Udemy (NASDAQ: UDMY) outlines Coursera merger terms and AI-first, subscription model
Filing Impact
Filing Sentiment
Form Type
10-K
Rhea-AI Filing Summary
Udemy, Inc. filed its annual report describing an AI-focused learning platform and a planned all-stock merger with Coursera. Udemy stockholders are expected to receive 0.800 shares of Coursera common stock for each Udemy share, with Coursera holders owning about 59% of the combined company and Udemy holders about 41%.
The company highlights a 2025 shift to a subscription-first model, with subscriptions providing 72% of total revenue and the Enterprise (Udemy Business) segment contributing 66% of revenue. Udemy serves nearly 84 million learners with over 290,000 courses and 90,000 instructors, and emphasizes AI-powered personalization, analytics and enterprise workforce upskilling.
Key risks center on completing the Coursera merger, integration uncertainty, potential litigation, business disruption, and broader challenges such as a history of losses, intense competition, evolving online learning demand, and the need to retain key instructors, customers and employees.
Positive
- None.
Negative
- None.
Insights
All-stock Coursera merger and subscription pivot reshape Udemy’s profile.
Udemy outlines a large-scale, AI-centric learning platform and a planned all-stock merger with Coursera. Udemy holders will receive 0.800 Coursera shares per Udemy share, with pro forma ownership of roughly
The report stresses a strategic pivot toward predictable subscription revenue: subscriptions represented
Risks are substantial: the merger depends on multiple stockholder, regulatory, listing and tax conditions, with a possible
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the fiscal year ended | ||||||||
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ___________ to ___________ | ||||||||
Commission File Number 001-40956
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
(415 ) 813-1710
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Securities registered pursuant to section12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ | |||||
Non-accelerated filer ☐ | Smaller reporting company | ||||
Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b)
.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Based on the closing price of the Registrant’s Common Stock on the last business day of the Registrant’s most recently completed second fiscal quarter, which was June 30, 2025, the aggregate market value of its shares held by non-affiliates was approximately $778.9 million.
As of February 13, 2026, 145,421,510 shares of the registrant’s common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
As noted herein, the information called for by Part III is incorporated by reference to specified portions of the registrant's definitive proxy statement to be filed in conjunction with the registrant's 2026 annual meeting of stockholders, if such definitive proxy statement is filed not later than 120 days after the registrant's fiscal year ended December 31 , 2025
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Table of Contents
| Page | ||||||||
Summary of Risk Factors | i | |||||||
Special Note Regarding Forward-Looking Statements | ii | |||||||
PART I. | ||||||||
Item 1. Business | 1 | |||||||
Item 1A. Risk Factors | 14 | |||||||
Item 1B. Unresolved Staff Comments | 48 | |||||||
Item 1C. Cybersecurity | 49 | |||||||
Item 2. Properties | 51 | |||||||
Item 3. Legal Proceedings | 52 | |||||||
Item 4. Mine Safety Disclosures | 53 | |||||||
PART II. | ||||||||
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 54 | |||||||
Item 6. [Reserved] | 56 | |||||||
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | 57 | |||||||
Item 7A. Quantitative and Qualitative Disclosures about Market Risk | 78 | |||||||
Item 8. Financial Statements and Supplementary Data | 79 | |||||||
Consolidated Balance Sheets | 82 | |||||||
Consolidated Statements of Operations | 83 | |||||||
Consolidated Statements of Comprehensive Income (Loss) | 84 | |||||||
Consolidated Statements of Stockholders’ Equity | 85 | |||||||
Consolidated Statements of Cash Flows | 86 | |||||||
Notes to Consolidated Financial Statements | 88 | |||||||
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 122 | |||||||
Item 9A. Controls and Procedures | 123 | |||||||
Item 9B. Other Information | 125 | |||||||
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 126 | |||||||
PART III. | ||||||||
Item 10. Directors, Executive Officers and Corporate Governance | 127 | |||||||
Item 11. Executive Compensation | 127 | |||||||
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 127 | |||||||
Item 13. Certain Relationships and Related Transactions, and Director Independence | 127 | |||||||
Item 14. Principal Accountant Fees and Services | 127 | |||||||
PART IV | ||||||||
Item 15. Exhibits and Financial Statement Schedules | 128 | |||||||
Item 16. Form 10-K Summary | 132 | |||||||
Signatures | 133 | |||||||
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Summary of risk factors
Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report titled “Risk Factors.” The following is a summary of the principal risks we face, any of which could adversely affect our business, operating results, financial condition, or prospects:
•The pendency of our Merger (as defined below) with Coursera, Inc., or the failure to complete the Merger in a timely manner or at all, could adversely affect our business, financial condition, results of operations and stock price.
•While the Merger is pending, we are subject to business uncertainties and contractual restrictions that could harm our business relationships, financial condition and results of operations.
•Litigation relating to the Merger, if any, could result in an injunction preventing the completion of the Merger and/or substantial costs.
•As a result of the Merger, our current and prospective employees could experience uncertainty about their future with us or the combined company following the Merger, and as a result, key employees may depart.
•As a result of the pending Merger, certain learners, instructors, UB customers and other business partners may decide not to do business with us or change their relationship with us.
•We have a history of losses, and we may not be able to generate sufficient revenue to increase or sustain profitability in the future.
•We operate in an emerging and dynamic market, which makes it difficult to evaluate our future results of operations.
•Our results of operations may fluctuate significantly from period to period due to a wide range of factors, which makes our future results difficult to predict.
•Our growth may not be sustainable and depends on our ability to attract new learners, instructors, and organizations and retain existing ones.
•Our platform relies on a limited number of instructors who create a significant portion of the most popular content on our platform, and the loss of these instructor relationships could adversely affect our business, financial condition, and results of operations.
•If we fail to maintain and expand our relationships with Udemy Business (“UB” or “Enterprise”) customers, our ability to grow our business and revenue will suffer.
•We operate in a highly competitive market, and we may not be able to compete successfully against current and future competitors.
•Our revolving credit facility contains customary affirmative and negative covenants, including financial covenants, that may limit our operating flexibility.
•The market for online learning solutions is relatively new and may not grow as we expect, which may harm our business, financial condition, and results of operations.
•Adherence to our values and our focus on long-term sustainability may negatively impact our short- or medium-term financial performance.
•Failure to effectively leverage our strategic partnerships to market and sell our products could impact our ability to increase brand awareness and grow our revenue.
•We operate internationally and we plan to continue expanding our international operations, which exposes us to risks inherent in international operations.
•Changes in laws or regulations relating to privacy, data protection, or cybersecurity, including those relating to the protection or transfer of data relating to individuals, or any actual or perceived failure by us to comply with such laws and regulations or any other obligations, could adversely affect our business.
•We may be unable to adequately obtain, maintain, protect, and enforce our intellectual property and proprietary information, which could adversely affect our business, financial condition, and results of operations.
•We could face liability, or our reputation might be harmed, as a result of courses posted to our platform.
•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.
•The trading price of our common stock may be volatile, and you could lose all or part of your investment.
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Special note regarding forward-looking statements
This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Form 10-K, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these terms or other similar expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Form 10-K include, but are not limited to, statements about:
•our proposed Merger with Coursera, Inc. (“Coursera”), and the expected timing and benefits of the proposed Merger, including our results of operations and financial condition during the pendency of the Merger and following the Merger (including relating to potential synergies);
•expenses, costs and fees relating to both our proposed Merger with Coursera and the potential termination of the Merger, including in connection with regulatory approvals, the impact of litigation, stockholder approvals and other requisite approvals to complete the Merger, the impact of the Merger on our management, employees and business relationships and potential termination fees under certain circumstances if the merger is not completed;
•our expectations regarding our financial and operating performance, including our expectations regarding our revenue, costs, number of Udemy Business (“UB”) customers, UB Annual Recurring Revenue, UB Net Dollar Retention Rate, UB Large Customer Net Dollar Retention Rate, paid Consumer subscribers, monthly average buyers, segment revenue, segment adjusted gross profit, adjusted EBITDA, adjusted EBITDA margin, and free cash flow;
•our ability to successfully execute our business, growth and operational strategies, including our operational efficiency initiatives;
•our ability to attract and retain learners, instructors, and enterprise customers;
•the timing, impact, and success of new features, integrations, capabilities, and other platform enhancements by us, or by our competitors to their offerings, or any other changes in the competitive landscape of our markets and industry;
•anticipated trends, developments, and challenges in our industry, business, the markets in which we compete, and broader macroeconomic environment;
•the size of our addressable markets, market share, and market trends, including our ability to grow our business internationally;
•the sufficiency of our cash, cash equivalents, and investments, together with the availability under our revolving credit facility, to meet our liquidity needs;
•our ability to develop and protect our brand and reputation;
•our expectations and management of future growth;
•our expectations concerning relationships with third parties;
•our ability to attract, retain, and motivate our skilled personnel, including members of our senior management team;
•our expectations regarding the effects of existing and developing laws and regulations, including with respect to taxation and privacy, data protection, and cybersecurity;
•our ability to maintain the security and availability of our platform;
•our ability to successfully defend litigation brought against us;
•our ability to successfully identify, execute, and integrate any potential acquisitions or strategic investments;
•our expectations regarding our income and other tax liabilities;
•our ability to effectively manage our exposure to fluctuations in foreign currency exchange rates; and
•our ability to obtain, maintain, protect, and enforce our intellectual property and proprietary information.
Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” and elsewhere in this Form 10-K. Moreover, we operate in a highly competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks
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and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-K. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-K. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Form 10-K relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Form 10-K to reflect events or circumstances after the date of this Form 10-K or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
Investors and others should note that we may announce material information to the public through filings with the Securities and Exchange Commission, our website (udemy.com), press releases, public conference calls, public webcasts, and social media, including our corporate and our Chief Executive Officer’s social media accounts on LinkedIn and X. We encourage our investors and others to review the information disclosed through such channels as such information could be deemed to be material information. Please note that this list may be updated from time to time.
Market and industry data
Certain market and industry data included in this Form 10-K has been obtained from third party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications, government publications, and third-party forecasts in conjunction with our assumptions about our markets. We have not independently verified such third-party information. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed in this Form 10-K in the section titled “Special Note Regarding Forward-Looking Statements” and in Part I, Item 1A, “Risk Factors.”
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PART I.
Item 1. Business
Our mission
Udemy’s mission is to transform lives through learning.
About Udemy
Udemy is a global learning company, which underwent a strategic transformation in 2025. Udemy’s AI-powered skills acceleration platform empowers organizations and individuals with flexible, measurable, and outcome-driven 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 nearly 84 million learners. Udemy leverages technology, including artificial intelligence (“AI”), as well as data and insights, including proprietary Role Play technology and Model Context Protocol (“MCP”) capabilities, to deliver personalized, immersive and effective learning experiences that demonstrate proven skill development and career advancement outcomes. 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 learning for all employees, immersive laboratory-style learning for tech teams and cohort-based learning focused on leadership development.
In today’s rapidly evolving labor environment, there are two key trends currently reshaping the future of work: the rise of the skills-based organization and the application of generative AI. By leveraging our comprehensive learning solutions and strategic customer success approach, we believe we are uniquely positioned to empower organizations with the tools to build a future-ready workforce, increase employee engagement and retention, and achieve critical business outcomes, while also helping individuals to achieve career goals. We believe that our AI-powered platform, combined with our subscription-first business model and demonstrated ability to deliver measurable outcomes, positions Udemy as a critical partner for organizations and individuals navigating the global AI-driven workforce transformation.
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. Skills are becoming increasingly important for the way organizations are defining work, deploying talent, managing careers, and valuing employees. As skills required for most professional roles evolve or become obsolete overtime, developing a culture of continuous learning and improvement has never been more critical. A recent study by the World Economic Forum found that approximately 80% of employers plan to reskill and upskill their existing workers over the next five years to work better alongside AI, while workers can expect that approximately 40% of their existing skill sets will be transformed or become outdated over the same period. The study also found that 60% of global professionals will need new skills by 2030, which we believe creates an unprecedented market opportunity for AI-powered platforms like Udemy that can deliver rapid, measurable skill development at scale.
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.
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.
Udemy has positioned itself at the forefront of AI-driven workforce transformation. With more than 5,500 courses focused on developing generative AI skills and AI-powered learning capabilities, we are uniquely positioned to help organizations navigate the reality that significant portions of their workforce will need new skills in the coming years.
Udemy’s AI-first strategy includes:
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•Learning Acceleration: AI-powered personalization that reduces time-to-competency through adaptive learning paths
•Outcome Measurement: AI-driven analytics that demonstrate tangible skill development and ROI, including career advancement and certifications
•Workflow Integration: Capabilities that embed learning directly into enterprise workflows.
Key AI innovations include:
•AI Role Play technology enabling immersive, scenario-based learning for sales, customer service, and leadership development.
•MCP server allowing enterprises to integrate Udemy’s learning platform into their internal LLMs (e.g., ChatGPT, Claude).
•AI-assisted content creation tools that enable our 90,000+ instructors to rapidly develop and update courses.
•Personalized learning paths that adapt in real-time to individual and organizational skill gaps
In 2025, we began transforming our revenue model to prioritize predictable, high-value subscription products. For the full year 2025, 72% of total revenue was derived from subscriptions, up from 66% in 2024.
Our global platform supports learners, instructors and enterprise customers. 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 290,000 free and paid courses is created by over 90,000 instructors and covers a wide range of topics, including technology, business and soft skills, and personal development. 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 its platform. Our AI capabilities now extend beyond content recommendation to include career pathway guidance and enterprise workflow integration through our MCP server.
Udemy’s marketplace addresses the evolving needs of learners across the globe by providing access to a wide range of high-quality and relevant content in local languages. Instructors around the world have created courses in 78 languages, resulting in over 40% of the courses on our platform being in non-English languages as of December 31, 2025. Our learners benefit from the local context provided by native language 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, real-time updates to their courses. On average, top courses were updated five times by top instructors on Udemy in 2025.
Udemy is powered by a flywheel effect where instructors are encouraged to create relevant, high-quality content that attracts more learners and Udemy Business customers to the platform. More learners on our platform results in a larger audience, compelling data and insights, and greater potential earnings for instructors, which in turn incentivizes more course creation and also attracts additional instructors to the platform. This flywheel resulted in an average of over 6,300 new courses added to our platform monthly during 2025. In 2025, instructors collectively earned $168 million. Udemy’s top 11 instructors each earned more than $1 million, and nearly 1,600 instructors earned more than the average annual income in their home country.
Udemy Business offers organizations access to over 33,000 of the highest rated on-demand courses from our marketplace across 16 languages, enhanced with AI-powered personalization, skills gap analysis, and outcome measurement that demonstrates tangible ROI to enterprise customers. The range and volume of our content 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.
By offering Udemy’s enterprise customers access to innovative learning tools, including AI Role Play technology, MCP server integration, Skills Mapping and AI-powered learning paths, Udemy is helping organizations build AI-ready workforces that deliver measurable business outcomes including improved employee retention, faster time-to-productivity, and increased innovation capability.
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Global learners are increasingly looking online to acquire new skills, while organizations are shifting much of their traditional offline in-person training of their workforce to more efficient online solutions for reskilling and upskilling. 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.
Recent developments
On December 17, 2025, we entered into an Agreement and Plan of Merger (as it may be amended, modified, supplemented or waived from time to time, the “Merger Agreement”) with Coursera, under which Coursera will combine with Udemy in an all-stock transaction (the “Merger”). Under the terms of the Merger Agreement, Udemy stockholders will receive 0.800 shares of common stock, par value $0.00001 per share, of Coursera (“Coursera Common Stock”) for each share of our common stock. Upon the closing of the Merger, existing Coursera stockholders are expected to own approximately 59% and existing Udemy stockholders are expected to own approximately 41% of the combined company, on a fully diluted basis.
The completion of the Merger is subject to the satisfaction of certain customary conditions set forth in the Merger Agreement, including, but not limited to: (i) adoption of the Merger Agreement by Udemy’s stockholders, (ii) approval of the issuance of the shares of Coursera Common Stock and an amendment of Coursera’s amended and restated certificate of incorporation to increase the number of authorized shares of Coursera Common Stock thereunder by Coursera’s stockholders; (iii) authorization for listing of the shares of Coursera Common Stock to be issued in the Merger on NYSE, subject to official notice of issuance; (iv) the expiration or termination of any waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) (on February 9, 2026, the Federal Trade Commission granted early termination of the waiting period under the HSR Act), and the receipt of certain other required regulatory approvals; and (v) effectiveness of the registration statement on Form S-4 for the Coursera Common Stock to be issued in the Merger. In addition, Udemy’s obligation to complete the Merger is also subject to the receipt by Udemy of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement includes certain customary termination rights for the Udemy and Coursera. Upon termination of the Merger Agreement in certain circumstances, Udemy or Coursera may be required to pay the other party a termination fee of $40.5 million.
The Merger is expected to close by the second half of 2026, subject to the satisfaction of the closing conditions.
The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 of this Annual Report on Form 10-K.
Our business model
Udemy has two symbiotic operating and reportable segments: Enterprise, or Udemy Business (66% of 2025 revenue), and Consumer, or our direct-to-consumer marketplace (34% of 2025 revenue). Udemy’s differentiated business model, compelling revenue share incentive and access to nearly 84 million learners attracts instructors from around the world. The Udemy Consumer marketplace consists of more than 290,000 courses in 78 languages. 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 28,000 of Udemy’s top-rated courses, including AI skills pathways, career specific journeys, and certification preparation programs. Udemy’s marketplace also offers approximately 28,000 free courses, which are an important source of conversion to paid enrollments.
Udemy’s global content engine powers Udemy Business with the highest-rated content from our marketplace, innovative AI-powered learning capabilities, and organic new business leads. 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 any time. 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. As of December 31, 2025, Udemy Business offers global companies annual or multi-year subscription access on a per-seat basis to a collection of more than 33,000 courses in 15 local languages, in addition to English. Udemy
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Business provides access to its platform through Team and Enterprise subscription plans and offers the ability to add on Udemy Business Pro services. Organizations looking to build leadership capabilities can separately purchase a subscription to our cohort learning development platform.
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. Our platform is purpose-built to empower instructors with data insights, AI-assisted content creation tools, and innovative technology to deliver measurable outcomes that directly support career advancement for individuals and tangible business outcomes for organizations. Our products are designed to deliver measurable incremental value, which ultimately creates upselling or expansion opportunities. Udemy generates revenue through the following product offerings:
•Per Course. Individual learners can purchase one of the more than 290,000 courses available on the Udemy marketplace to obtain lifetime access to that digital course content after enrollment. Individual course purchases also include access to interactive learning tools such as quizzes, exercises, and the ability to ask questions and engage with the instructor directly. Pricing is optimized for each individual course and by region.
•Subscriptions. Udemy Business offers seat-based subscription plans, including Team Plan, Enterprise Plan, and Leadership Academy, as well as the Udemy Business Pro add-on service. Udemy Business subscription plans are offered as annual and multi-year subscriptions with pricing based on volume and functionality. Individual learners can purchase a monthly or annual Personal Plan subscription with access to more than 28,000 courses across hundreds of professional and personal skills, AI-powered career pathways, and certification preparation programs. Monthly and annual Personal Plan subscription pricing vary by region.
•Professional Services. Udemy Business customers may elect to engage us to provide professional services that support the cohort learning experience, as well as learning architecture development and skills mapping.
•AI Transformation Packages: In 2025, Udemy launched specialized AI-specific enterprise packages including an AI Readiness program designed to bring entire organizations up to AI fluency, and an AI Growth program that delivers advanced training for technical teams and leadership.
Consumer
Udemy’s direct-to-consumer marketplace, which is a destination for on-demand content taught by expert instructors in their respective fields. Our platform is designed to meet the needs of our audience of more than 84 million learners and over 90,000 instructors that come to us for professional and personal skills development. Our global marketplace serves as a testing ground for content before the best - as determined by learner ratings and reviews - are selected for inclusion in the Udemy Business portfolio. It also serves as an organic lead generation channel.
Udemy analyzes platform data to better understand learners' needs and deliver personalized recommendations for the best courses and learning paths. Learners can access content from numerous local experts from around the world and in their preferred language. Udemy provides a comprehensive and immersive learning experience through tests, Q&As, and other interactive activities.
In 2025, we transformed our consumer business with a subscription-first strategy that delivers superior outcomes for learners and improved unit economics for Udemy. When subscribed to a Personal Plan, an individual learner will have unlimited access to the curated subscription content during the subscription term, including immersive learning experiences such as Role Play scenarios, practice tests, certification pathways and coding exercises.
Udemy Business
Global organizations recognize the need for upskilling and reskilling capabilities to ensure their workforce is agile, resilient and competitive in a rapidly changing environment. Many business leaders around the world believe the need for new skills is their largest business challenge and, for employees, opportunities for development have become an important factor that determines workplace satisfaction. Hybrid work, distributed teams and the rapid pace of change mean organizations can no longer rely on in-person training alone. As a result, organizations must leverage digital and hybrid learning experiences to scale skills acquisition. Our go-to-
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market approach is focused on understanding our customers’ business needs and developing learning strategies so they can achieve organizational goals. We build deep, trusted customer relationships at all levels with a specific focus on the C-suite, and our engagements support AI-powered upskilling and reskilling that deliver measurable business outcomes across hybrid and remote 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 continue to make investments in our global partner ecosystem and technology integrations to support direct and indirect revenue channels that help enable us to scale with agility across the global marketplace while delivering meaningful ROI to enterprise customers.
Udemy has curated more than 33,000 of the most highly-rated and relevant courses for in-demand skills from its extensive content collection on its marketplace to meet the needs of its Udemy Business customers in over 150 countries. Udemy Business features collections in 15 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. 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.
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 learner questions. We regularly review courses in the Udemy Business collection to ensure ratings consistently stay above a certain threshold and the topics are still relevant. Content that does not meet strict quality requirements will be removed from the Udemy Business collection.
When an instructor’s course is added to the Udemy Business collection, instructors are required to agree, subject to limited exceptions, to exclusivity, which prevents them from offering 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. This exclusivity clause remains in effect for so long as an instructor’s content is included in the Udemy Business collection, and we may continue to include content in the Udemy Business collection for up to 12 months after an instructor elects to opt out. We believe these exclusivity arrangements increase the value of our offerings by increasing the amount of unique content on Udemy and helping maintain our robust roster of expert instructors.
Udemy Business subscription plans include on-demand access to the curated course library, analytics, and learning path management. 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. Teams of up to 20 people can purchase Team Plan, which is a self-serve, subscription service. Team Plan is designed for teams or organizations who are in need of on-demand learning and development at work to reskill and upskill. With a subscription to Team Plan, subscribers get access to a selection of courses included in the Udemy Business collection, certification prep for more than 200 exams, practice tests, AI-powered coding exercises, goal-focused recommendations and analytics.
•Enterprise Plan. Organizations can purchase Enterprise Plan, which offers a vast collection of more than 33,000 high-quality courses. Enterprise plan includes the same features as Team Plan, but also includes additional features such as a dedicated customer success team, 15 non-English course collections, customizable content, and advanced analytics. Using the product’s reporting and analytics tools, organizations can easily view engagement, user activity, identify skills gaps and skill insights, including industry benchmarking, to assess Return on Investment, or ROI. Enterprise plans are offered as annual and multi-year subscriptions with pricing based on volume, contract length and functionality.
•Udemy Business Pro. 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 volume and contract length.
•Leadership Academy. Organizations looking to build leadership capabilities can purchase our cohort-based leadership development platform, which enables teams to learn together through an instructor-
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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.
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. Over time, we have been successful in retaining and expanding our customer relationships.
Customer success and expansion
The success and satisfaction of our customers is our North Star for Udemy. Today, most global companies are experiencing massive organizational change and are looking for a strong partner to help them navigate that change and achieve their desired business outcomes. Companies around the world are in the midst of 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, accelerated by generative AI. 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. 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 outcomes. 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 customers based on their specific needs as determined by their organizational size and complexity:
•Self-serve. A fully digital success experience for organizations utilizing our Team Plan product. This model delivers support and guidance through digital channels, customer marketing, the product and technology such as generative AI.
•Tech First. A digital first success experience for customers with smaller licensing requirements and less complex structures. Support and guidance are proactively delivered via digital channels throughout the customer journey, and direct reactive support is available from the customer success team at the customer’s request.
•Mid Touch. A blended success experience where a combination of digital and human success models are deployed to deliver outcomes for customers. This model involves a combination of data-driven journey automation and success management where a dedicated customer success manager will proactively engage based on the customer’s needs.
•High Touch Managed Service. A full service dedicated customer success management for customers who have more complex requirements. A dedicated customer success manager will proactively work with the customer over the lifetime of the relationship. The customer success manager will be deeply engaged with the customer on an ongoing basis.
In addition to each customer being assigned a Customer Success representative, we also provide specialized support for key customer needs.
•Renewals. Manage the customer renewal journey, making sure we optimize the renewal event for both Udemy and the customer.
•Professional Services. Multiple centers of excellence with services that support the delivery of our cohort learning experience as well as high-touch engagements such as learning architecture and content mapping.
•Customer Support. Self-service and global agents to assist with inquiries from all Udemy Business seat holders.
Our ability to attract, retain and expand revenue from our Udemy Business customers is demonstrated by our Net Dollar Retention Rate (“NDRR”). As of December 31, 2025, Udemy Business NDRR was 93%, and NDRR for Udemy Business customers with at least 1,000 employees, or Udemy Business Large Customer NDRR, was 97%. This level of retention demonstrates the potential for consistent expanded growth within the existing
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Udemy Business customer base. To date, customer expansion has been primarily driven by seat expansion, although new product adoption is becoming a more meaningful driver.
Partnerships
Partnerships are a key element of Udemy’s long-term growth strategy. 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 differentiated localized content 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. In some cases where we do not have localized content, we implement our high-touch partnership model to leverage a key local brand to help develop our content collection and to establish a local language version of Udemy Business once the collection meets our high-quality criteria. In 2025, 66% 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.
In addition, 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. In 2025, Udemy partnered with Emtrain, a leading provider of skills-based compliance training, to provide Udemy Business enterprise customers access to the company’s extensive compliance and workplace culture training content, creating a robust workforce enablement solution.
As part of Udemy’s initiative to focus the consumer marketplace on career driven outcomes, we partnered with Indeed, a leading global job site, to create a seamless career pathway, empowering professionals to build in-demand skills to successfully secure top job opportunities.
Additionally, customers need data integrations in order to assess ROI, adoption and other key metrics. Udemy’s open nature, platform services focus and APIs, enable us to build a robust integration ecosystem that supports our customers’ ability to get the most out of their software investments and investments in learning. In 2025, Udemy announced a partnership with Workera, a leading AI-powered skills verification platform, which will provide organizations with a unified, data-driven way to understand workforce capabilities, identify skill gaps, and demonstrate the impact of targeted learning at scale.
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”), such as Cornerstone OnDemand, Degreed, ServiceNow and Workday.
Our growth strategies
We are pursuing the following strategies to generate long-term sustainable growth for our business:
Accelerate growth by focusing upmarket and on key verticals. Enterprise customers represents the greatest growth potential for Udemy given the wider range of use cases and land-and-expand opportunities. Large enterprise customers, defined as those with at least 1,000 employees, represented approximately 74% of Udemy Business revenue during the fiscal year ended December 31, 2025, and the cohort is growing at a significantly faster rate than the SMB cohort. Historically, Udemy has executed successfully in this cohort, with stronger pipeline build, larger deal sizes, higher retention, more upsell opportunities, and better unit economics. With nearly 5,800 enterprise customers in this cohort, Udemy has barely penetrated the global addressable market opportunity of enterprises worldwide. Udemy’s enterprise solutions targeting AI and digital transformation needs have been particularly successful in financial services, technology, and manufacturing verticals where AI adoption is accelerating.
Increase Udemy Business penetration through a land-and-expand strategy. Our strategy focuses on acquiring new customers and efficiently growing our relationships with existing customers. 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 existing Udemy Business customer base worldwide as of the end of 2025, 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. In 2025, we expanded our enterprise offerings to include additional SKUs beyond our core offering, including AI Readiness and AI Growth
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Collections designed to develop comprehensive AI fluency, creating new opportunities for seat expansion across an organization.
Continue international expansion and localization. Udemy is accessible in more than 180 countries with courses in 78 languages. As the content collection expands in each country, we typically invest in additional growth levers such as local payment methods, local currency pricing and local marketing. For example, in 2025 we launched our platform in Arabic, enabling organizations and professionals across key Middle East and North Africa regions to upskill and reskill in high-growth, emerging roles. These investments drive higher traffic, enrollments and revenue for our direct-to-consumer business, as well as leads for Udemy Business. 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. We believe 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.
Launch innovative products that drive measurable learning outcomes and increased retention. We are investing in the platform and leveraging technology such as generative AI to:
•drive measurable learner outcomes;
•deliver more personalized learning experiences;
•improve our instructors’ ability to create content more efficiently;
•improve our ability to support learners through career-oriented learning journeys; and
•improve our ability to support organizations and their need to upskill and reskill their workforces efficiently, including leadership needs and cohort-based offerings.
Increase overall Udemy brand awareness. We are continuing to invest in growing brand awareness globally to position Udemy as a leader in AI-powered skills development. 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. 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 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. 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 enrollments.
Pursue strategic acquisitions. 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 the learner experience and customer outcomes and ultimately increasing new customer acquisition and retention.
Competition
The market for developing skills is rapidly growing and highly fragmented. Organizations are increasingly seeking comprehensive platforms that can deliver measurable skill development at scale rather than bundling multiple point solutions. The competitive landscape continued to evolve in 2025, with traditional e-learning providers introducing AI capabilities and extending their focus into workforce development, as well as technology giants expanding their learning solutions. Participants in this market can include corporate training offerings, direct-to-consumer training offerings, specialized content training offerings, and providers of online free resources. Increasingly, we also face competition from large language models (“LLMs”) and other generative AI offerings that can provide on-demand, conversational responses to user queries, generate customized learning content, or aggregate and summarize educational materials, including general purpose AI offerings as well as those tailored to the skills development markets in which we compete.
We compete for individual learners, Udemy Business customers and instructors on the following basis:
Learners: We compete for learners based on our content, instructors, learning tools and localization. Our AI-powered personalization, career pathways, and certification partnerships create competitive advantages in delivering measurable career advancement outcomes.
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Udemy Business customers: We compete for enterprise customers based on our high-quality, engaging and relevant content, the breadth and depth of that content across the full range of core business functions and advanced product features that optimize self-paced learning and enable organizations to effectively drive programmatic learning. We believe that we are positioned favorably because of 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, acquisition of certifications and increased productivity.
Instructors: We compete for instructors based on our ability to provide monetization opportunities and tools to enable instructors to create differentiated content to meet the needs of millions of global learners. We believe that we are positioned favorably because of our ability to attract learners across the globe, provide data and insights to help instructors enhance content to retain learners, and offer an attractive shared revenue model.
