U.S., and compliance with laws, regulations and similar requirements may be burdensome and expensive.
If financing is not available on satisfactory terms, or at all, we may be unable to expand its business at the rate desired and our results of operations may suffer. We operate internationally and we plan to continue expanding our international operations, which exposes us to risks inherent in international operations.
If financing is not available on satisfactory terms, or at all, we may be unable to expand our business at the rate desired and our results of operations may suffer. We operate internationally and we plan to continue expanding our international operations, which exposes us to risks inherent in international operations.
These kind of transactions involve numerous risks, including the following: • difficulties in realizing the anticipated economic, operational and other benefits of the acquisition or strategic investment successfully or in a timely manner; • failure of businesses we acquire or invest in to achieve anticipated revenue, earnings, or cash flow; • diversion of management’s attention or other resources from our existing business; • any inability to maintain the key customers, business relationships, suppliers, and brand potential of businesses we acquire or invest in; • uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions; • unanticipated or greater costs than expected associated with pursuing acquisitions or investments; • difficulties in, or costs associated with, any integration process, such as challenges associated with assigning or transferring acquired intellectual property or intellectual property licenses; integrating and auditing financial statements of acquired companies that have not historically prepared financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”); 22 Table of Contents and integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies; • responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective privacy, data protection and cybersecurity controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws; • inability to maintain our culture and values, ethical standards, controls, procedures, and policies; and • asset write-offs and impairments of goodwill and intangible assets in connection with any acquisition or strategic investment, as well as any inability to accurately forecast such impacts.
These kinds of transactions involve numerous risks, including the following: • difficulties in realizing the anticipated economic, operational and other benefits of the acquisition or strategic investment successfully or in a timely manner; • failure of businesses we acquire or invest in to achieve anticipated revenue, earnings, or cash flow; • diversion of management’s attention or other resources from our existing business; • any inability to maintain the key customers, business relationships, suppliers, and brand potential of businesses we acquire or invest in; • uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions; • unanticipated or greater costs than expected associated with pursuing acquisitions or investments; 21 Table of Contents • difficulties in, or costs associated with, any integration process, such as challenges associated with assigning or transferring acquired intellectual property or intellectual property licenses; integrating and auditing financial statements of acquired companies that have not historically prepared financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”); and integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies; • responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective privacy, data protection and cybersecurity controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws; • inability to maintain our culture and values, ethical standards, controls, procedures, and policies; and • asset write-offs and impairments of goodwill and intangible assets in connection with any acquisition or strategic investment, as well as any inability to accurately forecast such impacts.
Any of these risks could be difficult to eliminate or manage, and, if not addressed, could adversely affect our business, financial condition, and results of operations. 36 Table of Contents Risks related to financial reporting, taxation, and operations as a public company If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired, which may adversely affect investor confidence in us and, as a result, lead to a decline in the market price of our common stock.
Any of these risks could be difficult to eliminate or manage, and, if not addressed, could adversely affect our business, financial condition, and results of operations. 34 Table of Contents Risks related to financial reporting, taxation, and operations as a public company If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired, which may adversely affect investor confidence in us and, as a result, lead to a decline in the market price of our common stock.
We may need to change our pricing model for our platform’s offerings, which in turn could adversely impact our results of operations. We have in the past, and expect that we may in the future, need to change our pricing model or target contract length from time to time, which could impact our financial results.
We may need to change our pricing model for our platform’s offerings, which in turn could adversely impact our results of operations. We have in the past, and expect that we may in the future, need to change our pricing model or target contract length from time to time.
If our trademarks and trade names are not adequately protected, then we may not be able to build and maintain name recognition in our markets of interest and our business may be adversely affected.
If our trademarks and trade names are not adequately protected, we may not be able to build and maintain name recognition in our markets of interest and our business may be adversely affected.
Consequently, stockholders must rely on sales of their shares of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. 42 Table of Contents Our directors, executive officers, and principal stockholders beneficially own a substantial percentage of our common stock and are able to exert significant control over matters subject to stockholder approval.
Consequently, stockholders must rely on sales of their shares of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. 40 Table of Contents Our directors, executive officers, and principal stockholders beneficially own a substantial percentage of our common stock and are able to exert significant control over matters subject to stockholder approval.
Furthermore, many of our current and potential competitors may have the ability to dedicate substantially greater resources to developing and protecting their technology or intellectual property rights than we do. 35 Table of Contents Intellectual property litigation, including litigation related to content available on our platform, could result in significant costs and adversely affect our business, financial condition, results of operations, and reputation.
Furthermore, many of our current and potential competitors may have the ability to dedicate substantially greater resources to developing and protecting their technology or intellectual property rights than we do. 33 Table of Contents Intellectual property litigation, including litigation related to content available on our platform, could result in significant costs and adversely affect our business, financial condition, results of operations, and reputation.
These risks include: • the cost and resources required to localize our services, which requires the translation of our websites into foreign languages and adaptation for local practices and regulatory requirements; • competition with local market participants who understand the local market better than we do or who have pre-existing relationships with our potential learners and UB customers in those markets; • greater reliance on third-party resellers and other commercial partners for the distribution and marketing of our offerings; • legal uncertainty regarding our liability for the content and services provided by our instructors, including as a result of local laws or a lack of clear precedent of applicable law; • the burdens of complying with a wide variety of foreign laws and legal standards; • lack of familiarity with and unexpected changes in foreign regulatory requirements; • adapting to variations in methods of payment from learners and UB customers; 23 Table of Contents • difficulties in managing and staffing international operations; • fluctuations in currency exchange rates; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, digital services tax and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens and complexities and difficulties in implementing and maintaining adequate internal controls; • political, social, and economic instability abroad, wars and other armed conflicts, terrorist attacks, and security concerns in general, including Russia’s invasion of Ukraine; • reduced or varied protection for intellectual property rights in some countries; and • higher telecommunications and internet service provider costs.
These risks include: • the cost and resources required to localize our services, which requires the translation of our websites into foreign languages and adaptation for local practices and regulatory requirements; • competition with local market participants who understand the local market better than we do or who have pre-existing relationships with our potential learners and UB customers in those markets; • greater reliance on third-party resellers and other commercial partners for the distribution and marketing of our offerings; • legal uncertainty regarding our liability for the content and services provided by our instructors, including as a result of local laws or a lack of clear precedent of applicable law; • the burdens of complying with a wide variety of foreign laws and legal standards; • lack of familiarity with and unexpected changes in foreign regulatory requirements; 22 Table of Contents • adapting to variations in methods of payment from learners and UB customers; • difficulties in managing and staffing international operations; • fluctuations in currency exchange rates; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, digital services tax and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens and complexities and difficulties in implementing and maintaining adequate internal controls; • political, social, and economic instability abroad, wars and other armed conflicts, terrorist attacks, and security concerns in general, including Russia’s invasion of Ukraine and the conflict between Israel and Hamas in Gaza; • reduced or varied protection for intellectual property rights in some countries; and • higher telecommunications and internet service provider costs.
Factors that could cause fluctuations in the trading price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; • announcements by us or our competitors of new services or platform features; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or security breaches or other incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, services, or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; 41 Table of Contents • any significant change in our management; • general economic conditions and slow or negative growth of our markets; and • other events or factors, including those resulting from wars and other armed conflicts, such as Russia’s invasion of Ukraine, incidents of terrorism, natural disasters, public health concerns or epidemics, such as the COVID-19 pandemic, natural disasters, or responses to these events.
Factors that could cause fluctuations in the trading price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; • announcements by us or our competitors of new services or platform features; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; 38 Table of Contents • actual or anticipated changes in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or security breaches or other incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, services, or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management; • general economic conditions and slow or negative growth of our markets; and • other events or factors, including those resulting from wars and other armed conflicts, such as Russia’s invasion of Ukraine and the conflict between Israel and Hamas in Gaza, incidents of terrorism, natural disasters, public health concerns or epidemics, such as the COVID-19 pandemic, natural disasters, or responses to these events.
Our ability to monitor our service providers’ cybersecurity is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, disclosure, loss, unavailability, destruction or other processing of data they process for us, including sensitive and personal information.
Our ability to monitor our service providers’ cybersecurity is limited, and third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, disclosure, loss, unavailability, destruction or other processing of data they process for us, including sensitive and personal information.
As a result, we are subject to potential liability to third parties for the unauthorized duplication, distribution, or other use of this material. In addition, third parties have alleged, and in the future may allege, misappropriation, plagiarism, or similar claims related to content appearing on our platform.
As a result, we are subject to potential liability to third parties for the unauthorized duplication, distribution, or other use of this material. In addition, third parties have alleged, and in the future may allege, misappropriation, plagiarism, defamation, disparagement or similar claims related to content appearing on our platform.
Alternatively, if a court were to find either exclusive forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could have a material adverse effect on our business, financial condition, and results of operations. 44 Table of Contents Item 1B.
Alternatively, if a court were to find either exclusive forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could have a material adverse effect on our business, financial condition, and results of operations. Item 1B.
A cybersecurity attack or security breach or incident could delay or interrupt service to our learners, instructors, or organizations and may deter learners, instructors, or organizations from using our platform, and we and our service providers may face difficulties or delays in identifying, remediating, and otherwise responding to any cybersecurity attack or other security breach or incident.
A cybersecurity attack or security breach or incident could delay, disrupt or interrupt our platform and services and may deter learners, instructors, or organizations from using our platform, and we and our service providers may face difficulties or delays in identifying, remediating, and otherwise responding to any cybersecurity attack or other security breach or incident.
Factors that may contribute to the variability of our quarterly and annual results include, but are not limited to: • our ability to attract and retain learners, instructors, and enterprises that use our platform in a cost-effective manner; • our ability to accurately forecast revenue and operating expenses; • the effects of increased competition on our business; • our ability to successfully expand in existing markets and successfully enter new markets; • changes in learner or customer behavior with respect to online learning solutions; • increases in marketing, sales, and other operating expenses that we may incur to grow and acquire new learners, instructors, and customers; • the revenue mix between our consumer and UB offerings; • the impact of worldwide economic conditions, including the resulting effect on consumer and business spending on online learning solutions; • our ability to maintain an adequate rate of growth and effectively manage that growth; • the effects of changes in search engine placement and prominence; • our ability to keep pace with technology changes in our industry; • the success of our sales and marketing efforts; • our ability to protect, maintain, and enforce our intellectual property rights; • costs associated with defending claims, including intellectual property infringement claims, and related judgments or settlements; • changes in governmental or other regulations affecting our business; • interruptions in service and any related impact on our business, reputation, or brand; • the attraction and engagement of qualified employees and key personnel; • our ability to choose and effectively manage third-party service providers; • the effects of natural or man-made catastrophic events, including wars and other armed conflicts, such as Russia’s invasion of Ukraine; • the impact of a pandemic or an outbreak of disease or similar public health concern, such as the COVID-19 pandemic, or fear of such an event; • potential volatility in our gross margins, including due to revenue mix shifts between our Enterprise and Consumer segments, changes in our pricing policies, increased use of subscriptions in our Consumer segment, and timing differences between recognition of revenue and related content costs for courses; • the effectiveness of our internal controls over financial reporting; • the impact of payment processor costs and procedures; and 14 Table of Contents • changes in our tax rates or exposure to additional tax liabilities.
