Udemy, Inc.

Q3 revenue was $196 million, above the high end of guidance. Consolidated subscription revenue was $144 million, up 8% year over year, and made up 74% of total revenue, up 600 basis points from last year. Udemy Business revenue was $133 million, up 5% year over year; net new ARR was $7 million, ending at $527 million of ARR. Consumer revenue was $63 million, with subscription revenue up 43% year over year and nearly 295,000 paid subscribers. Gross margin was 67%, up from 64% a year ago; operating expenses were $112 million or 57% of revenue; GAAP net income was approximately $2 million versus a loss of $25 million a year ago; adjusted EBITDA was $24 million or 12% margin versus 6% last year; and free cash flow was $12 million or 6% of revenue. For Q4, Udemy guided to total revenue of $191 million to $194 million and adjusted EBITDA of $18 million to $20 million. Full-year 2025 revenue guidance was $787 million to $790 million, and full-year adjusted EBITDA guidance was raised to $92 million to $94 million. Management said consolidated subscription revenue should grow in the high-single digits in 2025 and closer to double digits in 2026, with subscription revenue at about three-quarters of total revenue next year.

Hugo Sarrazin framed the quarter as evidence that Udemy’s transformation toward a subscription-first, AI-enabled learning platform is working. He emphasized a more durable business built around recurring revenue, stronger learner outcomes, and a broader platform that combines skill acquisition, mastery, validation, and human connection. His tone was constructive and optimistic, especially around enterprise AI upskilling demand, consumer career and certification journeys, and the company’s ability to win larger deals by tying learning to business outcomes.

Sarah Blanchard highlighted the financial execution behind the quarter: revenue of $196 million, subscription revenue of $144 million, gross margin of 67%, adjusted EBITDA of $24 million, and free cash flow of $12 million. She pointed to a stronger mix shift toward subscriptions, stable gross dollar retention, improving pipeline quality, and $372 million in cash and marketable securities. She also noted the company bought back 4 million shares under its new $50 million repurchase program and raised full-year EBITDA guidance to $92 million to $94 million while signaling more investment in product and partnerships for 2026.

Analysts pressed on the Consumer strategy, net dollar retention, the gap between current EBITDA expectations and prior 2026 targets, and whether AI Role Plays and subscriptions can drive more monetization. Management said the consumer push is being executed through conversion and retention changes, new partnerships like Indeed and Pearson, and a move toward targeted subscription journeys tied to certification and career outcomes. On UB, they said the pipeline remains strong, the remaining pressure in net dollar retention is tied to the tail end of COVID-era contracts and SMB churn work, and stabilization is expected in Q4. They also said AI Role Plays are already being used in hundreds of enterprises and will be monetized more directly next year through tiered offers and stand-alone products.