Our competitive advantages
Udemy’s platform offers a comprehensive suite of skills development tools required to support learners and organizations in achieving their career goals and business outcomes, respectively. We believe our operating model benefits from several competitive advantages:
Comprehensive global content marketplace. We provide access to over 290,000 courses, including over 122,000 non-English language courses, and 5,500 courses focused on AI skills. This extensive library covers a broad range of topics, including technical skills, business and soft skills, and personal development. Many of our competitors specialize in a specific category, which is not effective for companies and their employees that require a blend of technical, business and soft skills. We have effectively built a creator platform that allows instructors to develop content on virtually any topic, while having the flexibility to update courses to keep up with the pace of change and based on feedback from millions of learners around the world. Our AI-powered content creation tools enable instructors to rapidly develop and update courses, giving us an advantage in providing the most current content on emerging technologies, particularly in AI skills. On average, our instructors publish more than 6,300 courses a month on our platform.
High-quality, relevant and up-to-date content. Udemy’s differentiated feedback loop between learners and instructors ensures that we are able to maintain the high-quality courses on in-demand topics to meet the needs of learners. Our marketplace model motivates instructors to provide high-quality content to learners quickly, whether by being first to address in-demand topics, refreshing existing topics, or finding new and better ways to serve the learner community on existing topics. We believe this incentive model helps drive our instructors to update their courses at a much higher rate than courses offered via a traditional publisher model. Rather than being subject to the “top down” review cycle of multiple editors inherent to traditional publishing, our model removes these publisher barriers to enable a flywheel of instructor content creation, engagement, and continuous content optimization. This regularly updated content, along with personalized recommendations and advanced search capabilities, presents a better value proposition for learners who benefit from accessing the most up-to-date, high-quality content that is relevant to their individual needs. Our marketplace model allows us to provide the freshest technical content that is able to keep up with the pace of innovation, providing the content needed to support organizations undergoing digital transformation efforts. We also regularly remove courses that fall below our ratings guidelines or are receiving limited engagement from learners.
Global instructor network. Udemy has a network of more than 90,000 global instructors. Instructors come to Udemy because of our scale and attractive revenue share model. Our massive audience provides us with a significant amount of learner data and incentive for instructors to come to our platform. 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. In 2025, our instructors earned $168 million and published an average of more than 6,300 courses per month.
Global distribution and reach. Our platform connects individual learners and enterprise customers with instructors across the world. In 2025, 61% of our revenue was generated outside of North America, and 85% of marketplace traffic originated from outside of the United States. We have courses in 78 languages on our marketplace. For Udemy Business, we have courses in English and 15 other local languages and customers in more than 150 countries. Having local language experts creating locally relevant content is a key differentiator for Udemy. As learners and organizations in a new geography begin to engage with us, we then have the opportunity to quickly and efficiently expand our global footprint by focusing our marketing, advertising, pricing, and language customization resources and expanding our payment options, which allows us to grow our base of individual learners and enterprises and attract new instructors who create native language courses.
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Powerful network effects. Udemy is one symbiotic, data-centric platform. The growing number of individual learners and enterprises on our AI-powered platform attracts more instructors with diverse experiences and backgrounds to create content for in-demand topics and update existing courses. The increasing number of relevant, high-quality and up-to-date courses attracts more individual learners and enterprises. The volume and frequency of these interactions allow us to generate meaningful insights and provide real-time feedback and data and analytics for our enterprise customers and instructors. These data insights improve content quality, enhance course personalization, and optimize productivity and satisfaction for our learners.
Powerful data insights and analytics. During 2025, we had an average of 40 million monthly unique visitors, and, through the end of 2025, we’ve had over 1 billion cumulative course enrollments since inception. 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. We leverage that data to provide personalized course recommendations and learning paths. We also analyze enrollment data, market insights and feedback from learners to identify needed skills or new topics of focus within our content collection and share this information with our instructors so they can continuously improve their course offerings in real time.
Flexible technology platform. We have built our technology to be flexible to enable us to continuously test and add new features, such as interactive exercises and immersive learning experiences. Our technology platform is modern, agile, and accessible from a variety of online and mobile channels. Collecting and analyzing billions of data points helps our data scientists recommend better and more relevant content. 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. 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. Our massive and growing network of instructors, learners and organizations enables us to create significant value for all customers. Our instructors create fresh, relevant content for our learners and organizations, including immersive learning experiences. Instructors are able to monetize their knowledge and receive learner feedback on their content. That data and insights allow us to experiment and iterate on our product. Organizations are empowered to upskill and reskill employees with our learning content, which can be integrated into the flow of work through our MCP server. Udemy leverages generative AI to enable more personalized learning experiences, such as our Role Play simulations, and provides valuable data and strategic insights related to employee’s learning trends, skills acquisition and progress toward goals.
Comprehensive learning. 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 on-demand videos, hands-on practice and assessments. Learners can focus on career and occupational areas of their choice. Udemy leverages AI to produce curated learning paths focused on key domains and skill sets. We also allow organizations to author their own custom learning paths.
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. This foundation fosters innovation across the customer experience and opens the door to faster, more efficient timelines to scale our offerings. It powers our first-party applications that include our customer-facing Udemy.com website, our Udemy Business web experience, our native mobile applications and new experiences. This approach also supports an expanding set of third-party ecosystem integrations, through industry standard interoperability with learning management systems and learning experience platforms, as well as other key business systems and tools. Our MCP server enables seamless integration between Udemy's learning platform and enterprise LLM systems, allowing organizations to embed learning directly into their workflows and technology stacks.
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Powerful data. 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. This helps learners know the skills needed to achieve their goals, including demonstration of skills proficiency through validation and certification. And for organizations, we are able to share powerful insights to help them achieve their goals and assess ROI. Our platform’s ability to provide a personalized experience is further enhanced by the machine learning methodologies used to develop the algorithms included in our technology, which allow us to personalize each learner’s experience.
Pricing optimization. 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 and update existing content. We have built a global pricing engine that allows anyone to have access to our products at prices adjusted to the local purchase power parity in the local currency and using payment methods they are familiar with. This powers the global dynamics of our marketplace, promoting strong learner conversion that fuels Udemy’s global pipeline. We routinely adjust our algorithm to attain prices based on a variety of factors, with an ultimate goal of increasing conversion to paid enrollment. These algorithms use dozens of course characteristics, such as content category, length of course, average course rating, and topic popularity to determine the most effective price for each course on a per country basis.
We have a cross-functional, agile team of data scientists, machine-learning engineers, software engineers, and product managers focused on continuously improving our platform to address evolving customer needs. 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.
Our market opportunity
Before 2020, the majority of corporate training occurred offline. With the increase of internet connectivity, technological advances, work-from-home flexibility and interactive tools at a low cost, we expect to see a continued acceleration of the shift from offline to online. We believe that online education is well-positioned to address the scalability and affordability limitations that offline education presents.
There are several macro trends that are driving the growth in online education, specifically the increasing shift of organizations around the world to skills-based talent management practices and the rapid development of digital transformation as more professional jobs are impacted by generative AI, automation and technology. In addition, there is a growing need to offer cost-effective, flexible and personalized training to allow employees to learn at their own pace as more companies offer remote and hybrid positions and strive to create a culture of continuous learning.
Our sales and marketing approach
We have built a data and technology-driven marketing engine that allows us to acquire learners across the globe efficiently. We have integrated our data flows with key marketing platforms to make near real-time decisions on bidding and targeting. We have also developed predictive lifetime value models that allow us to identify and acquire the most valuable learners. This engine allows us to be in control of our cost of acquisition, to grow customer lifetime values and manage our budgets to hit our ROI goals, while being flexible to adapt in real time to external trends and factors.
Our marketing strategy focuses on brand, account based and performance marketing, strategic partnerships and lifecycle monetization. In 2024, we entered into a multi-year partnership with McLaren Racing to become their Official Learning and Skills Partner and to build brand awareness among McLaren’s global fan base while showing the power of bringing a skills focus to the workplace.
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. Global instructors learn about Udemy in a variety of ways including awareness campaigns and by coming to the platform as learners.
We have approximately 28,000 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. Once learners interact with our platform, our
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machine-learning algorithms recommend courses for learners to purchase based on topic, quality, instructor rating, number of enrollments, learner’s country of origin and more. The algorithms help us drive customer conversion, maximizing revenue while offering the best experience and value to learners.
With only 15% of Udemy's traffic coming from the U.S., we are focused on ensuring that our marketing speaks to local audiences around the world. Our design communications and production capabilities allow us to produce creatives that, while anchored on our global brand, also adapt to the cultural norms of the countries we advertise in. We leverage our global infrastructure to produce assets at scale and work with local language experts and native marketers to make the necessary adaptations for each country.
Go-to-market strategy
We sell to our Udemy Business customers both directly, through our sales teams, and indirectly, through third-party channels. 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, which can ultimately lead to customer expansions and upsells.
Seasonality
Historically, we have received a higher volume of orders from new and existing Udemy Business customers in the fourth quarter of each year as a result of industry buying patterns. We recognize revenue from Udemy Business subscription bookings over the life of the contract. We also have traditionally seen increased bookings in the Consumer segment as the result of various holiday promotions offered in the fourth quarter. We recognize revenue for consumer individual course purchases over an estimated service period of four months, while revenue for consumer subscriptions is recognized over the corresponding subscription term. 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. In addition, as we direct more consumer customers toward annual subscription products, a meaningful portion of that revenue will be deferred to future periods. We believe this short-term impact is the right trade-off for building a more predictable, higher-value business that better serves our learners’ long-term success. For more information, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Intellectual property
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.
As of December 31, 2025, we held 6 registered trademarks in the United States and 48 registered trademarks in foreign jurisdictions, which have various expiration dates between 2026 and 2036, and we also held 3 registered patents in the United States, with various expiration dates between 2037 and 2038. We also have common law rights in some trademarks and pending trademark applications in the United States and foreign jurisdictions. In addition, we have registered domain names for websites that we use in our business, such as www.udemy.com and some other variations.
Although we rely on intellectual property rights, including patents, copyrights, trademarks and trade secrets, as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, creation of new services, features and functionality, and frequent enhancements to our platform are more essential to establishing and maintaining our technology leadership position.
Human capital resources
Our employees are our greatest asset. We believe we have a world-class culture with employees committed to redefining the future of work through a skills based approach and continuous learning. In addition, we invest in areas to help us attract and retain top talent that support our core values. On top of competitive health and retirement benefits, we offer WholeU benefits, a comprehensive suite to care for employees’ emotional, physical, and financial well-being.
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We are proud of our internal focus on learning and development and leverage the Udemy Business platform to drive upskilling and career growth within our organization. Due to these efforts, 95% of employees spent time learning on our platform during the fiscal year ended December 31, 2025. Employees from around the globe participated in our Leader Development programs, including MentorU, Udemy Manager, Invested Leader and Leadership Coaching.
As of December 31, 2025, we had 1,380 full-time employees. None of our employees are represented by unions. We consider the relationship with our employees to be strong and have not experienced interruptions of operations due to labor disagreements.
Environmental, social, and governance (ESG)
At Udemy, we are committed to operating responsibly and sustainably to create long-term value for all stakeholders. Our ESG efforts reflect our dedication to addressing the evolving needs of our customers, employees, shareholders, and the communities in which we operate.
Our ESG priorities are informed by feedback from stakeholders, alignment with recognized frameworks and standards, and an ongoing assessment of the risks and opportunities most relevant to our business. We remain committed to continuous improvement and transparent reporting as we work toward achieving our sustainability goals.
Additional information
We make available free of charge through our investor relations website, investors.udemy.com, our annual reports, quarterly reports, current reports, proxy statements and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished with the SEC. These reports may also be obtained without charge by contacting Investor Relations, Udemy, Inc., 600 Harrison Street, 3rd Floor, San Francisco, California 94107, e-mail: ir@udemy.com. Our Internet website and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding reports that we file or furnish electronically with them at www.sec.gov.
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Item 1A. Risk Factors
Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should carefully consider the following risks, together with all of the other information contained in this Form 10-K, including the sections titled “Special Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this Form 10-K. Any of the following risks could have an adverse effect on our business, financial condition, operating results, or prospects and could cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. Our business, financial condition, operating results, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. Our risk factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.
Risks related to our proposed merger with Coursera
The pendency of the Merger, or the failure to complete the Merger in a timely manner or at all, could adversely affect our business, financial condition, results of operations and stock price.
On December 17, 2025, we entered into the Merger Agreement. The completion of the Merger is subject to the satisfaction of certain conditions set forth in the Merger Agreement, including, but not limited to: (i) adoption of the Merger Agreement by Udemy’s stockholders, (ii) approval of the issuance of the shares of Coursera Common Stock and an amendment of Coursera’s amended and restated certificate of incorporation to increase the number of authorized shares of Coursera Common Stock thereunder by Coursera’s stockholders; (iii) authorization for listing of the shares of Coursera Common Stock to be issued in the Merger on NYSE, subject to official notice of issuance; (iv) the expiration or termination of any waiting period applicable to the Merger under the HSR Act (on February 9, 2026, the Federal Trade Commission granted early termination of the waiting period under the HSR Act), and the receipt of certain other required regulatory approvals; and (v) effectiveness of the registration statement on Form S-4 for the Coursera Common Stock to be issued in the Merger. In addition, Udemy’s obligation to complete the Merger is also subject to the receipt by Udemy of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. There is no assurance that these conditions to closing the Merger will be satisfied before the Termination Date (as defined in the Merger Agreement) or at all, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all.
Additionally, the Merger may be delayed, and may ultimately not be completed, due to a number of factors, including failure to obtain any of the approvals, clearances or other conditions described in (i)-(v) above.
If the Merger does not close, we may suffer other consequences that could adversely affect our business, financial condition, results of operations and stock price, and our stockholders could be exposed to additional risks, including:
•to the extent the current market price of our common stock reflects the assumption that the Merger will be completed, the market price of our common stock could decrease if the Merger is not completed;
•investor confidence in us could decline, relationships with existing and prospective customers, investors, lenders and other business partners may be adversely impacted and we may be unable to retain key personnel if the Merger is not completed;
•the diversion of management time from ongoing business operations and opportunities as a result of the Merger; and
•the termination of the Merger under certain circumstances could require us to pay a termination fee of $40.5 million or an expense reimbursement payment of $8 million to Coursera.
Even if successfully completed, there are certain risks to our stockholders from the Merger, including:
•that, because the Exchange Ratio (as defined below) is fixed and because the market prices of Coursera Common Stock and our common stock will fluctuate, our stockholders cannot be certain of the market value of the consideration they will receive in the Merger or the difference between the market value of such consideration and the market value of our common stock immediately prior to the Merger;
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•that if the Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, our stockholders may be required to pay substantial U.S. federal income taxes in connection with the Merger;
•risks inherent to owning shares of Coursera Common Stock, including relating to Coursera’s status as a Delaware public benefit corporation; and
•if the Merger is completed, our stockholders will forego the opportunity to realize the potential long-term value of the successful execution of our strategy as an independent company before the Merger.
While the Merger is pending, we are subject to business uncertainties and contractual restrictions that could harm our business relationships, financial condition and results of operations.
During the period prior to the closing of the Merger and pursuant to the terms of the Merger Agreement, our business is exposed to certain inherent risks and contractual restrictions that could harm our business relationships, financial condition, results of operations, and business, including:
•our ability to continue to develop and protect our brand and reputation;
•our ability to successfully develop, launch, maintain, and scale new programs, offerings and features, including artificial intelligence;
•potential uncertainty in the market for our products and services, which could lead current and prospective customers to purchase products and services from other providers or delay purchasing from us;
•risks relating to our relationships with employees and business partners, as described below;
•our inability to freely issue securities, incur certain indebtedness, declare or authorize dividends or distributions or make certain material capital expenditures without Coursera’s approval;
•our inability to solicit other acquisition proposals during the pendency of the Merger under the terms of the Merger Agreement;
•the costs, fees, expenses and charges related to the Merger Agreement and the Merger, including but not limited to the cost of professional services, insurance, regulatory compliance and litigation; and
•other developments beyond our control, including, but not limited to, natural and man-made disasters; civil unrest, pandemics, and conditions that may result from legislative, regulatory, trade and policy changes.
If any of these effects were to occur, it could adversely impact our business, cash flow, results of operations or financial condition, as well as the market price of our common stock and our perceived value, regardless of whether the Merger is completed.
Litigation relating to the Merger, if any, could result in an injunction preventing the completion of the Merger and/or substantial costs
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements like the Merger Agreement. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Coursera’s and our respective liquidity and financial condition. Lawsuits that may be brought against Coursera, Udemy or their respective directors could also seek, among other things, injunctive relief or other equitable relief, including a request to rescind parts of the Merger Agreement already implemented and to otherwise enjoin the parties from consummating the Merger. One of the conditions to the closing of the Merger is that no injunction issued by a governmental entity of competent jurisdiction shall be in effect and no law shall have been enacted by any governmental entity of competent jurisdiction which prohibits or makes illegal the consummation of the Merger. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, that injunction may delay or prevent the Merger from being completed within the expected timeframe or at all, which may adversely affect Coursera’s and Udemy’s respective businesses, financial condition, cash flows and results of operations. In addition, either Coursera or Udemy may terminate the Merger Agreement if any governmental entity of competent jurisdiction has issued a final order permanently enjoining or preventing the Merger, so long as Coursera’s (in the case of a termination by Coursera) or Udemy’s
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(in the case of a termination by Udemy) failure to fulfill any obligation under the Merger Agreement has not been a principal cause of the order.
As a result of the Merger, our current and prospective employees could experience uncertainty about their future with us or the combined company following the Merger, and as a result, key employees may depart.
As a result of the Merger, our current and prospective employees could experience uncertainty about their future with us or the combined company following the Merger, or decide that they do not want to continue their employment following the completion of the Merger. As a result, key employees may depart. Losses of officers or employees could materially harm our business, results of operations and financial condition. Such adverse effects could also be exacerbated by a delay in the completion of the Merger for any reason, including delays associated with obtaining requisite regulatory approvals. On the other hand, we may experience challenges in hiring and retaining new employees because of uncertainty or other conditions associated with the pendency or termination of the Merger, which could materially harm our business, results of operations and financial condition.
As a result of the pending Merger, certain learners, instructors, UB customers and other business partners may decide not to do business with us or change their relationship with us.
As a result of the pending Merger, certain of our learners and UB customers may decide to discontinue purchasing our products and services or reduce the amount they spend or commit to spend on our products and services due to uncertainties related to the Merger, such as unpredictability as to if and when the closing of the Merger will occur and perceived uncertainty as to the impact of the Merger on their relationship with us. Additionally, our relationships with instructors and business partners could be affected and such instructors and business partners could seek changes to their existing relationships with us. These decisions could materially harm our business, results of operations and financial condition.
For more information on risks relating to the proposed Merger, we encourage you to review the risk factors that will be included in the forthcoming joint proxy statement/prospectus to be filed with the SEC by Udemy and Coursera in connection with each party’s stockholder approvals relating to the Merger.
Risks related to our business and operations
We have a history of losses, and we may not be able to generate sufficient revenue to increase or sustain profitability in the future.
We reported net income (loss) of $3.8 million, $(85.3) million, and $(107.3) million during the fiscal years ended December 31, 2025, 2024, and 2023, respectively, and, as of December 31, 2025, we had an accumulated deficit of $801.2 million. We may incur losses in the near-term as we continue to make targeted investments towards growing our business and operating as a public company. We have invested, and expect to continue to invest, substantial financial and other resources in developing our platform, including expanding our platform offerings, developing or acquiring new platform features and services, expanding into new markets and geographies, and increasing our sales and marketing efforts. These expenditures may make achieving and maintaining profitability more difficult, and these efforts may also be more costly than we expect and may not result in increased revenue or growth in our business.
We have undertaken, and are continuing to undertake, measures intended to accelerate our operational efficiency and position our company for long-term profitability. However, we cannot guarantee that these measures will be successful. We may experience delays or unanticipated costs in implementing these measures, which could prevent the timely or full realization of the anticipated benefits. Even if we successfully execute on our operational efficiency measures, these measures may not be sufficient to ensure our investments and other expenses keep pace with our revenue.
As a result, we can provide no assurance as to whether we can increase or sustain profitability in the future. If we are not able to do so, the value of our company and our common stock could decline significantly, and you could lose some or all of your investment.
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We operate in an emerging and dynamic market, which makes it difficult to evaluate our prospects and future results of operations.
The market for online learning solutions is relatively new and continues to evolve rapidly. These factors may make it difficult to accurately assess our future prospects and the risks, challenges, and uncertainties that we may encounter. These uncertainties include:
•maintaining and increasing a base of learners, instructors, and UB customers using our platform;
•successfully competing with existing and future participants in the market for online learning solutions;
•successfully expanding our business in existing markets and entering new markets and geographies;
•anticipating and responding to market and broader economic conditions;
•avoiding interruptions or disruptions in the service of our platform;
•accurately forecasting our revenue and operating expenses on a quarterly and annual basis;
•maintaining and enhancing the value of our reputation and brand;
•attracting, hiring, and retaining qualified personnel to manage our operations and further develop our platform;
•effectively managing growth in our operations, including personnel; and
•successfully implementing and executing our business strategies.
Additionally, because we operate in a rapidly evolving market, any predictions about our future revenue and expenses may not be as accurate as they would be if we operated in a more established and predictable market. We have encountered in the past, and will encounter in the future, risks, challenges, and uncertainties frequently experienced by companies operating in emerging markets. If our assumptions regarding any of these risks, challenges, or uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address them successfully, our results of operations could differ materially from our expectations and our business, financial condition, and results of operations could be adversely affected.
Our results of operations may fluctuate significantly from period to period due to a wide range of factors, which makes our future results difficult to predict.
Our results of operations have historically varied from period to period, and we expect that our results of operations will continue to vary significantly from quarter to quarter and year to year because of a variety of factors, many of which are outside of our control. As a result, comparing our results of operations on a period-to-period basis may not be meaningful. Factors that may contribute to the variability of our quarterly and annual results include, but are not limited to:
•the Merger, the pendency of the Merger, or the failure to complete the Merger;
•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 and manage the risks associated with doing so;
•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;
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•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;
•actual or anticipated changes in international trade policies, including those resulting from tariffs, trade barriers and other trade regulations, as well as the actual or anticipated effect of such policies on us and our customers;
•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 ongoing conflicts in the Middle East;
•the impact of actual or anticipated public health emergencies, such as an outbreak of an epidemic or pandemic;
•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
•changes in our tax rates or exposure to additional tax liabilities.
The unpredictability of our results of operations could cause our results to vary from period to period or to fall below our public guidance or the expectations of analysts and investors for a given period, which will adversely affect our business, financial condition, and results of operations.
Our growth may not be sustainable and depends on our ability to attract new learners, instructors, and organizations and retain existing ones.
Our success depends, in part, on growing the number of learners and instructors engaging with 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. This dynamic marketplace model takes time to build and may grow at a slower pace than we expect. In addition, although the number of individual and UB learners and instructors engaging with our platform has grown in recent years, there can be no assurance that this growth will continue. For example, there is significant uncertainty regarding the adoption and growth of remote, online and asynchronous learning and training, as well as skills-based learning, compared to the traditional models of education and training, which may adversely affect demand for our platform. We have also experienced elongated sales cycles for our UB offerings as a result of what we believe to be budget tightening as a result of economic uncertainty. Additionally, our average sales cycle may lengthen as we focus more on our UB Large Customers, which we define as companies with at least 1,000 employees, and which tend to have longer procurement processes than smaller customers. If we fail to grow or maintain the number of learners and instructors engaging with our platform, the value of our platform will diminish and our revenue will decline.
We believe that many of our new learners find us by word of mouth and other non-paid referrals from existing learners. If existing learners do not find our platform or its content appealing and engaging, whether because of a negative experience with, declining interest in or relevancy of the content, they may stop referring others to us. In turn, if instructors perceive that our platform lacks an adequate learner audience, instructors may be less
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willing to provide content for our platform, and the experience of learners could be further negatively impacted. 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.
In addition, the costs associated with retaining learners and instructors are substantially lower than those associated with acquiring new learners and instructors. As a result, if we are unable to retain existing learners and instructors, even if such losses are offset by an increase in revenue resulting from new learners and instructors, it could harm our growth prospects and have a material adverse effect on our business, financial condition, and results of operations.
Our platform relies on a limited number of instructors who create a significant portion of the most popular content on our platform, and the loss of these instructor relationships could adversely affect our business, financial condition, and results of operations.
We strive to build meaningful connections with instructors, ranging from those that are well known and have created extensively to those that have just begun the process of creating courses. As of December 31, 2025, we had relationships with more than 91,000 instructors. 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 consequently a significant portion of our revenue—is attributable to a limited number of our instructors. Instructors may unpublish content or choose to leave the Udemy platform altogether, subject to certain contractual limitations, for a variety of reasons. For example, in November 2023 we announced changes to our instructor revenue share model, which changes became fully effective in January 2026; these changes, together with any future changes we may announce in the future, could result in instructor attrition. Although we do not believe the loss of any one instructor would materially impact our business, significant attrition by multiple instructors, as well as any failure to attract additional instructors or source replacement content as needed, could adversely affect our ability to provide high-quality, engaging, and relevant content for one or more subject matters, slow the pace at which we provide such content, and reduce the attractiveness of our platform to learners and customers, any of which could negatively impact our business, financial condition, and results of operations.
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 66%, 63%, and 58% of total revenue during the fiscal years ended December 31, 2025, 2024, and 2023 respectively. We believe that our future success depends, in part, on our ability to grow this offering, both by retaining and expanding our relationship with existing customers and attracting new customers. Many customers initially use our platform within specific groups or departments within their organizations, or for specific use cases. 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. Customers may decide not to renew their subscriptions with a similar contract period, at the same prices and terms, with the same or a greater number of users, or at all. It is difficult to accurately predict whether we will have future success in retaining customers or expanding our relationships with them. We have experienced significant growth in the number of customers subscribing to our UB offerings, but we do not know whether we will continue to achieve similar growth, or achieve any growth at all, in the future. 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, customers’ spending levels, sufficient adoption of our platform by our customers’ constituents, and customers’ satisfaction with 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.
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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. We compete for learners, enterprise customers, and instructors:
•Learners: We compete for learners based on our course collection, instructors, and learning tools (including AI-powered features).
•UB customers: We compete for customers based on our up-to-date content, the breadth and depth of that content across the full range of core business functions, and advanced product features and integrations that optimize self-paced learning and enable organizations to effectively drive programmatic learning.
•Instructors: We compete for instructors based on our ability to promote monetization opportunities.
Our competition includes corporate training offerings, direct-to-consumer training offerings, specialized content training offerings, and free online resources used to gather and share knowledge and skills. Increasingly, we also face competition from large language models (“LLMs”) and other generative AI offerings that can provide on-demand, conversational responses to user queries, generate customized learning content, or aggregate and summarize educational materials. These LLM-based solutions, which may be offered by both established technology companies and new entrants, are emerging as an alternative to other online learning modalities.
We expect both existing competitors and new entrants to the online learning market to continually evolve and improve their business models. If these or other market participants introduce new or improved delivery of online education and technology-enabled services that are more compelling or widely accepted than ours, our ability to grow our revenue and achieve profitability could suffer. The emergence of enhanced generative AI capabilities could provide competitors with an advantage. For example, as LLMs and generative AI platforms become more capable, organizations and individuals may increasingly rely on these technologies to perform tasks directly, which could potentially reduce the need for human learning or training altogether. Several new and existing companies in the online education industry provide or may provide offerings similar to what we offer on our platform, and, despite any exclusivity arrangements we have with our instructors, these companies may nonetheless pursue relationships with our instructors that may reduce, or stop altogether, the content our instructors produce for our platform. In addition, enterprise customers may choose to continue using or develop their own online learning or training solutions in-house rather than pay for our platform.
We 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 changes to our instructor revenue sharing model;
•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, AI 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.
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 AI, and substantially greater financial, technical, and other
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resources than we have. Our current or new competitors may adopt certain aspects of our business model, which could reduce our ability to differentiate our services. Furthermore, online educational content is not typically marketed exclusively through any single channel and, accordingly, our competitors could aggregate a set of online learning courses similar to ours. Competition may intensify as our competitors raise additional capital or as new participants, including established companies, enter the markets in which we compete. Our ability to grow our business and achieve profitability could be impaired if we cannot compete successfully.
The market for online learning solutions may not grow as we expect, which may harm our business, financial condition, and results of operations.
Our future success depends in part on the future growth in the demand for online learning solutions. We expect that broader societal and macroeconomic conditions, including inflation, interest rates, general economic uncertainty, and the prevalence of remote or hybrid work, will influence the further development of the online learning market and the growth rate of remote, online and asynchronous learning and training solutions such as ours. The emergence and increasing adoption of LLMs and other generative AI technologies may also impact demand for online learning solutions, as these technologies could enable organizations and individuals to rely on AI systems to perform tasks directly, potentially reducing the need for human learning or training altogether. In addition, the rate at which online learning solutions are adopted by learners or UB customers may also depend on a variety of factors specific to individual learners or UB customers, such as budget constraints and training needs. Consequently, it is difficult to predict demand for and continued use of our platform by learners, instructors, and UB customers, the rate at which existing learners and instructors expand their engagement with our platform, the size and growth rate of the market for our platform, the entry of competitive offerings into the market, or the success of existing competitive offerings. Even if market demand for online learning solutions generally increases, we cannot assure you that adoption of our platform will also increase. 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.
Our revolving credit facility contains customary affirmative and negative covenants, including financial covenants, that may limit our operating flexibility.
Our revolving credit facility contains customary affirmative and negative covenants that limit our ability to, among other things, transfer or dispose of assets, merge with other companies or consummate certain other changes of control, acquire other companies, pay dividends, incur additional indebtedness and liens, make certain investments and engage in new businesses unrelated to our current business. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consent of the lenders or terminate the credit facility, which may limit our operating flexibility. In addition, our credit facility is secured by substantially all of our assets, including our intellectual property, and requires us to satisfy certain financial covenants. If we do not meet the financial covenants as specified in the credit facility, we may require forbearance or relief from our financial covenant violations from the lenders or be required to arrange alternative financing.
There is no guarantee that we will be able to generate sufficient cash flow or sales to meet these financial covenants or pay the principal and interest on any such debt. Furthermore, there is no guarantee that future working capital, borrowings or equity financings will be available to repay or refinance any such debt. A breach of any of these covenants or the occurrence of certain other events specified in the credit agreement governing our revolving credit facility and/or the related collateral documents could result in an event of default under the credit agreement. If an event of default has occurred and is continuing, the lenders could elect to declare all amounts outstanding under the credit facility immediately due and payable. If we are unable to repay those amounts, the lenders could foreclose on the collateral granted to them to secure our obligations under our revolving credit facility. If the lenders accelerate the repayment of borrowings, if any, we may not have sufficient funds to repay our existing debt.
Our ability to meet the financial covenants could be affected by events beyond our control. Any inability to make scheduled payments or meet the financial covenants of our credit facility would adversely affect our business.