Factors that may contribute to the variability of our quarterly and annual results include, but are not limited to: • our ability to attract and retain learners, instructors, and enterprises that use our platform in a cost-effective manner; • our ability to accurately forecast revenue and operating expenses; • the effects of increased competition on our business; • the impact of worldwide economic conditions, including the resulting effect on consumer and business spending on online learning solutions; • our ability to successfully expand in existing markets and successfully enter new markets; • our ability to successfully leverage our resellers and other strategic relationships to market and sell our products; • changes in learner or customer behavior with respect to online learning solutions; • increases in marketing, sales, and other operating expenses that we may incur to grow and acquire new learners, instructors, and customers; • the revenue mix between our consumer and UB offerings; • our ability to maintain an adequate rate of growth and effectively manage that growth; • the effects of changes in search engine placement and prominence; • our ability to keep pace with technology changes in our industry; • the success of our sales and marketing efforts; • our ability to protect, maintain, and enforce our intellectual property rights; • costs associated with defending claims, including intellectual property infringement claims, and related judgments or settlements; • changes in governmental or other regulations affecting our business; • interruptions in service and any related impact on our business, reputation, or brand; • the attraction and engagement of qualified employees and key personnel; • our ability to choose and effectively manage third-party service providers; • the effects of natural or man-made catastrophic events, including wars and other armed conflicts, such as Russia’s invasion of Ukraine, and the conflict between Israel and Hamas in Gaza; • the impact of a pandemic or an outbreak of disease or similar public health concern, such as the COVID-19 pandemic, or fear of such an event; • potential volatility in our gross margins, including due to revenue mix shifts between our Enterprise and Consumer segments, changes in our pricing policies, increased use of subscriptions in our Consumer segment, and timing differences between recognition of revenue and related content costs for courses; 14 Table of Contents • the effectiveness of our internal controls over financial reporting; • the impact of payment processor costs and procedures; and • changes in our tax rates or exposure to additional tax liabilities.
Inflation has also contributed to higher interest rates, which may make it more difficult for us to raise capital on acceptable terms, should we choose to pursue additional financing in the future. 40 Table of Contents In any case, there can be no assurance that any measures we take to mitigate or address the impact of inflation will be effective.
Inflation has also contributed to higher interest rates, which may make it more difficult for us to raise capital on acceptable terms, should we choose to pursue additional financing in the future. In any case, there can be no assurance that any measures we take to mitigate or address the impact of inflation will be effective.
Any change in export or import regulations, economic sanctions, or related legislation or changes in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our platform. Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.
Any change in export or import regulations, economic sanctions, or related legislation or changes in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our platform. 24 Table of Contents Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.
Although we take precautions to prevent our platform from being provided in violation of such laws, our platform could be provided inadvertently in violation of such laws, despite the precautions we take. Complying with these laws and regulations could be particularly difficult because our products are widely available worldwide, in some cases, by providing only minimal information at registration.
Although we take precautions to prevent our platform from being provided in violation of such laws and regulations, our platform could nevertheless be provided inadvertently in violation of such laws. Complying with these laws and regulations could be particularly difficult because our products are widely available worldwide, in some cases, by providing only minimal information at registration.
If we are restricted from operating in one or more countries, our ability to attract and retain learners, instructors, and customers may be adversely affected and we may not be able to grow our business as we anticipate. 31 Table of Contents We rely on Amazon Web Services for a substantial portion of our platform services.
If we are restricted from operating in one or more countries, our ability to attract and retain learners, instructors, and customers may be adversely affected and we may not be able to grow our business as we anticipate. We rely on Amazon Web Services for a substantial portion of our platform services.
Moreover, any attempts to rehabilitate our reputation and brand recognition may be costly and time-consuming, and there can be no assurance that any such efforts will ultimately be successful. 19 Table of Contents We could face liability, or our reputation might be harmed, as a result of courses posted to our platform.
Moreover, any attempts to rehabilitate our reputation and brand recognition may be costly and time-consuming, and there can be no assurance that any such efforts will ultimately be successful. We could face liability, or our reputation might be harmed, as a result of courses posted to our platform.
These sources can also implement social engineering techniques to induce our employees, contractors, or customers to disclose passwords or other sensitive information or take other actions to gain access to data, and we and our platform otherwise may be subject to security breaches and incidents resulting from employee or contractor error or malfeasance.
They can also implement social engineering techniques to induce our employees, contractors, or customers to disclose passwords or other sensitive information or take other actions to gain access to data, and we and our platform otherwise may be subject to security breaches and incidents resulting from employee or contractor error or malfeasance.
If our competitors infringe, misappropriate, or otherwise violate our intellectual property rights and we are not adequately protected, or if our competitors are able to develop a platform with the same or similar functionality as ours without infringing our intellectual property, our competitive advantage and results of operations could be harmed.
If our competitors infringe, misappropriate, or otherwise violate our intellectual property rights and we are not able to enforce our rights, or if our competitors are able to develop a platform with the same or similar functionality as ours without infringing our intellectual property, our competitive advantage and results of operations could be harmed.
Any allegations or violation of the FCPA or other applicable anti-bribery and anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, all of which may have an adverse effect on our reputation, business, financial condition, results of operations, and prospects.
Any allegations or violations of applicable anti-bribery and anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, all of which may have an adverse effect on our reputation, business, financial condition, results of operations, and prospects.
Additionally, we collect and store certain sensitive and proprietary information, and personal data and personal information, in the operation of our business, including trade secrets, intellectual property, employee data, and other confidential data. 29 Table of Contents We engage third-party service providers to store and otherwise process certain data, including sensitive and personal information.
Additionally, we collect and store certain sensitive and proprietary information, and personal information, in the operation of our business, including trade secrets, intellectual property, employee data, and other confidential data. We engage third-party service providers to store and otherwise process certain data, including sensitive and personal information.
This adequacy determination must, however, be renewed after four years and may be modified or revoked in the interim. We cannot fully predict how United Kingdom data protection laws or regulations may develop in the medium to longer term nor the effects of divergent laws and guidance, including those relating to how data transfers to and from the United Kingdom.
This adequacy determination must, however, be renewed after four years and may be modified or revoked in the interim. We cannot fully predict how United Kingdom data protection laws or regulations may develop nor the effects of divergent laws and guidance, including those relating to data transfers.
While our Terms of Use, Instructor Terms and Trust & Safety policies require instructors to respect the intellectual property rights of others, we have limited ability to influence the behavior of third parties, and there can be no assurance that these terms and policies will be sufficient to dissuade or prevent infringing activity by third parties on our platform.
While our terms and policies require instructors to respect the intellectual property rights of others, we have limited ability to influence the behavior of third parties, and there can be no assurance that these terms and policies will be sufficient to dissuade or prevent infringing activity by third parties on our platform.
Even if not subject to legal challenge, the perception of concerns relating to privacy, data protection, or cybersecurity, whether or not valid, may harm our reputation and brand adversely affect our business, financial condition, and operating results.
Even if not subject to legal challenge, concerns relating to privacy, data protection, or cybersecurity, whether or not valid, may harm our reputation and brand adversely affect our business, financial condition, and operating results.
In addition, as we develop and roll out new products, such as our recently launched consumer subscription model, or improve existing ones, we will need to develop pricing and contract models for these products that appeal to consumer learners over time, and we may not be successful in doing so.
In addition, as we develop and roll out new products, such as Personal Plan (our consumer subscription model), or improve existing ones, we will need to develop pricing and contract models for these products that appeal to consumer learners over time, and we may not be successful in doing so.
Additionally, we have incurred, and may continue to incur, significant expenses in an effort to comply with privacy, data protection, and cybersecurity standards and protocols imposed by law, regulation, industry standards, or contractual obligations.
Additionally, we have incurred, and may continue to incur, significant expenses in efforts to comply with privacy, data protection, and cybersecurity standards and protocols imposed by law, regulation, industry standards, or contractual obligations.
During the fiscal year ended December 31, 2022, 32% of our sales were denominated in currencies other than U.S. dollars, including euros, Indian rupees, British pounds sterling, Brazilian reais, and Japanese yen. Our expenses, by contrast, are primarily denominated in U.S. dollars.
During the fiscal year ended December 31, 2023, 29% of our sales were denominated in currencies other than U.S. dollars, including euros, Indian rupees, British pounds sterling, Brazilian reais, and Japanese yen. Our expenses, by contrast, are primarily denominated in U.S. dollars.
M oreover, because instructors may unpublish content or leave the Udemy platform altogether, subject to our right to continue offering such content to new learners on the consumer marketplace for 60 days afterwards and in our subscription offerings for 12 months afterwards, we may need to source replacement content by a different instructor on short notice.
B ecause instructors may unpublish content or leave the Udemy platform altogether, subject to our right to continue offering such content to new learners on the consumer marketplace for 60 days afterwards and in our subscription offerings for 12 months afterwards, we may need to source replacement content by a different instructor on short notice.
Additionally, changes in our compensation structure, workforce reductions (including the reduction in force we announced in February 2023), or any previously implemented reductions in workforce and other cost reduction efforts may be negatively received by employees and result in attrition or cause difficulty in the recruiting process.
Additionally, changes in our compensation structure, workforce reductions (including the reduction in force we announced in February 2023), or any previously implemented reductions in workforce and other cost reduction efforts may be negatively received by employees and result in attrition or recruiting difficulties.
There is also a risk that due to regulatory and economic changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. Our NOLs may similarly expire under state laws.
There is also a risk that due to regulatory and economic changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. Similar or different limitations may apply under state laws.
In addition, any actual or perceived cybersecurity attack or security breach or incident could damage our reputation and brand, expose us to a risk of claims, litigation, regulatory investigations, or other proceedings and possible fines, penalties, or other liability and require us to expend significant capital and other resources to alleviate problems caused by the cybersecurity attack or security breach or incident.
In addition, any actual or perceived cybersecurity attack or security breach or incident could damage our reputation and brand, expose us to a risk of claims, litigation, regulatory investigations or other proceedings and possible fines, penalties, or other liability and require us to expend significant capital and other resources.
Certain of our gross U.S. federal NOLs are subject to this limitation as a result of these ownership changes, and if it is determined that we have in the past experienced additional ownership changes, including as a result of our IPO, future transactions in our stock, some of which are outside our control, or both, our ability to use our NOLs and federal tax credit carryforwards to reduce future taxable income and tax liabilities may be further limited.
Certain of our gross U.S. federal NOLs are subject to this limitation as a result of these ownership changes, and if it is determined that we have experienced additional ownership changes, including as a result of our Initial Public Offering (“IPO”), future transactions in our stock, some of which are outside our control, or both, our ability to use our NOLs and federal tax credit carryforwards to reduce future taxable income and tax liabilities may be further limited.
Alternatively, if we choose to absorb the cost of inflation to prioritize growth, our financial condition and results of operations may be negatively impacted as a result.
Alternatively, if we choose to absorb the cost of inflation to prioritize growth, our financial condition and results of operations may be negatively impacted.
As of December 31, 2022, our directors, executive officers, and holders of more than 5% of our outstanding common stock, together with their respective affiliates, beneficially owned shares representing approximately 48% of our outstanding common stock.
As of December 31, 2023, our directors, executive officers, and holders of more than 5% of our outstanding common stock, together with their respective affiliates, beneficially owned shares representing approximately 43% of our outstanding common stock.
Moreover, as our business grows, we will need to devote additional resources to improving our operational infrastructure and continuing to enhance our scalability in order to maintain the performance of our platform. 21 Table of Contents Our growth has placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial, and other resources.
Moreover, as our business grows, we will need to devote additional resources to improving our operational infrastructure and enhancing our scalability in order to maintain the performance of our platform. Our growth has placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial, and other resources.
