Udemy (UDMY) Stock Forecast & Price Target

Udemy Inc. reported a 5.0% year-over-year growth in Udemy Business revenue, amounting to $132.8 million, which now constitutes 67.9% of total revenue, primarily driven by strong new customer adoption and large deal activity. The Consumer segment demonstrated notable improvement with gross margin expanding by 300 basis points year-over-year to 57.0%, supported by an 8% growth in the consumer subscription segment, which represents 19% of total consumer revenue. The company's adjusted EBITDA also exceeded expectations, reaching $24.3 million, a $5.3 million increase year-over-year, reflecting solid performance in both revenue growth and operational efficiency.

Udemy Inc. is experiencing challenges in its Consumer segment, which reported a 9.2% year-over-year decline in revenues during the third quarter, raising concerns about the segment's stability amid efforts to transition to a subscription model. Additionally, the company's fourth-quarter revenue guidance suggests a contraction of 3-5% year-over-year, primarily driven by anticipated high teens decline in Consumer revenue, which is below market consensus. Furthermore, the lowering of profitability estimates for FY26 reflects the impact of reduced top-line growth and the company's planned investments for future product enhancements, indicating potential struggles in maintaining investor confidence.