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We may need to change our pricing, subscription, and contract models 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 the pricing, subscription, and contract models for our platform’s offerings from time to time. As the market for our learning platform develops, as new competitors introduce competitive applications or services, or as we enter into new international markets, we may be unable to attract new learners or UB customers at the same price or based on the same pricing or subscription models we have historically used, or for contract lengths consistent with our historical averages. In addition, as we introduce new products, or improve existing ones, we may not be successful in developing appealing pricing, subscription and contract models for these products. Decisions we make may also impact the mix of adoption among our offerings, including the mix between subscription- and transaction-based offerings, and negatively impact our overall revenue and results. Changes to our pricing, subscription, or contract models may also result in increased customer churn, reduced customer lifetime value, or lower overall engagement with our platform. Competition may also require us to make substantial price concessions. Moreover, our consumer pricing model and methodology has been, and may in the future become, subject to legal challenge under applicable federal or state laws, regulations, and guidelines relating to promotional pricing practices. Our results of operations may be adversely affected by any of the foregoing, and consequently we may have increased difficulty achieving or maintaining profitability.
Failure to effectively leverage our strategic partnerships to market and sell our products could impact our ability to increase brand awareness and grow our revenue.
We rely on strategic partners, including resellers, for certain sales and marketing efforts. We plan to continue to establish and maintain similar strategic relationships as part of our growth strategy, and we expect these partners to become an increasingly important aspect of our business. Identifying partners and negotiating terms with them requires significant time and resources, and we are dependent on our ability to negotiate terms that are favorable to us and provide sufficient incentives for our partners to promote our products. If our partners do not effectively sell or market our products, choose to promote our competitors’ products or otherwise choose not to devote sufficient efforts to our business, our ability to grow our revenue may be impaired, and our results of operations may suffer.
In addition, we have granted exclusivity to resellers in certain geographies for UB, and so we are dependent on the sales efforts of our resellers in those geographies. For example, we have partnered with Benesse as our exclusive reseller in Japan. If we fail to effectively manage our existing resellers, or if our reseller partners are unsuccessful in fulfilling the orders for our products, or if we are unable to enter into arrangements with, and retain a sufficient number of, high quality reseller partners in each of the regions in which they sell products and keep them motivated to sell our products, our ability to sell our products and operating results will be harmed. Any negative changes in our relationship with our reseller partners, including the loss of a reseller or a significant reduction in business with a reseller, could adversely impact our sales in particular geographies, which could, in turn, negatively impact our results of operations.
Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our base of learners and UB customers and achieve broader market acceptance.
Our ability to broaden our base of both consumer learners and UB customers, and achieve broader market acceptance of our marketplace platform, will depend to a significant extent on the ability of our sales and marketing organizations to work together to drive our sales pipeline and cultivate customer relationships. Our marketing efforts include the use of search engine optimization, paid search, email marketing, and television.
We have invested in and plan to continue expanding our sales and marketing organizations, both domestically and internationally. Identifying, recruiting, training, and retaining talented sales and marketing personnel will require significant time, expense, and attention, and if we are unable to do so, or if the hired personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective, our ability to broaden our customer base and achieve broader market acceptance of our platform could be harmed. In addition, the investments we make in our sales and marketing organizations will occur in advance of experiencing benefits from such investments, making it difficult to determine in a timely manner if we are efficiently allocating our resources in these areas.
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If we are not able to maintain and enhance our brand, our reputation and business may suffer.
We believe that maintaining and enhancing our reputation and brand recognition is critical to our ability to attract and retain learners, instructors, and UB customers, as well as commercial and strategic partners, and that the importance of our reputation and brand recognition will continue to increase as competition in the markets in which we operate continues to develop. Our success in this arena will depend on a range of factors, both within and beyond our control. Factors affecting our reputation and brand recognition that are within our control include our ability to:
•market our platform effectively and efficiently;
•maintain a useful, innovative, and reliable platform;
•maintain a high satisfaction among learners, instructors, and UB customers;
•provide a high quality and perceived value for our platform;
•successfully differentiate our platform from competing offerings;
•maintain a consistently high level of customer service; and
•prevent any actual or perceived data security breach or incident or data loss, or misuse or perceived misuse of our platform.
Additionally, our reputation and brand recognition may be affected by factors that are beyond our control, such as:
•the actions of competitors or other third parties;
•the quality and quantity of, as well as the nature and subject matter of, content available from instructors on our platform;
•positive or negative publicity, including with respect to events or activities attributed to us, our employees, instructors, or our commercial partners;
•interruptions, delays, or attacks on our platform; and
•litigation or legal developments.
Damage to our reputation and brand, from the factors listed above or otherwise, may reduce demand for our platform and have an adverse effect on our business, operating results and financial condition. 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.
Instructors at times post courses and related materials to our platform that contain content owned by third parties, and we do not proactively review content for potential infringement of intellectual property rights. Although we maintain and enforce terms and policies requiring instructors to respect the intellectual property rights of others, they may not do so. 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. Any such claims could subject us to costly litigation, regardless of whether the claims have merit. Moreover, there can be no assurance that our responses to complaints by third-party content owners regarding intellectual property violations will be sufficient to protect us from adverse claims. Our various liability insurance coverages may not cover potential claims of this type adequately or at all, and we may be required to alter or cease our uses of such material, which may include removing course content or altering the functionality of our platform, or be required to pay monetary damages.
Where applicable, we rely on a variety of statutory and common law frameworks and defenses, including those provided by the Digital Millennium Copyright Act of 1998, the Communications Decency Act (the “CDA”), the fair-use doctrine in the United States and the E-Commerce Directive in the European Union (the “E.U.”). However, the availability, scope, and application of such frameworks, defenses, and statutes varies across the many jurisdictions in which we operate, and the applicable limitations on immunity, requirements to maintain immunity, and moderation efforts required in the many jurisdictions in which we operate may affect our ability to rely on these frameworks and defenses, or create uncertainty regarding liability for content posted to our platform.
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Moreover, regulators in the United States, the E.U., and in other jurisdictions in which we operate may introduce new regulatory regimes or modify existing regulatory regimes, including in ways that increase potential liability for information or content available on or through our platform or the content moderation decisions we make with respect to our platform, or which impose additional obligations to monitor such information or content, which could increase our costs. For example, the E.U.’s Digital Services Act (the “DSA”), which imposes new content moderation obligations, notice and transparency requirements, advertising limitations, and other consumer protection requirements, became fully applicable in February 2024. Non-compliance with the DSA could result in fines of up to 6% of global turnover, and could potentially subject us to litigation, enforcement actions, or other claims. Additionally, E.U. jurisdictions have imposed, and may in the future impose, additional content moderation requirements beyond those established by the DSA. For example, the Irish Online Safety Code, which became effective in October 2024, introduces additional obligations on video-sharing platforms to restrict the spread of harmful video and associated content. Non-compliance with the Online Safety Code could result in fines of up to the greater of €20 million or 10% of annual turnover.
Failure of our resellers or other commercial partners to use acceptable ethical business practices or comply with applicable laws could negatively impact our business.
In certain jurisdictions, such as Japan, we rely on third-party resellers and other commercial partners to distribute and market our offerings. We expect these resellers and partners to operate in compliance with applicable laws, rules, and regulations, but we cannot control their conduct. If any of our resellers or partners violates applicable laws or implements business practices that are regarded as unethical, the distribution of our platform in those jurisdictions could be interrupted, usage of our platform could decline, our reputation could be damaged and we may be subject to liability. Any of these events could have a negative impact on our business, financial condition, and results of operations.
Our revenue, results of operations, and financial condition could be negatively affected by general economic conditions.
Our business is sensitive to trends in the general economy, which is unpredictable. Therefore, our operating results, to the extent they reflect changes in the broader economy, may be subject to significant fluctuations. Since online learning is generally dependent on discretionary spending, negative general economic or financial conditions or uncertainty regarding future economic or financial conditions 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 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. Additionally, adverse developments affecting the banking or financial services industries or the financial and capital markets, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could negatively affect our revenue, results of operations and financial condition.
Our business and operations could be materially and adversely affected by natural disasters, public health emergencies, political crises, or other catastrophic events.
Our business and operations could be materially and adversely affected by catastrophic events, such as earthquakes, floods, fires, telecommunications failures, power losses, break-ins, acts of terrorism, wars and other armed conflicts, political or geopolitical crises, inclement weather and public health emergencies. In particular, our corporate headquarters are located in San Francisco, California, an earthquake-sensitive area and one that has been increasingly vulnerable to wildfires, and damage to or total destruction of our executive offices resulting from earthquakes may not be covered in whole or in part by any insurance we may have. If catastrophic events were to cause damage to our properties or interrupt our operations, our results of operations would suffer. Global climate change may result in natural disasters, such as drought, wildfires, severe storms, flooding, and heat waves, occurring more frequently or with greater intensity, which could result in greater physical risk to our business and operations as well as more significant indirect impacts to our business due to supply chain disruption and market volatility. We may not be able to effectively adapt our operations to avoid disruptions arising from the occurrence of such events, and our business could be affected adversely as a result.
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Our business could be harmed if we fail to manage our growth effectively.
The growth we have experienced, and may continue to experience, in our business places significant demands on our operational infrastructure. The scalability and flexibility of our platform depends on the functionality of our technology and network infrastructure and our ability to handle increased traffic and demand for bandwidth. The growth in the number of learners and instructors using our platform and the amount of educational content available through our platform has increased the amount of data and requests that we process. Any problems with the transmission of increased data and requests could result in harm to our brand or reputation. 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. Future growth in our organization could place additional strain on our existing resources and processes, and we could experience systemic operating difficulties in managing our business, which may negatively impact our gross profit or operating expenses.
Our future success depends on our ability to retain our senior management team and other highly skilled employees and to attract, retain, and motivate our qualified personnel.
We depend on the continued services and performance of our senior management team, key technical employees, and other key personnel. Although we have entered into employment agreements with senior management team members, each of them may terminate their employment with us at any time or not be able to perform the services we require in the future. We do not maintain “key person” insurance for any of our executives or other employees. Similarly, third parties may attempt to encourage our senior management team or other key employees to leave for other employment. The loss of one or more of the members of our senior management team or other key personnel for any reason could disrupt our operations, create uncertainty among investors, adversely impact employee retention and morale and significantly harm our business. Some members of our senior leadership team, such as our Chief Executive Officer and Chief Technology Officer, have been with our company for a short period of time.
From time to time we have experienced, and may continue to experience, difficulty in hiring and retaining employees with the appropriate level of qualifications. The companies with which we compete for qualified employees may have greater resources than we have and may offer compensation packages that are perceived to be better than ours. We use restricted stock units and performance-based restricted stock units, among other things, to help attract and retain employees; however, if our stock price performs poorly, these equity incentives may not be sufficient to achieve these goals. Additionally, changes in our compensation structure, workforce reductions and other cost reduction efforts (including our ongoing operational efficiency initiatives) may be negatively received by employees and result in attrition or recruiting difficulties.
If we fail to attract new employees or fail to retain and motivate our current employees, our business and future growth prospects could be adversely affected.
Acquisitions and other strategic investments may expose us to significant risks, any of which could materially and adversely affect our business, financial condition, and results of operations.
We have in the past pursued, and, subject to contractual restrictions set forth in the Merger Agreement, may in the future pursue, acquisitions of, or strategic investments in, businesses, technologies, services and other assets that complement our business. We have limited experience as an organization with successfully executing and managing acquisitions and strategic investments. 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;
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•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.
We may not succeed in addressing these or other risks in connection with any acquisitions or strategic investments we undertake, which could have a material adverse effect on our business, financial condition, and results of operations. Furthermore, we may have to pay cash, incur additional debt or issue equity or equity-linked securities to finance any acquisitions or investments, which could also adversely affect our financial condition or the trading price of our securities, and the sale of equity or equity-linked securities could result in dilution to our stockholders.
We may need to raise additional funds to pursue our growth strategy or continue operations, and we may be unable to raise capital when needed or on acceptable terms.
From time to time, we may seek additional equity or debt financing to fund our growth, enhance our platform, respond to competitive pressures, or make acquisitions or other investments. Our business plans may change, general economic, financial or political conditions in our markets may deteriorate or other circumstances may arise, in each case that have a material adverse effect on our cash flows and the anticipated cash needs of our business. Any of these events or circumstances could result in significant additional funding needs, requiring us to raise additional capital. We cannot predict the timing or amount of any such capital requirements at this time. 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.
Managing a global organization requires significant resources and management attention. We currently maintain operations outside of the United States, including in Ireland, Turkey, India, Australia, and Mexico, and we may expand our international operations in the future.
We generated 61%, 60%, and 60% of our total revenue outside of North America during the fiscal years ended December 31, 2025, 2024, and 2023, respectively. Based on our instructor registration records, we estimate that a majority of our instructors are located outside the United States. Any further international expansion efforts that we may undertake may not be as successful as we expect or at all.
Additionally, conducting international operations subjects us to risks that we have not generally faced in the United States. 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 the operations of our platform and our liability for the content and services provided by our instructors, including as a result of evolving 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;
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•lack of familiarity with and unexpected changes in foreign regulatory requirements;
•adapting to variations in methods of payment from learners and UB customers;
•difficulties in managing and staffing international operations;
•fluctuations in currency exchange rates;
•risks associated with foreign tax regimes, trade tariffs, foreign investment restrictions or requirements, or similar issues, which could negatively impact international adoption of our offerings;
•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, reporting, and other regulatory burdens and complexities, as well as difficulties in implementing and maintaining adequate internal controls over the same;
•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 ongoing conflicts in the Middle East;
•reduced or varied protection for intellectual property rights in some countries; and
•higher telecommunications and internet service provider costs.
Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability.
Our strategic and other relationships with partners overseas may also subject us to additional regulatory scrutiny in the United States and other jurisdictions. Operating in international markets could also increase our business exposure to the effects of trade and economic sanctions regulations. See “—We are subject to governmental export and import controls and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.”
Further, as we continue to expand internationally, we could also become subject to increased difficulties in collecting accounts receivable (including as a result of international sanctions or other trade restrictions affecting the geographies in which we or our learners or customers are present), repatriating money without adverse tax consequences, and risks relating to foreign currency exchange rate fluctuations. We have not engaged in currency hedging activities to limit risk of exchange rate fluctuations, and while we may decide to do so in the future, the availability and effectiveness of these hedging transactions may be limited. Changes in exchange rates affect our costs and earnings, and may also affect the book value of our assets located outside the United States and the amount of our stockholders’ equity.
We are subject to laws and regulations worldwide, and failure to comply with such laws and regulations could subject us to claims or otherwise adversely affect our business, financial condition and results of operations.
We are subject to a variety of laws in the U.S. and abroad that affect our business. As a global platform with learners and instructors in over 180 countries, we 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.
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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. Because these laws and regulations are subject to change over time, we must continue to dedicate resources to monitoring developments in the law and ensuring compliance. Laws and regulations may be inconsistent from jurisdiction to jurisdiction, and certain jurisdictions may impose more stringent regulatory requirements than the U.S., which may increase the cost of compliance and doing business and expose us to possible litigation, penalties, or fines. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could make our platform less attractive to learners, instructors, or enterprise customers or cause us to change or limit our ability to make available our platform. We have policies and procedures designed to ensure compliance with applicable laws and regulations, but we cannot assure you that we will not experience violations of such laws and regulations or our policies and procedures. Any such violations could subject us to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, operating results, and financial condition.
We are subject to governmental export and import controls and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.
Our business activities are subject to various restrictions under U.S. export and similar laws and regulations, including trade and economic sanctions regulations. The U.S. export control and economic sanctions laws and regulations include restrictions or prohibitions on the sale of certain services to U.S. embargoed or sanctioned countries, governments, persons, and entities which in some cases might apply to our activities. In addition, various countries regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide learners access to our platform or could limit our learners’ ability to access or use our services in those countries.
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 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. In addition, various countries regulate the import and export of certain encryption and other technology, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our learners’ ability to access our platform in those countries. Changes in our platform, or future changes in export and import regulations, may prevent our international learners or instructors from using our platform or, in some cases, prevent the export or import of our platform to certain countries, governments, or persons altogether. 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.
We are subject to the anti-bribery and anti-money laundering laws in the U.S. and other applicable jurisdictions. 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.
We sometimes engage third parties to sell our products and conduct our business abroad. We and our employees, agents, representatives, business partners, or third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other illegal activities of these employees, agents, representatives, business partners, or third-party intermediaries even if we do not explicitly authorize such activities. We cannot assure you that none of our employees and agents will take actions in violation of applicable law, for which we may be ultimately held responsible.
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These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. While we have policies and procedures to address compliance with such laws, we cannot assure you that none of our employees, agents, representatives, business partners, or third-party intermediaries will take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
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. Responding to any investigation or action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
We are from time to time involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.
We are involved in litigation matters from time to time, such as matters incidental to the ordinary course of our business, including intellectual property, commercial, employment, class action, whistleblower, accessibility, and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices. In addition, the expense of litigation and the timing of these expenses from period to period are difficult to estimate, subject to change, and could adversely affect our financial condition and results of operations. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect our business, financial condition, and results of operations.
Our sales to government clients expose us to additional risks.
We derive a portion of our revenue from sales to US federal, state and local governmental agencies, as well as foreign governments and agencies. Sales to government customers may be subject to lengthy and complex procurement processes, including technology and security assessments, budget approvals and competitive bidding requirements. Government demand for our offerings may be impacted by government shutdowns, public sector budgetary cycles, contracting requirements, and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products and subscriptions. Further, governmental entities may demand contract terms that differ from our standard arrangements and are less favorable than terms agreed with private sector customers, including terms that may allow a government to terminate without cause and provide for higher liability limits for certain losses.
In addition, as a government contractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts, which affect how we do business with government agencies. Governmental entities may also be subject to a rapidly evolving regulatory framework that may impact their ability to use our platform and products. As a result of actual or perceived noncompliance with these laws, regulations, or contractual provisions, or applicable executive orders, we may be subject to non-ordinary course audits and internal investigations, which may prove costly to our business, divert management time, or limit our ability to continue selling our products and services to our government customers. Any violation of government contracting laws and regulations or contract terms could result in the imposition of various civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments and fines, treble damages, and suspension from future government contracting. Also, engaging in sales activities to foreign governments introduces additional compliance risks specific to the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate. All these factors add further risk to business conducted with these customers.
Adherence to our values and our focus on long-term sustainability may negatively impact our short- or medium-term financial performance.
Our values motivate everything we do, and we accordingly intend to focus on the long-term sustainability of our business and platform. We may take actions that we believe will benefit our business and our ecosystem and, therefore, our stockholders over a period of time, even if those actions do not maximize short- or medium-term
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financial results. However, these longer-term benefits may not materialize within the timeframe we expect or at all. 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.
Inadequate self-insurance accruals or insurance coverage for employee healthcare benefits could have an adverse effect on our business, financial results or financial condition.
We self-insure for certain medical benefits, up to certain stop-loss limits. We accrue these costs based on known claims and estimates of incurred but not reported claims. Our actual liabilities may exceed our estimates of losses. We may also experience an unexpectedly large number of claims that result in costs or liabilities in excess of our projections, which could cause us to record additional expenses.
Risks related to technology, privacy, and cybersecurity
Changes in laws or regulations relating to privacy, data protection, or cybersecurity, including those relating to the protection or transfer of data relating to individuals, or any actual or perceived failure by us to comply with such laws and regulations or any other obligations, could adversely affect our business.
We receive, transmit, store, and otherwise process personal information and other data relating to our learners, instructors, and other individuals, such as our employees. Numerous local, municipal, state, federal, and international laws and regulations address privacy, data protection, cybersecurity, and the collection, storage, use, disclosure, protection, and other processing of certain types of data. 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.
For example, the E.U. General Data Protection Regulation (“GDPR”) has resulted and will continue to result in significantly greater compliance burdens and costs for companies like ours. The GDPR regulates our collection, control, sharing, use, disclosure, and other processing of personal data of individuals in the E.U. Actual or alleged failure to comply with the GDPR may result in fines of up to 20 million euros or up to 4% of the annual global revenue of the infringer, whichever is greater. It may also lead to civil litigation, with the risks of damages, injunctive relief, or regulatory orders adversely impacting our processing of personal data.
The United Kingdom maintains a United Kingdom version of the GDPR (combining the GDPR and the United Kingdom Data Protection Act of 2018), referred to as the U.K. GDPR, which provides for fines of up to 17.5 million British pounds sterling or 4% of global turnover, whichever is greater. In June 2025, the United Kingdom adopted the Data (Use and Access) Act 2025 (the “DUAA”), which amends and supplements the U.K. GDPR and is expected to become fully effective by June 2026. The relationship between the United Kingdom and the E.U. in relation to certain aspects of data protection law is subject to uncertainty. 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. This adequacy determination was renewed in 2025, after assessment of the DUAA, to extend through December 2031, but remains subject to modification or revocation. We cannot predict how the United Kingdom’s data protection regime may continue to develop. Changes with respect to the UK’s data protection regime, its adequacy status, or related matters may lead to additional costs and increase our risk exposure.
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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. Recent developments have created complexity and uncertainty regarding transfers of personal data from the EEA to the U.S. and other jurisdictions. In 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the E.U.-U.S. Privacy Shield Framework (the “Privacy Shield”), under which personal data could be transferred from the EEA. The CJEU also noted that standard contractual clauses (approved by the European Commission as an adequate personal data transfer mechanism) may not necessarily be relied upon in all circumstances. In addition to other mechanisms, in limited circumstances we may rely on Privacy Shield certifications of third parties (for example, vendors and partners). The European Commission and the United Kingdom’s Information Commissioner’s Office have published new standard contractual clauses that are required to be implemented.
Following issuance of a U.S. Executive Order, a new framework, the EU-U.S. Data Privacy Framework (“EU-U.S. DPF”) was created as a successor to the Privacy Shield. Following an adequacy decision issued by the European Commission on July 10, 2023, the DPF, along with a UK extension to the EU-U.S. DPF that allows the transfer of personal data from the UK to the U.S. (the “UK DPF Extension”), is available for companies as a lawful transfer mechanism for personal data transfers to the U.S. from the EEA and UK. The Swiss-U.S. Data Privacy Framework (“Swiss-U.S. DPF”) also has been established to serve as a lawful transfer mechanism for personal data transfers to the U.S. from Switzerland. We have self-certified to the EU-U.S. DPF, the UK DPF Extension, and the Swiss-U.S. DPF. The EU-U.S. DPF has been the subject of legal challenge, however, and more generally, these frameworks may be subject to legal challenges from privacy advocacy groups or others. Additionally, the European Commission's adequacy decision regarding the DPF provides that the DPF will be subject to future reviews and may be subject to suspension, amendment, repeal, or limitations in scope by the European Commission. These developments regarding cross-border data transfers have created uncertainty and increased the risk around our international operations and may require us to review and amend the legal mechanisms by which we make or receive personal data transfers to the U.S. and other jurisdictions. We may, among other things, be required to implement additional contractual and technical safeguards for any personal data transferred out of the EEA, Switzerland, the United Kingdom or other regions which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual negotiations, and may adversely impact our business, financial condition and operating results.
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. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches. Additionally, in November 2020, California voters passed the California Privacy Rights and Enforcement Act of 2020 (the “CPRA”). As of January 1, 2023, the CPRA expanded the CCPA with additional requirements that may impact our business and establishes a regulatory agency dedicated to enforcing the law. More than a dozen U.S. states have enacted comprehensive privacy laws similar to the CCPA and CPRA, including Virginia, Colorado, Connecticut, Utah, Iowa, Indiana, Tennessee, Montana, Texas, Oregon, Delaware, New Jersey, New Hampshire, Minnesota, Nebraska, Florida, Kentucky, Maryland, and Rhode Island, with additional states continuing to consider similar legislation. Many of these state privacy laws have taken effect or will take effect in coming years, creating a patchwork of overlapping but different state laws and reflecting a trend of increasingly stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business, financial condition, and results of operations.
Outside of Europe, many other countries, including countries where we have operations or otherwise do business, have adopted or are considering adopting data protection legislation, including, for example, regimes adopted in Australia, India, and Mexico. Many of these data protection regimes are based upon principles underlying the GDPR or its predecessor, the E.U. Data Protection Directive, and provide for substantial obligations and penalties for non-compliance. In addition, the Personal Information Protection Law (the “PIPL”), went into effect in the People’s Republic of China (the “PRC”) on November 1, 2021. The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data localization, and purpose limitation requirements, and obligations to provide certain notices and rights to PRC citizens. The PIPL allows for fines of up to 50 million renminbi or 5% of a covered company’s revenue in the prior year.
We may also become subject to new laws regulating non-personal information. For example, the European Union's Data Act (the “EDA”) requires data and cloud service interoperability, mandates switching capabilities that allow users to change cloud service providers without undue delay or cost, and establishes requirements for cross-border transfers of and governmental access to non-personal information outside the EEA.
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We may need to adjust our business practices, contractual arrangements, or services based on how the EDA and similar laws are implemented and interpreted, which may result in additional costs, contract renegotiations, and operational disruption. These changes could adversely affect our revenue and results of operations, especially if they result in impacts to customer subscription terms. Because the full scope and enforcement of these requirements remains uncertain, the potential impact on our business is difficult to predict.
Federal, state, and foreign laws and regulations relating to privacy and the collection, storing, sharing, use, disclosure, protection, and other processing of certain types of data continue to evolve. These laws and regulations are subject to varying enforcement as well as new and changing interpretations by courts, which may result in different or inconsistent obligations. 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.
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. We may be subject to investigation or enforcement actions by regulators if our statements, policies or practices relating to privacy, data protection, or cybersecurity are alleged to be deficient, lacking transparency, deceptive, unfair, or misrepresentative. 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. With laws, regulations, and other actual and asserted obligations relating to privacy, data protection, and cybersecurity imposing new and relatively burdensome obligations and with uncertainty over their interpretation and application, we may face challenges in addressing their requirements and making necessary changes to our policies and practices and may incur significant costs and expenses in efforts to do so. Despite our efforts, our interpretations of the law or our practices, policies, or platform or other services or offerings could be inconsistent with, or fail or be alleged to fail to meet all requirements of, such laws, regulations, or obligations. 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. 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.
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. 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. Our service providers have been, and in the future may be, the targets of cyberattacks, malicious software, phishing schemes, fraud, intentional and unintentional insider threats, and other risks to the confidentiality, security, integrity, and availability of their systems and the data they process for us. 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. There have been and may continue to be significant supply chain attacks, and we cannot guarantee that our or our third-party providers’ systems and networks have not been breached or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our services.
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While we have taken measures to protect our own proprietary and confidential information, as well as the personal data and confidential information that we otherwise process, and measures to protect our platform, we, our third-party service providers, other third parties on which we rely, and the networks and systems used in our business, including those of third-party service providers, have been subject to, and we, our service providers and our platform may in the future be subject to, cybersecurity attacks or other security breaches or incidents. Cybersecurity attacks may take the form of denial of service attacks, attacks using ransomware or other malware, or other attacks, and can come from insider threats as well as individual hackers, criminal groups, and state-sponsored organizations. These sources have used AI and machine learning to launch more automated, targeted and sophisticated attacks against targets. 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 these social engineering attacks have become more sophisticated as attackers leverage AI and “deepfake” technologies to craft increasingly convincing fraudulent communications and scenarios. Additionally, we and many other companies with whom we interact increasingly rely on automated systems and processes, which creates and heightens certain security threats. Further, we and our platform otherwise may be subject to security breaches and incidents resulting from employee or contractor error or malfeasance, including as a result of intentional or accidental misuse of authorized access to our systems. These and other threats may be heightened by geopolitical tensions and conflicts. We also may be more susceptible to cyberattacks and other security breaches and other security incidents while many of our employees work remotely, because we have less ability to implement, monitor, and enforce our information security and data protection policies.
More generally, we cannot guarantee that applicable recovery systems, security and data encryption protocols, network protection mechanisms, and other procedures of ourselves or our third-party service providers, or other third parties on which we rely, 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. Moreover, our platform could be breached or disrupted if vulnerabilities in our platform are exploited by unauthorized third parties. Techniques used to obtain unauthorized access change frequently and the volumes of cybersecurity attacks and of security breaches and incidents generally are increasing. We and our third-party service providers, and other third parties on which we rely, may be unable to implement adequate preventative measures or stop any attacks while they are occurring. 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. 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.
We incur significant costs in an effort to detect and prevent security breaches and other security-related incidents, including costs associated with training our employees to identify and avoid potential security risks, and we expect our costs will increase as we make improvements to our systems and processes to prevent future breaches and incidents. Some jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data. Any disclosures relating to an actual or perceived cybersecurity attack or other security breach or incident suffered by us or any of our third-party service providers, or other third parties on which we rely, could lead to negative publicity and any such disclosures, or any belief that a cybersecurity attack, or a security breach or incident, has impacted us, our platform, or our service providers, or other third parties on which we rely, may cause our learners, instructors, or UB customers to lose confidence in the security of our platform and the effectiveness of the cybersecurity measures we and our service providers utilize.
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Further, any limitations of liability provisions in our customer and user agreements, contracts with third-party service providers, or other contracts may not be enforceable or adequate or otherwise protect us from any liabilities or damages with respect to any particular claim relating to a security breach or incident or other security-related matter. While our insurance policies include liability coverage for certain of these matters, subject to applicable deductibles, any cybersecurity attack or other security breach or other incident, could subject us to claims or damages that exceed our insurance coverage. Our insurance coverage might not be adequate for liabilities actually incurred relating to any security breach or incident, such insurance may not continue to be available to us in the future on economically reasonable terms, or at all, and insurers may deny us coverage as to any future claim. 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.
We may not be able to successfully deploy AI, machine learning, and other evolving technologies.
We leverage generative AI, machine learning, and other evolving technologies throughout our business, including to enhance our platform and offerings. For example, in October 2024, we announced the release of the Udemy AI Assistant, a natural-language chat interface designed to help learners better discover and engage with our content, as well as our AI Skills Mapping tool. We expect AI to become more important to our operations and future growth over time. However, we may not be able to realize the desired or anticipated benefits from our investments in, and use of, AI. We also may not be able to properly develop, implement, or market AI-related features. Our competitors or other third parties may also incorporate AI into their offerings more quickly or more successfully than us, which could impair our competitiveness and adversely affect our business, operating results, and growth prospects.
Additionally, our use of AI systems may subject us to legal liability, whether to private parties or regulatory authorities, as well as brand or reputational harm. If the outputs of our AI systems are, or are alleged to be, deficient, inaccurate, or biased, if such outputs or systems are, or are alleged to be, infringing or misappropriating others’ intellectual property rights or otherwise violating applicable laws or regulations, or if any of these had occurred, or were alleged to have occurred, previously, then our business, operating results, financial condition, and growth prospects could be adversely affected. Further, if our employees, contractors or other agents input inappropriate or confidential information into an AI system, our business data and operations could be compromised or otherwise disrupted.
The legal and regulatory frameworks governing AI continue to evolve rapidly. For example, the E.U. Artificial Intelligence Act (the “E.U. AI Act”) entered into force on August 1, 2024 and will mostly take full effect by 2026. The E.U. AI Act establishes a risk-based framework for the regulation of AI systems, and will require operators of AI systems to comply with various risk management, data governance, technical documentation, oversight, transparency, and other obligations, depending on the risk classification of the AI systems being used by such operator. Actual or alleged failures to comply with the E.U. AI Act may result in penalties of up to 35 million euros or up to 7% of an operator’s total worldwide annual turnover, whichever is greater. Various U.S. states, including California and Colorado, have also recently adopted laws and regulations applicable to the development and use of AI systems and outputs, and U.S. federal legislation addressing AI has also been introduced. Such laws and regulations will have a material impact on the adoption and use of AI systems. Compliance with these laws and regulations may affect our ability to deploy AI systems in our business or integrate AI features into our platform, require changes to our operations and processes, result in heightened compliance burdens and costs, or expose us to additional legal liabilities, any of which could negatively impact our business, financial condition, or operating results.