Our effective tax rate could be subject to volatility or adversely affected by several factors, many of which are outside of our control, including changes in the mix of earnings and losses in countries with differing statutory tax rates, changes in tax laws, rates, treaties, and regulations or the interpretation of the same, changes to the financial accounting rules for income taxes, the outcome of current and future tax audits, examinations or administrative appeals, certain non-deductible expenses, any decision to repatriate non-U.S. earnings for which we have not previously provided for taxes and the valuation of deferred tax assets and liabilities.
Our effective tax rate could be subject to volatility or adversely affected by several factors, many of which are outside of our control, including changes in the mix of earnings and losses in countries with differing statutory tax rates, changes in tax laws, rates, treaties, and regulations or the interpretation of the same, changes to the financial accounting rules for income taxes, the outcome of current and future tax audits, examinations or administrative appeals, certain non-deductible expenses and the valuation of deferred tax assets and liabilities.
If we fail to maintain and expand our relationships with UB customers, our ability to grow our business and revenue will suffer. Revenue from our Enterprise segment represented 50%, 36%, and 24% during the fiscal years ended December 31, 2022, 2021, and 2020, respectively.
If we fail to maintain and expand our relationships with UB customers, our ability to grow our business and revenue will suffer. Revenue from our Enterprise segment represented 58%, 50%, and 36% of total revenue during the fiscal years ended December 31, 2023, 2022, and 2021, respectively.
Any failure, or consequences associated with our efforts to comply with applicable laws or regulations or any other obligations relating to privacy, data protection, or cybersecurity, or any compromise of security that results in unauthorized access to, or use or release of data relating to learners, instructors, or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing learners, instructors, and UB customers from using our platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, financial condition and operating results.
Any actual or perceived failure, or consequences associated with our efforts to comply with applicable laws or regulations or any other obligations relating to privacy, data protection, cybersecurity, or data processing, or any compromise of security that results in unauthorized access to, or use or release of data relating to learners, instructors, or other individuals could damage our reputation, discourage new and existing learners, instructors, and UB customers from using our platform, and could result in investigations, or other proceedings by governmental agencies, private claims and litigation, and fines, penalties, and other liabilities, any of which could adversely affect our business, financial condition and operating results.
We expect our loss of “emerging growth company” status will require additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others.
Our recent loss of “emerging growth company” status has required additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others.
If we fail to comply with these laws and regulations, we and certain of our employees could be subject to civil or criminal penalties, including the possible loss of export privileges and fines. We also may be adversely affected through penalties, reputational harm, loss of access to certain markets, or otherwise.
If we fail to comply with these laws and regulations, we and certain of our employees could be subject to civil or criminal penalties. We also may be adversely affected through penalties, reputational harm, loss of access to certain markets, or otherwise.
As we continue to expand our international operations, we will become more exposed to the effects of fluctuations in currency exchange rates. This exposure is the result of selling in m ultiple currencies and operating in foreign countries where the functional currency is the local currency.
As we continue to expand our international operations, we will become more exposed to the effects of fluctuations in currency exchange rates. This exposure is the result of selli ng in multiple currencies and operating in foreign countries where the functional currency is the local currency.
Current and potential competitors (including any new entrants into the market) may enjoy substantial competitive advantages over us, such as greater name recognition, longer operating histories, market- or industry-specific knowledge, more successful marketing capabilities, and substantially greater financial, technical, and other resources than we have.
Current and potential competitors (including any new entrants into the market) may enjoy substantial competitive advantages over us, such as greater name recognition, longer operating histories, market- or industry-specific knowledge, more successful marketing capabilities, more successful adaptation to or integration of emerging technologies such as artificial intelligence, and substantially greater financial, technical, and other resources than we have.
Changes with respect to any of these matters may lead to additional costs and increase our overall risk exposure. Additionally, we are or may become subject to laws, rules, and regulations regarding cross-border transfers of personal data, including those relating to transfer of personal data outside the EEA.
Changes with respect to any of these matters may lead to additional costs and increase our risk exposure. Additionally, we are or may become subject to laws, rules, and regulations regarding cross-border transfers of personal data, including transfers of personal data outside the EEA, Switzerland and the United Kingdom.
A critical factor in attracting learners to our website is how prominently we are displayed in response to search queries. Search engine companies typically provide two types of search results: algorithmic listings and paid advertisements. We rely on both types of search results to attract visitors to our website.
Many learners find our website through internet search engines, like Google. A critical factor in attracting learners to our website is how prominently we are displayed in response to search queries. Search engine companies typically provide two types of search results: algorithmic listings and paid advertisements. We rely on both types of search results to attract visitors to our website.
Our business depends on our intellectual property, the protection of which is critical to our success. We rely on a combination of intellectual property rights, including patents, trade secrets, trade dress, domain names, copyrights, and trademarks to protect our competitive advantage, all of which offer only limited protection.
We rely on a combination of intellectual property rights, including patents, trade secrets, trade dress, domain names, copyrights, and trademarks to protect our competitive advantage, all of which offer only limited protection.
Our payments system depends on third-party providers and is subject to evolving laws and regulations. We rely on third-party payment processors to process payments made by learners and customers, and to instructors, on our platform. We have engaged third-party service providers to perform underlying card processing, currency exchange, identity verification, and fraud analysis services.
We rely on third-party payment processors to process payments made by learners and customers, and to instructors, on our platform. We have engaged third-party service providers to perform underlying card processing, currency exchange, identity verification, and fraud analysis services.
If we fail to comply with these rules or requirements, we may be subject to additional fines and higher transaction fees and lose our ability to accept credit and debit card payments from our learners and UB customers, process electronic funds transfers or facilitate other types of online payments, and our business and operating results could be adversely affected. 32 Table of Contents The use of our platform could be adversely affected if our mobile solutions are not effective.
If we fail to comply with these rules or requirements, we may be subject to additional fines and higher transaction fees and lose our ability to accept credit and debit card payments from our learners and UB customers, process electronic funds transfers or facilitate other types of online payments, and our business and operating results could be adversely affected.
We incurred net losses of $153.9 million, $80.0 million, and $77.6 million during the fiscal years ended December 31, 2022, 2021, and 2020, respectively, and, as of December 31, 2022, we had an accumulated deficit of $612.4 million. We expect our losses to continue as we make significant investments towards growing our business and operating as a public company.
We incurred net losses of $107.3 million, $153.9 million, and $80.0 million during the fiscal years ended December 31, 2023, 2022, and 2021 respectively, and, as of December 31, 2023, we had an accumulated deficit of $719.7 million. We expect our losses to continue as we make significant investments towards growing our business and operating as a public company.
Any or all of these factors could reduce the demand for our services, reducing our revenue. In addition, the occurrence of any of these events could increase our need to make significant expenditures to continue to attract learners and UB customers to our platform.
Any or all of these factors could reduce the demand for our services, reducing our revenue and potentially increasing our need to make significant expenditures to continue to attract learners and UB customers to our platform.
We will not be able to protect our competitive advantage if we are unable to establish, protect, maintain, or enforce our rights or if we do not detect or are unable to address unauthorized use of our intellectual property. We may be required to use significant resources to monitor and protect these rights.
We will not be able to protect our competitive advantage if we are unable to establish, protect, maintain, or enforce our rights or if we do not detect or are unable to address unauthorized use of our intellectual property.
Learners have been increasingly accessing our platform on mobile devices through our Udemy and UB apps in recent years. The smaller screen size and reduced functionality associated with some mobile devices may make the use of our platform more difficult.
The use of our platform could be adversely affected if our mobile solutions are not effective. Learners have been increasingly accessing our platform on mobile devices through our Udemy and UB apps in recent years. The smaller screen size and reduced functionality associated with some mobile devices may make the use of our platform more difficult.
Since online learning is generally dependent on discretionary spending, negative general economic conditions or uncertainty regarding future economic conditions, including as a result of the COVID-19 pandemic, could significantly reduce the overall amount that learners and organizations spend on, and the frequency of, online learning or result in delays to planned spending on online learning.
Since online learning is generally dependent on discretionary spending, negative general economic conditions or uncertainty regarding future economic conditions, including as a result of public health concerns like the COVID-19 pandemic, inflation, and instability in the banking or financial services industries or in financial and capital markets, could significantly reduce the overall amount that learners and organizations spend on, and the frequency of, online learning or result in delays to planned spending on online learning.
Any of these developments or changes in federal, state, or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. 38 Table of Contents Taxing authorities may successfully assert that we have not properly collected or remitted, or in the future should collect or remit, sales and use, gross receipts, value added, or similar taxes, or employment, payroll, or withholding taxes, and may successfully impose additional obligations on us, and any such assessments, obligations, or inaccuracies could adversely affect our business, financial condition, and results of operations.
Taxing authorities may successfully assert that we have not properly collected or remitted, or in the future should collect or remit, sales and use, gross receipts, value added, or similar taxes, or employment, payroll, or withholding taxes, and may successfully impose additional obligations on us, and any such assessments, obligations, or inaccuracies could adversely affect our business, financial condition, and results of operations.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, agents, representatives, business partners, and third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. 25 Table of Contents We sometimes engage third parties to sell our products and conduct our business abroad.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, agents, representatives, business partners, and third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation. 29 Table of Contents Interruptions or performance problems associated with our technology and infrastructure could adversely affect our business and results of operations.
The CCPA, which went into effect on January 1, 2020, among other things, requires covered companies to provide new disclosures to California consumers and affords such consumers the ability to opt out of certain types of data sharing and sales of their personal information.
The California Consumer Protection Act (“CCPA”), which went into effect on January 1, 2020, among other things, requires covered companies to provide specified disclosures to California consumers and affords such consumers the ability to opt out of certain types of data sharing and sales.
These laws and other changes in laws or regulations relating to privacy, data protection, and cybersecurity, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of such laws or regulations, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could greatly increase the cost of providing our platform, require significant changes to our operations, or even prevent us from providing our platform in jurisdictions in which we currently operate and in which we may operate in the future.
These laws or regulations, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of laws or regulations, that require enhanced protection of certain data or new obligations, could greatly increase the cost of providing our platform, require significant changes to our data processing practices and other aspects of our operations, or prevent us from providing our platform in jurisdictions in which we currently operate and in which we may operate in the future.
Any of the foregoing could adversely affect our business, financial condition, and results of operations. 26 Table of Contents Increased scrutiny and changing expectations from regulators, investors, customers, employees, and others regarding our environmental, social and governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, customer acquisition and retention, access to capital and employee retention.
Increased scrutiny and changing expectations from regulators, investors, customers, employees, and others regarding our environmental, social and governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, customer acquisition and retention, access to capital and employee retention.
These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in enforcement, and may be inconsistent from one jurisdiction to another.
These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in enforcement, and may be inconsistent from one jurisdiction to another. 26 Table of Contents For example, the E.U.
We are also bound by contractual obligations related to privacy, data protection, and cybersecurity and our efforts to comply with such obligations may not be successful or may have other negative consequences.
We are also bound by contractual obligations related to our collection, use, disclosure, protection, and other processing of personal data and other types of data. Our efforts to comply with such obligations may not be successful or may have other negative consequences.
If the market for online learning solutions does not grow as we expect or our platform does not achieve widespread adoption, it could result in reduced learner and customer spending, reduced engagement from instructors, attrition by learners, instructors, and UB customers, and decreased revenue, any of which would adversely affect our business, financial condition, and results of operations. 17 Table of Contents Adherence to our values and our focus on long-term sustainability may negatively impact our short- or medium-term financial performance.
If the market for online learning solutions does not grow as we expect or our platform does not achieve widespread adoption, it could result in reduced learner and customer spending, reduced engagement from instructors, attrition by learners, instructors, and UB customers, and decreased revenue, any of which would adversely affect our business, financial condition, and results of operations.
Amazon Web Services may take actions beyond our control that could seriously harm our business, including discontinuing or limiting access to Amazon Web Services, increasing pricing terms, terminating our contract, establishing more favorable relationships or pricing terms with one or more of our competitors, and modifying or interpreting its terms of service or other policies in a manner that impacts our ability to administer our business and operations.
Amazon Web Services may take actions beyond our control that could seriously harm our business, including discontinuing or limiting access to Amazon Web Services, increasing pricing terms, terminating our contract, establishing more favorable terms with one or more of our competitors, and modifying or interpreting its terms of service or other policies in a manner that impacts our ability to administer our business and operations. 30 Table of Contents Our payments system depends on third-party providers and is subject to evolving laws and regulations.
As a result of these and other factors, the ultimate amount of tax obligations owed may differ from the amounts recorded in our financial statements and any such difference may adversely affect our results of operations in future periods in which we change our estimates of our tax obligations or in which the ultimate tax outcome is determined. 39 Table of Contents Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As a result of these and other factors, the ultimate amount of tax obligations owed may differ from the amounts recorded in our financial statements and any such difference may adversely affect our results of operations in future periods in which we change our estimates of our tax obligations or in which the ultimate tax outcome is determined.
If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets and demand for our securities could decrease, which could cause the price and trading volume of our common stock to decline.
If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets and demand for our securities could decrease, which could cause the price and trading volume of our common stock to decline.
Our ability to retain UB customers and expand our deployments with them may decline or fluctuate as a result of a number of factors, including customers’ satisfaction with our platform, the quality and timeliness of our customer success and customer support services, our prices, the prices and features of competing solutions, reductions in customers’ spending levels, insufficient adoption of our platform by our customers’ constituents, and new feature releases.
Our ability to retain UB customers and expand our deployments with them may decline or fluctuate as a result of a number of factors, including customers’ satisfaction with our platform, the quality and timeliness of our customer success and customer support services, our prices, the prices and features of competing solutions, reductions in customers’ spending levels, insufficient adoption of our platform by our customers’ constituents, and new feature releases, any of which could cause our revenue to decline or grow less quickly than anticipated, which would harm our business, financial condition, and results of operations.
On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the United Kingdom ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the European Economic Area (the “EEA”) to the United Kingdom.
On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the United Kingdom ensures an equivalent level of data protection to the GDPR, generally permitting personal data transfers from the European Economic Area (the “EEA”) to the United Kingdom.
Our ability to grow our UB business depends, in part, on our ability to persuade these customers to expand their use of our platform to address additional use cases. Further, to continue to grow our business, it is important that our customers renew their subscriptions when existing contracts expire and that we expand our relationships with our existing customers.
Our ability to grow our UB business depends, in part, on our ability to persuade these customers to expand their use of our platform to address additional use cases. Further, the continued growth of our business requires that our customers renew their subscriptions with us and that we expand our relationships with our existing customers.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters, consisting of approximately 59,000 square feet of office space in San Francisco, California, is leased through 2024, with an option to extend until 2029. We also lease additional office space in locations around the world, including Mountain View, California; Denver, Colorado; Ankara, Turkey; and Dublin, Ireland.
Biggest changeItem 2. Properties Our corporate headquarters, consisting of approximately 59,000 square feet of office space in San Francisco, California, is leased through October 2024. We also lease additional office space in locations around the world, including Denver, Colorado; Ankara, Turkey; and Dublin, Ireland.
We also maintain co-working or other short-term office spaces in Austin, Texas; Melbourne, Australia; Gurugram, India; and Istanbul, Turkey through co-working leases or similar arrangements. We believe that our facilities are suitable to meet our current needs. We also anticipate that suitable additional or alternative space will be available at commercially reasonable terms for future expansion.
We maintain co-working or other short-term office spaces in Austin, Texas; Melbourne, Australia; Gurugram, India; and Istanbul, Turkey through co-working leases or similar arrangements. We believe that our facilities are suitable to meet our current needs. We anticipate that suitable additional or alternative space would be available at commercially reasonable terms for future expansion, as needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOn December 13, 2022, the parties entered into a definitive settlement agreement for an immaterial amount. Other legal proceedings We are subject to other legal proceedings and claims that arise in the ordinary course of business from time to time, as well as governmental and other regulatory investigations and proceedings.
Biggest changeOther legal proceedings We are subject to other legal proceedings and claims that arise in the ordinary course of business from time to time, as well as governmental and other regulatory investigations and proceedings. In addition, third parties may from time to time assert claims against us in the form of letters and other communications.
In addition, third parties may from time to time assert claims against us in the form of letters and other communications. We are not currently a party to any legal proceedings that, if determined adversely to us, would, in our opinion, have a material adverse effect on our business, financial condition, results of operations, or cash flows.
We are not currently a party to any legal proceedings that, if determined adversely to us, would, in our opinion, have a material adverse effect on our business, financial condition, results of operations, or cash flows.
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On December 13, 2022, the parties entered into a definitive settlement agreement for an immaterial amount. Pursuant to the settlement agreement, the parties agreed to dismiss the pending case in federal court and refile in California state court, which filing was made on February 3, 2023.
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On July 28, 2023, the Superior Court of California, County of San Diego granted final approval of the settlement in Case No.37-2023-00003666-CU-BT-NC. Video Privacy Protection Act class action complaint and threatened arbitration demands On December 12, 2022, a putative class action complaint captioned Mohamed Saleh v.
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Udemy, Inc., was filed against us, alleging violations of the Video Privacy Protection Act (the “VPPA”) and claiming that Udemy violated the VPPA by knowingly sharing personally identifiable information about the viewing history of Udemy courses with an advertiser. The complaint is currently pending in the United States District Court for the District of New Jersey, Case No. 2:23-cv-02207.
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The complaint seeks declaratory relief, injunctive relief, statutory, liquidated, and punitive damages, as well as reasonable attorney fees and costs. On August 30, 2023, we filed a motion to compel arbitration. We intend to vigorously defend ourselves in this matter.
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In addition, on June 6, 2023, and July 28, 2023, we were informed that several law firms threatened to file individual arbitration demands against us on behalf of approximately 20,000 alleged Udemy learners. The firms 44 Table of Contents threaten claims similar to those in the class action complaint described above. We intend to vigorously defend ourselves in these matters.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 45 PART II. Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 Item 6. [Reserved] 47 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 48 I tem 7A. Qualitative and Quantitative Disclosures about Market Risk 66 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 45 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of E quity Securities 46 I tem 6. [Reserved] 47 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 48 Item 7A. Qualitative and Quantitative Disclosures about Market Risk 67 Item 8.
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Financial Statements and Supplementary Data 68 Consolidated Balance Sheets 71 Consolidated Statements of Operations 72 Consolidated Statements of Comprehensive Loss 73 Consolidated Statements Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) 74 Consolidated Statements of Cash Flows 75 Notes to Consolidated Financial Statements 77 I tem 9.
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Changes in and Disagreements W ith Accountants on Accounting a n d Financial Disclosure 108 Item 9A. Controls and Procedures 108 Item 9B. Other Information 110

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOctober 29, 2021 December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Udemy $ 100.00 $ 71.05 $ 45.31 $ 37.13 $ 43.96 $ 38.36 S&P 500 Index $ 100.00 $ 103.76 $ 98.37 $ 82.19 $ 77.86 $ 83.37 Nasdaq Computer $ 100.00 $ 105.56 $ 95.23 $ 73.55 $ 67.80 $ 67.79
Biggest changeData for the S&P 500 Index and Nasdaq Computer Index assumes reinvestment of dividends. 46 Table of Contents October 29, 2021 December 31, 2021 December 31, 2022 December 31, 2023 Udemy $ 100.00 $ 71.05 $ 38.36 $ 53.53 S&P 500 Index $ 100.00 $ 103.76 $ 83.37 $ 103.57 Nasdaq Computer $ 100.00 $ 105.56 $ 67.79 $ 112.86
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index ("S&P 500 Index") and the Nasdaq Computer Index (“Nasdaq Computer Index”) since our IPO on October 29, 2021 through December 31, 2022, assuming an initial investment of $100.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index ("S&P 500 Index") and the Nasdaq Computer Index (“Nasdaq Computer Index”) since our IPO on October 29, 2021 through December 31, 2023, assuming an initial investment of $100.
Stockholders As of December 31, 2022, there were 40 registered stockholders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Recent sales of unregistered equity securities None.
Stockholders As of December 31, 2023, there were 44 registered stockholders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Recent sales of unregistered equity securities None.
Issuer Purchases of Equity Securities None. Securities authorized for issuance under equity compensation plans Refer to Item 8, Note 14 (“Stockholders’ equity”) for information on securities authorized for issuance.
Issuer Purchases of Equity Securities None. Securities authorized for issuance under equity compensation plans Refer to Item 8, Note 12 – Stockholders' equity for information on securities authorized for issuance.
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Data for the S&P 500 Index and Nasdaq Computer Index assumes reinvestment of dividends. 46 Table of Contents The graph below uses the closing market price on October 29, 2021 of $27.50 per share as the initial value of our common stock.
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The comparisons below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults are as follows (in thousands): Fiscal Year Ended December 31, 2022 2021 2020 Revenue $ 629,097 $ 515,657 $ 429,899 Cost of revenue (1)(2) 275,320 236,024 209,253 Gross profit 353,777 279,633 220,646 Operating expenses (1)(2) Sales and marketing 301,347 227,023 192,600 Research and development 104,556 66,107 50,643 General and administrative 99,064 64,410 50,783 Total operating expenses 504,967 357,540 294,026 Loss from operations (151,190) (77,907) (73,380) Other income (expense) Interest income (expense), net 4,297 (16) (1,146) Other income (expense), net (4,696) (920) 55 Total other expense, net (399) (936) (1,091) Net loss before taxes (151,589) (78,843) (74,471) Income tax provision (2,286) (1,183) (3,149) Net loss attributable to common stockholders $ (153,875) $ (80,026) $ (77,620) Net loss per share attributable to common stockholders Basic and diluted $ (1.09) $ (1.46) $ (2.33) Weighted-average shares used in computing net loss per share attributable to common stockholders Basic and diluted 140,873,504 54,972,827 33,384,438 (1) Includes stock-based compensation expense as follows (in thousands): Fiscal Year Ended December 31, 2022 2021 2020 Cost of revenue $ 5,360 $ 1,623 $ 418 Sales and marketing 29,054 8,637 7,518 Research and development 20,850 6,816 5,232 General and administrative 26,029 17,604 18,450 Total stock-based compensation expense $ 81,293 $ 34,680 $ 31,618 (2) Includes amortization of intangible assets as follows (in thousands): Fiscal Year Ended December 31, 2022 2021 2020 Cost of revenue $ 2,900 $ 1,022 $ — Sales and marketing 1,366 481 — Total amortization of intangible assets $ 4,266 $ 1,503 $ — 53 Table of Contents The following table summarizes our results of operations as a percentage of revenue for each of the periods indicated: Fiscal Year Ended December 31, 2022 2021 2020 Revenue 100 % 100 % 100 % Cost of revenue 44 46 49 Gross profit 56 54 51 Operating expenses Sales and marketing 48 44 45 Research and development 17 13 12 General and administrative 15 12 11 Total operating expenses 80 69 68 Loss from operations (24) (15) (17) Other income (expense) Interest income (expense), net 1 — — Other income (expense), net (1) — — Total other expense, net — — — Net loss before taxes (24) (15) (17) Income tax provision — — (1) Net loss attributable to common stockholders (24) % (15) % (18) % Comparison of the fiscal years ended December 31, 2022 and 2021 Revenue Fiscal Year Ended December 31, Change 2022 2021 $ % Revenue (in thousands, except percentages) Consumer $ 315,059 $ 328,703 $ (13,644) (4) % Enterprise 314,038 186,954 127,084 68 % Total revenue $ 629,097 $ 515,657 $ 113,440 22 % Revenue for the fiscal year ended December 31, 2022 was $629.1 million, compared to $515.7 million for the same period in the prior year, which represents an increase of $113.4 million, or 22%.