Interruptions or performance problems associated with our technology and infrastructure could adversely affect our business and results of operations.
Our continued growth partially depends on the ability of learners and instructors to access our platform at any time. Our platform has encountered, and may in the future encounter, disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, introductions of new capabilities, human or technology errors, distributed denial of service attacks, or other security related incidents. In some instances, we may not be able to identify the cause or causes of these performance problems in a timely manner. It may become increasingly difficult to maintain and improve the performance of our platform as it grows and becomes more complex, and in the future we may be required to allocate significant resources to augment and update our technology and network infrastructure. If learners or instructors are unable to access our platform within a reasonable amount of time, or at all, our business will be harmed.
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Applicable regulations that permit ISPs to limit internet consumption could harm our business.
The current legislative and regulatory landscape regarding the regulation of the Internet and, in particular, Internet neutrality, in the United States is subject to uncertainty. In 2018, the Federal Communications Commission (the “FCC”) repealed its open internet rules, which prohibited internet service providers from charging content providers higher rates in order to deliver their content over certain “fast traffic” lanes. In response, California and several other U.S. states have implemented their own open internet or net neutrality rules. In 2024, the FCC voted to reinstate, with certain modifications, its open internet rules; however, in January 2025, the U.S. Court of Appeals for the Sixth Circuit struck down the FCC’s 2024 order, holding that the FCC lacks statutory authority to regulate broadband internet service as a telecommunications service. As a result, there are currently no federal net neutrality rules in effect, though state-level net neutrality laws, including California’s comprehensive net neutrality statute, remain in place. We cannot predict whether Congress will enact federal net neutrality legislation, or whether state initiatives regulating providers will be modified, overturned, or vacated by legal action, or the degree to which the current regulatory uncertainty would adversely affect our business, if at all.
Similarly, the EU requires equal access to internet content, but as part of its Digital Single Market initiative, the EU may impose network security and disability access requirements, which could increase our costs. Outside these jurisdictions, government regulation of the internet, including the idea of network neutrality, may be developing or non-existent. It is possible that governments of one or more foreign countries may seek to censor content available on our platform or may even attempt to block access to our platform. 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. Any disruption of, or interference with, our use of Amazon Web Services could negatively impact our business and operations.
Amazon Web Services provides distributed computing infrastructure platforms for business operations, commonly referred to as “cloud” computing services. We currently run a significant portion of our platform’s computing on Amazon Web Services, and any significant disruption of, or interference with, our use of Amazon Web Services would negatively impact our operations and our business would be seriously harmed. If learners or instructors are unable to access our platform through Amazon Web Services or encounter difficulties in doing so, we may lose learners, instructors, and UB customers. The level of service provided by Amazon Web Services may also impact the adoption and perception of our platform. If Amazon Web Services experiences interruptions in service regularly or for a prolonged basis, or other similar issues, our business would be seriously harmed. Hosting costs will also increase if and as our base of learners, instructors, and UB customers grows, and our business, financial condition, and results of operations may be adversely affected if we are unable to grow our revenue faster than the cost of using Amazon Web Services or similar providers increases.
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.
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. If these service providers do not perform adequately or if our relationships with these service providers end for any reason, we will need to find an alternate payment processor and may not be able to secure similar terms or replace such payment processors in an acceptable time frame. Further, the software and services provided by our third-party payment processors may not meet our expectations, contain errors or vulnerabilities, be compromised, or experience outages. Any of these risks could cause us to lose our ability to accept online payments, make payments to our instructors or conduct other payment transactions, any of which could make our platform less convenient and attractive and harm our ability to attract and retain learners, instructors, and customers. In addition, if these providers increase the fees they charge us, our operating expenses could increase.
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The laws and regulations related to payments are complex and vary across different jurisdictions in the United States and globally. As a result, we are required to spend significant time and effort to comply with those laws and regulations. Any failure or claim of our failure to comply, or any failure by our third-party service providers to comply, could cost us substantial resources, result in liabilities, or force us to stop offering certain third-party payment services. In addition, as we expand our international operations, we will need to accommodate international payment method alternatives. As we expand the availability of new payment methods in the future, including internationally, we may become subject to additional regulations and compliance requirements.
Further, through our agreement with our third-party credit card processors, we are indirectly subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard. We are also subject to rules governing electronic funds transfers. Any change in these rules and requirements could make it difficult or impossible for us to comply. 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.
The use of our platform could be adversely affected if our mobile apps 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. Those accessing our platform primarily on mobile devices may not enroll in the courses offered on our platform as often as those accessing our platform through personal computers, which could result in less revenue for us. If we are not able to provide a rewarding experience on mobile devices, our ability to attract learners to our platform could be impaired, and consequently our business may suffer.
As new mobile devices and mobile features are released, we may encounter problems in developing or supporting apps for them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources.
The success of our mobile apps could also be harmed by factors outside our control, including:
•actions taken by mobile app distributors, including the Apple App Store and the Google Play Store;
•unfavorable treatment received by our mobile apps, especially as compared to competing apps, such as the placement of our mobile apps in a mobile app download store;
•increased costs in the distribution and use our mobile app; or
•changes in mobile operating systems, such as iOS and Android, that degrade the functionality of our mobile website or mobile apps or that give preferential treatment to competitive offerings.
If our learners encounter difficulty accessing or using, or if they choose not to use, our mobile platform, our business and results of operations may be adversely affected.
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Internet search engines drive traffic to our platform and, if we fail to appear prominently in search results, our growth rate could decline and our business, financial condition and results of operations could be adversely affected.
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. Algorithmic search result listings are determined and displayed in accordance with a set of proprietary formulas or algorithms developed by particular search engine companies. From time to time, these companies revise their algorithms without notice. In some instances, these modifications have caused our website to be listed less prominently in search results. In addition, search engine companies retain broad discretion to remove from search results any company whose marketing practices are deemed to be inconsistent with the search engine companies’ guidelines. If our marketing practices violate or appear to violate search engine company guidelines, we may, without warning, not appear in search result listings at all. If we are listed less prominently or fail to appear in search result listings for any reason, visits by prospective learners to our website would likely decline. We may not be able to replace this traffic and any attempt to do so may require us to increase our sales and marketing expenditures, which may not be offset by additional revenue and could adversely affect our operating results.
Risks related to our intellectual property
We may be unable to adequately obtain, maintain, protect, and enforce our intellectual property and proprietary information, which could adversely affect our business, financial condition, and results of operations.
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. The steps we take to protect our intellectual property, including physical, operational, and managerial protections of our confidential information, contractual obligations of confidentiality, assignment agreements with our employees and contractors, license agreements, and the prosecution and maintenance of registrations and applications for registration of intellectual property rights, require significant resources and may be inadequate. 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. Some license provisions protecting against unauthorized use, copying, transfer, and disclosure of our proprietary information may be unenforceable under the laws of certain jurisdictions.
We hold various registered trademarks in the United States and in foreign jurisdictions. We also have common law rights in some trademarks and pending trademark applications in the United States and foreign jurisdictions. In addition, we have registered domain names for websites that we use in our business, such as www.udemy.com and some other variations. Competitors may adopt service names or domain names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion. In addition, our registered or unregistered trademarks or trade names could be declared generic, and there could be potential trade name or trademark infringement claims brought by owners of other trademarks that are similar to our trademarks. 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. Effective trademark protection may not be available or may not be sought in every country in which our products are made available, in every class of goods and services in which we operate, and contractual disputes may affect the use of marks governed by private contract. Additionally, we may from time to time be subject to opposition or similar proceedings with respect to applications for registrations of our intellectual property, including trademarks. While we aim to acquire adequate protection of our brand through trademark registrations in key markets, occasionally third parties may have already registered or otherwise acquired rights to identical or similar marks for services that also address our market. We rely on our brand and trademarks to identify our platform and to differentiate our platform and services from those of our competitors, and if we are unable to adequately protect our trademarks, third parties may use our brand names or trademarks similar to ours in a manner that may cause confusion in the market, which could decrease the value of our brand and adversely affect our business and competitive advantages.
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We hold a small number of issued patents and thus have a limited ability to exclude or prevent our competitors from implementing technology, methods, and processes similar to our own. Further, we may not timely or successfully apply for a patent or register its trademarks or otherwise secure rights in our intellectual property. We expect to continue to expand internationally and, in some foreign countries, the mechanisms to establish and enforce intellectual property rights may be inadequate to protect our technology, which could harm our business.
It is our policy to enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships. The confidentiality agreements on which we rely to protect certain technologies may be breached, may not be adequate to protect our confidential information, trade secrets, and proprietary technologies, and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, trade secrets, or proprietary technology. Further, these agreements do not prevent our competitors or others from independently developing products that are substantially equivalent or superior to ours.
Our intellectual property rights and the enforcement or defense of such rights may be affected by developments or uncertainty in laws and regulations relating to intellectual property rights. Moreover, many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, which could make it difficult for us to stop the infringement, misappropriation, or other violation of our intellectual property or marketing of competing products in violation of our intellectual property rights generally.
Policing unauthorized use of our intellectual property and misappropriation of our technology and trade secrets is difficult and we may not always be aware of such unauthorized use or misappropriation. Despite our efforts to protect our intellectual property rights, unauthorized third parties may attempt to use, copy, or otherwise obtain and market or distribute our technology or otherwise develop services with the same or similar functionality as our platform. 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. Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property. As a result, we may be aware of infringement by our competitors but may choose not to bring litigation to protect our intellectual property rights due to the cost, time, and distraction of bringing such litigation. Furthermore, if we do decide to bring litigation, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits challenging or opposing our right to use and otherwise exploit particular intellectual property, services, and technology or the enforceability of our intellectual property rights. Any failure to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products, impair the functionality of our platform, prevent or delay introductions of new or enhanced products or features, result in us substituting inferior or more costly technologies into our platform, or injure our 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.
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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.
Companies in the technology industry are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights. We periodically receive notices that claim we have infringed, misappropriated, or misused other parties’ intellectual property rights, including with respect to content made available on our platform by instructors and other third parties. As we gain greater public recognition, we may face a higher risk of being the subject of intellectual property claims. Any intellectual property claims against us, with or without merit, could be time consuming and expensive to settle or litigate and could divert the attention of our management. Some of our competitors have extensive portfolios of issued patents. Many potential litigants, including some of our competitors and patent holding companies, have the ability to dedicate substantial resources to enforcing their intellectual property rights. Litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters. Furthermore, we may not qualify for the safe harbors established by laws in the United States and other countries protecting online service providers from claims related to content posted by users, or those laws could change in a manner making it difficult or impossible to qualify for such protection, increasing our exposure. 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. For more information, see “—Risks related to our business and operations—We could face liability, or our reputation might be harmed, as a result of courses posted to our platform.”
Any claims successfully brought against us could subject us to significant liability for damages and we may be required to stop using technology or other intellectual property alleged to be in violation of a third party’s rights. We also might be required to seek a license for third-party intellectual property. Even if a license is available, we could be required to pay significant royalties or submit to unreasonable terms, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, which could require significant time and expense. If we cannot license or develop technology for any allegedly infringing aspect of our business, we would be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business.
Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to provide our platform.
We use open source software in our platform and expect to continue to use open source software in the future. In addition, we contribute software source code to open source projects under open source licenses or release internal software projects under open source licenses and anticipate continuing to do so in the future. 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. Third parties may also seek to enforce the terms of the applicable open source license through litigation which, if successful, could subject us to liability and require us to make our proprietary software source code available under an open source license, seek to purchase a license (which, if available, could be costly), and cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources, and we may not be able to complete it successfully. Many of the terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. While we try to insulate our proprietary code from the effects of such open source license provisions, we cannot guarantee that we will be successful, that all open source software is reviewed prior to use in our products, that our developers have not incorporated open source software into our products in potentially disruptive ways, or that they will not do so in the future. In addition to risks related to open source license requirements, use of certain open source software may pose greater risks than use of third-party commercial software, since open source licensors generally do not provide warranties or controls on the origin of software. 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.
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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.
As a public company, we are required to comply with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act, among other things, requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers.
Under the Sarbanes-Oxley Act, we are required to make a formal assessment of the effectiveness of our internal control over financial reporting. The cost of our compliance with Section 404 will continue to divert resources and take significant time and effort. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq. Our current controls and any new controls that we develop may become inadequate for a variety of reasons, including changes in conditions in our business. Moreover, our testing, or the subsequent testing by our independent registered public accounting firm, may reveal additional deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our disclosure controls and procedures or our internal control over financial reporting are not expected to prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Any failure to implement and maintain effective disclosure controls and procedures and internal control over financial reporting, including the identification of one or more material weaknesses, could cause investors to lose confidence in the accuracy and completeness of our financial statements and reports, which would likely adversely affect the market price of our common stock. In addition, we could be subject to sanctions or investigations by Nasdaq, the SEC, and other regulatory authorities.
Operating as a public company requires us to incur substantial costs and administrative burdens, which could have an adverse effect on our business, financial condition and results of operations.
As a public company, we are subject to additional reporting and other obligations, such as the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, and the applicable listing standards of Nasdaq. Compliance with these rules and regulations results in legal and financial compliance costs and places demands on our systems. Our 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. As a public company, we may also be subject to stockholder activism, which can lead to additional substantial costs, distract management, and impact the manner in which we operate our business in ways we cannot currently anticipate. Our business and financial condition will become more visible as a result of our reporting obligations as a public company, which may result in threatened or actual litigation, including by competitors.
Many members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. 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. These new obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations.
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Unanticipated changes in our effective tax rate and additional tax liabilities, including as a result of our international operations or implementation of new tax rules, could harm our future results of operations.
We are subject to income taxes in the United States and certain foreign jurisdictions. 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. For example, in July 2025, the United States enacted tax legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBB Act”). We do not believe the provisions under the OBBB Act had a material effect on our consolidated financial statements for the fiscal year ended December 31, 2025, and we are continuously assessing the potential impact the OBBB Act will have on our consolidated financial statements. Additionally, the Organization for Economic Cooperation and Development (the “OECD”) proposed a 15% global minimum tax framework (known as “Pillar Two”), which has been adopted or is being considered by several jurisdictions. The OECD and participating jurisdictions have recently agreed to a “side-by-side” solution that would exempt U.S.-parented multinational businesses, like us, from certain provisions of Pillar Two for fiscal years beginning on or after January 1, 2026. Increases in our effective tax rate would reduce profitability or increase losses. Changes in tax and trade laws, treaties, or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could have a material adverse effect on our tax position. We made significant judgments and assumptions in the interpretation of new laws and in our calculations reflected in our financial statements.
In addition, we are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions. We believe that we operate in compliance with applicable transfer pricing laws, but our transfer pricing procedures are not binding on applicable tax authorities. If such tax authorities were to successfully challenge our transfer pricing procedures, they could require us to adjust our transfer prices, which could result in a higher overall tax liability to us and possibly interest and penalties.
Further, we are subject to examination by tax authorities on income, employment, sales, and other tax matters. While we regularly assess the likelihood of adverse outcomes from such examinations and the adequacy of our provision for taxes, there can be no assurance that such provision is sufficient and that a determination by a tax authority would not have an adverse effect on our business, financial condition, and results of operations. We believe our income, employment, and transactional tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, but an adverse resolution of one or more uncertain tax positions in any period could have a material impact on the results of operations for that period.
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.
The application of non-income, or indirect, taxes, such as sales and use tax, value-added tax, goods and services tax, business tax, and gross receipt tax, to businesses like ours is a complex and evolving issue. Significant judgment is required on an ongoing basis to evaluate applicable tax obligations, and as a result, amounts recorded are estimates and are subject to adjustments. In many cases, the ultimate tax determination is uncertain because it is not clear how new and existing statutes might apply to our business. In addition, we do not collect and remit indirect taxes in all jurisdictions in which we operate on the basis that such indirect taxes are not applicable to us. Certain jurisdictions in which we do not collect and remit such taxes may assert that such taxes are applicable, which could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest, could discourage learners, instructors, or organizations from using our platform, could increase the cost for consumers using our platform, or could otherwise harm our business, financial condition, and results of operations.
Additionally, one or more states, localities, or other taxing jurisdictions may seek to impose additional reporting, record-keeping, or indirect tax collection obligations on businesses like ours. Requiring tax reporting or collection could decrease learner or instructor activity, which would harm our business, and could require us to incur substantial costs in order to comply, including costs associated with tax calculation, collection, and
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remittance and audit requirements, which could make our offerings less attractive and could adversely affect our business, financial condition, and results of operations.
Also, tax rules of certain countries, including the United States, generally require payors to report payments to unrelated parties to the applicable taxing authority and to withhold a percentage of certain amounts and remit such amounts to the applicable taxing authority. Failure to comply with such reporting and withholding obligations with respect to payments we make to our instructors could result in the imposition of liabilities for the under withheld amounts, fines, and penalties. In addition, a tax authority could assert that we should be withholding employment or other taxes from payments to instructors. Due to our large number of instructors and the amounts paid to each, process failures with respect to these reporting obligations could result in financial liability and other consequences to us if we were unable to remedy such failures in a timely manner.
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.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
We have incurred net operating losses (“NOLs”) during prior periods. As such, there is a risk that our existing NOLs could expire unused and be unavailable to offset future income tax liabilities. Specifically, the Tax Cuts and Jobs Act of 2017 imposes certain limitations on the deduction of NOLs generated in tax years that began on or after January 1, 2018, including a limitation on use of NOLs to offset only 80% of taxable income and the disallowance of NOL carrybacks. Although NOLs generated in tax years before 2018 may still be used to offset future income without limitation, the legislation, among other regulatory and economic changes, may limit our ability to use our NOLs to offset any future taxable income. Our NOLs may similarly expire under state laws.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and federal tax credit carryforwards to offset its post-change taxable income, or reduce its federal income tax liability, may be limited. In general, an “ownership change” occurs when there is a cumulative change in our equity ownership by “5 percent shareholders” that exceeds 50 percentage points over a rolling three-year period. 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, our ability to use our NOLs and federal tax credit carryforwards to reduce future taxable income and tax liabilities may be further limited. Similar limitations may apply under state tax laws. In addition, in June 2024, California enacted a temporary suspension on the use of state NOLs in the taxable years 2024, 2025 and 2026, which would adversely affect us if we earn taxable income in the impacted taxable years. Other state tax limitations may also apply.
Our results of operations, which we report in U.S. dollars, could be adversely affected if currency exchange rates fluctuate substantially in the future.
We conduct our business across more than 180 countries around the world. 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 multiple currencies and operating in foreign countries where the functional currency is the local currency. During the fiscal year ended December 31, 2025, 26% of our sales were denominated in currencies other than U.S. dollars, including euros, Indian rupees, British pounds sterling, Brazilian reais, and Japanese yen. Similarly, we incur expenses in multiple currencies. As a result, fluctuations in the value of the U.S. dollar against these foreign currencies may result in negative impacts to our revenue, costs and profit margins. Because we conduct business in currencies other than U.S. dollars, but report our results of operations in U.S. dollars, we also face remeasurement exposure to fluctuations in currency exchange rates, which could hinder our ability to predict our future results and earnings and could materially impact our results of operations. We do not currently maintain a program to hedge exposures to non-U.S. dollar currencies.
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We could be adversely impacted by the effects of inflation.
Certain of our key markets, including the United States, are experiencing historically high rates of inflation, resulting from several macroeconomic and geopolitical factors, including supply chain constraints and rising oil and natural gas prices. Our operating costs have increased and may continue to increase due to rising inflation and as a result we may be required to take measures to respond to the impact of inflation. Among other things, we could be required to change our pricing model to offset inflationary pressures on our operating costs, but doing so could adversely affect customer acquisition and retention, negatively impacting our long-term growth, and could impair our competitive position if our competitors choose to absorb the cost of inflation. Alternatively, if we choose to absorb the cost of inflation to prioritize growth, our financial condition and results of operations may be negatively impacted. Moreover, our instructors may independently make pricing decisions with respect to the courses they offer on our platform as a result of inflationary pressures, and any price increase could negatively impact the attractiveness of our marketplace to learners. 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. Even if such mitigatory measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.
Any failure to successfully manage the impact of inflation on our business in a timely manner could materially and adversely affect our business, financial condition, and results of operations.
Our reported financial results may be adversely affected by changes in generally accepted accounting principles.
Generally accepted accounting principles are subject to interpretation by the Financial Accounting Standards Board, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the announcement of a change. It is difficult to predict the impact of future changes to accounting principles or our accounting policies, any of which could negatively affect our reported results of operations.
Risks related to ownership of our common stock
The trading price of our common stock may be volatile, and you could lose all or part of your investment.
The market price of our common stock has, and may continue to, fluctuate substantially depending on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock. Factors that could cause fluctuations in the trading price of our common stock include the following:
•the Merger, the pendency of the Merger, or the failure to complete the Merger;
•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;
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•rumors and market speculation involving us or other companies in our industry;
•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;
•actual or anticipated changes in international trade policies, including those resulting from tariffs, trade barriers and other trade regulations, as well as the actual or anticipated effect of such policies on us and our customers;
•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 ongoing conflicts in the Middle East, incidents of terrorism, natural disasters, public health emergencies, or natural disasters, as well as responses to any of these events.
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
Future sales of our common stock could depress the market price of our common stock.
The market price of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders, a large number of shares of our common stock becoming available for sale, or the perception in the market that such sales could occur.
Certain holders of our common stock are entitled to rights with respect to the registration of their shares under the Securities Act under our investors’ rights agreement. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates (as defined in Rule 144 under the Securities Act), which shares would be subject to the limitations of Rule 144. Sales of our securities or the perception that such sales could occur pursuant to these registration rights may make it more difficult for us to issue and sell securities in the future at a time and at a price that we deem appropriate. These sales could also adversely affect the trading price of our common stock and make it more difficult for you to sell shares of our common stock.
Future issuances of our common stock or rights to purchase common stock could result in additional dilution to our stockholders and cause the price of our common stock to decline.
We may issue additional common stock, convertible securities, or other equity from time to time. We also expect to issue common stock to our employees, directors, and other service providers pursuant to our equity incentive plans. Such issuances will be dilutive to investors and could cause the price of our common stock to decline. New investors in such issuances could also receive rights senior to those of holders of our common stock.
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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business or our industry, or if they change their recommendation regarding our common stock adversely, the market price and trading volume of our common stock could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors. The analysts’ estimates are based upon their own opinions and are often different from our estimates or expectations. If any of the analysts who cover us change their recommendation regarding our common stock adversely, provide more favorable relative recommendations about our competitors, or publish inaccurate or unfavorable research about our business, the price of our securities would likely 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.
We do not expect to pay dividends in the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not anticipate declaring or paying any dividends to holders of our capital stock in the foreseeable future. Further, our ability to pay dividends on our capital stock in the future is limited by contractual restrictions under the terms of the Merger Agreement. 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.
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.
As of December 31, 2025, 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 54% of our outstanding common stock. As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might affect the market price of our common stock.
Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws might delay, discourage or prevent a merger, tender offer or proxy contest, thereby depressing the market price of our common stock.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law (the “DGCL”), may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make any acquisition of our company more difficult or delay or prevent changes in control of our management. 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;
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•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;
•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.
These provisions, alone or together, could delay, discourage, or prevent a transaction, including the proposed Merger with Coursera, involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Our amended and restated bylaws provide, to the fullest extent permitted by law, that the Court of Chancery of the State of Delaware and the federal district courts of the United States are the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders, or employees and, in turn, discourage lawsuits against our directors, officers, or employees.
Our amended and restated bylaws provide that, to the fullest extent permitted by applicable law and unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court in Delaware or the federal district court for the District of Delaware) will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers, or other employees to us or our stockholders; any action arising pursuant to any provision of the DGCL, our certificate of incorporation, or our bylaws; and any other action asserting a claim that is governed by the internal affairs doctrine. This exclusive forum provision would not apply to any action brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction.
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Our amended and restated bylaws also provide that, to the fullest extent permitted by applicable law and unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of our securities. The enforceability of similar exclusive federal forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and while the Delaware Supreme Court and certain other state courts have ruled that this type of exclusive federal forum provision is facially valid under Delaware law, there is uncertainty as to whether other courts would enforce such provisions and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. This exclusive federal forum provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction.
These exclusive forum provisions may discourage lawsuits against us and our current and former directors, officers, stockholders, and other employees. 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.
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Item 1B. Unresolved Staff Comments
Not applicable.
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Item 1C. Cybersecurity
Risk Management and Strategy
We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are subject to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
Following these risk assessments, we work to design, implement, and maintain reasonable safeguards to mitigate identified risks; work to reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. We devote significant resources and designate high-level personnel, including our Chief Information Security Officer (“CISO”) , who reports to our Chief Financial Officer and Chief Technology Officer, to manage the risk assessment and mitigation process.
Our CISO during fiscal year 2025 had over 25 years of industry experience, including serving in similar roles overseeing cybersecurity programs at other companies, and held Certified Information Systems Security Professional (CISSP), Information Systems Security Management Professional (ISSMP), and Certified Information Security Auditor (CISA) credentials, as well as the National Association of Corporate Directors (NACD) CERT Certificate in Cybersecurity Oversight from Carnegie Mellon University. In February 2026, our CISO separated from service and we appointed an interim CISO to undertake the responsibilities of the role.
As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with our Legal, Information Security, and Information Technology Departments and management. Personnel at all levels and departments are made aware of our cybersecurity policies through required trainings.
Governance
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Our CISO and our management Risk Committee, consisting of our executive leadership team, are responsible for overseeing our cybersecurity risk management processes. The processes by which our CISO and our Risk Committee are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents includes direct engagement with the security team by our CISO, as well as our incident reporting process. Under our incident reporting process, cybersecurity incidents are reported, and then reviewed by senior members of our information security, internal audit and legal department, who then evaluate and, if appropriate, escalate any incidents immediately to our Audit Committee.
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Item 2. Properties
Our corporate headquarters, consisting of approximately 59,000 square feet of office space in San Francisco, California, is leased through June 2029. We also lease additional office space in locations around the world, including Denver, Colorado; Dublin, Ireland; Ankara, Turkey; and Melbourne, Australia. We maintain co-working or other short-term office spaces in Austin, Texas; Gurugram, Chennai and Mumbai, India; Istanbul, Turkey; and Mexico City, Mexico, 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.
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Item 3. Legal Proceedings
From time to time, we are involved in legal proceedings and subject to claims that arise in the ordinary course of our business. Although the results of legal proceedings and claims cannot be predicted with certainty, we believe we are not currently party to any legal proceedings which, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results or financial condition. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
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Item 4. Mine Safety Disclosures
Not applicable.
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PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market information for common stock
Our common stock is traded on the Nasdaq Stock Exchange under the symbol “UDMY”. Trading of our common stock commenced on October 29, 2021 in connection with our initial public offering.
Use of proceeds
Our initial public offering of our common stock was affected pursuant to a registration statement on Form S-1 (File No. 333-260042), which was declared effective by the SEC on October 28, 2021.
There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus dated as of October 28, 2021 and filed with the SEC pursuant to Rule 424(b)(4) on October 29, 2021.
Dividend policy
We have never paid any cash dividends on our common stock. Our board of directors currently intends to retain any future earnings to support operations and to finance the growth and development of our business and does not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors.
Stockholders
As of December 31, 2025, there were 31 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
In 2025, our Board of Directors approved a share repurchase program, which authorized the purchase of up to $50 million of Udemy common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. During fiscal year ended December 31, 2025, the Company repurchased 7,971,500 shares for an aggregate total of $50.2 million, inclusive of direct costs incurred. This share repurchase program was completed in December 2025.
The following table summarizes share repurchase activity during the fourth quarter of 2025:
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be repurchased under the program (in thousands) | ||||||||||||||||||||||
October 1, 2025 - October 31, 2025 | 1,088,694 | $ | 6.70 | 1,088,694 | $ | 14,386 | ||||||||||||||||||||
November 1, 2025 - November 30, 2025 | 1,911,497 | 5.15 | 1,911,497 | 4,539 | ||||||||||||||||||||||
December 1, 2025 - December 31, 2025 | 873,118 | 5.20 | 873,118 | — | ||||||||||||||||||||||
Total | 3,873,309 | $ | 5.60 | 3,873,309 | 18,925 | |||||||||||||||||||||
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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Stock performance graph
The following shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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, 2025, assuming an initial investment of $100. Data for the S&P 500 Index and Nasdaq Computer Index assumes reinvestment of any dividends.
| October 29, 2021 | December 31, 2021 | December 31, 2022 | December 31, 2023 | December 31, 2024 | December 31, 2025 | ||||||||||||||||||||||||||||||
Udemy | $ | 100.00 | $ | 71.05 | $ | 38.36 | $ | 53.53 | $ | 29.93 | $ | 21.27 | |||||||||||||||||||||||
S&P 500 Index | $ | 100.00 | $ | 103.76 | $ | 83.37 | $ | 103.57 | $ | 127.71 | $ | 149.74 | |||||||||||||||||||||||
Nasdaq Computer | $ | 100.00 | $ | 105.56 | $ | 67.79 | $ | 112.86 | $ | 153.89 | $ | 197.89 | |||||||||||||||||||||||
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Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and in Part I, Item 1A, “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Form 10-K.
A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2025 compared to the fiscal year ended December 31, 2024 is presented below. A discussion regarding our financial condition and results of operations for the fiscal year ended December 31, 2024 compared to the fiscal year ended December 31, 2023 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 19, 2025.
Overview
Our mission is to transform lives through learning.
We believe traditional skills development and validation methods are fast becoming outdated. Technological advancements, such as generative artificial intelligence (“AI”), have significantly altered the types of skills required of workers across nearly every industry and role, and lifelong training and continuous skills acquisition are becoming the norm. Udemy’s AI-powered skills acceleration platform empowers organizations and individuals with effective skill acquisition and development through various modalities, connecting learners around the world with relevant and up-to-date content created by experts and practitioners.
Udemy’s consumer marketplace has attracted over 84 million learners in over 180 countries who are looking to develop the skills they need to attain in-demand jobs and advance their career. Our expansive ecosystem comprises more than 91,000 instructors who have developed and published over 293,000 courses across 75 languages, spanning critical skill domains including technology, business, leadership, and personal development. Based on ratings and reviews from enrolled learners on our marketplace, we curate our highest-quality content for Udemy’s enterprise software-as-a-service (SaaS) platform, Udemy Business (“UB”), which enables companies around the world to offer effective on-demand skills development solutions for employees, immersive laboratory-style learning for technology teams, and cohort-based learning focused on leadership development.
Our dual-revenue model offers consumers flexible purchasing options: either subscription-based plans providing unlimited access to a curated selection of premium content for monthly or annual periods, or perpetual single-course purchases granting lifetime access to specific content. These offerings allow us to capitalize on both recurring revenue opportunities and individual transaction value, while simultaneously addressing varying consumer preferences for skill development across global markets and enhancing our ability to monetize effectively.