Biggest changeResults are as follows (in thousands): Fiscal Year Ended December 31, 2023 2022 2021 Revenue $ 728,937 $ 629,097 $ 515,657 Cost of revenue (1)(2) 309,598 275,320 236,024 Gross profit 419,339 353,777 279,633 Operating expenses (1)(2) Sales and marketing 316,738 301,347 227,023 Research and development 120,335 104,556 66,107 General and administrative 93,898 99,064 64,410 Restructuring charges 10,263 — — Total operating expenses 541,234 504,967 357,540 Loss from operations (121,895) (151,190) (77,907) Other income (expense) Interest income 20,670 5,548 204 Interest expense (518) (1,251) (220) Other expense, net (1,898) (4,696) (920) Total other income (expense), net 18,254 (399) (936) Net loss before taxes (103,641) (151,589) (78,843) Income tax provision (3,653) (2,286) (1,183) Net loss attributable to common stockholders $ (107,294) $ (153,875) $ (80,026) Net loss per share attributable to common stockholders Basic and diluted $ (0.71) $ (1.09) $ (1.46) Weighted-average shares used in computing net loss per share attributable to common stockholders Basic and diluted 150,098,776 140,873,504 54,972,827 53 Table of Contents (1) Includes stock-based compensation expense as follows (in thousands): Fiscal Year Ended December 31, 2023 2022 2021 Cost of revenue $ 7,006 $ 5,360 $ 1,623 Sales and marketing 30,859 29,054 8,637 Research and development 26,301 20,850 6,816 General and administrative 30,672 26,029 17,604 Restructuring charges 1,208 — — Total stock-based compensation expense $ 96,046 $ 81,293 $ 34,680 (2) Includes amortization of intangible assets as follows (in thousands): Fiscal Year Ended December 31, 2023 2022 2021 Cost of revenue $ 2,900 $ 2,900 $ 1,022 Sales and marketing 1,208 1,366 481 Total amortization of intangible assets $ 4,108 $ 4,266 $ 1,503 The following table summarizes our results of operations as a percentage of revenue for each of the periods indicated: Fiscal Year Ended December 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Cost of revenue 42 44 46 Gross profit 58 56 54 Operating expenses Sales and marketing 43 48 44 Research and development 17 17 13 General and administrative 13 15 12 Restructuring charges 1 — — Total operating expenses 74 80 69 Loss from operations (16) (24) (15) Other income (expense) Interest income 3 1 — Interest expense — — — Other expense, net — (1) — Total other income (expense), net 3 — — Net loss before taxes (13) (24) (15) Income tax provision (1) — — Net loss attributable to common stockholders (14) % (24) % (15) % 54 Table of Contents Comparison of the fiscal year ended December 31, 2023 and 2022 Revenue Fiscal Year Ended December 31, Change 2023 2022 $ % Revenue (in thousands, except percentages) Enterprise $ 420,646 $ 314,038 $ 106,608 34 % Consumer 308,291 315,059 (6,768) (2) % Total revenue $ 728,937 $ 629,097 $ 99,840 16 % Revenue for the fiscal year ended December 31, 2023, was $728.9 million, compared to $629.1 million for the same period in the prior year, which represents an increase of $99.8 million, or 16%.
However, it is difficult to predict customer adoption rates and demand, the future growth rate and size of the market for cloud-based skill development solutions, or the entry of competitive solutions. Components of results of operations Revenue We recognize revenue from contracts with paid consumer learners and UB customers by delivering access to our online learning platform.
However, it is difficult to predict customer adoption rates and demand, the future growth rate and size of the market for cloud-based skill development solutions, or the entry of competitive solutions. Components of results of operations Revenue We recognize revenue from contracts with UB customers and paid consumer learners by delivering access to our online learning platform.
Financing activities For the fiscal year ended December 31, 2022, net cash provided by financing activities was $14.8 million, primarily driven by proceeds from issuance of common stock via stock option exercises of $7.1 million and issuances of common stock under our employee stock purchase plan of $9.2 million, which was partially offset by a $1.6 million payment of deferred offering costs associated with our IPO.
For the fiscal year ended December 31, 2022, net cash provided by financing activities was $14.8 million, primarily driven by proceeds from issuance of common stock via stock option exercises of $7.1 million and issuances of common stock under our employee stock purchase plan of $9.2 million, which were partially offset by a $1.6 million payment of deferred offering costs associated with our IPO.
Our efforts to grow our existing relationships with our consumer learners are focused on increasing their engagement and converting free learners into buyers. New learners to our platform typically begin to engage with our free courses, which serve as a funnel to grow our total learner base and drive referrals to our paid other offerings.
Our efforts to grow our existing relationships with our consumer learners are focused on increasing their engagement and converting free learners into buyers. New learners to our platform typically begin to engage with our free courses, which serve as a funnel to grow our total learner base and drive referrals to our paid offerings.
We presently expect that revenue from our Enterprise segment will grow faster than our Consumer segment, which will be beneficial to our overall margins. 49 Table of Contents Ability to expand our international footprint We currently generate a significant portion of our revenue outside North America.
We presently expect that revenue from our Enterprise segment will continue to grow faster than our Consumer segment, which will be beneficial to our overall margins. 49 Table of Contents Ability to expand our international footprint We currently generate a significant portion of our revenue outside North America.
Principal versus agent — In order to determine whether revenue should be reported as gross or net of either payments to third-party instructors or amounts retained by reseller partners who sell access to Enterprise subscription offerings, we evaluated whether we are the principal for sales of our consumer and UB offerings. 63 Table of Contents Determining whether we are the principal involves making key judgments about whether Udemy controls the contracted services before being transferred to the end customer.
Principal versus agent — In order to determine whether revenue should be reported as gross or net of either payments to third-party instructors or amounts retained by reseller partners who sell access to Enterprise subscription offerings, we evaluated whether we are the principal for sales of our consumer and UB offerings. 64 Table of Contents Determining whether we are the principal involves making key judgments about whether Udemy controls the contracted services before being transferred to the end customer.
Any investments we make in our sales and marketing organization, in encouraging the development of new content, and in expanding our platform offerings and capabilities, whether organically or through acquisitions, will occur in advance of the benefits from such investments, making it difficult to determine if we are efficiently allocating our resources in these areas.
Any investments we make in our sales and marketing organization, in encouraging the development of new content, and in expanding our platform offerings and capabilities, whether organically or through acquisitions or strategic partnerships, will occur in advance of the benefits from such investments, making it difficult to determine if we are efficiently allocating our resources in these areas.
Interest income (expense), net Interest income consists primarily of interest income earned on our cash equivalents and short-term and long-term investments, including amortization of premiums and accretion of discounts related to our available-for-sale marketable securities, net of associated fees. Interest expense consists primarily of interest expense recorded related to certain indirect tax reserves.
Interest income Interest income consists primarily of interest income earned on our cash equivalents and short-term investments, including amortization of premiums and accretion of discounts related to our available-for-sale marketable securities, net of associated fees. Interest expense Interest expense consists primarily of interest expense related to certain indirect tax reserves.
Recent accounting pronouncements See Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recently issued accounting pronouncements. 65 Table of Contents
Recent accounting pronouncements See Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recently issued accounting pronouncements. 66 Table of Contents
Udemy’s consumer marketplace has attracted 59 million learners in over 180 countries who are looking for the knowledge and skills they need to attain in-demand jobs, further their career, and improve their well-being.
Udemy’s consumer marketplace has attracted 69 million learners in over 180 countries who are looking for the knowledge and skills they need to attain in-demand jobs, further their career, and improve their well-being.
Off-balance sheet arrangements During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. 62 Table of Contents Contractual obligations and commitments Our estimated future obligations as of December 31, 2022 include both current and long term obligations.
Off-balance sheet arrangements During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. 63 Table of Contents Contractual obligations and commitments Our estimated future obligations as of December 31, 2023, include both current and long term obligations.
We define adjusted EBITDA as net loss attributable to common stockholders, adjusted to exclude: • interest expense (income), net; • provision for income taxes; • depreciation and amortization; • stock-based compensation expense; and • other expense (income), net.
We define adjusted EBITDA as net loss attributable to common stockholders, adjusted to exclude: • interest income; • interest expense; • provision for income taxes; • depreciation and amortization; • stock-based compensation expense; • other expense (income), net; and • restructuring charges.
We believe that our existing cash and cash equivalents and our expected cash flows from operations will be sufficient to meet our cash needs for at least the next 12 months. Over the long term, we plan to continue investing in the growth and development of our platform.
We believe that our existing cash and cash equivalents and our expected cash flows from operations will be sufficient to meet our cash needs for at least the next 12 months. 61 Table of Contents Over the long term, we plan to continue investing in the growth and development of our platform.
A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021 is presented below.
A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2023 compared to the fiscal year ended December 31, 2022 is presented below.
Restricted cash totaled $3.6 million and consists of cash deposited with financial institutions held as collateral for our obligations under various facility leases. Marketable securities are comprised of investments in U.S. government securities with an original maturity greater than 90 days at the date of purchase.
Restricted cash totaled $4.0 million and consists of cash deposited with financial institutions held as collateral for our obligations under various facility leases. Marketable securities are comprised of investments in U.S. government securities with an original maturity greater than 90 days at the date of purchase.
Investing activities For the fiscal year ended December 31, 2022, net cash used in investing activities was $173.2 million, primarily as a result of $158.5 million in purchases of marketable securities, $5.0 million for the purchase of strategic investments, and $14.2 million related to capitalized software costs.
For the fiscal year ended December 31, 2022, net cash used in investing activities was $173.2 million, primarily as a result of our $158.5 million purchase of marketable securities, $5.0 million purchase of strategic investments, and $14.2 million related to capitalized internal-use software costs.
Under our operating leases, as noted in the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data", we have a current obligation of $7.0 million and a long-term obligation of $6.5 million.
Under our operating leases, as noted in the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data", Note 6 – Leases, we have a current obligation of $5.8 million and a long-term obligation of $1.1 million.
We expect cost of revenue to generally decrease as a percentage of revenue as we increase the percentage of revenue derived from our UB offering. Operating expenses Operating expenses consist of research and development, sales and marketing, and general and administrative expenses.
We expect cost of revenue to generally decrease as a percentage of revenue as we increase the percentage of revenue derived from our UB offering and decrease the instructor revenue share percentage. Operating expenses Operating expenses consist of research and development, sales and marketing, general and administrative expenses, and restructuring charges.
In addition, we expect sales and marketing expenses as a percentage of revenue to vary from period to period but generally decrease over the long term. Research and development Our research and development expenses consist primarily of personnel-related costs, including stock-based compensation, costs related to the ongoing management, maintenance, and expansion of features and services offered on our platform.
In addition, we expect sales and marketing expenses as a percentage of revenue to vary from period to period, depending on the timing of our marketing activities, but generally expect this percentage to decrease over the long term. 51 Table of Contents Research and development Our research and development expenses consist primarily of personnel-related costs, including stock-based compensation, and costs related to the ongoing management, maintenance, and expansion of features and services offered on our platform.