Advancements in AI are fundamentally transforming our learning platform capabilities beyond traditional linear video instruction, enabling Udemy to deliver more personalized, efficient, and measurable skill development experiences. Our AI investments power sophisticated skills assessment technology that evaluates a learner's existing competencies and automatically generates customized learning paths tailored to individual development needs. This has expanded our product offering to include high-engagement modalities, such as interactive simulations, AI-powered role-play exercises, microlearning content, and continuous knowledge reinforcement tools that verify skill mastery and retention. These capabilities represent substantial differentiation in the learning marketplace, can accelerate time-to-proficiency for learners, and help strengthen our value proposition for both enterprise customers and individual learners.
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Recent developments
Proposed merger with Coursera
On December 17, 2025, we entered into Merger Agreement with Coursera, under which Coursera will combine with Udemy in an all-stock transaction. Under the terms of the Merger Agreement, Udemy stockholders will receive 0.800 shares of Coursera Common Stock for each share of our common stock. Upon the closing of the Merger, existing Coursera stockholders are expected to own approximately 59% and existing Udemy stockholders are expected to own approximately 41% of the combined company, on a fully diluted basis.
The completion of the Merger is subject to the satisfaction of certain customary conditions set forth in the Merger Agreement, including, but not limited to: (i) adoption of the Merger Agreement by Udemy’s stockholders, (ii) approval of the issuance of the shares of Coursera Common Stock and an amendment of Coursera’s amended and restated certificate of incorporation to increase the number of authorized shares of Coursera Common Stock thereunder by Coursera’s stockholders; (iii) authorization for listing of the shares of Coursera Common Stock to be issued in the Merger on NYSE, subject to official notice of issuance; (iv) the expiration or termination of any waiting period applicable to the Merger under the HSR Act (on February 9, 2026, the Federal Trade Commission granted early termination of the waiting period under the HSR Act), and the receipt of certain other required regulatory approvals; and (v) effectiveness of the registration statement on Form S-4 for the Coursera Common Stock to be issued in the Merger. In addition, Udemy’s obligation to complete the Merger is also subject to the receipt by Udemy of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement includes certain customary termination rights for the Udemy and Coursera. Upon termination of the Merger Agreement in certain circumstances, Udemy or Coursera may be required to pay the other party a termination fee of $40.5 million.
The Merger is expected to close by the second half of 2026, subject to the satisfaction of the closing conditions.
The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 of this Annual Report on Form 10-K.
Other than acquisition-related expenses associated with the proposed merger of $3.7 million recorded in general and administrative expense in the accompanying consolidated statements of operations for the fiscal year ended December 31, 2025, the Merger did not impact the Company’s consolidated financial statements.
Key factors impacting our performance
We believe that the growth of our business and our future success are dependent upon many factors. 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.
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. Our organic channels include those outside of our paid marketing efforts, such as a Udemy brand name internet search. Once we bring new learners and UB customers onto our platform, we work to create a best-in-class experience to encourage engagement to deliver measurable career and business outcomes.
Ability to retain and expand our existing learner and customer relationships
Our business and results of operations will depend on our ability to drive greater retention and expansion within our existing customer base and expand adoption of our subscription offerings within our existing learner base.
Our efforts to grow our UB offering are focused primarily on corporate and government customers. Historically, we have expanded from individual department to multi-department to enterprise-wide sales as our value is proven. Building upon this success, we believe a significant opportunity exists for us to acquire new UB customers and expand our existing UB customers’ license count by identifying new use cases and increasing the size of existing deployments. In particular, we believe that our UB Large Customers, which we define as companies with at least 1,000 employees, present the most significant opportunities for us to retain and grow revenue over time, given the wider range of potential use cases and expansion opportunities.
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We often enter into customized contractual arrangements with our UB customers in which we offer more favorable pricing terms in exchange for larger total contract values that accompany larger deployments and longer terms. Over the long term, as we drive a greater portion of our revenue through our deployments with UB customers, we expect that our revenue will continue to grow, but the price we charge UB customers per seat may decline, which could reduce margins in the future.
Our efforts to grow our existing relationships with our consumer learners are focused on increasing their engagement and converting free learners first into purchasers of individual courses, and then into monthly or annual subscribers. New learners to our platform may first engage with our free courses, which serve as a funnel to grow our total learner base and drive purchases of our paid offerings, including UB referrals and consumer subscription offerings.
For the fiscal years ended December 31, 2025 and 2024, subscription offerings across both our Consumer and Enterprise segments accounted for 72% and 66% of our consolidated revenue, respectively. We expect growth in our subscription offerings to improve the predictability of our revenue period-to-period; however, the impact of new or renewed subscriptions, or a decline in subscriptions, during any one period may not be fully or immediately reflected in our revenue for that period. Moreover, growth in our Consumer subscription offerings may negatively impact our transactional and other revenue as learners shift their spending from individual course purchases to subscription fees. Impacts to our transactional and other revenue during any one period may not be fully offset by subscription growth during the same period.
Ability to source in-demand content from our instructors
We believe that learners and UB customers are attracted to Udemy largely because of the high quality and wide selection of content our instructors offer. Continuing to source in-demand content across various modalities from our instructors will be an important factor in attracting learners and UB customers and growing our revenue over time. When we offer content as part of the UB and consumer subscription offerings, our instructors agree to distribute such content exclusively through our platform, which we believe demonstrates our ability to increase the value of our platform through unique content.
We view the breadth and diverse expertise of our instructors as one of our competitive advantages. Our ability to create attractive content creation incentive opportunities while optimizing the revenue share structure is a key element of supporting the long-term growth of our business. 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, 2025.
Impact of mix of Enterprise and Consumer segments
Our mix of revenue continues to shift toward our higher-margin Enterprise segment from our Consumer segment. Our Enterprise segment’s higher gross margins are primarily driven by comparably lower content costs, though partially offset by higher customer support costs. The mix of customer acquisition methods in our Consumer segment will substantially impact our financial performance. 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.
Ability to expand our international footprint
We currently generate a majority of our revenue outside North America. We see a significant opportunity to expand our offerings into regions with large underserved adult and corporate learning populations. We have invested, and plan to continue to invest, in personnel and marketing efforts to support our international growth and expand our international operations as part of our strategy to grow our customer and learner base, particularly among our UB customers. We also plan to continue investing in strategic partnerships that either extend our marketing reach or the capabilities and reach of our global go-to-market sales team. Our success in certain markets, such as Japan, depends on strategic partnerships with key resellers.
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Our investment in growth
We are actively investing in our business as we believe that we are only just beginning to penetrate our market opportunity. We are prioritizing resources for high-growth opportunities through expanding and deepening our opportunities with larger enterprise customers, further penetrating our existing customer base, and pursuing strategic partnerships and acquisitions. As we continue to build our sales and marketing efforts, expand our content collection, develop our immersive learning capabilities, execute on our operational efficiency initiatives, and invest in our technology development, including investments in generative AI, we anticipate our operating expenses will generally decrease as a percentage of revenue over time. Any investments we make to facilitate our future growth, whether organically or through acquisitions or strategic partnerships, will occur in advance of the benefits from such investments.
Pace of adoption of cloud-based skill development solutions
Our ability to grow our learner base and drive market adoption of our platform is affected by the overall demand for cloud-based skill development solutions. The market for cloud-based skill development is less mature than the market for in-person, instructor-led-training, and potential customers may be slow or unwilling to migrate from these legacy approaches. We believe that as technology becomes increasingly critical to business operations, the need for cloud-based skill development solutions, particularly an integrated enterprise-grade platform such as ours, will increase, and our customer base and the breadth and deployment of usage in our customer base will also increase. 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 skill development platform.
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. Access to the Udemy platform represents a series of distinct services as we continually provide access to skill development content and fulfill our obligation to the UB customer over the subscription term. Because the series of distinct services represents a single performance obligation that is satisfied over time, we recognize revenue ratably over the contractual subscription term. Enterprise revenue recognized from professional services, in which Udemy provides customers with effective support and strategic guidance to enable learners and align with business goals, was immaterial for the periods presented.
Consumer revenue consists of individual 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. After a successful checkout, consumer learners receive a non-exclusive license to the digital course content in addition to stand-ready access to the Udemy platform hosting services needed to access the content. Access to the online content on the Udemy platform represents a series of distinct services as we continually provide access to and fulfill our hosting obligation to the learner. This series of distinct services represents a single performance obligation that is satisfied over time. 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.
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.
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Cost of revenue
Cost of revenue primarily consists of content costs, which are the payments to our instructors. Content costs are driven by the means by which we acquired the learner consuming the content. For courses offered on Udemy’s consumer marketplace, instructors earn a specific percentage of the net sale amount when a learner purchases the instructor’s course. For courses offered through Udemy Business or a consumer subscription offering, instructors earn a pro-rata share of a monthly instructor payments pool for that subscription offering. Each month, Udemy calculates the revenue for each subscription offering, with a fixed percentage allocated as an instructor payments pool. 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. 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. We are reducing the instructor revenue share for our subscription offerings, which are derived as a percentage of total UB and consumer subscription revenue, to 15% by 2026. The first rate adjustment to 20% was effective on January 1, 2024, the second rate adjustment to 17.5% was effective on January 1, 2025, and the final rate adjustment to 15% was effective on January 1, 2026.
For consumer single course purchases, content costs are incurred at the time of purchase. As consumer course content revenue is recognized ratably over an estimated service period of four months, consumer gross margins are lower in the period of purchase, and higher in the remaining periods of the estimated service period over which revenue is recognized. 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.
Cost of revenue also includes payment and mobile processing fees, costs associated with hosting digital content, employee related expenses for our customer support organization, including salaries, benefits, stock-based compensation, facilities and other expenses, depreciation of network equipment, amortization of capitalized software, amortization of vendor relationship and developed technology intangible assets acquired through business combinations, and the portion of fees paid to certain reseller partners attributable to their providing customer support services to UB customers. We expect cost of revenue as a percentage of revenue to generally decrease, as we increase the percentage of revenue derived from our subscription offerings and decrease the instructor revenue share percentage.
Operating expenses
Operating expenses consist of sales and marketing, research and development, general and administrative expenses, and restructuring charges. 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. We are focused on investing in initiatives which will drive operational efficiency while focusing resources on high-growth opportunities, and as a result we anticipate our operating expenses will generally decrease as a percentage of revenue over time.
Sales and marketing
Our sales and marketing expenses consist primarily of personnel-related costs, including stock-based compensation, marketing costs, sponsorship and brand costs, costs related to customer and instructor acquisition, amortization of deferred contract costs, and amortization of trade name and customer relationship intangible assets acquired through business combinations. Sales and marketing expenses also consist of costs incurred for hosting and customer support services related to providing our platform to free learners. While sales and marketing expenses as a percentage of revenue may vary from period to period, in part due to the extent and timing of sales and marketing initiatives, we generally expect this percentage to decrease over the long term given our focus on sales efficiency and our expansion strategy.
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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, and amortization of assembled workforce intangible assets acquired through asset acquisitions. Research and development costs also include contracted services, supplies, and other miscellaneous expenses. We believe that continued investment in our platform is important to our future growth and to maintain and attract learners and UB customers to our platform. While research and development expenses as a percentage of revenue may vary from period to period, in part due to the timing of investments in our platform, we generally expect this percentage to decrease over the long term given our focus on operational efficiency and high-growth opportunities.
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 as a percentage of revenue to vary from period to period but generally decrease over the long term as we benefit from greater operational scale and efficiency.
Restructuring charges
Our restructuring charges consist primarily of personnel expenses, such as employee severance, benefits costs, and stock-based compensation, as well as other direct and incremental costs incurred as a result of non-recurring restructuring activities that we committed to during the third quarter of 2024.
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 our revolving credit facility and certain indirect tax reserves.
Other income (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. We have a full valuation allowance against our U.S. federal and state deferred tax assets as the realization of the full amount of these deferred tax assets is uncertain, including net operating loss carryforwards and tax credits related primarily to research and development. The valuation allowance is driven by our historical overall loss position, and we will not be able to utilize any of these favorable tax attributes until we are consistently in a taxable income position. When we begin to consistently operate in a taxable income position, we may release portions of the valuation allowance to recognize and use those tax attributes. Until then, we expect to maintain this full valuation allowance until it becomes more likely than not that the deferred tax assets will be realized.
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Results of operations
The following table summarizes our results of operations for the periods presented. The results below are not necessarily indicative of results to be expected for future periods. Results are as follows (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
| Revenue | $ | 789,844 | $ | 786,565 | $ | 728,937 | |||||||||||
| Cost of revenue (1)(2) | 271,438 | 294,625 | 309,598 | ||||||||||||||
| Gross profit | 518,406 | 491,940 | 419,339 | ||||||||||||||
| Operating expenses (1)(2) | |||||||||||||||||
| Sales and marketing | 326,451 | 342,946 | 316,738 | ||||||||||||||
| Research and development | 101,513 | 125,438 | 120,335 | ||||||||||||||
| General and administrative | 93,020 | 96,199 | 93,898 | ||||||||||||||
| Restructuring charges | 1,578 | 16,685 | 10,263 | ||||||||||||||
| Total operating expenses | 522,562 | 581,268 | 541,234 | ||||||||||||||
| Loss from operations | (4,156) | (89,328) | (121,895) | ||||||||||||||
| Other income (expense), net | |||||||||||||||||
| Interest income | 14,208 | 19,666 | 20,670 | ||||||||||||||
| Interest expense | (734) | 379 | (518) | ||||||||||||||
Other expense, net | (981) | (11,655) | (1,898) | ||||||||||||||
Total other income, net | 12,493 | 8,390 | 18,254 | ||||||||||||||
Net income (loss) before taxes | 8,337 | (80,938) | (103,641) | ||||||||||||||
| Income tax provision | 4,530 | 4,350 | 3,653 | ||||||||||||||
Net income (loss) | $ | 3,807 | $ | (85,288) | $ | (107,294) | |||||||||||
(1)Includes stock-based compensation expense as follows (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | $ | 6,748 | $ | 6,887 | $ | 7,006 | |||||||||||
| Sales and marketing | 22,074 | 28,665 | 30,859 | ||||||||||||||
| Research and development | 18,385 | 27,046 | 26,301 | ||||||||||||||
| General and administrative | 21,547 | 27,584 | 30,672 | ||||||||||||||
Restructuring charges | $ | — | $ | (160) | $ | 1,208 | |||||||||||
| Total stock-based compensation expense | $ | 68,754 | $ | 90,022 | $ | 96,046 | |||||||||||
(2) Includes amortization of intangible assets as follows (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | $ | — | $ | 1,880 | $ | 2,900 | |||||||||||
| Sales and marketing | 918 | 915 | 1,208 | ||||||||||||||
Research and development | 563 | — | — | ||||||||||||||
| Total amortization of intangible assets | $ | 1,481 | $ | 2,795 | $ | 4,108 | |||||||||||
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The following table summarizes our results of operations as a percentage of revenue for each of the periods indicated:
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | |||||||||||
| Cost of revenue | 34 | 37 | 42 | ||||||||||||||
| Gross profit | 66 | 63 | 58 | ||||||||||||||
| Operating expenses | |||||||||||||||||
| Sales and marketing | 41 | 44 | 43 | ||||||||||||||
| Research and development | 13 | 16 | 17 | ||||||||||||||
| General and administrative | 12 | 12 | 13 | ||||||||||||||
| Restructuring charges | — | 2 | 1 | ||||||||||||||
| Total operating expenses | 66 | 74 | 74 | ||||||||||||||
| Loss from operations | — | (11) | (16) | ||||||||||||||
| Other income (expense), net | |||||||||||||||||
| Interest income | 1 | 3 | 3 | ||||||||||||||
| Interest expense | — | — | — | ||||||||||||||
Other expense, net | — | (2) | — | ||||||||||||||
Total other income, net | 1 | 1 | 3 | ||||||||||||||
Net income (loss) before taxes | 1 | (10) | (13) | ||||||||||||||
| Income tax provision | 1 | 1 | 1 | ||||||||||||||
Net income (loss) | — | % | (11) | % | (14) | % | |||||||||||
Comparison of the fiscal years ended December 31, 2025 and 2024
Revenue
| Fiscal Year Ended December 31, | Change | |||||||||||||||||||
2025 | 2024 | $ | % | |||||||||||||||||
| Revenue | (in thousands, except percentages) | |||||||||||||||||||
Enterprise | $ | 524,074 | $ | 494,458 | $ | 29,616 | 6 | % | ||||||||||||
| Consumer | 265,770 | 292,107 | (26,337) | (9) | % | |||||||||||||||
| Total revenue | $ | 789,844 | $ | 786,565 | $ | 3,279 | — | % | ||||||||||||
Revenue for the fiscal year ended December 31, 2025, was $789.8 million, compared to $786.6 million for the prior year, which represents an increase of $3.3 million, or 0.4%. The increase in revenue for the fiscal year ended December 31, 2025 was primarily driven by an increase in revenue from our Enterprise segment while being partially offset by a decrease in revenue from our Consumer segment.
For the fiscal year ended December 31, 2025, Enterprise segment revenue was $524.1 million, or 66% of total revenue, compared to $494.5 million, or 63% of total revenue, for the prior year. The $29.6 million, or 6%, increase in Enterprise segment revenue was primarily driven by increases in UB subscription revenues of $30.0 million. The increase in UB subscription revenue was due to an increase in the average deal size for new customers, and was partially offset by lower net retention rates. Although churn outpaced expansion across all existing UB customers, as reflected by our UB NDRR of 93% as of December 31, 2025, net retention among our UB Large Customers was higher, as reflected by our UB Large Customer NDRR of 97% as of December 31, 2025.
For the fiscal year ended December 31, 2025, Consumer segment revenue was $265.8 million, or 34% of total revenue, compared to $292.1 million, or 37% of total revenue, for the prior year. The $26.3 million, or 9%, decrease in Consumer segment revenue was primarily due to a decrease in revenue recognized from
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transactional and other purchases of $39.8 million, offset by an increase in consumer subscription revenue of $13.5 million.
The decrease in transactional and other revenue is primarily attributable to a decrease in monthly average buyers purchasing single courses, the amount of revenue recognized in the current period that was deferred from course purchases in the prior period, and foreign currency exchange rates. The overall decrease in transactional and other revenue also includes a $2.7 million increase in breakage revenue from unredeemed Udemy credits, of which $2.5 million related to performance obligations satisfied in prior periods, following the Company’s determination in the second quarter of 2025 that such breakage could be recognized.
The increase in consumer subscription revenue is primarily attributable to our growth in paid Consumer subscribers.
Cost of revenue, gross profit and gross margin
| Fiscal Year Ended December 31, | Change | |||||||||||||||||||
2025 | 2024 | $ | % | |||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||
| Cost of revenue | 271,438 | 294,625 | $ | (23,187) | (8) | % | ||||||||||||||
| Gross profit | 518,406 | 491,940 | $ | 26,466 | 5 | % | ||||||||||||||
| Gross margin | 66 | % | 63 | % | ||||||||||||||||
Cost of revenue for the fiscal year ended December 31, 2025, was $271.4 million, compared to $294.6 million for the prior year. The decrease of $23.2 million, or 8%, across the comparative periods was driven by a $22.8 million decrease in content costs and a $1.9 million decrease in amortization of intangible assets, which were partially offset by a $0.8 million increase in amortization of capitalized software.
Content costs for the Enterprise and Consumer segments were $84.5 million and $85.0 million for the fiscal year ended December 31, 2025, respectively, compared to $89.6 million and $102.7 million in the prior year, respectively. Segment content costs as a percentage of segment revenue for the Enterprise and Consumer segments were 16% and 32% for the fiscal year ended December 31, 2025, respectively, compared to 18% and 35% for the prior year, respectively. The reduction in content costs as a percentage of revenue was primarily driven by the reduction in instructor revenue share from 20% to 17.5% for all subscription offerings, which became effective on January 1, 2025, as well as the continued mix shift from single course purchases to subscription purchases in our Consumer segment.
In our Enterprise segment, customer support costs and other segment items were generally consistent with those costs incurred the prior year. In our Consumer segment, other segment items, comprised of payment processing fees and hosting costs, decreased by $1.2 million as compared to the prior year.
Gross margin was 66% for the fiscal year ended December 31, 2025, compared to 63% for the prior year. The increase in gross margin was primarily due to the reduction in instructor revenue share for all subscription offerings and the continued shift in the mix of revenue toward our Enterprise segment and subscription offerings.
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Operating expenses
| Fiscal Year Ended December 31, | Change | |||||||||||||||||||
2025 | 2024 | $ | % | |||||||||||||||||
| Operating expenses | (in thousands, except percentages) | |||||||||||||||||||
| Sales and marketing | $ | 326,451 | $ | 342,946 | $ | (16,495) | (5) | % | ||||||||||||
| Research and development | 101,513 | 125,438 | (23,925) | (19) | % | |||||||||||||||
| General and administrative | 93,020 | 96,199 | (3,179) | (3) | % | |||||||||||||||
| Restructuring charges | 1,578 | 16,685 | (15,107) | (91) | % | |||||||||||||||
| Total operating expenses | $ | 522,562 | $ | 581,268 | $ | (58,706) | (10) | % | ||||||||||||
Sales and marketing. Sales and marketing expenses for the fiscal year ended December 31, 2025 were $326.5 million, compared to $342.9 million in the prior year. The $16.5 million decrease in sales and marketing expense was primarily due to a $15.4 million decrease in direct marketing and other advertising costs, a $3.4 million decrease in personnel-related expenses, and a $6.6 million decrease in stock-based compensation expense. These decreases were partially offset by a $5.9 million increase in amortization of deferred contract costs and a $3.2 million increase in software subscriptions and allocated costs.
Research and development. Research and development expenses for the fiscal year ended December 31, 2025 were $101.5 million, compared to $125.4 million in the prior year. The $23.9 million decrease was primarily due to a $15.1 million decrease in personnel-related expenses and a $8.7 million decrease in stock-based compensation expense.
General and administrative. General and administrative expenses for the fiscal year ended December 31, 2025 were $93.0 million, compared to $96.2 million in the prior year. The $3.2 million decrease was primarily driven by a $6.0 million decrease in stock-based compensation expense and a $4.5 million decrease in professional services costs incurred in the prior year that were not part of ongoing operations. These were partially offset by a $3.7 million increase in acquisition related costs, a $1.8 million increase in charges to the credit losses reserve, and a $1.2 million increase professional services expenses in support of ongoing operations.
Restructuring charges. As a result of the strategic restructuring activities announced in September 2024, we recognized $1.6 million and $16.7 million of restructuring charges during the fiscal years ended December 31, 2025 and 2024, respectively. The restructuring charges primarily consisted of one-time severance payments, salary and wages earned over required retention periods, and other benefits.
Total other income (expense), net
| Fiscal Year Ended December 31, | Change | |||||||||||||||||||
2025 | 2024 | $ | % | |||||||||||||||||
| Other income (expense), net | (in thousands, except percentages) | |||||||||||||||||||
| Interest income | $ | 14,208 | $ | 19,666 | $ | (5,458) | (28) | % | ||||||||||||
| Interest expense | (734) | 379 | (1,113) | (294) | % | |||||||||||||||
| Other expense, net | (981) | (11,655) | 10,674 | (92) | % | |||||||||||||||
| Total other income, net | $ | 12,493 | $ | 8,390 | $ | 4,103 | 49 | % | ||||||||||||
We recorded total other income, net of $12.5 million for the fiscal year ended December 31, 2025, compared to total other income, net of $8.4 million in the prior year. The $4.1 million increase in total other income, net was primarily driven by an impairment charge of $10.3 million recognized on our strategic investments in the fiscal year ended December 31, 2024, which was partially offset by a $5.5 million decrease in interest and accretion income on our existing cash, cash equivalents, and marketable securities portfolio.
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Income tax provision
| Fiscal Year Ended December 31, | Change | |||||||||||||||||||
2025 | 2024 | $ | % | |||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||
| Income tax provision | $ | 4,530 | $ | 4,350 | $ | 180 | 4 | % | ||||||||||||
For the fiscal year ended December 31, 2025, we recognized income tax expense of $4.5 million, compared to $4.4 million for the prior year. Income tax expense for the fiscal years ended December 31, 2025 and 2024, was primarily comprised of foreign and state taxes.
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.
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. 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 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. The slight decrease in UB customers is primarily attributable to our strategy of focusing resources on UB Large Customers, which provide the most opportunities for us to grow revenue over time.
| As of December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
Udemy Business customers | 17,029 | 17,096 | 15,726 | ||||||||||||||
Udemy Business Annual Recurring Revenue
We disclose our UB Annual Recurring Revenue (“ARR”) as a measure of our Enterprise segment revenue growth. ARR represents the annualized value of our UB customer contracts on the last day of a given period. Only revenue from closed UB contracts with active seats as of the last day of the period are included. The increase in UB ARR was primarily driven by an increase in the average deal size for new customers, and was partially offset by churn outpacing expansion across all existing customers. Our upmarket focus has resulted in increased customer count and comparatively better net retention within our UB Large Customer cohort.
| As of December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Udemy Business annual recurring revenue | $ | 539,973 | $ | 516,945 | $ | 465,997 | |||||||||||
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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. We believe UB NDRR is an important metric that provides insight into the long-term value of our UB subscription agreements and our ability to retain and grow revenue from our UB customers. We believe UB Large Customer NDRR reflects our ability to retain and expand our footprint with larger organizations, who present greater opportunities for us to retain and grow revenue given the wider range of potential use cases and expansion opportunities.
We calculate UB NDRR as the total ARR at the end of a trailing twelve-month period divided by the total ARR at the beginning of a trailing twelve-month period for the cohort of all UB customers active at the beginning of the trailing twelve-month period. We calculate UB Large Customer NDRR as the total UB Large Customer ARR at the end of a trailing twelve-month period divided by the total Large Customer ARR at the beginning of a trailing twelve-month period for the cohort of UB customers with at least 1,000 employees active at the beginning of the trailing twelve-month period. Total ARR and Large Customer ARR at the end of a trailing twelve-month period are calculated as ARR and Large Customer ARR, respectively, at the beginning of a trailing twelve-month period that are then adjusted for upsells, downsells, and churns for the same cohort of customers during that period. Large Customer ARR represents the annualized value of contracts for UB customers with active seats and having at least 1,000 employees on the last day of a given period.
Our UB NDRR and UB Large Customer NDRR are expected to fluctuate in future periods due to a number of factors, including the growth of our revenue base, the penetration within our learner base, expansion of products and features, and our ability to retain our UB customers. The decreases in our NDRR metrics were driven by lower rates of upsells and expansions, largely as a result of budget scrutiny, although net retention among our UB Large Customers was higher.
| As of December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
Udemy Business net dollar retention rate | 93 | % | 98 | % | 106 | % | |||||||||||
Udemy Business Large Customer net dollar retention rate | 97 | % | 103 | % | 113 | % | |||||||||||
Paid Consumer subscribers
We count the total number of paid Consumer subscribers at the end of each period. Paid Consumer subscribers are defined as users who had an active paid subscription to any Consumer subscription offering at the end of the last day of a given period. The count of paid subscribers does not include users who are currently on a free trial.
We believe that the number of paid Consumer subscribers and our ability to increase this metric is an important indicator of the growth of our Consumer business and future revenue and profitability trends. The increase in paid Consumer subscribers is primarily attributable to our increased focus on global subscription expansion.
| As of December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
Paid Consumer subscribers | 343 | 170 | 118 | ||||||||||||||
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Monthly average buyers
A buyer is a consumer who purchases a course or subscription through our Consumer offering. We first determine the number of monthly buyers by taking the total buyers of single courses during a given month plus the total active, paid Consumer subscribers at any point in that month, adjusting for duplicate buyers that may be present in both totals. 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. We believe that the number of monthly average buyers in a given period is an important indicator of the growth of our business and potential future revenue trends. Our monthly average buyers count is expected to fluctuate in future periods due to a number of factors, including the growth of our customer base, expansion of products and features, and our ability to retain our Consumer customers.
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
(in thousands) | |||||||||||||||||
| Monthly average buyers | 1,275 | 1,340 | 1,378 | ||||||||||||||
Segment revenue and segment adjusted gross profit
Our revenue is generated from our UB and Consumer offerings, which respectively correspond to our two operating and reportable segments, Enterprise and Consumer. Segment revenue represents the revenue recognized from each of these offerings and is a key measure of the performance of our platform, and in turn drives our financial performance.
We also monitor segment adjusted gross profit as a key metric to help evaluate the financial performance of our individual segments and our business as a whole. Segment adjusted gross profit is defined as segment revenue less segment adjusted cost of revenue. Segment adjusted cost of revenue includes content costs, customer support services, hosting and platform costs, and payment processing fees that are allocable to each segment. Segment adjusted gross profit excludes amortization of capitalized software, depreciation, stock-based compensation, and amortization of intangible assets included in cost of revenue as our chief operating decision maker does not include the information in his measurement of the performance of the operating segments. Content costs, which are payments made to our instructors, are the largest individual component of segment adjusted 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.
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
(in thousands except percentages) | |||||||||||||||||
Enterprise segment revenue | $ | 524,074 | $ | 494,458 | $ | 420,646 | |||||||||||
Enterprise segment adjusted gross profit | $ | 394,920 | $ | 361,673 | $ | 283,419 | |||||||||||
Enterprise segment adjusted gross margin | 75 | % | 73 | % | 67 | % | |||||||||||
| Consumer segment revenue | $ | 265,770 | $ | 292,107 | $ | 308,291 | |||||||||||
Consumer segment adjusted gross profit | $ | 151,493 | $ | 159,357 | $ | 163,766 | |||||||||||
| Consumer segment adjusted gross margin | 57 | % | 55 | % | 53 | % | |||||||||||
For the fiscal year ended December 31, 2025, the increase in Enterprise segment adjusted gross margin was primarily due to the reduction in instructor revenue share from 20% to 17.5% for all subscription offerings, which was effective on January 1, 2025. Customer support costs and other segment items allocable to the Enterprise segment as a percentage of Enterprise revenue were each generally consistent when compared to the prior year.
For the fiscal year ended December 31, 2025, the increase in Consumer segment adjusted gross margin was primarily due to the relative increase in consumer subscriptions as a percentage of total Consumer revenue, the reduction in instructor revenue share from 20% to 17.5% for consumer subscriptions, and the impact of breakage revenue as discussed above.
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Non-GAAP financial metrics
In addition to the measures presented in our consolidated financial statements, we use the following non-GAAP financial metrics identified below to help us evaluate our business, formulate business plans, and make strategic decisions.
Adjusted EBITDA and adjusted EBITDA margin
As adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and certain variable charges.
We define adjusted EBITDA as net income (loss), adjusted to exclude:
•interest income;
•interest expense;
•provision for income taxes;
•depreciation and amortization;
•stock-based compensation expense;
•other expense, net;
•restructuring charges; and
•acquisition related costs.
We define adjusted EBITDA margin as adjusted EBITDA divided by revenue for the same period.
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The following table provides a reconciliation of net income (loss), the most directly comparable GAAP financial measure, to adjusted EBITDA (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
Net income (loss) | $ | 3,807 | $ | (85,288) | $ | (107,294) | |||||||||||
| Adjusted to exclude the following: | |||||||||||||||||
| Interest income | (14,208) | (19,666) | (20,670) | ||||||||||||||
Interest expense | 734 | (379) | 518 | ||||||||||||||
| Income tax provision | 4,530 | 4,350 | 3,653 | ||||||||||||||
| Depreciation and amortization | 25,359 | 25,421 | 24,588 | ||||||||||||||
| Stock-based compensation expense | 68,754 | 90,182 | 94,838 | ||||||||||||||
| Other expense, net | 981 | 11,655 | 1,898 | ||||||||||||||
| Restructuring charges | 1,578 | 16,685 | 10,263 | ||||||||||||||
| Acquisition-related costs | 3,729 | — | — | ||||||||||||||
| Adjusted EBITDA | $ | 95,264 | $ | 42,960 | $ | 7,794 | |||||||||||
The following table provides a reconciliation of net income (loss) margin, the most directly comparable GAAP financial measure, to adjusted EBITDA margin (in thousands, except percentages):
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
| Revenue | $ | 789,844 | $ | 786,565 | $ | 728,937 | |||||||||||
Net income (loss) | $ | 3,807 | $ | (85,288) | $ | (107,294) | |||||||||||
Net income (loss) margin | 0 | % | (11) | % | (15) | % | |||||||||||
| Revenue | $ | 789,844 | $ | 786,565 | $ | 728,937 | |||||||||||
| Adjusted EBITDA | $ | 95,264 | $ | 42,960 | $ | 7,794 | |||||||||||
| Adjusted EBITDA margin | 12 | % | 5 | % | 1 | % | |||||||||||
Net income (loss) improved by $89.1 million during the fiscal year ended December 31, 2025, compared to the prior year. The increase in net income (loss) was driven by the reduction in the instructor revenue share for all subscription offerings, the continued shift in mix of revenue toward our Enterprise segment and subscription offerings, decreases in direct marketing and stock-based compensation costs, and lower restructuring and personnel costs as a result of our operational efficiency initiatives. Additionally, during the fiscal year ended December 31, 2024, we recognized $10.3 million of impairment charges on our strategic investments and $4.5 million of professional services costs that were not part of ongoing operations. In comparison, during the fiscal year ended December 31, 2025, we recognized $3.7 million in acquisition related costs.
Adjusted EBITDA increased by $52.3 million during the fiscal year ended December 31, 2025, compared to the prior year. The increase in adjusted EBITDA was driven by the reduction in the instructor revenue share for all subscription offerings, the continued shift in mix of revenue toward our Enterprise segment and subscription offerings, decreases in direct marketing costs, lower personnel costs as a result of our operational efficiency initiatives, and the prior year professional services costs that were not part of ongoing operations as discussed above.
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Free cash flow
We define free cash flow as net cash provided by operating activities, less purchases of property and equipment and capitalized software costs, as we consider these capital expenditures necessary to support our ongoing operations.
We consider free cash flow to be a liquidity measure that provides our management, board of directors, and investors with information about our ability to generate or use cash to enhance the strength of our balance sheet, further invest in our business, and pursue potential strategic initiatives.
We expect our free cash flow to generally increase in the near term due to our operational efficiency initiatives. We expect our purchases of property and equipment to vary based on the timing of leasing activities and renovations to our office real estate portfolio. We anticipate that our capitalized software costs may fluctuate in future periods based on the nature and timing of investments in our platform and new offerings. The timing of our operating expenses may cause free cash flow to vary from period to period as a percentage of revenue.
The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP financial measure, to free cash flow (in thousands):
Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 87,659 | $ | 53,043 | $ | (2,005) | |||||||||||
Less: purchases of property and equipment | (5,803) | (2,300) | (632) | ||||||||||||||
Less: capitalized software costs | (11,880) | (12,475) | (12,434) | ||||||||||||||
Free cash flow | $ | 69,976 | $ | 38,268 | $ | (15,071) | |||||||||||
Our free cash flow increased for the fiscal years ended December 31, 2025, compared to the same period in the prior year, primarily due to increases in our cash provided by operating activities due to the increase in net income, offset by the timing of certain working capital assets and liabilities, including accounts payable, accrued expenses and other liabilities activities, due to restructuring costs accrued for in prior periods, and deferred revenue.
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Liquidity and capital resources
As of December 31, 2025, our principal sources of liquidity were cash, cash equivalents and restricted cash of $231.9 million, marketable securities of $127.3 million, and $200.0 million of available capacity under a revolving credit facility. Cash and cash equivalents includes money market funds, certain U.S. government securities purchased with original maturities of less than 90 days, time and on demand deposits, and amounts in transit from certain payment processors for credit and debit card transactions. Restricted cash totaled $0.4 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. Our non-U.S. cash and cash equivalents have been earmarked for indefinite investment in our operations outside the U.S., and consequently no U.S. current or deferred taxes have been accrued on such amounts. 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.
In May 2025, we entered into a credit agreement with Citibank and certain other financial institutions. The revolving credit facility established by this agreement provides us with revolving commitments in an aggregate principal amount of $200.0 million, all of which were undrawn as of December 31, 2025. The revolving credit facility matures in May 2030. Refer to Note 6 – Debt for additional details.
Pursuant to the Merger Agreement with Coursera, we have agreed to various covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective date of the Merger. The Merger Agreement also restricts us from incurring new debt, issuing new shares and entering into certain material commercial contracts, in each case subject to customary exceptions (including certain preexisting arrangements and actions taken with Coursera’s prior consent).
We do not believe these restrictions will prevent us from meeting our ongoing costs of operations, working capital needs, or capital expenditure requirements.
Over the long term, we plan to continue investing in the growth and development of our platform. 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.
Sources of funds
We have historically financed our operations primarily through revenue, as well as proceeds from issuances of our capital stock. As noted above, in May 2025, we entered into a revolving credit facility with Citibank and certain other financial institutions. 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. We can provide no assurance that any additional financing will be available to us on acceptable terms.
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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 $801.2 million as of December 31, 2025. We have historically incurred operating losses and generated negative cash flows from operations as we have invested in growing our business. Our operating cash requirements may increase in the future as we continue to invest in the development of our platform and the growth of our business. We cannot be certain our revenue will grow sufficiently to offset our operating expense increases. As a result, we may need to raise additional funds to support our operations, and such funding may not be available to us on acceptable terms, if at all.
The following table summarizes our cash flows for the periods indicated (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | 87,659 | $ | 53,043 | $ | (2,005) | |||||||||||
| Investing activities | 20,629 | 1,077 | (24,972) | ||||||||||||||
| Financing activities | (68,464) | (171,749) | 19,195 | ||||||||||||||
| Effect of foreign exchange rates on cash flows | 238 | (116) | 20 | ||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 40,062 | $ | (117,745) | $ | (7,762) | |||||||||||
Operating activities
Cash provided by operating activities mainly consists of our net income (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.
Our main source of operating cash is payments received from our customers. Our primary use of cash from operating activities are for personnel-related expenses, instructor payments, advertising and marketing expenses, indirect taxes, and third-party cloud infrastructure expenses.
For the fiscal year ended December 31, 2025, cash provided by operating activities was $87.7 million. This consisted of our net income of $3.8 million, net adjustments for non-cash charges of $165.2 million, and net cash outflows from changes in operating assets and liabilities of $81.3 million. Cash outflows due to changes in operating assets and liabilities were primarily driven by $64.4 million in additions to deferred contract costs and a $11.0 million increase in accounts receivable, each of which are attributable to continued expansion in our Enterprise business.
For the fiscal year ended December 31, 2024, cash provided by operating activities was $53.0 million. This consisted of our net loss of $85.3 million, net adjustments for non-cash charges of $185.7 million, and net cash outflows from changes in operating assets and liabilities of $47.4 million. Cash outflows due to changes in operating assets and liabilities were primarily driven by $58.3 million in additions to deferred contract costs, attributable to continued expansion in our Enterprise business. This was partially offset by $10.1 million in accounts payable, accrued expenses and other liabilities, and a $11.1 million increase in deferred revenue, attributable to continued expansion in our Enterprise business.
Net cash provided by operating activities increased by $34.6 million for the fiscal year ended December 31, 2025, compared to the same period in the prior year, primarily due to the increase in net income, which was partially offset by the timing of changes in certain operating assets and liabilities, including accounts payable, accrued expenses and other liabilities activities, which includes restructuring costs accrued for in prior periods, and deferred revenue.
Investing activities
For the fiscal year ended December 31, 2025, net cash provided by investing activities was $20.6 million, primarily as a result of $222.4 million of proceeds received from the maturity and sale of marketable securities, which was partially offset by $182.6 million in purchases of marketable securities, $11.9 million related to capitalized software costs, $5.8 million in purchases of property and equipment, and $1.5 million for payments related to asset acquisitions.
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For the fiscal year ended December 31, 2024, net cash provided by investing activities was $1.1 million, primarily as a result of $352.8 million of proceeds received from the maturity of marketable securities, which was partially offset by $336.9 million in purchases of marketable securities and $12.5 million related to capitalized internal-use software costs.
Financing activities
For the fiscal year ended December 31, 2025, net cash used in financing activities was $68.5 million, primarily driven by $51.0 million in repurchases of common stock, $20.3 million in taxes paid related to net share settlement of employee equity awards, and payments of debt issuance costs of $1.4 million. This was partially offset by $4.2 million of proceeds from issuances of common stock under our employee stock purchase plan.
For the fiscal year ended December 31, 2024, net cash used in financing activities was $171.7 million, driven by $150.3 million in repurchases of common stock and $30.8 million in taxes paid related to net share settlement of employee equity awards. This was partially offset by proceeds from issuances of common stock under our employee stock purchase plan of $7.1 million and proceeds from issuance of common stock via stock option exercises of $2.3 million.
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.
Contractual obligations and commitments
Our estimated future obligations as of December 31, 2025, include both current and long term obligations. Under our operating leases, as noted in the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data", Note 7 – Leases, we have a current obligation of $4.5 million and a long-term obligation of $5.7 million.
Other contractual obligations generally consist of commitments to third-party cloud infrastructure providers, software subscriptions, and other service agreements to support operations in the ordinary course of business. As of December 31, 2025, we had $27.9 million of other purchase obligations with remaining terms in excess of one year. Additionally, we had $15.1 million of non-cancelable contractual commitments with our third-party cloud infrastructure agreement for fiscal year 2026. 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. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. See Note 2 to our consolidated financial statements for a description of our other significant accounting policies.
Revenue recognition
We recognize revenue using the five steps outlined in Accounting Standards Codification (“ASC”) Topic 606. We derive revenue from contracts with consumer and UB customers for access to our online learning platform and related services. For our single course and subscription product offerings, we offer a single, combined performance obligation, which is the customer’s access to the online content on the Udemy platform, representing a series of distinct services as we continually fulfill our stand-ready obligation to provide the customer access to the online licensed content with the functionality of the Udemy platform. As such, we recognize revenue on a straight-line basis using an estimated service period for consumer single course
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purchases and the contractual subscription term for UB and consumer subscription customers. Our professional services arrangements are generally offered as fixed price contracts. The revenue associated with these contracts is recognized on a proportional performance basis.
We believe the following are the significant estimates and judgments impacting our revenue recognition, and any changes to these estimates and judgments could impact the timing and amount of revenue recognized.
Estimated service period for consumer single course purchases— Consumers who purchase an individual course receive a non-exclusive lifetime license to the digital course content in addition to stand-ready access to the Udemy platform hosting services needed to access the content. Because consumers who purchase an individual course receive lifetime access to their purchased content, we believe an estimated service period best represents the time period during which learners access the online course content on the platform. Determining the estimated service period requires us to make certain judgments about the expected period over which a consumer benefits from their purchase. We consider quantitative and qualitative data in determining our estimate, including, but not limited to, the average time period between a learner’s purchase date and the last date the learner accesses the purchased content, the average total hours consumed for a given purchase, the time period over which learner activity stabilizes, known online trends, and, to the extent publicly available, service periods for competitors with similar online content. The estimated service period for single course purchases is four months from the date of enrollment.
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.
Determining whether we are the principal involves making key judgments about whether Udemy controls the contracted services before being transferred to the end customer. We have determined that we are the principal to customers who purchase access to online individual course content or through our subscription offerings, as we control the promised goods or services (i.e., access to course content via the Udemy platform) before it is transferred to the customer and are primarily responsible for fulfillment with respect to delivering access to course content. We also have substantial discretion to determine the pricing of our offerings. We therefore report revenue related to these arrangements based on the gross purchase price paid by customers.
Stock-based compensation
We account for stock-based compensation from stock-based awards using the estimated fair value of the awards on the date of grant. 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.
We estimate the fair value of RSUs, PSUs, and restricted stock based on our common stock price on the date of grant or modification. We estimate the fair value of stock options, SARs, and ESPP Rights using the Black-Scholes option-pricing model, which requires the use of the following subjective and complex assumptions:
Expected Term— For stock options and SARs, we use the midpoint of the vesting term and contractual expiration period to compute the expected term, as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. For ESPP Rights, the expected term is equal to the purchase periods in a given offering period.
Risk-Free Interest Rate— The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the award’s expected term.
Expected Volatility— We estimate future expected volatility by considering both the average volatility of a peer group of representative public companies with sufficient trading history and, to the extent available, our historical volatility over the expected term.
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. Future grants or modifications of stock-based awards that require the use of complex
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valuation models may cause us to alter or refine the estimates and assumptions described above, which could impact future stock-based compensation expense.
Income taxes
We are subject to income taxes in the United States and numerous foreign jurisdictions. 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.
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. Deferred tax amounts are determined by using the tax rates expected to be in effect when the taxes will actually be paid or refunds received, as provided for under currently enacted tax law. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. 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.
Goodwill and intangible assets
We evaluate and test the recoverability of goodwill for impairment annually, during the fourth quarter, or more often if and when circumstances indicate that goodwill may not be recoverable. We also evaluate the estimated remaining useful life of intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. In order to identify potential impairment, we consider a variety of judgmental qualitative factors, which may include financial performance; legal, regulatory, contractual, political, or business factors; entity specific events; industry and market considerations; and macroeconomic conditions. To the extent we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative test would be performed.
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.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest rate sensitivity
As of December 31, 2025 we had $231.5 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, time and on demand deposits, and amounts in transit from certain payment processors for credit and debit card transactions. We also held $127.3 million of marketable securities, consisting of investments in various U.S. government securities. We had $0.4 million of restricted cash, primarily consisting of cash deposited with financial institutions held as collateral for our obligations under various facility leases.
Our cash and cash equivalents are held for working capital purposes. 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, 2025, or interest income earned from our portfolio during the fiscal year ended December 31, 2025.
We are subject to market risk exposure related to changes in interest rates on borrowings under our revolving credit facility. Interest on borrowings under the revolving credit facility is based on Term SOFR or alternate base rate, in each case plus an applicable margin. At December 31, 2025, we had no borrowings outstanding under the revolving credit facility. We did not hold any debt during the fiscal years ended December 31, 2025 or 2024.
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. Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statement of operations, or translation gains and losses in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Our marketable securities portfolio is also held in U.S. dollar investments, and to date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future. 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, 2025 or 2024.
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Item 8. Financial Statements and Supplementary Data
The following financial statements are filed as part of this Annual Report on Form 10-K:
Page | |||||
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. | 80 | ||||
Consolidated Balance Sheets | 82 | ||||
Consolidated Statements of Operations | 83 | ||||
Consolidated Statements of Comprehensive Income (Loss) | 84 | ||||
Consolidated Statements of Stockholders’ Equity | 85 | ||||
Consolidated Statements of Cash Flows | 86 | ||||
Notes to Consolidated Financial Statements | 88 | ||||
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Udemy, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Udemy, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue - Estimated service period for consumer single course purchases— Refer to Notes 2 and 3 to the financial statements.
Critical Audit Matter Description
Consumer customers purchasing a single course receive a lifetime license to the digital course content in addition to stand-ready access to the Udemy platform needed to access the course content. The Company recognizes revenue from consumer single course purchases over an estimated service period (“estimated service period”). The determination of the estimated service period involves management’s judgement in evaluating the average time period between a learner’s purchase date and the last date the learner accesses the purchased content (the “consumption data”), among other factors.
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We identified the estimated service period as a critical audit matter because the judgements made by management in determining the estimated service period rely on consumption data captured by automated and internally developed systems. This required a high degree of auditor judgement and increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), when performing audit procedures to test and evaluate the Company’s systems, software applications, and automated controls that relate to the consumption data.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the estimated service period for consumer single course purchases included the following, among others:
•With the assistance of our IT specialists, we:
–Identified the relevant systems used to record consumer revenue transactions and capture consumption data and tested the effectiveness of the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.
–Performed testing of automated controls related to the capturing of consumption data.
•We tested the effectiveness of internal controls related to management’s review of factors used in determining the estimated service period for consumer single course purchases, including review of the consumption data.
•We evaluated the reasonableness of the methodology used by management to determine the estimated service period and tested the mathematical accuracy of the calculations involved.
•We evaluated the reasonableness of management's estimated service period by comparing the estimate to the consumption data and other internal and external information.
•We tested the completeness and accuracy of the consumption data used to determine the estimated service period by independently purchasing and consuming courses and tracing the transaction and consumption data through the Company's IT systems and to its inclusion in the underlying course consumption data.
/s/ DELOITTE & TOUCHE LLP
February 19, 2026
We have served as the Company’s auditor since 2019.
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Udemy, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| December 31, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Restricted cash, current | |||||||||||
Marketable securities | |||||||||||
| Accounts receivable, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Deferred contract costs, current | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Capitalized software, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Restricted cash, non-current | |||||||||||
| Deferred contract costs, non-current | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Content costs payable | |||||||||||
| Accrued compensation and benefits | |||||||||||
| Operating lease liabilities, current | |||||||||||
| Deferred revenue, current | |||||||||||
| Total current liabilities | |||||||||||
| Operating lease liabilities, non-current | |||||||||||
| Deferred revenue, non-current | |||||||||||
| Other liabilities, non-current | |||||||||||
| Total liabilities | |||||||||||
| Note 8 – Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
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Udemy, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Cost of revenue | |||||||||||||||||
| Gross profit | |||||||||||||||||
| Operating expenses | |||||||||||||||||
| Sales and marketing | |||||||||||||||||
| Research and development | |||||||||||||||||
| General and administrative | |||||||||||||||||
| Restructuring charges | |||||||||||||||||
| Total operating expenses | |||||||||||||||||
| Loss from operations | ( | ( | ( | ||||||||||||||
| Other income (expense), net | |||||||||||||||||
| Interest income | |||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||
Other expense, net | ( | ( | ( | ||||||||||||||
Total other income, net | |||||||||||||||||
Net income (loss) before taxes | ( | ( | |||||||||||||||
| Income tax provision | |||||||||||||||||
Net income (loss) | $ | $ | ( | $ | ( | ||||||||||||
Net income (loss) per share | |||||||||||||||||
Basic | $ | $ | ( | $ | ( | ||||||||||||
Diluted | $ | $ | ( | $ | ( | ||||||||||||
Weighted-average shares used in computing net income (loss) per share | |||||||||||||||||
Basic | |||||||||||||||||
Diluted | |||||||||||||||||
See accompanying notes to consolidated financial statements.
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Udemy, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Net income (loss) | $ | $ | ( | $ | ( | ||||||||||||
Other comprehensive income (loss): | |||||||||||||||||
Foreign currency translation gain, net of tax | |||||||||||||||||
Change in unrealized gain (loss) on marketable securities, net of tax | ( | ||||||||||||||||
Total other comprehensive income (loss) | ( | ||||||||||||||||
Comprehensive income (loss) | $ | $ | ( | $ | ( | ||||||||||||
See accompanying notes to consolidated financial statements.
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Udemy, Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance—December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock under employee stock purchase plan | — | — | — | ||||||||||||||||||||||||||||||||
| Shares withheld related to net share settlement of equity awards | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance—December 31, 2023 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | ||||||||||||||||||||||||||||||||
| Issuance of common stock under employee stock purchase plan | — | — | — | ||||||||||||||||||||||||||||||||
| Shares withheld related to net share settlement of equity awards | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance—December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Issuance of common stock under employee stock purchase plan | — | — | — | ||||||||||||||||||||||||||||||||
| Shares withheld related to net share settlement of equity awards | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance—December 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
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Udemy, Inc.
Consolidated Statements of Cash Flows
(in thousands)
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
Net income (loss) | $ | $ | ( | $ | ( | ||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
Amortization of deferred contract costs | |||||||||||||||||
| Stock-based compensation | |||||||||||||||||
| Allowance for credit losses | |||||||||||||||||
Net (accretion) amortization of marketable securities | ( | ( | ( | ||||||||||||||
| Non-cash operating lease expense | |||||||||||||||||
| Unrealized loss on strategic investments | |||||||||||||||||
| Other | |||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable | ( | ||||||||||||||||
| Prepaid expenses and other assets | ( | ( | ( | ||||||||||||||
| Deferred contract costs | ( | ( | ( | ||||||||||||||
| Accounts payable, accrued expenses and other liabilities | ( | ||||||||||||||||
| Content costs payable | ( | ( | |||||||||||||||
| Operating lease liabilities | ( | ( | ( | ||||||||||||||
| Deferred revenue | |||||||||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Purchases of marketable securities | ( | ( | ( | ||||||||||||||
| Proceeds from maturities and sales of marketable securities | |||||||||||||||||
| Purchases of property and equipment | ( | ( | ( | ||||||||||||||
| Capitalized software costs | ( | ( | ( | ||||||||||||||
Payments related to asset acquisitions | ( | ||||||||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Net proceeds from exercise of stock options | |||||||||||||||||
Proceeds from share purchases under employee stock purchase plan | |||||||||||||||||
Taxes paid related to net share settlement of equity awards | ( | ( | ( | ||||||||||||||
Repurchases of common stock and excise taxes paid | ( | ( | |||||||||||||||
Payments of debt issuance costs | ( | ||||||||||||||||
| Net cash provided by (used in) financing activities | ( | ( | |||||||||||||||
| Effect of foreign exchange rates on cash flows | ( | ||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ( | |||||||||||||||
Cash, cash equivalents and restricted cash—Beginning of period | |||||||||||||||||
Cash, cash equivalents and restricted cash—End of period | $ | $ | $ | ||||||||||||||
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| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Reconciliation of cash, cash equivalents and restricted cash: | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Restricted cash, current | |||||||||||||||||
| Restricted cash, non-current | |||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | $ | ||||||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||||||||
| Interest paid | $ | $ | $ | ||||||||||||||
| Income taxes paid | $ | $ | $ | ||||||||||||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||||||||
| Stock-based compensation in capitalized costs | $ | $ | $ | ||||||||||||||
Net change in unrealized gain (loss) on marketable securities | $ | $ | $ | ||||||||||||||
Increase (decrease) in purchases of property and equipment included in liabilities | $ | ( | $ | $ | ( | ||||||||||||
Operating lease right-of-use assets exchanged for operating lease liabilities | $ | $ | $ | ||||||||||||||
Accrued excise tax on share repurchases | $ | $ | $ | ||||||||||||||
See accompanying notes to consolidated financial statements.
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Udemy, Inc.
Notes to Consolidated Financial Statements
1. Organization and description of business
Description of business
Udemy, Inc. (“Udemy” or the “Company”) was incorporated in January 2010 under the laws of the state of Delaware. The Company is headquartered in San Francisco, California.
Udemy is a global technology company enabling organizations and individuals to develop in-demand skills and capabilities needed to thrive in a rapidly evolving world of work. The Company’s AI-powered platform offers consumers the option to purchase either subscription-based plans or a non-exclusive lifetime license to a single course on the Udemy marketplace. The Company also curates its highest-quality content for its enterprise platform, Udemy Business (“UB”), which enables companies around the world to offer on-demand learning across their organizations through various modalities.
Proposed merger with Coursera
On December 17, 2025, we entered into an Agreement and Plan of Merger (as it may be amended, modified, supplemented or waived from time to time, the “Merger Agreement”) with Coursera, under which Coursera will combine with Udemy in an all-stock transaction (the “Merger”). Under the terms of the Merger Agreement, Udemy stockholders will receive 0.800 shares of common stock, par value $0.00001 per share, of Coursera (“Coursera Common Stock”) for each share of our common stock. Upon the closing of the Merger, existing Coursera stockholders are expected to own approximately 59 % and existing Udemy stockholders are expected to own approximately 41 % of the combined company, on a fully diluted basis.
The completion of the Merger is subject to the satisfaction of certain customary conditions set forth in the Merger Agreement, including, but not limited to: (i) adoption of the Merger Agreement by Udemy’s stockholders, (ii) approval of the issuance of the shares of Coursera Common Stock and an amendment of Coursera’s amended and restated certificate of incorporation to increase the number of authorized shares of Coursera Common Stock thereunder by Coursera’s stockholders; (iii) authorization for listing of the shares of Coursera Common Stock to be issued in the Merger on NYSE, subject to official notice of issuance; (iv) the expiration or termination of any waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) (on February 9, 2026, the Federal Trade Commission granted early termination of the waiting period under the HSR Act), and the receipt of certain other required regulatory approvals; and (v) effectiveness of the registration statement on Form S-4 for the Coursera Common Stock to be issued in the Merger. In addition, Udemy’s obligation to complete the Merger is also subject to the receipt by Udemy of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
If the Merger Agreement is terminated by Coursera because Udemy’s board of directors changes its recommendation to its stockholders regarding the Merger Agreement or because Udemy breaches its obligations not to solicit proposals relating to an alternative transaction to the Merger (an “Alternative Transaction”) or its obligations in respect of Udemy’s stockholder meeting, Udemy will be required to pay Coursera a termination fee equal to $40.5 million (the “Termination Fee”). Udemy is also required to pay the Termination Fee to Coursera if the Merger Agreement is terminated in certain circumstances after a proposal for an Alternative Transaction is made and, within twelve months of termination, Udemy enters into any Alternative Transaction. Coursera is subject to reciprocal obligations to pay the Termination Fee to Udemy in corresponding circumstances.
In addition, if the Merger Agreement is terminated in certain circumstances because the requisite approval of Udemy stockholders is not obtained at Udemy’s special meeting of stockholders in connection with the Merger or because the requisite approval of Coursera’s stockholders is not obtained at Coursera’s special meeting of stockholders in connection with the Merger, Udemy or Coursera, as applicable, will be required to pay the other party an expense reimbursement equal to $8.0 million.
The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 of this Annual Report on Form 10-K.
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Other than acquisition-related expenses associated with the proposed merger of $3.7 million recorded in general and administrative expense in the accompanying consolidated statements of operations for the fiscal year ended December 31, 2025, the Merger did not impact the Company’s consolidated financial statements.
2. Summary of significant accounting policies
Segment information— On March 12, 2025, Hugo Sarrazin became the Company’s new Chief Executive Officer and chief operating decision maker (“CODM”). The Company defines its segments as those operations the CODM regularly reviews to allocate resources and assess performance. For the fiscal years ended December 31, 2025, 2024, and 2023, the Company had two
Use of estimates— The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the results of operations during the reporting periods.
Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, allowance for credit losses, capitalized software and the associated useful lives, stock-based compensation, determination of the income tax valuation allowance and the potential outcome of uncertain tax positions, estimated service period for consumer single course purchases, recognition pattern of breakage revenue on Udemy credits, the period of benefit for deferred commissions, the fair value and associated useful lives of acquired intangible assets and goodwill, the valuation of marketable securities and privately-held strategic investments, including impairments, and the carrying value of operating lease right-of-use (“ROU”) assets. Management periodically evaluates such estimates and assumptions for continued reasonableness.
Actual results may ultimately differ from management’s estimates and such differences could be material to the Company’s financial position and results of operations.
Concentration of credit risk— Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, restricted cash, and accounts receivable. For cash and restricted cash, the Company is exposed to credit risk in the event of default by the financial institutions to the extent the amounts recorded on the accompanying consolidated balance sheets are in excess of federal insurance limits. The Company’s investments that are classified as cash equivalents and marketable securities consist of high-credit-quality instruments and fixed-income securities.
Summary of significant accounting policies
Revenue recognition— The Company accounts for revenue under ASC Topic 606, Revenue from Contracts with Customers. The Company’s two sources of revenue are its Enterprise and Consumer business channels.
Enterprise revenue— The Company primarily generates revenue by selling subscription licenses to a variety of enterprise and government customers.
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The Company’s subscription contracts with enterprise customers generally have annual or multi-year contractual terms and consist of a fixed quantity of seat licenses, which allows each seat to access an unlimited number of course enrollments during the contract term. Enterprise license subscriptions include Team Plan, Enterprise Plan, Udemy Business Pro, and Leadership Academy. Subscribers retain access to the courses in which they enroll for the duration of their subscriptions (including any renewal period), even if the instructor subsequently elects to remove the course from the Company’s subscription programs. Enterprise contracts are typically evidenced by a fully executed Master Services Agreement with an accompanying executed Order Form specifying the contractual subscription term and pricing. Revenue is recognized ratably over the respective contractual subscription term beginning on the date that the platform is made available to the customer. Other Enterprise revenue is primarily comprised of professional services arrangements, which are generally offered as fixed price contracts. While a limited number of contracts with enterprise customers contain multiple performance obligations, the amount of other Enterprise revenue, including professional services, was immaterial during the fiscal years ended December 31, 2025, 2024, and 2023.
Standard subscription agreements have auto-renewal clauses, which allow the agreement to continue after the expiration of the initial term. The Company’s standard billing terms are to invoice upfront annually for contracts with terms of one year or longer. For contracts that are less than one year, the Company generally bills in advance on a quarterly or semi-annual basis. The Company recognizes unbilled receivables that relate to consideration for services completed but not billed as of period end. Unbilled receivables are recorded in accounts receivable, net, and were not material for any period presented.
Consumer revenue— The Company generates revenue by selling access to course content on the Udemy platform directly to individual learners. Consumer revenue consists of (i) consumer subscriptions and (ii) transactional and other revenue. All contracts with consumer customers are billed in advance and require payment via credit card by the customer prior to accessing any course content, or in the case for new consumer subscription customers, upon expiration of a 7-day free trial available to new customers in certain jurisdictions.
Consumer subscription plans offer on-demand access to a library of courses over a subscription term, as well as additional features and functionalities. Consumer subscriptions are either -month or -year in duration and paid in advance, with new customers in certain jurisdictions able to sign up for a 7 -day free trial period. Once the free trial period lapses and advance payment is made, there is no right to a refund (unless otherwise required by applicable law). Subscribers have continuous access to enroll in and consume an unlimited number of curated courses included in the subscription collection on the platform during the subscription term. Subscribers retain access to the courses in which they enroll for the duration of their subscriptions (including any renewal period), even if the instructor subsequently elects to remove the course from the Company’s subscription programs. The continual access to the platform represents a series of distinct services, as the Company continually provides access to, and fulfills its obligation to, the customer over the contract term. Consumer subscriptions automatically renew at the end of the subscription term. Customers may cancel renewal of their subscription at any point but will retain their access to the platform until the end of the current subscription term.
Transactional and other revenue is primarily comprised of sales of single courses. After checkout, consumer customers purchasing a single course receive a lifetime access license to the digital course content in addition to stand-ready access to the Udemy platform online services needed to access the content. Revenue recognized from other products sold on the consumer marketplace on a non-recurring basis was not material for all periods presented.