For our subscription based UB offering, content costs are incurred based on monthly subscription fees, and margins are more stable from period to period.
For our UB and consumer subscription offerings, content costs are incurred based on monthly subscription fees, and margins are more stable from period to period.
Income tax expense for the fiscal years ended December 31, 2022 and 2021, was primarily comprised of foreign taxes.
Income tax expense for the fiscal years ended December 31, 2023 and 2022, was primarily comprised of foreign and state taxes.
December 31, 2022 2021 2020 (in thousands) Udemy Business annual recurring revenue $ 371,727 $ 239,257 $ 137,621 57 Table of Contents Udemy Business Net Dollar Retention Rate and Udemy Business Large Customer Net Dollar Retention Rate We disclose UB Net Dollar Retention Rate, or UB NDRR, as a measure of revenue growth for all UB customers within our Enterprise segment, including UB Large Customers, which we define as companies with at least 1,000 employees.
December 31, 2023 2022 2021 (in thousands) Udemy Business annual recurring revenue $ 465,997 $ 371,727 $ 239,257 Udemy Business Net Dollar Retention Rate and Udemy Business Large Customer Net Dollar Retention Rate We disclose UB Net Dollar Retention Rate, or UB NDRR, as a measure of revenue growth for all UB customers within our Enterprise segment, including UB Large Customers, which we define as companies with at least 1,000 employees.
A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2021 compared to the fiscal year ended December 31, 2020 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our prior year Form 10-K, which was originally filed with the SEC on March 25, 2022.
A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our prior year Form 10-K, which was filed with the SEC on February 27, 2023.
We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our course catalog, develop our immersive learning capabilities, and invest in our technology development.
We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our course catalog, develop our immersive learning capabilities, and invest in our technology development, including investments in generative artificial intelligence.
The following table summarizes our cash flows for the periods indicated (in thousands): Fiscal Year Ended December 31, 2022 2021 2020 Net cash provided by (used in): Operating activities $ (60,957) $ (7,104) $ 9,624 Investing activities (173,227) (52,693) (14,537) Financing activities 14,755 418,634 131,093 Effect of foreign exchange rates on cash flows (25) — — Net increase (decrease) in cash, cash equivalents and restricted cash $ (219,454) $ 358,837 $ 126,180 Operating activities Cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization, amortization of deferred sales commissions, as well as the effect of changes in operating assets and liabilities during each period.
The following table summarizes our cash flows for the periods indicated (in thousands): Fiscal Year Ended December 31, 2023 2022 2021 Net cash provided by (used in): Operating activities $ (2,005) $ (60,957) $ (7,104) Investing activities (24,972) (173,227) (52,693) Financing activities 19,195 14,755 418,634 Effect of foreign exchange rates on cash flows 20 (25) — Net increase (decrease) in cash, cash equivalents and restricted cash $ (7,762) $ (219,454) $ 358,837 Operating activities Cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization, amortization of deferred sales commissions, as well as the effect of changes in operating assets and liabilities during each period.
General and administrative Our general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, costs related to our executive, legal, finance, and human resources departments, as well as charges for indirect tax reserves, allowance for credit losses, professional fees, and other corporate expenses.
General and administrative Our general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, costs related to our executive, legal, finance, and human resources departments, as well as charges for indirect tax reserves, allowance for credit losses, professional fees, and other corporate expenses. We expect general and administrative expenses to increase in absolute dollars as our business grows.
These increases were partially offset by a decrease in marketing costs of $8.3 million. 55 Table of Contents Research and development. Research and development expenses for the fiscal year ended December 31, 2022 were $104.6 million, compared to $66.1 million for the same period in the prior year.
These increases were partially offset by a decrease in marketing costs of $8.3 million. Research and development. Research and development expenses for the fiscal year ended December 31, 2023 were $120.3 million, compared to $104.6 million for the same period in the prior year.
In our Enterprise segment, customer support costs increased by $11.5 million in the fiscal year ended December 31, 2022, as compared to the same period in the prior year.
In our Enterprise segment, customer support costs increased by $8.4 million in the fiscal year ended December 31, 2023, as compared to the same period in the prior year.
Sales and marketing expenses for the fiscal year ended December 31, 2022 were $301.3 million, compared to $227.0 million for the same period in the prior year.
Sales and marketing expenses for the fiscal year ended December 31, 2023 were $316.7 million, compared to $301.3 million for the same period in the prior year.
General and administrative expenses for the fiscal year ended December 31, 2022 were $99.1 million, compared to $64.4 million for the same period in the prior year.
General and administrative expenses for the fiscal year ended December 31, 2023 were $93.9 million, compared to $99.1 million for the same period in the prior year.
Income tax provision Fiscal Year Ended December 31, Change 2022 2021 $ % (in thousands, except percentages) Income tax provision $ (2,286) $ (1,183) $ (1,103) 93 % For the fiscal year ended December 31, 2022, we recognized income tax expense of $2.3 million, compared to $1.2 million for the same period in the prior year.
Income tax provision Fiscal Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Income tax provision $ (3,653) $ (2,286) $ (1,367) 60 % For the fiscal year ended December 31, 2023, we recognized income tax expense of $3.7 million, compared to $2.3 million for the same period in the prior year.
Content costs for the Consumer and Enterprise segments were $118.8 million and $73.7 million for the fiscal year ended December 31, 2022, respectively, compared to $131.9 million and $45.0 million for the same period in the prior year, respectively.
Content costs for the Enterprise and Consumer segments were $95.8 million and $113.7 million for the fiscal year ended December 31, 2023, respectively, compared to $73.7 million and $118.8 million for the same period in the prior year, respectively.
The increase in revenue for the fiscal year ended December 31, 2022 was primarily driven by the significant growth in our UB customer base, which was partially offset by a decrease in Consumer revenue during the same period.
The increase in revenue for the fiscal year ended December 31, 2023 was primarily driven by the growth in our Enterprise segment, which was partially offset by a decrease in Consumer revenue during the same period.
The number of monthly average buyers is calculated as the average of monthly buyers during a particular period, such as a fiscal year. Our monthly average buyer count is not intended as a measure of active engagement, as not all buyers are active at any given time or over any given period.
We then calculate monthly average buyers by taking an average of the monthly buyer totals over a particular period, such as a fiscal year. Our monthly average buyer count is not intended as a measure of active engagement, as not all buyers are active at any given time or over any given period.
Consumer revenue consists of individual course content purchases made by individual learners, as well as our consumer subscription offerings. Consumer revenue includes the gross transaction value paid by the learner at checkout, net of (a) actual and estimated refunds and (b) passthrough taxes collected from learners and remitted to governmental authorities.
Consumer revenue includes the gross transaction value paid by the learner at checkout, net of (a) actual and estimated refunds and (b) passthrough taxes collected from learners and remitted to governmental authorities.
The $38.4 million increase was primarily due to higher personnel-related expenses of $17.9 million, mainly driven by additional headcount; increased stock-based compensation expense of $14.0 million; and an additional $6.5 million of software subscriptions and allocated costs to support the growth of our business. General and administrative.
The $15.8 million increase was primarily due to higher personnel-related expenses of $7.6 million, increased stock-based compensation expense of $5.5 million, and an additional $3.0 million of software subscriptions and allocated costs to support the growth of our business. General and administrative.
Content costs as a percentage of segment revenue for the Consumer and Enterprise segments were 38% and 23% for the fiscal year ended December 31, 2022, respectively, compared to 40% and 24% for the same period in the prior year, respectively.
Content costs as a percentage of segment revenue for the Enterprise and Consumer segments were 23% and 37%, respectively, for the fiscal year ended December 31, 2023, and 23% and 38%, respectively, for the fiscal year ended December 31, 2022.
On a consolidated basis, there was an increase of $3.3 million in amortization of capitalized software, an increase of $1.9 million of amortization of intangible assets, and an increase of $3.7 million related to stock-based compensation expense for the fiscal year ended December 31, 2022, when compared to the same period in the prior year.
On a consolidated basis, there was an increase of $4.9 million in amortization of capitalized software and an increase of $1.6 million related to stock-based compensation expense for the fiscal year ended December 31, 2023, when compared to the same period in the prior year. 55 Table of Contents Gross margin was 58% for the fiscal year ended December 31, 2023, compared to 56% for the same period in the prior year.
Enterprise license subscriptions include Team Plan, Enterprise Plan, Udemy Business Pro, and Cohort Learning. Enterprise subscriptions are generally billed in advance on a quarterly or annual basis. Subscription revenue excludes any taxes to be remitted to governmental authorities.
Enterprise revenue primarily relates to enterprise license subscription contracts with annual or multi-year subscription terms. Enterprise license subscriptions include Team Plan, Enterprise Plan, Udemy Business Pro, and Leadership Academy. Enterprise subscriptions are typically billed in advance on a quarterly or annual basis. Subscription revenue excludes any taxes to be remitted to governmental authorities.
Gross margin was 56% for the fiscal year ended December 31, 2022, compared to 54% for the same period in the prior year. The increase in gross margin was primarily due to a shift in mix of revenue toward our Enterprise segment, which has comparatively lower content costs as a percentage of revenue than the Consumer segment.
The increase in gross margin was primarily due to a shift in mix of revenue toward our Enterprise segment, which has comparatively lower content costs as a percentage of revenue than the Consumer segment.
We define adjusted EBITDA margin as adjusted EBITDA divided by revenue for the same period. 59 Table of Contents The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to adjusted EBITDA (in thousands): Fiscal Year Ended December 31, 2022 2021 2020 Net loss $ (153,875) $ (80,026) $ (77,620) Adjusted to exclude the following: Interest (income) expense, net (4,297) 16 1,146 Income tax provision 2,286 1,183 3,149 Depreciation and amortization 21,216 15,297 11,055 Stock-based compensation expense 81,293 34,680 31,618 Other (income) expense, net 4,696 920 (55) Adjusted EBITDA $ (48,681) $ (27,930) $ (30,707) The following table provides a reconciliation of net loss margin, the most directly comparable GAAP financial measure, to adjusted EBITDA margin (in thousands, except percentages): Fiscal Year Ended December 31, 2022 2021 2020 Revenue $ 629,097 $ 515,657 $ 429,899 Net loss $ (153,875) $ (80,026) $ (77,620) Net loss margin (24) % (16) % (18) % Revenue $ 629,097 $ 515,657 $ 429,899 Adjusted EBITDA $ (48,681) $ (27,930) $ (30,707) Adjusted EBITDA margin (8) % (5) % (7) % Net loss increased by $73.8 million in the fiscal year ended December 31, 2022 compared to the same period in the prior year, and adjusted EBITDA decreased by $20.8 million in the fiscal year ended December 31, 2022 compared to the same period in the prior year.
We define adjusted EBITDA margin as adjusted EBITDA divided by revenue for the same period. 60 Table of Contents The following table provides a reconciliation of net loss attributable to common stockholders, the most directly comparable GAAP financial measure, to adjusted EBITDA (in thousands): Fiscal Year Ended December 31, 2023 2022 2021 Net loss attributable to common stockholders $ (107,294) $ (153,875) $ (80,026) Adjusted to exclude the following: Interest income (20,670) (5,548) (204) Interest expense 518 1,251 220 Income tax provision 3,653 2,286 1,183 Depreciation and amortization 24,588 21,216 15,297 Stock-based compensation expense 94,838 81,293 34,680 Other expense, net 1,898 4,696 920 Restructuring charges 10,263 — — Adjusted EBITDA $ 7,794 $ (48,681) $ (27,930) The following table provides a reconciliation of net loss margin, the most directly comparable GAAP financial measure, to adjusted EBITDA margin (in thousands, except percentages): Fiscal Year Ended December 31, 2023 2022 2021 Revenue $ 728,937 $ 629,097 $ 515,657 Net loss attributable to common stockholders $ (107,294) $ (153,875) $ (80,026) Net loss margin (15) % (24) % (16) % Revenue $ 728,937 $ 629,097 $ 515,657 Adjusted EBITDA $ 7,794 $ (48,681) $ (27,930) Adjusted EBITDA margin 1 % (8) % (5) % Net loss attributable to common stockholders decreased by $46.6 million in the fiscal year ended December 31, 2023, compared to the same period in the prior year.
The main drivers of the changes in operating assets and liabilities were a $67.7 million increase in deferred revenue, resulting primarily from our enterprise business growth, offset by a $32.3 million increase in accounts receivable, a $28.6 million decrease in accounts payable, accrued expenses and other current liabilities, which includes a $13.7 million one-time payment to settle our instructor withholding tax reserve, and a $53.4 million increase in deferred contract costs. 61 Table of Contents For the fiscal year ended December 31, 2021, cash used in operating activities was $7.1 million, primarily consisting of our net loss of $80.0 million, adjusted for non-cash charges of $68.1 million and net cash outflows of $4.8 million provided by changes in our operating assets and liabilities.
The main drivers of the changes in operating assets and liabilities were a $67.7 million increase in deferred revenue, resulting primarily from our Enterprise business growth, offset by a $32.3 million increase in accounts receivable $28.6 million decrease in accounts payable, accrued expenses and other current liabilities, which includes a $13.7 million one-time payment to settle our instructor withholding tax reserve, and a $53.4 million increase in deferred contract costs.
Certain key business metrics and non-GAAP financial metrics In addition to the measures presented in our consolidated financial statements, we use the key business metrics and non-GAAP financial metrics identified below to help us assess the health of our community, evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. 56 Table of Contents Monthly average buyers A buyer is a consumer who purchases a course or subscription through our direct-to-consumer offering.
Certain key business metrics and non-GAAP financial metrics In addition to the measures presented in our consolidated financial statements, we use the key business metrics and non-GAAP financial metrics identified below to help us assess the health of our community, evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Significant judgment is required in determining our income tax expense and deferred tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. 64 Table of Contents We utilize the asset and liability method under which deferred tax assets and liabilities arise from the temporary differences between the tax basis of an asset or liability and our reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards.
We utilize the asset and liability method under which deferred tax assets and liabilities arise from the temporary differences between the tax basis of an asset or liability and our reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards.
If our available funds are insufficient to fund these future activities or execute on our business strategies, we may raise additional capital through equity, equity-linked or debt financing, to the extent such funding sources are available.
If our available funds are insufficient to fund these future activities or execute on our business strategies, we may raise additional capital through equity, equity-linked or debt financing, to the extent such funding sources are available. Alternatively, we may be required to reduce expenses to manage liquidity; however, any such reductions could adversely impact our business and competitive position.
Business combinations Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.
We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.
The increase in Enterprise revenue was primarily driven by an increase in the number of UB customers, as well as an increase in the average deal size per new customer and net expansions in our existing UB customer base.
The increase in UB ARR was primarily driven by an increase in the number of UB customers and net expansions in our existing UB customer base.
Personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and commissions. Our operating expenses also include allocated costs of facilities, information technology, depreciation, and amortization.
Personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and commissions. Our operating expenses also include allocated costs of facilities, information technology, depreciation, and amortization. Although our operating expenses may fluctuate from period to period, we currently expect our operating expenses to increase in absolute dollars over time.
The $74.3 million increase in sales and marketing expense was primarily due to higher personnel-related expenses of $32.5 million, driven by headcount growth in our sales force to support additional demand for our platform; increased stock-based compensation expense of $20.4 million; increased amortization expense related to deferred contract acquisition costs of $14.5 million, driven by an expansion of our UB customer base over time; a $5.0 million increase in travel and employee activities due to additional in-person sales events and the easing of COVID-19 travel restrictions; a $7.4 million increase in software subscriptions and allocated costs to support the growth in our sales force; and a $1.7 million increase in professional services to support the growth of our business.
The $15.4 million increase in sales and marketing expense was primarily due to increased amortization of deferred contract costs of $15.9 million, driven by an expansion of our UB customer base over time, increased personnel-related expenses of $2.7 million, increased stock-based compensation expense of $1.8 million, a $0.8 million increase in travel and employee activities, and a $1.8 million increase in software subscriptions and allocated costs to support the growth of our business.
From time to time, we may explore additional financing sources, which could include equity, equity-linked or debt financing. In addition, in connection with any future acquisitions or strategic investments, we may pursue additional funding, which could include debt, equity or equity-linked financings, or a combination of these methods.
In addition, in connection with any future acquisitions or strategic investments, we may pursue additional funding, which could include debt, equity or equity-linked financings, or a combination of these methods. We can provide no assurance that any additional financing will be available to us on acceptable terms.
For the fiscal year ended December 31, 2022, Consumer and Enterprise revenue were $315.1 million and $314.0 million, respectively, representing 50% and 50% of total revenue, respectively, compared to $328.7 million and $187.0 million, respectively, representing 64% and 36% of total revenue, respectively, for the same period in the prior year.
For the fiscal year ended December 31, 2023, Enterprise and Consumer revenue was $420.6 million and $308.3 million, respectively, representing 58% and 42% of total revenue, respectively, compared to $314.0 million and $315.1 million, respectively, representing 50% and 50% of total revenue, respectively, for the same period in the prior year.
In October 2021, we received net proceeds of $397.4 million, after deducting underwriting discounts and commissions of $23.1 million, from our IPO. In November 2021, the underwriters exercised their option to purchase additional shares of our common stock, resulting in net proceeds of $17.8 million after deducting underwriting discounts and commissions of $1.0 million.
In November 2021, the underwriters exercised their option to purchase additional shares of our common stock, resulting in net proceeds of $17.8 million after deducting underwriting discounts and commissions of $1.0 million. From time to time, we may explore additional financing sources, which could include equity, equity-linked or debt financing.
Key factors impacting our performance We believe that the growth of our business and our future success are dependent upon many factors.
The restructuring plan was completed in the third quarter of 2023. 48 Table of Contents Key factors impacting our performance We believe that the growth of our business and our future success are dependent upon many factors.
Although our operating expenses may fluctuate from period to period, we currently expect our operating expenses to increase in absolute dollars over time. 51 Table of Contents Sales and marketing Our sales and marketing expenses consist primarily of personnel-related costs, including stock-based compensation, as well as marketing costs, costs related to customer and instructor acquisition, amortization of deferred contract costs, amortization of tradenames and customer relationships acquired through business combinations, and brand marketing.
Sales and marketing Our sales and marketing expenses consist primarily of personnel-related costs, including stock-based compensation, as well as marketing and brand costs, costs related to customer and instructor acquisition, amortization of deferred contract costs, and amortization of tradenames and customer relationships acquired through business combinations.
To do so, we generally count unique customers using the concept of a domestic ultimate parent, defined as the highest business in the family tree that is in the same country as the contracted entity. In some cases, we deviate from this methodology, defining the contracted entity as a unique customer despite existence of a domestic ultimate parent.
Udemy Business customers We count the total number of UB customers at the end of each period. To do so, we generally count unique customers using the concept of a domestic ultimate parent, defined as the highest business in the family tree that is in the same country as the contracted entity.
While each of these factors presents significant opportunities for us, these factors also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations. 48 Table of Contents Ability to attract and engage new learners and Udemy Business customers To grow our business, we must attract new learners and UB customers efficiently and increase engagement on our platform over time.
While each of these factors presents significant opportunities for us, these factors also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.
Instructors whose content is included in the collection earn a prorated portion of this pool based on the number of minutes of consumption their courses achieved that month. Content costs as a percentage of revenue for our UB and consumer subscription offerings are lower relative to individual course content purchases in our consumer offering.
Instructors whose content is included in the collection earn a prorated portion of this pool based on the number of minutes of consumption their courses achieved that month. Content costs are recorded as cost of revenue in the period earned by our instructors.
As noted in Note 10, Commitments and Contingencies, to the consolidated financials included in Part II, Item 8, "Financial Statements and Supplementary Data", we have a current obligation of $24.3 million and a long-term obligation of $36.9 million. Critical accounting policies and estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Refer to Note 8 – Commitments and contingencies, to the consolidated financials included in Part II, Item 8, "Financial Statements and Supplementary Data", for more information. Critical accounting policies and estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Once we bring new learners onto our platform, we work to create a best-in-class experience to encourage engagement and drive learning and career outcomes.
Our organic channels include those outside of our paid marketing efforts, such as a Udemy brand name internet search. Once we bring new learners onto our platform, we work to create a best-in-class experience to encourage engagement and drive learning and career outcomes.
In addition, we expect research and development expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.
In addition, we expect research and development expenses as a percentage of revenue may vary from period to period depending on the timing of investments in our platform.
We can provide no assurance that any additional financing will be available to us on acceptable terms. Use of funds Our principal uses of cash are funding our operations, capital expenditures and working capital requirements. We have generated significant net losses from our operations as reflected in our accumulated deficit of $612.4 million as of December 31, 2022.
Use of funds Our principal uses of cash are funding our operations, capital expenditures and working capital requirements. We have generated significant net losses from our operations as reflected in our accumulated deficit of $719.7 million as of December 31, 2023.
Interest income and interest expense were each immaterial for the periods presented. Other income (expense), net Other income (expense), net consists primarily of foreign currency transaction gains and losses, as well as changes in the valuation of strategic investments, if any.
Other expense, net Other expense, net consists of foreign currency transaction gains and losses, as well as changes in the valuation of strategic investments, if any. Income tax provision Our income tax provision consists primarily of income taxes in certain foreign jurisdictions in which we conduct business.
Dividend Yield — The expected dividend was assumed to be zero as we have never paid dividends and have no current plans to do so.
Dividend Yield — The expected dividend was assumed to be zero as we have never paid dividends and have no current plans to do so. We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis.
Content costs, which are payments made to our instructors, are the largest individual component of segment cost of revenue.
Content costs, which are payments made to our instructors, are the largest individual component of segment cost of revenue. We expect to increase the percentage of our revenue derived from our Enterprise segment over time, which we expect will improve our gross margins.
For the fiscal year ended December 31, 2022, total Consumer revenue decreased by $13.6 million, or 4%, compared to the same period in the prior year. The decrease in Consumer revenue is primarily due to negative impacts from foreign currency exchange rates. Monthly average buyers were flat for the comparative periods.
These changes were partially offset by a negative impact from foreign currency exchange rates. For the fiscal year ended December 31, 2023, total Consumer revenue decreased by $6.8 million, or 2%, compared to the same period in the prior year. The decrease was primarily due to a decrease in revenue from single course purchases.
As a result, we expect to recognize restructuring charges of $9.0 million to $11.0 million in the first quarter of 2023, primarily consisting of personnel expenses such as salaries and wages, one-time severance payments, and other benefits, as well as stock-based compensation expense. Cash payments related to these expenses will occur primarily in the first and second quarters of 2023.
As a result, we recognized restructuring charges of $10.3 million, primarily consisting of personnel expenses such as salaries and wages, one-time severance payments, and other benefits, as well as stock-based compensation expense.
We consider all available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income in assessing the need for a valuation allowance.
We consider all available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income in assessing the need for a valuation allowance. 65 Table of Contents Business combinations Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed.