Consumer revenue transactions are governed by Udemy’s standard terms of use. The time between a customer’s payment and the receipt of funds is not significant. Payment terms are generally fixed and do not include variable consideration. Consumer revenue is recorded net of actual and estimated refunds and exclude any taxes that are collected from learners and remitted to governmental authorities. Consumer revenue arrangements do not include significant obligations associated with warranties.
In certain circumstances, consumer customers who purchase a single course may request a refund in the form of Udemy credits instead of a cash refund. Customers with Udemy credit balances may apply these credits toward future purchases.
During the second quarter of 2025, as a result of a change in the entity structure servicing the Udemy credits program, the Company determined it was entitled to recognize breakage for unredeemed Udemy credits. The breakage rate for Udemy credits is calculated based on historical redemption patterns specific to the Company. Breakage revenue is recognized using the proportionate method.
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Due to the above, the Company recognized $2.7 million of breakage revenue for Udemy credits during the fiscal year ended December 31, 2025, respectively, compared to zero 2.7 million in breakage revenue recognized during the fiscal year ended December 31, 2025, $2.5 million related to previously satisfied performance obligations.
ASC Topic 606 Five-Step Model— Revenue from contracts with customers is recognized when control of promised services is transferred. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. The Company accounts for revenue contracts with customers using the five-step model under ASC Topic 606:
1) Identify the contract with a customer
Udemy determines a contract with a customer to exist when the contract is approved, each party’s rights regarding the services to be transferred can be identified, the payment terms for the services can be identified, the customer has the ability and intent to pay, and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience if available.
2) Identify the performance obligations in the contract
Performance obligations committed in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from Udemy, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract. Customers do not have the ability to take possession of the software supporting the platform and, as a result, contracts are accounted for as service arrangements.
The non-exclusive lifetime access license associated with single course purchases and the licensed content associated with subscriptions are not considered distinct from the Udemy platform, because the course content is significantly integrated with and highly dependent on the platform. Specifically, the learner does not obtain control of the course content’s intellectual property and functionality without the Udemy platform. Accordingly, for single course and subscription product offerings, management concluded there is a single, combined performance obligation, which is the customer’s access to the online content on the Udemy platform, representing a series of distinct services as the Company continually provides access to and fulfills its obligation to allow access to licensed content and platform functionality to the learner.
3) Determine the transaction price
The transaction price is determined based on the consideration to which Udemy expects to be entitled in exchange for transferring services to the customer. The prices for Consumer and Enterprise, or Udemy Business (“UB”), contracts are fixed at contract inception and do not contain significant estimates related to variable consideration. With respect to single course purchases, consumers may request a full refund within 30 days after the initial purchase transaction. The Company estimates and establishes a refund reserve based on historical refund rates, which has historically been immaterial. The Company’s contracts do not contain significant financing components. Revenue excludes taxes collected from customers, which are subsequently remitted to governmental entities (e.g., sales and other indirect taxes).
4) Allocate the transaction price to performance obligations in the contract
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on each performance obligation’s relative standalone selling price.
As access to content is not considered distinct from the Udemy platform hosting services for single course purchases and subscription offerings, the transaction price is allocated to a single performance obligation.
5) Recognize revenue when or as performance obligations are satisfied
Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Revenue is recognized in an amount that reflects the consideration that Udemy expects to receive in exchange for those services. Udemy has a stand ready obligation to deliver its services continually throughout the requisite contract period, which is either lifetime access for consumer single course purchases or the contractual subscription term for UB and consumer subscription customers. As such, the Company recognizes revenue on a straight-line basis as it satisfies the performance obligation, using an
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estimated service period for consumer single course purchases and the contractual subscription term for UB and consumer subscription customers. Enterprise revenue from professional services contracts is recognized on a proportional performance basis.
The Company records contract liabilities to deferred revenue for amounts billed to Enterprise and Consumer customers in advance of satisfaction of the performance obligations. Unearned revenue also includes unbilled amounts related to noncancellable contracts to deliver services to Enterprise customers in the future. The amount of revenue recognized in the periods presented from performance obligations satisfied (or partially satisfied) in prior periods was not material.
Other than the circumstances noted below, no significant judgment has historically been required in determining the amount and timing of revenue from the Company’s contracts with customers.
Principal vs. agent— In order to determine if revenue should be reported gross or net of either payments to third-party instructors or amounts retained by reseller partners who sell access to Enterprise subscription offerings, the Company evaluated whether Udemy acts as the principal in sales of its online course offerings. An entity is the principal if it controls a good or service before it is transferred to the end customer. Key indicators that management evaluated in determining gross versus net treatment included but are not limited to:
•the nature of the Company’s promise to the customer, as well as the distinct performance obligation identified;
•the underlying contract terms and conditions between the parties to the transaction;
•which party is primarily responsible for fulfilling the promise to provide the specified good or service to the end customer;
•which party has inventory risk before the specified good or service has been transferred to the end customer; and
•which party has discretion in establishing the price for the specified good or service.
Based on an evaluation of the above indicators, management determined that the Company is the principal to learners who purchase access to online course content via direct or reseller sales of its Enterprise and Consumer offerings. The Company controls the promised goods or services (i.e., access to course content via the Udemy platform) before it is transferred to the customer and is primarily responsible for fulfillment with respect to delivering access to course content. The Company is the entity which licenses content to learners as the agreements with instructors grant the Company the right to sub-license content to its learners at its discretion. The Company also has substantial discretion to determine the pricing of its offerings. Therefore, the Company records the gross purchase price paid by the customer related to these arrangements within revenue on the consolidated statements of operations. The Company records payments to instructors as content costs within cost of revenue, while amounts retained by reseller partners for Enterprise sales are recognized as customer support costs within cost of revenue and deferred sales commissions within sales and marketing, based on the nature of the reseller partnership transaction.
Estimated service period for consumer single course purchases— The Company considers a variety of data points when determining the estimated service period for a consumer single course purchase over which revenue is recognized. Quantitative data points considered include, but are not limited to, the average time period between a learner’s purchase date and the last date the learner accesses the purchased content, the average total hours consumed for a given purchase, and the time period over which learner activity stabilizes. Management also considers certain qualitative factors such as the nature of the Company’s consumer offerings, known online trends, and, to the extent publicly available, service periods of competitors’ online content that is similar in nature to those offered by the Company. The Company believes consideration of all of these factors enables the Company to determine the best representation of the time period during which consumer learners access the online course content on the Company’s platform and therefore the service period over which the Company provides services to learners. Determining the estimated service period is subjective and requires management’s judgment. Future usage patterns may differ from historical usage patterns, and the estimated service period may change in the future. The estimated service period for consumer single course purchase transactions is four months from the date of enrollment.
Cost of revenue— Cost of revenue consists of content costs, which are payments to instructors, employee-related expenses for the customer support and professional services organization, including salaries, benefits, stock-based compensation, facilities and other expenses, the portion of fees paid to certain reseller partners attributable to their providing customer support services to UB customers, payment and mobile processing fees,
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costs associated with the hosting of digital content, amortization of capitalized software, amortization of vendor relationship and developed technology intangible assets acquired through business combinations, and depreciation of network equipment.
Advertising and sponsorship costs— Advertising costs are expensed as incurred. In general, sponsorship costs are expensed on a straight-line basis over the contractual sponsorship term. Prepayments made under sponsorship contracts are included in the prepaid expenses and other current assets caption of the consolidated balance sheets. Advertising and sponsorship costs are recorded in sales and marketing expenses in the accompanying consolidated statements of operations and totaled $80.6 million, $94.9 million and $82.5 million for the fiscal years ended December 31, 2025, 2024, and 2023, respectively.
Research and development— Research and development costs are expensed as incurred. Research and development expenses include salaries, benefits, stock-based compensation, costs related to the ongoing management, maintenance, and expansion of features and services offered on the Company’s platform. Research and development costs also include contracted services, supplies, and other miscellaneous expenses.
Stock-based compensation— The Company accounts for its stock-based compensation pursuant to ASC Topic 718, Compensation-Stock Compensation, which requires the measurement and recognition of stock-based awards using the estimated fair value of the awards on the date of grant. Stock-based awards include stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock appreciation rights (“SARs”), and restricted stock granted to employees, directors, and non-employees, 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 (“IPO”) in 2021.
The Company estimates the fair value of RSUs, PSUs, and restricted stock based on the fair value of the Company’s common stock on the date of grant. The Company estimates the fair value of stock options, SARs, and ESPP Rights using the Black-Scholes option-pricing model, which requires the use of the following subjective and complex assumptions:
Expected term— For stock options and SARs, the Company has elected to use the midpoint of the vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. For ESPP Rights, the expected term is equal to the purchase periods in a given offering period.
Risk-free interest rate— The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the award’s expected term.
Expected volatility— The Company estimates future expected volatility by considering both the average volatility of a peer group of representative public companies with sufficient trading history and, to the extent available, its historical volatility over the expected term.
Dividend yield— The expected dividend was assumed to be zero as the Company has never paid dividends and has no current plans to do so.
Stock appreciation rights granted to employees are settled in cash upon exercise. The Company accounts for SARs in the other liabilities, non-current caption in the accompanying consolidated balance sheets. Vested and outstanding SARs are subject to remeasurement at each balance sheet date using the Black-Scholes option-pricing model and the assumptions described above, and any change in fair value is recognized as a component of expense. The Company adjusts the fair value of the liability for vested and outstanding SARs until the earlier of the exercise or expiration of the SARs.
For awards with only service-based vesting conditions, the Company recognizes the resulting stock-based compensation on a straight-line basis over the requisite service period of the awards. For awards that are subject to both performance and service-based vesting conditions, the Company separately attributes stock-based compensation expense for each vesting tranche of the award over their requisite service periods. The Company accounts for forfeitures in the period they occur.
Management estimates the number of PSUs that are expected to vest based on the anticipated achievement of the specified performance metrics. If the performance-based vesting condition is considered probable of being achieved, the Company recognizes expense over the requisite service period based on the probable outcome
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of achievement. If the performance goals are not met, or are considered improbable, no compensation cost is recognized, and any previously recognized compensation cost is reversed.
During the fourth quarter of 2023, the Company's began funding withholding taxes due upon the vesting of employee RSUs, the exercise of stock options, and the exercise of ESPP purchase rights in certain jurisdictions by net share settlement, rather than its previous approach of selling shares of the Company’s common stock. The amount of withholding taxes related to net share settlement is reflected as (i) a reduction to additional paid-in-capital and (ii) cash outflows for financing activities when the payments are made. The shares withheld by the Company as a result of net share settlement are returned to the pool of shares available for future issuance. Therefore, they are not considered issued and outstanding and do not impact the calculation of net income (loss) per share, basic and diluted.
Income taxes— The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach in accounting for income taxes. Under this method, the tax provision includes taxes currently due plus the net change in deferred tax assets and liabilities. Deferred tax assets and liabilities arise from the temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the tax rates expected to be in effect when the taxes will actually be paid or refund received, as provided for under currently enacted tax law. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, is not expected to be realized.
ASC 740 prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under this guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company recognizes interest accrued related to uncertain tax positions as a component of the provision for income taxes. There was no accrued interest or penalties associated with any uncertain tax positions, nor was any interest expense recognized during the fiscal years ended December 31, 2025, 2024, and 2023. The Company does not currently anticipate that any significant increase or decrease to uncertain tax positions will be recorded during the next twelve months.
Translation of foreign currency— The Company’s reporting currency is the U.S. dollar. The Company determines the functional currency for each of its foreign subsidiaries by reviewing their operations and currencies used in their primary economic environments. Assets and liabilities for foreign subsidiaries with functional currency other than U.S. dollar are translated into U.S. dollars at the rate of exchange existing at the balance sheet date. Statements of operations amounts are translated at average exchange rates for the period. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Remeasurement gains and losses are included in other income (expense), net in the consolidated statements of operations. Monetary assets and liabilities are remeasured at the exchange rate on the balance sheet date and nonmonetary assets and liabilities are measured at historical exchange rates.
Net income (loss) per share— Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method. For periods in which the Company reports net losses, diluted net loss per share is the same as basic net loss per share, because potentially dilutive common shares are anti-dilutive. Equity awards that have been released or exercised, but are subject to forfeiture or repurchase clauses that lapse upon satisfaction of a future service condition, are not considered outstanding in the computation of basic weighted-average number of shares of common stock outstanding until the service condition is met.
Fair value of financial instruments— The Company considers fair value as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Valuation
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techniques used to measure fair value are either observable or unobservable. Observable inputs reflect assumptions that market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based on their own market assumptions.
The Company utilizes the following three-level fair value hierarchy to establish the priorities of the inputs used to measure fair value:
Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2— Inputs are observable, unadjusted quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data; and
Level 3— Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.
The carrying amounts of cash, cash equivalents, restricted cash, accounts receivable, and accounts payable approximate fair value due to the relatively short-term maturities and are classified as current assets and liabilities, as appropriate, in the accompanying consolidated balance sheets.
The Company’s money market funds, time deposits, and sweep account are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company’s investments in U.S. government securities are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are directly or indirectly observable. The Company’s strategic investment and cash settled stock appreciation rights are classified within Level 3 of the fair value hierarchy because they have been valued using significant unobservable inputs for which the Company has been required to develop its own assumptions.
Cash and cash equivalents— Cash and cash equivalents include on demand deposits, money market funds, time deposits, and other highly liquid investments with original or remaining maturities of less than 90 days when purchased. Cash equivalents also include amounts in transit from certain payment processors for credit and debit card transactions, which typically settle within five business days.
Restricted cash— Restricted cash primarily consists of cash restricted in connection with lease agreements for the Company’s facilities. Restricted cash is included in current assets when the corresponding restrictions, which are generally tied to the accompanying lease term, lapse within one year from the balance sheet date and in non-current assets when restrictions lapse more than one year from the balance sheet date.
Marketable securities— Marketable securities consist of obligations issued by the U.S. Treasury and other U.S. federal agencies, corporate debt, and commercial paper securities, with an original maturity greater than 90 days at the date of purchase and are classified as available-for-sale securities. As the Company views these securities as available to support current operations, it has classified all available-for-sale securities as current assets. Available-for-sale securities are initially recorded at cost and periodically adjusted to fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, while realized gains and losses are reported within other income (expense), net as a component of net income (loss).
Accounts receivable, net— Accounts receivable primarily represent amounts owed to the Company for Enterprise subscriptions. Also included in accounts receivable are amounts due from payment processors or mobile application store partners that settle over a period longer than five business days. Accounts receivable balances are recorded at the invoiced amount and are non-interest-bearing. Accounts receivable is presented net of allowance for credit losses in the accompanying consolidated balance sheets.
The Company maintains an allowance based upon expected credit losses of outstanding receivables. Management derives its estimate using a variety of factors, including historical collection and loss patterns; the current aging of receivables; geographic and other customer-specific credit risk factors; and reasonable and supportable forecasts of future economic conditions which inform adjustments to historical loss patterns. The provision for expected credit losses is recorded in general and administrative expenses in the accompanying consolidated statements of operations. Accounts receivable deemed to be uncollectible are written off, net of expected or actual recoveries.
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| Balance at Beginning of Period | Charged to Expenses | Charges Utilized/Written-off, Net of Recoveries | Balance at End of Period | ||||||||||||||||||||
| Allowance for credit losses (in thousands) | |||||||||||||||||||||||
| Fiscal Year Ended December 31, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||
Fiscal Year Ended December 31, 2024 | $ | $ | $ | ( | $ | ||||||||||||||||||
Fiscal Year Ended December 31, 2023 | $ | $ | $ | ( | $ | ||||||||||||||||||
Deferred contract costs— Sales commissions earned by the Company’s sales force on both new and renewal business are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for new contracts and incremental sales to existing customers are deferred and then amortized on a straight-line basis over an estimated period of benefit of four years . This period of benefit was determined by taking into consideration term lengths of Enterprise customer contracts, changes and enhancements in course offerings, and other factors. Beginning January 1, 2025, the Company began paying commissions on the renewing portion of existing contracts. Commissions on renewals that are not commensurate with the initial contract are deferred and amortized on a straight-line basis over the average renewal term, which is estimated to be 18 months.
In addition, a portion of the revenue share retained by enterprise reseller partners from sales to UB customers is considered an incremental and recoverable cost of obtaining a contract with a customer. This cost is deferred and amortized on a straight-line basis over the service term of the corresponding contractual subscription term, as commissions paid to resellers on initial and renewal contracts are generally commensurate.
Amounts expected to be recognized within one year of the consolidated balance sheet dates are recorded as deferred contract costs, current, while the remaining portion is recorded as deferred contract costs, non-current in the consolidated balance sheets. Deferred contract costs are periodically analyzed for impairment. Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of operations.
Property and equipment, net— Property, equipment, and purchased software are stated at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, which are generally three years five years for furniture and fixtures. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the term of the related lease. Expenditures for repairs and maintenance are charged to expense as incurred. Upon disposition or retirement, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is reflected as operating expenses in the consolidated statements of operations.
Capitalized software, net— The Company capitalizes costs directly associated with the development of software for internal use and certain content assets hosted on the Company's platform. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Once the software or content being developed has reached the application development stage, qualifying internal and external costs are capitalized until the software or content asset is substantially complete and ready for its intended use. Once the software or content is ready for its intended use, capitalized costs are amortized on a straight-line basis over an estimated useful life, which is generally three years for internal use software and two years for content assets. The Company evaluates the useful lives of these assets and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Operating leases— The Company accounts for non-cancelable operating leases of real estate facilities under ASC Topic 842. The Company determines if an arrangement contains a lease at inception based on whether there is an identified tangible asset and whether the Company controls the use of the identified asset throughout the period of use.
Operating leases are included in operating lease ROU assets and in operating lease liabilities in the accompanying consolidated balance sheet. Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
The Company measures its operating lease liabilities at lease commencement date based on the present value of total lease payments over the lease term. Total lease payments are discounted to present value using the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate
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(which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease). Because the Company’s operating leases generally do not provide an implicit rate, the Company estimates its incremental borrowing rate using information available at the lease commencement date, including but not limited to credit rating, lease term, and the currency in which the arrangement is denominated. The Company’s operating lease ROU assets are equal to the corresponding operating lease liability, adjusted for payments made to the lessor at or before the commencement date, initial direct costs incurred, and tenant incentives under the lease.
The Company does not assume renewals or early terminations unless it is reasonably certain to exercise these options at commencement. The Company does not allocate consideration between lease and non-lease components. Variable lease payments, such as those for common area maintenance or property taxes, are not included in the measurement of operating lease liabilities and are expensed as incurred. In addition, the Company does not recognize operating ROU assets or operating lease liabilities for leases with a term of 12 months or less for all asset classes. Operating lease expense is recognized on a straight-line basis over the lease term.
Strategic investments— The Company holds an investment in equity securities of a privately held company without a readily determinable fair value and in which the Company does not have a controlling interest. Investments in equity securities without readily determinable fair values are initially recorded at cost and are subsequently adjusted to fair value only in the event of either price changes from observable transactions in the same or a similar security from the same issuer or impairment, as discussed below. This practice is referred to as the measurement alternative.
Privately held equity securities are valued using significant unobservable inputs or data in inactive markets. This valuation requires judgment due to the absence of market prices and inherent lack of liquidity and are classified as Level 3 in the fair value hierarchy. In determining the estimated fair value of investments in privately held companies, the Company utilizes the most recent data available including observed transactions, such as equity financing transactions of the investees and sales of the existing shares of the investees’ securities. In addition, the determination of whether an observed transaction is similar to the equity securities held by the Company requires significant management judgment based on the rights and preferences of the securities.
Acquisitions— The Company assesses whether an acquisition is a business combination or an asset acquisition. If substantially all of the gross assets acquired are concentrated in a single asset or group of similar assets, then the acquisition is accounted for as an asset acquisition, where the purchase consideration is allocated on a relative fair value basis to the assets acquired. Goodwill is not recorded in an asset acquisition. If the gross assets are not concentrated in a single asset or group of similar assets, then the Company determines if the set of assets acquired represents a business. A business is an integrated set of activities and assets capable of being conducted and managed for the purpose of providing a return. Depending on the nature of the acquisition, judgment may be required to determine if the set of assets acquired is a business combination or not.
Goodwill and intangible assets— Intangible assets are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Management tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. No such triggering events were noted for the fiscal years ended December 31, 2025, 2024, or 2023.
Goodwill represents the excess purchase price over net assets acquired in the Company’s business combinations. The Company evaluates and tests the recoverability of its goodwill for impairment at least annually, during the fourth quarter of each fiscal year, or more often if and when circumstances indicate that goodwill may not be recoverable. No such triggering events were noted for the fiscal years ended December 31, 2025, 2024, or 2023.
Impairment of long-lived assets— The Company evaluates the carrying value of long-lived assets, such as property and equipment, whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash
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flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset. The impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets. The Company did not identify any impairment losses on long-lived assets for the fiscal years ended December 31, 2025, 2024, or 2023.
Recently Adopted Accounting Pronouncements Adopted in 2025
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The standard became effective as of the Company’s fiscal year ended December 31, 2025. The Company has elected to use a prospective approach and has included the required disclosures in the notes to the financial statements for income taxes. This standard update did not affect the Company’s operating results.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting-Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires more detailed information about the types of expenses (including employee compensation and depreciation and amortization) included within income statement expense captions. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all periods presented in the financial statements. The Company is currently assessing the potential impact of the new standard on the Company’s consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets for Private Companies and Certain Not-for-Profit Entities,” which amends ASC 326-20 to provide a practical expedient and an accounting policy election related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. This ASU is effective for interim and annual reporting periods beginning after December 15, 2025, and early adoption is permitted. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on the consolidated financial statements and accompanying notes.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 provides updated guidance on the capitalization and subsequent measurement of costs incurred in connection with the implementation of internal-use software, including cloud computing arrangements. The amendment replaces former stage-based rules with a principles-based framework. Entities will now capitalize costs associated with internal-use software only when management has authorized and committed funding and it is probable that the project will be completed and the software will be used to perform the intended function. This ASU is effective for interim and annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832), to provide guidance on how business entities should recognize, measure, and present government grants received. The effective date for this standard is for fiscal years beginning after December 15, 2028, and interim periods within those fiscal years. Early adoption is permitted. The amendments in this ASU may be applied using a modified prospective, modified retrospective, or retrospective approach. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
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In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Improvements to Interim Disclosure Requirements, to provide clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
3. Revenue recognition
Disaggregation of Revenue—The following table presents revenue disaggregated by product offering for each segment (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Enterprise: | |||||||||||||||||
Subscription | $ | $ | $ | ||||||||||||||
Other | |||||||||||||||||
Enterprise revenue | $ | $ | $ | ||||||||||||||
Consumer: | |||||||||||||||||
Subscription | $ | $ | $ | ||||||||||||||
Transactional and other | |||||||||||||||||
Consumer revenue | $ | $ | $ | ||||||||||||||
Total revenue | $ | $ | $ | ||||||||||||||
Deferred revenue—Revenue recognized for the fiscal year ended December 31, 2025, from amounts included in deferred revenue as of December 31, 2024 was $286.1 million. Revenue recognized for the fiscal year ended December 31, 2024, from amounts included in deferred revenue as of December 31, 2023 was $270.7 million. Revenue recognized for the fiscal year ended December 31, 2023, from amounts included in deferred revenue as of December 31, 2022 was $268.3 million.
The below table presents a summary of deferred revenue balances by reportable segment (in thousands):
| December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | ||||||||||||||||||||
| Deferred revenue: | |||||||||||||||||||||||
Enterprise | $ | $ | $ | $ | |||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Total deferred revenue | $ | $ | $ | $ | |||||||||||||||||||
Remaining performance obligations— Remaining performance obligations represent the aggregate amount of the transaction price in contracts for performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations primarily relate to deferred revenue and unbilled revenue related to multi-year Enterprise subscription contracts with future installment billings, as well as unearned revenue from consumer single course purchases and subscriptions at the end of any given period. As of December 31, 2025, the aggregate transaction price for remaining performance obligations was $567.9 million, of which 72 % is expected to be recognized over the next twelve months and the remainder thereafter.
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Deferred contract costs— The following table represents a roll forward of the Company’s deferred contract costs (in thousands):
| Balance at Beginning of Period | Additions | Amortization Expense | Balance at End of Period | ||||||||||||||||||||
| Fiscal Year Ended December 31, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||
| Fiscal Year Ended December 31, 2024 | $ | $ | $ | ( | $ | ||||||||||||||||||
Fiscal Year Ended December 31, 2023 | $ | $ | $ | ( | $ | ||||||||||||||||||
4. Investments and fair value measurements
The following tables present the Company’s assets that are measured at fair value on a recurring basis within the fair value hierarchy (in thousands):
As of December 31, 2025 | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash equivalents(1): | ||||||||||||||||||||
| Money market funds | $ | $ | $ | |||||||||||||||||
Time deposits | ||||||||||||||||||||
| Marketable securities: | ||||||||||||||||||||
| U.S. government securities | ||||||||||||||||||||
Total assets | $ | $ | $ | |||||||||||||||||
As of December 31, 2024 | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash equivalents(1): | ||||||||||||||||||||
| Money market funds | $ | $ | $ | |||||||||||||||||
Time deposits | ||||||||||||||||||||
U.S. government securities | ||||||||||||||||||||
| Marketable securities: | ||||||||||||||||||||
| U.S. government securities | ||||||||||||||||||||
Total assets | $ | $ | $ | |||||||||||||||||
1) Included in cash and cash equivalents in the accompanying consolidated balance sheets, in addition to $ | ||||||||||||||||||||
The Company did not have a material amount of liabilities measured at fair value on a recurring basis as of December 31, 2025 or December 31, 2024.
The Company’s money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company’s investments in U.S. government securities are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are directly or indirectly observable. The Company’s strategic investments are classified within Level 3 of the fair value hierarchy because they have been valued using significant unobservable inputs for which the Company has been required to develop its own assumptions.
A summary of the changes in the fair value of Level 3 financial instruments, of which vesting and remeasurement of SARs and impairment of strategic investments is recognized in the consolidated statements of operations, is as follows (in thousands):
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| Stock Appreciation Rights | Strategic Investments | ||||||||||
Balance— December 31, 2022 | $ | $ | |||||||||
Vesting and remeasurement of SARs | ( | ||||||||||
Exercises of SARs | ( | ||||||||||
Unrealized loss on strategic investments | ( | ||||||||||
Balance— December 31, 2023 | |||||||||||
Vesting and remeasurement of SARs | ( | ||||||||||
Exercises of SARs | ( | ||||||||||
| Unrealized loss on strategic investments | ( | ||||||||||
Balance— December 31, 2024 | |||||||||||
Vesting and remeasurement of SARs | ( | ||||||||||
| Balance— December 31, 2025 | $ | $ | |||||||||
The Company evaluates its strategic investments for impairment at each reporting period. This evaluation considers several potential qualitative and quantitative impairment indicators including, but not limited to, the investee's financial metrics, whether there were any significant adverse changes in the economic environment or general market conditions of the geographies and industries in which the investee operates, and any other publicly available information that may affect the value of the investment.
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5. Consolidated balance sheet components
Cash, cash equivalents, and marketable securities— The amortized cost, unrealized gains and losses, and estimated fair value of cash, cash equivalents, and marketable securities consisted of the following (in thousands):
As of December 31, 2025 | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market funds | ||||||||||||||||||||||||||
Time deposits | ||||||||||||||||||||||||||
| Total cash and cash equivalents | ||||||||||||||||||||||||||
| Marketable securities: | ||||||||||||||||||||||||||
| U.S. government securities | ||||||||||||||||||||||||||
| Total cash, cash equivalents, and marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
As of December 31, 2024 | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market funds | ||||||||||||||||||||||||||
Time deposits | ||||||||||||||||||||||||||
| U.S. government securities | ||||||||||||||||||||||||||
| Total cash and cash equivalents | ||||||||||||||||||||||||||
| Marketable securities: | ||||||||||||||||||||||||||
| U.S. government securities | ||||||||||||||||||||||||||
| Total cash, cash equivalents, and marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
Cash equivalents and marketable securities in an unrealized loss position consisted of the following (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses(1) | Fair Value | Gross Unrealized Losses(1) | ||||||||||||||||||||
| Marketable securities: | |||||||||||||||||||||||
U.S. government securities | $ | $ | $ | $ | |||||||||||||||||||
Total securities in an unrealized loss position | $ | $ | $ | $ | |||||||||||||||||||
(1) Gross unrealized losses as of December 31, 2025 and December 31, 2024 were less than one thousand dollars and rounded to zero. | |||||||||||||||||||||||
Realized gains and losses reclassified from accumulated other comprehensive loss to other expense, net were zero
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Contractual maturities of investments classified as marketable securities are as follows (in thousands):
| December 31, | ||||||||
| 2025 | ||||||||
| Due within one year | $ | |||||||
| Due in one to two years | ||||||||
| Total | $ | |||||||
Property and equipment, net— Property and equipment, net consisted of the following (in thousands):
| December 31, | December 31, | |||||||||||||
| 2025 | 2024 | |||||||||||||
| Leasehold improvements | $ | $ | ||||||||||||
| Computers and equipment | ||||||||||||||
| Furniture and fixtures | ||||||||||||||
| Purchased software | ||||||||||||||
| Construction in progress | ||||||||||||||
| Total property and equipment | ||||||||||||||
| Less accumulated depreciation and amortization | ( | ( | ||||||||||||
| Property and equipment, net | $ | $ | ||||||||||||
Depreciation expense was $3.1 million, $2.7 million, and $3.0 million for the fiscal years ended December 31, 2025, 2024, and 2023, respectively.
Capitalized software, net— Capitalized software, net consisted of the following (in thousands):
| December 31, | December 31, | |||||||||||||
| 2025 | 2024 | |||||||||||||
Internal use software | $ | $ | ||||||||||||
Content assets | ||||||||||||||
Total capitalized software | ||||||||||||||
| Less accumulated amortization | ( | ( | ||||||||||||
| Capitalized software, net | $ | $ | ||||||||||||
Amortization expense of capitalized software was $20.8 million, $19.9 million, and $17.5 million for the fiscal years ended December 31, 2025, 2024, and 2023 respectively.
As of December 31, 2025, expected amortization expense for capitalized software over the remaining asset lives was as follows (in thousands):
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| Total expected amortization | $ | ||||
Intangible assets, net and goodwill— On April 8, 2025, the Company entered into a $1.5 million asset purchase agreement with a private entity. The transaction was accounted for as an asset acquisition in accordance with ASC 805, Business Combinations, and the assembled workforce represented substantially all of the fair value of the acquired assets.
As of December 31, 2025, intangible assets, net were as follows (in thousands):
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| Estimated Useful Lives | Intangible Assets, Gross | Accumulated Amortization | Intangible Assets, Net | |||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | ||||||||||||||||||||||
Assembled workforce | ( | |||||||||||||||||||||||||
| Vendor relationships | ( | |||||||||||||||||||||||||
| Developed technology | ( | |||||||||||||||||||||||||
| Tradename | ( | |||||||||||||||||||||||||
| Total | $ | $ | ( | $ | ||||||||||||||||||||||
As of December 31, 2024, intangible assets, net were as follows (in thousands):
| Estimated Useful Lives | Intangible Assets, Gross | Accumulated Amortization | Intangible Assets, Net | |||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | ||||||||||||||||||||||
| Vendor relationships | ( | |||||||||||||||||||||||||
| Developed technology | ( | |||||||||||||||||||||||||
| Tradename | ( | |||||||||||||||||||||||||
| Total | $ | $ | ( | $ | ||||||||||||||||||||||
Amortization expense of intangible assets was $1.5 million, $2.8 million, and $4.1 million for the fiscal years ended December 31, 2025, 2024, and 2023, respectively.