As a result, shifts in the mix between our two offerings is expected to be a significant driver of future changes in gross margin. Content costs are recorded as cost of revenue in the period earned by our instructors. For consumer single course purchases, content costs are incurred at the time of purchase.
Content costs as a percentage of revenue for our UB and consumer subscription offerings are lower relative to individual course content purchases in our consumer offering. As a result, shifts in the mix between offerings and changes to the revenue share structure for UB and consumer subscriptions are expected to be a significant driver of future changes in gross margin.
Pricing was not a significant driver of the increase in revenue. 54 Table of Contents Cost of revenue, gross profit and gross margin Fiscal Year Ended December 31, Change 2022 2021 $ % (in thousands, except percentages) Cost of revenue $ 275,320 $ 236,024 $ 39,296 17 % Gross profit 353,777 279,633 74,144 27 % Gross margin 56 % 54 % Cost of revenue for the fiscal year ended December 31, 2022 was $275.3 million, compared to $236.0 million for the same period in the prior year, which represents an increase of $39.3 million, or 17%.
Cost of revenue, gross profit and gross margin Fiscal Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Cost of revenue $ 309,598 $ 275,320 $ 34,278 12 % Gross profit 419,339 353,777 65,562 19 % Gross margin 58 % 56 % Cost of revenue for the fiscal year ended December 31, 2023 was $309.6 million, compared to $275.3 million for the same period in the prior year, which represents an increase of $34.3 million, or 12%.
Stock-based awards that may be granted to employees, directors, and non-employees include restricted stock units (“RSUs”), stock options, stock appreciation rights (“SARs”), restricted stock, and stock purchase rights granted to employees under the Employee Stock Purchase Plan (“ESPP Rights”). We estimate the fair value of RSUs based on our common stock price on the date of grant or modification.
Stock-based awards that may be granted to employees, directors, and non-employees include restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options, stock appreciation rights (“SARs”), restricted stock, and stock purchase rights granted to employees under the Employee Stock Purchase Plan (“ESPP Rights”). No stock options or SARs have been granted since the Company’s initial public offering in 2021.
Revenue from single course purchases is recognized ratably over the estimated service period, which is four months from the date of enrollment, while revenue from consumer subscriptions is recognized ratably over the contractual subscription term. 50 Table of Contents Enterprise revenue primarily relates to enterprise license subscription contracts with annual or multi-year subscription terms.
Revenue from single course purchases is recognized ratably over the estimated service period, which is four months from the date of enrollment, while revenue from consumer subscriptions is recognized ratably over the contractual subscription term. 50 Table of Contents We are the principal with respect to revenue generated from sales to UB and consumer customers as we control the performance obligation and are the primary obligor with respect to delivering our customers access to the course content.
We expect general and administrative expenses to increase in absolute dollars as our business grows. In addition, we expect general and administrative expenses as a percentage of revenue to vary from period to period but generally decrease over the long term.
In addition, we expect general and administrative expenses as a percentage of revenue to vary from period to period but generally decrease over the long term. Restructuring charges Our restructuring charges consist primarily of personnel expenses, such as employee severance, benefits costs, and stock-based compensation, related to the reduction of our global workforce in the first quarter of 2023.
We expect to increase the percentage of our revenue derived from our Enterprise segment over time, which we expect will improve our gross margins. 58 Table of Contents Fiscal Year Ended December 31, 2022 2021 2020 (in thousands, except percentages) Consumer segment revenue $ 315,059 $ 328,703 $ 326,454 Consumer segment gross profit $ 165,805 $ 169,361 $ 160,650 Consumer segment gross margin 53 % 52 % 49 % Enterprise segment revenue $ 314,038 $ 186,954 $ 103,445 Enterprise segment gross profit $ 209,461 $ 122,970 $ 67,926 Enterprise segment gross margin 67 % 66 % 66 % For the fiscal year ended December 31, 2022, the increase in Consumer segment gross margin was primarily due to a decrease in content costs as a percentage of Consumer revenue and the timing of revenue recognition relative to content costs.
Fiscal Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Enterprise segment revenue $ 420,646 $ 314,038 $ 186,954 Enterprise segment gross profit $ 283,419 $ 209,461 $ 122,970 Enterprise segment gross margin 67 % 67 % 66 % Consumer segment revenue $ 308,291 $ 315,059 $ 328,703 Consumer segment gross profit $ 163,766 $ 165,805 $ 169,361 Consumer segment gross margin 53 % 53 % 52 % For the fiscal year ended December 31, 2023, Enterprise segment gross margin was generally consistent with the same period in the prior year, as the mix of Enterprise segment costs of revenue remained a consistent percentage of Enterprise revenue when compared to the same period in the prior year. 59 Table of Contents For the fiscal year ended December 31, 2023 Consumer segment gross margin was generally consistent with the same period in the prior year, as the mix of Consumer segment costs of revenue remained a consistent percentage of Consumer revenue when compared to the same period in the prior year.
Total other expense, net Fiscal Year Ended December 31, Change 2022 2021 $ % Other income (expense) (in thousands, except percentages) Interest income (expense), net $ 4,297 $ (16) $ 4,313 n/m Other expense, net (4,696) (920) (3,776) n/m Total other expense, net $ (399) $ (936) $ 537 (57) % n/m - not meaningful We recorded $0.4 million of total other expense, net for the fiscal year ended December 31, 2022, compared to $0.9 million for the same period in the prior year.
There were no restructuring activities in the same period in the prior year. 56 Table of Contents Total other income (expense), net Fiscal Year Ended December 31, Change 2023 2022 $ % Other income (expense) (in thousands, except percentages) Interest income $ 20,670 $ 5,548 $ 15,122 273 % Interest expense (518) (1,251) 733 (59) % Other income (expense), net (1,898) (4,696) 2,798 (60) % Total other income (expense), net $ 18,254 $ (399) $ 18,653 n/m n/m - not meaningful We recorded net total other income of $18.3 million for the fiscal year ended December 31, 2023, compared to net total other expense of $0.4 million for the same period in the prior year.
Our network of over 70,000 instructors have created over 200,000 courses in nearly 75 languages that cover a wide range of topics, including technology, business, soft skills, and personal development.
Our network of 75,000 instructors have created over 220,000 courses in 75 languages that cover a wide range of topics, including technology, business, soft skills, and personal development. Share repurchase On February 14, 2024, our Board of Directors approved a share repurchase program (the “Repurchase Program”) with authorization to purchase up to $100 million of Udemy common stock.
We believe that the number of UB customers and our ability to increase this number is an important indicator of the growth of our UB and future revenue trends. The increase in UB customers is primarily attributable to the continued pursuit of our global land and expand strategy, as well as growth of our enterprise sales force.
We define a UB customer as a customer who purchases Udemy via our direct sales force, reseller partnerships or through our self-service platform. We believe that the number of UB customers and our ability to increase this number is an important indicator of the growth of our UB and future revenue trends.
This often occurs where the domestic ultimate parent is a financial owner, government entity, or acquisition target where we have contracted directly with the subsidiary. We define a UB customer as a customer who purchases Udemy via our direct sales force, reseller partnerships or through our self-service platform.
In some cases, we deviate from this methodology, defining the contracted entity as a unique customer despite the existence of a domestic ultimate parent. This often occurs where the domestic ultimate parent is a financial owner, government entity, conglomerate, or acquisition target where we have contracted directly with the subsidiary.
We acquire a substantial portion of our learners via organic channels and also use paid marketing to further enhance the growth of our learner base. Our organic channels include those outside of our paid market efforts, such as a Udemy brand name internet search.
Ability to attract and engage new learners and Udemy Business customers To grow our business, we must attract new learners and UB customers efficiently and increase engagement on our platform over time. We acquire a substantial portion of our learners via organic channels and also use paid marketing to further enhance the growth of our learner base.
Although we view the breadth and diverse expertise of our instructor base and the content they create as one of our competitive advantages, a significant portion of the most popular content on our platform, and as a result a significant portion of our revenue, is attributable to a limited number of our instructors.
Furthermore, a significant portion of the most popular content on our platform, and as a result a significant portion of our revenue, is attributable to a limited number of our instructors. We experienced minimal turnover among top instructors during the fiscal year ended December 31, 2023.
December 31, 2022 2021 2020 Udemy Business net dollar retention rate 115 % 118 % 118 % Udemy Business Large Customer net dollar retention rate 123 % 124 % 121 % Segment revenue and segment gross profit Our revenue is generated from our Consumer and UB offerings, each of which is an individual segment of our business.
Fiscal Year Ended December 31, 2023 2022 2021 (in thousands) Monthly average buyers 1,378 1,336 1,345 Segment revenue and segment gross profit Our revenue is generated from our UB and Consumer offerings, each of which is an individual segment of our business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−1 removed2 unchanged
Biggest changeIn addition, we had $2.9 million of restricted cash, primarily due to the outstanding letter of credit related to the operating lease agreement for our corporate headquarters. We did not hold any marketable securities or long-term debt as of or during the fiscal year ended December 31, 2021. Our cash and cash equivalents are held for working capital purposes.
Biggest changeWe did not hold any long-term debt during the fiscal years ended December 31, 2023, 2022, or 2021. Our cash and cash equivalents are held for working capital purposes.
Quantitative and Qualitative Disclosures About Market Risk Interest rate sensitivity As of December 31, 2022 we had $313.7 million of cash and cash equivalents, which includes money market funds, certain U.S. government securities purchased with original maturities of less than 90 days, on demand deposits, and amounts in transit from certain payment processors for credit and debit card transactions.
Quantitative and Qualitative Disclosures About Market Risk Interest rate sensitivity As of December 31, 2023 we had $305.6 million of cash and cash equivalents, which includes money market funds, certain U.S. government securities purchased with original maturities of less than 90 days, on demand deposits, and amounts in transit from certain payment processors for credit and debit card transactions.
We also held $151.7 million of marketable securities, consisting of investments in various U.S. government securities. In addition, we had $3.6 million of restricted cash, primarily due to the outstanding letter of credit related to the operating lease agreement for our corporate headquarters.
We also held $171.4 million of marketable securities, consisting of investments in various U.S. government securities. In addition, we had $4.0 million of restricted cash, primarily due to the outstanding letter of credit related to the operating lease agreement for our corporate headquarters.
As such, a hypothetical 10% increase or decrease in current exchange rates would not have had a material impact on income or expense for the fiscal years ended December 31, 2022 and 2021. 66 Table of Contents
As such, a hypothetical 10% increase or decrease in current exchange rates would not have had a material impact on income or expense for the fiscal year ended December 31, 2023. 67 Table of Contents
We determine the functional currency for each of our foreign subsidiaries by reviewing their operations and currencies used in their primary economic environments.
Foreign currency risk The Company’s reporting currency is the U.S. dollar. We determine the functional currency for each of our foreign subsidiaries by reviewing their operations and currencies used in their primary economic environments.
Given the above facts and circumstances, hypothetical changes in interest rates of 100 basis points would not result in a material increase or decrease of the market value of our marketable securities portfolio as of December 31, 2022. Foreign currency risk The reporting currency is the U.S. dollar.
Given the above facts and circumstances, hypothetical changes in interest rates of 100 basis points would not result in a material increase or decrease of either the market value of our portfolio of cash equivalents and marketable securities as of December 31, 2023, or interest income earned from our portfolio during the fiscal year ended December 31, 2023.
Removed
We did not hold any long-term debt as of or during the fiscal year ended December 31, 2022. As of December 31, 2021 we had $533.9 million of cash and cash equivalents, which includes on demand deposits and amounts in transit from certain payment processors for credit and debit card transactions.

Other UDMY 10-K year-over-year comparisons