The expected future amortization expense for intangible assets as of December 31, 2025 was as follows (in thousands):
| 2026 | $ | ||||
| 2027 | |||||
| Total expected amortization | $ | ||||
Goodwill in the amount of $12.6 million was established as part of the acquisition of CUX, Inc. (d/b/a CorpU) on August 24, 2021, and allocated to the Enterprise segment. This amount represents the excess of the purchase price over the fair value of net assets acquired. There have been no adjustments to the carrying amount of goodwill as of December 31, 2025.
The Company tests for impairment at least annually, or whenever events or changes in circumstances occur that could impact the recoverability of these assets. No such triggering events were identified during the fiscal years ended December 31, 2025, 2024, or 2023.
Accrued expenses and other current liabilities— Accrued expenses and other current liabilities consisted of the following (in thousands):
| December 31, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Accrued expenses | $ | $ | |||||||||
| Indirect tax reserves | |||||||||||
| Indirect tax payables | |||||||||||
| Other current liabilities | |||||||||||
| Accrued expenses and other current liabilities | $ | $ | |||||||||
6. Debt
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In May 2025, the Company, as borrower, entered into a Credit Agreement with Citibank, as administrative agent, collateral agent and a lender, and certain other financial institutions, as lenders (the facility established thereby, the “Revolving Credit Facility”). The Revolving Credit Facility, which matures in May 2030, provides the Company with revolving commitments in an aggregate principal amount of $200.0 million, with a $10.0 million sublimit for the issuance of letters of credit and a $10.0 million sublimit for swingline borrowings. The Company, subject to the satisfaction of certain conditions, including obtaining commitments from new or existing lenders, may increase the commitments under the Revolving Credit Facility by an aggregate principal amount of up to the greater of $100.0 million or 100 % of trailing twelve months adjusted EBITDA (calculated in accordance with the terms of the Revolving Credit Facility). The obligations of the Company under the Revolving Credit Facility are secured on a first priority basis by a lien on substantially all of the assets of the Company.
Borrowings under the Revolving Credit Facility bear interest through maturity and, at the Company’s election, at a variable rate based upon either (i) an adjusted term SOFR rate (based on one-, three- or six-month interest periods), plus an applicable margin (“SOFR Borrowings”) or (ii) an alternative base rate, plus an applicable margin (“ABR Borrowings”). The applicable margin for SOFR Borrowings is between 2.0 % and 2.5 %, and the applicable margin for ABR Borrowings is between 1.0 % to 1.5 %, in each case depending on the Company’s consolidated net leverage ratio calculated in accordance with the terms of the Revolving Credit Facility. The Revolving Credit Facility bears a commitment fee on the daily undrawn amount of revolving commitments ranging from 0.25 % to 0.35 % per annum payable quarterly in arrears, depending on the Company’s consolidated total net leverage ratio.
The Revolving Credit Facility contains customary affirmative and negative covenants, including negative covenants imposing limitations on, among others, incurring additional indebtedness, granting liens, making certain restricted payments (including stock repurchases or the payment of cash dividends), making investments and entering into certain transactions with affiliates. The Company is also subject to financial covenants to maintain a minimum consolidated interest coverage ratio of 3.0 to 1.0 and a maximum consolidated net leverage ratio of 3.5 to 1.0, in each case calculated in accordance with the terms of the Revolving Credit Facility. Noncompliance with these covenants, or the occurrence of certain other events specified in the Revolving Credit Facility, could result in an event of default under the Revolving Credit Facility. Upon the occurrence and during the continuance of an event of default, any outstanding principal, interest, and fees could become immediately due and payable. As of December 31, 2025, the Company was in compliance with all covenants under the Revolving Credit Facility.
As of December 31, 2025, the Company had no outstanding borrowings under the Revolving Credit Facility.
The Company incurred $1.4 million worth of debt issuance costs in connection with the Revolving Credit Facility. The Company recorded interest expense of $0.5 million during the fiscal year ended December 31, 2025, of which $0.2 million was related to the amortization of capitalized debt issuance costs.
7. Leases
The Company applies the guidance under Topic 842 for leases of real estate facilities under non-cancelable operating leases, with lease terms expiring through June 2029.
As a result of new leasing activity during the fiscal year ended December 31, 2024, the Company was entitled to receive $2.1 million in tenant incentives for leasehold improvements constructed by the Company, which it received during the fiscal year ended December 31, 2025.
The components of lease costs, supplemental cash flow information, lease term, and discount rate for operating leases are as follows (in thousands, except for percentages and years):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating lease costs | $ | $ | $ | ||||||||||||||
| Variable lease costs | |||||||||||||||||
Short-term lease costs | |||||||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities, net of lease incentives | |||||||||||||||||
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| December 31, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| Weighted average remaining term (years) | |||||||||||
| Weighted average discount rate | % | % | |||||||||
During the fiscal years ended December 31, 2025, 2024 and 2023, the Company recognized no sublease income.
Future minimum lease payments under noncancellable operating leases with initial lease terms in excess of one year as of December 31, 2025, were as follows (in thousands):
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Gross lease payments | |||||
| Less imputed interest | ( | ||||
| Present value of operating lease liabilities | $ | ||||
8. Commitments and contingencies
Noncancellable purchase commitments— The Company has noncancellable contractual commitments related to third-party cloud infrastructure providers, software subscriptions, and other service agreements to support operations in the ordinary course of business. As of December 31, 2025, future noncancellable commitments with remaining terms in excess of one year under these arrangements were as follows (in thousands):
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
Total purchase commitments (1) | $ | ||||
(1) Does not include $ | |||||
Indemnification— The Company enters into indemnification provisions under agreements with other parties in the ordinary course of business, including certain business partners, investors, contractors, and the Company’s officers, directors, and certain employees. The Company has agreed to indemnify and defend the indemnified party’s claims and related losses suffered or incurred by the indemnified party resulting from actual or threatened third-party claims because of the Company’s activities or, in some cases, non-compliance with certain representations and warranties made by the Company. In general, the Company does not record any liability for these indemnities in the accompanying consolidated balance sheets as the amounts cannot be reasonably estimated and are not considered probable. The Company does, however, accrue for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable. To date, losses recorded in the Company’s consolidated statements of operations in connection with the indemnification provisions have not been material.
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Litigation— From time to time, in the ordinary course of business, the Company is subject to legal proceedings, claims, investigations, and other proceedings, including claims of alleged infringement of third-party patents and other intellectual property rights, and commercial, employment, and other matters. In accordance with generally accepted accounting principles, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least annually and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. The outcome of such litigation is not expected to have a material effect on the financial position, results of operation and cash flows of the Company. The Company has recorded an immaterial amount related to all outstanding litigation matters in the accrued expenses and other current liabilities caption of the accompanying consolidated balance sheets as of December 31, 2025, and December 31, 2024.
9. Income taxes
The following footnote reflects the Company’s adoption of ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Refer to Note 2 – Summary of significant accounting policies for more information about recently adopted accounting pronouncements.
The domestic and foreign components of income (loss) before provision for income taxes consisted of the following (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Domestic | $ | ( | $ | ( | $ | ( | |||||||||||
Foreign | |||||||||||||||||
Total net income (loss) before taxes | $ | $ | ( | $ | ( | ||||||||||||
The provision for income taxes consisted of the following (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current | |||||||||||||||||
Federal | $ | $ | $ | ||||||||||||||
State | |||||||||||||||||
Foreign | |||||||||||||||||
Total current income tax expense | |||||||||||||||||
Deferred: | |||||||||||||||||
Federal | |||||||||||||||||
State | |||||||||||||||||
Foreign | ( | ( | ( | ||||||||||||||
Total deferred income tax benefit | ( | ( | ( | ||||||||||||||
Total provision for income taxes | $ | $ | $ | ||||||||||||||
The Company had an effective tax rate of 54.34 %, (5.37 )%, and (3.52 )% for the periods ended December 31, 2025, 2024, and 2023, respectively. The difference between the 21% statutory federal tax rate and the effective tax rate was primarily a result of the decrease in the total of valuation allowances against federal and state net deferred tax assets, offset by income earned in jurisdictions with higher statutory tax rates, foreign withholding taxes, and tax credits.
The reconciliation between the statutory federal income tax rate and the Company’s effective tax rate as a percentage of net income before taxes is as follows (dollar amounts in thousands):
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Fiscal Year Ended December 31, 2025 | |||||||||||
| Amount | As a % of net income before taxes | ||||||||||
| Net income before taxes | $ | ||||||||||
| U.S. federal statutory tax rate | % | ||||||||||
State and local income taxes, net of federal income tax effect(1) | % | ||||||||||
| Foreign tax effects | % | ||||||||||
| Effect of changes in tax laws or rates enacted in the current period | |||||||||||
| Effect of cross-border tax laws | |||||||||||
| Withholding taxes | % | ||||||||||
| Tax credits | |||||||||||
| Research credits | ( | ( | % | ||||||||
| Changes in valuation allowance - federal | ( | ( | % | ||||||||
| Non-taxable or non-deductible items | |||||||||||
| Non-deductible compensation | % | ||||||||||
| Stock-based compensation | % | ||||||||||
| Changes in unrecognized tax benefits | % | ||||||||||
| Other | % | ||||||||||
| Income tax provision | $ | % | |||||||||
| (1) States taxes in Virginia and Florida made up the majority (greater than 50%) of the tax effect in this category. | |||||||||||
As previously disclosed for the periods ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
| Fiscal Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
Federal tax expense | % | % | |||||||||
State taxes, net of federal benefit | % | % | |||||||||
Foreign rate differential | ( | % | ( | % | |||||||
Withholding taxes | ( | % | ( | % | |||||||
Nondeductible compensation | ( | % | ( | % | |||||||
Stock-based compensation | ( | % | ( | % | |||||||
Change in valuation allowance | ( | % | ( | % | |||||||
Research and development credits | % | % | |||||||||
Nontaxable dividends | % | % | |||||||||
Other | % | ( | % | ||||||||
Effective tax rate | ( | % | ( | % | |||||||
The amount of cash taxes paid by Udemy, Inc., inclusive of amounts withheld by customers and remitted to tax authorities on the Company's behalf, are as follows (in thousands):
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Fiscal Year Ended December 31, 2025 | ||||||||
| Federal | $ | |||||||
| State | ||||||||
| Foreign | ||||||||
| India | ||||||||
| Australia | ||||||||
| All other foreign | ||||||||
| Cash taxes, net of amounts refunded | $ | |||||||
Significant components of the net deferred tax assets (liabilities) for the fiscal years ended December 31, 2025 and 2024, consisted of the following (in thousands):
| December 31, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets: | |||||||||||
Accruals and reserves | $ | $ | |||||||||
Deferred revenue | |||||||||||
Net operating loss | |||||||||||
Research and development tax credits | |||||||||||
Stock-based compensation expense | |||||||||||
Indirect tax reserves | |||||||||||
Property and equipment, net | |||||||||||
Capitalized research and development costs | |||||||||||
Operating lease liabilities | |||||||||||
| Other deferred tax assets | |||||||||||
Gross deferred tax assets | |||||||||||
Valuation allowance | ( | ( | |||||||||
Total deferred tax assets | |||||||||||
Deferred tax liabilities: | |||||||||||
Deferred contract costs | ( | ( | |||||||||
Operating lease right-of-use-assets | ( | ( | |||||||||
Other deferred tax liabilities | ( | ( | |||||||||
Total deferred tax liabilities | ( | ( | |||||||||
Net deferred tax assets | $ | $ | |||||||||
A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. We regularly assess our ability to realize our deferred tax assets on a quarterly basis and will establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including our earnings history and results of recent operations, reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. In 2025, after considering both positive and negative evidence, we determined that there is not sufficient objectively verifiable positive evidence to conclude that it is more-likely-than-not that our US deferred tax assets are realizable in the future. As a result, we continue to record a full valuation allowance against our U.S. Federal and State net deferred tax balances.
As of December 31, 2025, the Company has established a valuation allowance of $160.9 million, against its gross deferred tax assets due to the uncertainty surrounding the realization of such assets. The change in total valuation allowance from 2024 to 2025 was an decrease of $4.6 million.
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As of December 31, 2025, the Company had $170.4 million of federal net operating loss (“NOL”) carryforwards. All of the federal NOL carryforwards generated in taxable years beginning after December 31, 2017 have an indefinite carryforward period, but are subject to the 80% deduction limitation based upon pre-NOL deduction taxable income.
As of December 31, 2025, the Company had $58.0 million of state NOL carryforwards. The state NOL carryforwards begin expiring in 2030, if not utilized.
As of December 31, 2025, the Company had U.S. federal and state research and development tax credit carryforwards of $30.6 million and $20.2 million, respectively. The federal research and development tax credit carryforwards will expire in various amounts beginning in 2035 while the state research and development tax credit carryforwards can be carried forward indefinitely.
In July 2025, the United States enacted tax legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBB Act”). The OBBB Act, among other things, extends certain provisions of 2017 U.S. federal tax legislation relating to federal bonus depreciation and immediate expensing for domestic research and development expenditures. These provisions did not have a material effect on the Company’s consolidated financial statements for the year ended December 31, 2025. We will continue to monitor future developments, including regulatory guidance and interpretations, which could have a material impact.
The utilization of the Company’s net operating losses may be subject to a limitation due to the “ownership change” provisions under Section 382 of the Internal Revenue Code and similar state and foreign provisions. The Company has performed a Section 382 study through December 31, 2025 to determine any potential Section 382 limitations on the utilization of its net operating loss carryforwards and tax credit carryforwards and has determined that the Company has not experienced any ownership changes expected to impact Net Operating Loss carryforwards.
Uncertain tax positions— As of December 31, 2025 and 2024, the Company had gross unrecognized tax benefits of $10.0 million and $9.0 million, respectively, related to federal and state research and development tax credits. The Company has performed a R&D tax credit study. The Company’s tax position of such credits is not more likely than not to be sustained upon examination. The Company has recorded an uncertain tax position related to the deferred tax asset recognized for these credits.
A reconciliation of the beginning and ending balance of unrecognized tax benefit is as follows (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Gross unrecognized tax benefits at the beginning of the year | $ | $ | $ | ||||||||||||||
| Increases related to prior year tax positions | |||||||||||||||||
Increases related to current year tax positions | |||||||||||||||||
Statues of limitations expirations | |||||||||||||||||
Gross unrecognized tax benefits at the end of the year | $ | $ | $ | ||||||||||||||
The Company is currently unaware of uncertain tax positions that could result in significant additional payments, accruals, or other material deviations in the next 12 months. The Company currently does not record interest and penalties, if any, related to unrecognized tax benefits due to the existence of tax attribute carryforwards.
The Company intends to indefinitely reinvest any future undistributed foreign earnings outside the United States and therefore such earnings will not be subject to U.S. federal or state, or foreign withholding tax.
The Company files income tax returns in U.S. federal, and certain state and foreign jurisdictions with varying statutes of limitations. Due to NOL carryforwards and tax credit carryforwards, the statutes of limitations remain open for tax years from inception of the Company through the fiscal year ended December 31, 2025. There are currently no income tax audits underway by U.S. federal or state tax authorities.
The Company’s subsidiary, Udemy India LLP, has received tax assessments from the India Income Tax Department. These assessments have challenged the transfer pricing methodology used by Udemy India LLP for the fiscal years ended March 31, 2022 and 2021. The Company believes the proposed adjustments are without merit and will vigorously defend its position; however, it could take a number of years to reach resolution of this matter.
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10. Employee Retirement Plan
The Company maintains a 401(k) retirement savings plan covering eligible employees. Employee contributions to the plan consist of a percentage based on eligible employee compensation. In the fiscal years ended December 31, 2025 and 2024, the Company matched 50 6 50 % of an employee’s contribution up to 4 % of eligible compensation, with no vesting requirements.
11. Related party transactions
Naspers Ltd. (“Naspers”), through an investment entity controlled by Prosus N.V. (“Prosus”), beneficially owns more than 5 % of the Company’s outstanding capital stock. During the year ended December 31, 2024, a current member of the Company’s board of directors was employed by Prosus as an operating partner and by OLX Group B.V., a Prosus operating subsidiary, as Chief Executive Officer; these affiliations ceased as of December 31, 2024. Naspers and certain entities directly and indirectly controlled by Naspers are customers of the Company’s Enterprise subscription offering.
Insight Partners (“Insight”), where a member of the Company’s board of directors is a Managing Director, has certain affiliates who are customers of the Company’s Enterprise subscription offering. Insight Partners is also affiliated with certain vendors that the Company has contracted to provide technology and software solutions.
Certain members of the Company’s board of directors also served as executive officers for customers of the Company’s Enterprise subscription offering.
The following tables summarize the Company’s related party transactions (in millions):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Revenue recognized from services provided to customers | |||||||||||||||||
| Naspers and affiliates | $ | $ | $ | ||||||||||||||
| Insight and affiliates | |||||||||||||||||
| Companies affiliated with Board members | |||||||||||||||||
Expense recognized from services provided by vendors | |||||||||||||||||
| Insight and affiliates | |||||||||||||||||
| December 31, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
Amounts in accounts receivable | |||||||||||
| Insight and affiliates | $ | $ | |||||||||
| Companies affiliated with Board members | |||||||||||
12. Stockholders' equity
Preferred stock— Under its amended and restated certificate of incorporation, the Company is authorized to issue 50,000,000 0.00001 zero
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Common stock— Common stockholders are entitled to one vote per share. Shares of common stock reserved for future issuance consisted of the following:
| December 31, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| 2010 Equity Incentive Plan: | |||||||||||
| Stock options outstanding | |||||||||||
| 2021 Equity Incentive Plan: | |||||||||||
RSUs outstanding and PSUs(1) | |||||||||||
| Shares available for future issuance under: | |||||||||||
| 2021 Equity Incentive Plan | |||||||||||
| 2021 Employee Stock Purchase Plan | |||||||||||
| Total shares of common stock reserved | |||||||||||
| (1) For those PSUs in their respective performance periods, the number of shares reserved for issuance is based on the maximum achievement of the corporate performance metrics. | |||||||||||
Share repurchase programs— The Company may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The number of shares to be repurchased and the timing of the repurchases depend on several factors, including, without limitation, business, economic, and market conditions, corporate, legal, and regulatory requirements, prevailing stock prices, trading volume, and other considerations. Prior to completion, the repurchase programs could have been suspended or discontinued at any time and did not obligate the Company to acquire any amount of common stock.
Shares repurchased by the Company are accounted for on the settlement date. Upon settlement, repurchased shares are immediately retired and no longer considered issued or outstanding. The total cost to repurchase shares includes any direct costs incurred, including broker commissions and excise taxes, and is recorded as a reduction to additional paid in capital in the consolidated balance sheets.
In September 2025, the Company’s board of directors approved a share repurchase program (the “2025 Repurchase Program”), which authorized the purchase of up to $50 million in shares of the Company’s common stock. During the fiscal year ended December 31, 2025, the Company repurchased 7,971,500 shares for an aggregate total of $50.2 million, inclusive of direct costs incurred. The 2025 Repurchase Program was completed in December 2025.
During the fiscal year ended December 31, 2024, the Company’s board of directors approved a share repurchase program (the “2024 Repurchase Program”), which authorized the purchase of up to $150 million in shares of the Company’s common stock. During the fiscal year ended December 31, 2024, the Company repurchased 16,205,119 shares for an aggregate total of $151.2 million, inclusive of direct costs incurred. The 2024 Repurchase Program was completed in November 2024.
Equity incentive plans— In 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan provided for incentive stock options (“ISOs”), non-statutory stock options (“NSOs”, collectively with ISOs, “stock options”), stock appreciation rights, restricted stock, and restricted stock units to be granted to eligible employees, directors, and consultants. The 2010 Plan was terminated in October 2021 in connection with the IPO but continues to govern the terms and conditions of the outstanding awards granted pursuant to the 2010 Plan. No further equity awards will be granted under the 2010 Plan.
The Company adopted the 2021 Equity Incentive Plan (the "2021 Plan") in September 2021, which became effective on October 28, 2021 (collectively with the 2010 Plan, the “Equity Incentive Plans”) and was approved by the Company’s stockholders. The 2021 Plan provides for the granting of ISOs, NSOs, SARs, restricted stock, RSUs, and performance awards to eligible employees, directors, and consultants.
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The Company initially reserved 13,800,000 shares for issuance under the 2021 Plan. The amount available for issuance is subject to an annual increase on the first day of each calendar year, beginning on January 1, 2023, in an amount equal to 5 % of the outstanding shares of the Company’s common stock on the last day of the immediately preceding calendar year or a lesser amount determined by the Company’s board of directors or compensation committee. The amount available for issuance shall also include Returning Shares, which are any shares subject to awards granted under the 2010 Plan that, on or after October 29, 2021, expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest. Additionally, any difference in (i) the number of PSUs reserved for future issuance based on maximum achievement of the corporate performance metric and (ii) the number of PSUs issued based on actual attainment are returned to the 2021 Plan.
On January 1, 2025, the shares available for future grants under the 2021 Plan automatically increased by 7,374,214 pursuant to the above evergreen provision of the 2021 Plan.
Equity Exchange— On July 11, 2022, the Company launched an equity exchange program (the “Equity Exchange”) in which eligible employees and executives were able to exchange certain outstanding stock options and SARs, whether vested or unvested, with a per share exercise price equal to or greater than $11.13 , for RSUs on a one -for-one basis. Upon expiration of the offer to exchange on August 6, 2022, 6,958,544 stock options and SARs (collectively, the “Exchanged Awards”) were canceled and immediately exchanged for an equivalent number of new RSUs, representing a participation rate by eligible awards of approximately 97 %.
The incremental stock-based compensation expense associated with the Equity Exchange was calculated as the excess of the fair value of each new RSU awarded, as measured on the date exchanged, over the fair value of the corresponding Exchanged Awards, as measured immediately prior to the exchange closing on August 6, 2022. The fair value of the new RSUs was estimated using the fair value of the Company’s common stock on the exchange date. The following table summarizes the weighted-average assumptions used in the Black-Scholes option-pricing model to estimate the fair value of the Exchanged Awards as of August 6, 2022:
| Risk-free interest rate | |||||
Expected volatility | |||||
Expected life (in years) | |||||
Expected dividend yield | |||||
As a result of the Equity Exchange, there was $45.7 million in incremental stock-based compensation expense from the modification accounting. That amount, as well as the remaining unrecognized expense associated with the Exchanged Awards at the time of the exchange, began to be recognized on a straight-line basis over the requisite service period for the new RSUs, adjusted as needed for those new RSUs issued for certain Exchanged Awards whose per share exercise prices were lower than the Company’s stock price at the exchange date. The requisite service periods for all unforfeited Exchanged Awards were satisfied no later than August 2025.
Restricted stock units and performance-based restricted stock units— The fair value of RSUs and PSUs are determined using the fair value of the Company’s common stock on the date of grant. The Company recognizes stock-based compensation expense for RSUs with service-based vesting conditions on a straight-line basis over the requisite service period for each award, which is typically between to four years .
Each PSU conveys a right to receive one share of the Company’s common stock on the date it vests, provided that the number of PSUs that will ultimately vest may vary based upon achievement of the corporate performance metrics at the end of the performance period. During the performance period, Management estimates the number of PSUs that are expected to vest based on the anticipated achievement. If the performance-based vesting condition is considered probable of being achieved, the Company recognizes expense over the requisite service period based on the probable outcome of achievement. If the performance goals are not met, or are considered improbable, no compensation cost is recognized, and any previously recognized compensation cost is reversed. Total stock-based compensation expense to be recognized may fluctuate during the performance period due to changes in forecasted achievement.
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During the third quarter of 2025, the Company granted 553,125 PSUs at target to certain executives, with payout achievement ranging from 0 % to 150 % of target. One third of the eligible PSUs vest upon certification of the corporate performance metrics by the Board of Directors’ compensation committee in the third quarter of 2026, and the remaining two thirds will vest equally over the following 6 quarters, subject to continual service by the grantee. Achievement has been considered probable since the grant date, and, as of December 31, 2025, the Company estimated a payout rate of 70 % of target based on forecasted achievement.
During the first quarter of 2025, the Company granted 372,044 PSUs at target to certain executives, with payout achievement ranging from 0 % to 150 % of target. One third of the eligible PSUs vest upon certification of the corporate performance metrics by the Board of Directors’ compensation committee in the first quarter of 2026, and the remaining two thirds will vest equally over the following 8 quarters, subject to continual service by the grantee. Achievement has been considered probable since the grant date, and, as of December 31, 2025, management calculated a payout rate equal to 66 % of the number of target shares granted based on actual attainment of the metrics.
During the first quarter of 2024, the Company granted 553,568 PSUs at target to certain executives, with payout achievement ranging from 0 % to 150 % of target. In February 2025, the Board of Directors’ compensation committee certified actual achievement against target of 45 %. As a result, 218,565 shares were awarded to the grantees, of which one quarter vested in the quarter of certification, while the remaining 75 % will vest equally over the following 12 quarters, subject to continual service by the grantee. The difference in the number of shares granted at target and the shares certified by the Board based on actual achievement were canceled and returned to the pool of available for future issuance under the 2021 Plan.
During the first quarter of 2023, the Company granted 645,833 PSUs at target to certain executives, with payout achievement ranging from 0 % to 150 % of target. In February 2024, the Board of Directors’ compensation committee certified actual achievement against target of 70 %. As a result, 450,170 shares were awarded to the grantees, of which one quarter vested in the quarter of certification, while the remaining 75 % will vest equally over the following 12 quarters, subject to continual service by the grantee. The difference in the number of shares granted at target and the shares certified by the Board based on actual achievement were canceled and returned to the pool of available for future issuance under the 2021 Plan.
A summary of RSU and PSU activity under the 2021 Plan is as follows:
| RSUs Outstanding | Weighted Average Grant Date Fair Value | PSUs Outstanding (1) | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
Balance - December 31, 2024 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Released | ( | ( | |||||||||||||||||||||
| Canceled | ( | ( | |||||||||||||||||||||
Balance - December 31, 2025 | $ | $ | |||||||||||||||||||||
Unvested - December 31, 2025 | $ | $ | |||||||||||||||||||||
Awards vested, not yet released - December 31, 2025 | $ | $ | |||||||||||||||||||||
(1) Canceled PSU shares consist of awards forfeited as well as the difference in the number of shares granted at target and the shares certified by the Board based on actual achievement. | |||||||||||||||||||||||
The weighted-average grant date fair value of RSUs that were granted during the fiscal years ended December 31, 2024 and 2023, was $9.25 and $9.86 , respectively. The aggregate fair value of RSUs that vested during the fiscal years ended December 31, 2025, 2024, and 2023 was $51.3 million, $61.2 million and $68.4 million, respectively. As of December 31, 2025, total unrecognized stock-based compensation expense related to unvested RSUs was $104.1 million, which will be recognized over a weighted average period of 2.2 years.
The weighted-average grant date fair value of PSUs that were granted during the fiscal years ended December 31, 2024 and 2023, was $10.98 and $8.89 , respectively. The aggregate fair value of PSUs that vested during the fiscal years ended December 31, 2025 and 2024 was $1.2 million and $1.9 million, respectively. No PSUs vested prior to the fiscal year ended December 31, 2024. As of December 31, 2025, total unrecognized stock-based compensation expense related to unvested PSUs was $2.9 million, which will be recognized over a weighted average period of 1.1 years.
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Stock options— The Company may grant stock options at exercise prices not less than the fair market value at the date of grant. These options generally expire 10 years from the date of grant. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for each award, which is generally even over four years .
The following is a summary of activity for stock options having only service-based vesting conditions under the Equity Incentive Plans:
| Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (In Thousands) | ||||||||||||||||||||
Balance - December 31, 2024 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Exercised | ( | ||||||||||||||||||||||
| Canceled | ( | ||||||||||||||||||||||
Balance - December 31, 2025 | $ | $ | |||||||||||||||||||||
Vested & exercisable as of December 31, 2025 | $ | $ | |||||||||||||||||||||
There were no
Total aggregate intrinsic value of options exercised during the fiscal years ended December 31, 2025, 2024, and 2023 was $1.6 million, $15.9 million, and $45.6 million, respectively.
As of December 31, 2025, there was no unrecognized stock-based compensation for stock options with service-based vesting conditions, as all such awards were fully vested.
Performance-based stock options— Under the Equity Incentive Plans, the Company may grant share-based awards whose vesting is contingent on meeting various departmental or company-wide performance goals, such as the achievement of certain sales targets or an IPO event, in lieu of or in addition to a service-based vesting condition (“Performance-Based Options”). Such awards are generally granted with an exercise price equal to the fair market value of the underlying common stock share on the date of grant and have a contractual term of 10 years. If vesting is dependent on satisfying a performance condition that is probable of being achieved, the Company estimates the expected term as the midpoint between the time at which the performance conditions are probable of being satisfied and the contractual term of the award. If vesting is dependent on satisfying a performance condition that is not probable of being achieved and the service period is not explicitly stated, the Company estimates the expected term as the contractual term. The remaining inputs to the Black-Scholes option pricing model used to determine grant date fair value, including risk-free interest, expected volatility, and expected dividend yield, are calculated using the same method as that used for stock options with service-based vesting conditions. Grants for Performance-Based Options are made out of the same pool of stock options available for future issuance under the Equity Incentive Plans.
Compensation expense for Performance-Based Options is based on the grant date fair market value. The Company recognizes expense for Performance-Based Options having either (a) multiple performance-based vesting conditions, or (b) performance and graded service-based vesting conditions, by separately attributing each vesting tranche of the award over the requisite service period applicable to each vesting condition. Management’s estimate of the number of shares expected to vest is based on the anticipated achievement of the specified performance goals. If the performance-based vesting condition is considered probable of being achieved, the Company recognizes expense over the remaining service period based on the probable outcome of achievement. If the performance goals are not met, no compensation cost is recognized, and any previously recognized compensation cost is reversed. For awards with both performance and service-based vesting conditions where the performance condition is considered improbable of being achieved, the Company does not recognize expense until the performance condition is satisfied, after which time expense is recognized over the requisite service period.
The Company had one Performance-Based Option outstanding as of December 31, 2025. The following table summarizes the activities of Performance-Based Options under the Equity Incentive Plans:
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Performance-Based Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (In Thousands) | ||||||||||||||||||||
Balance - December 31, 2024 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Exercised | |||||||||||||||||||||||
| Canceled | |||||||||||||||||||||||
Balance - December 31, 2025 | $ | $ | |||||||||||||||||||||
| Vested & exercisable as of December 31, 2025 | $ | $ | |||||||||||||||||||||
As of December 31, 2025, there was no unrecognized stock-based compensation for stock options with performance-based vesting conditions, as all such awards were fully vested.
Stock appreciation rights— The Company may grant SARs at exercise prices not less than the fair market value at the date of grant. The SARs are liability-classified awards that generally expire 10 years from the date of grant. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for each award, which is generally even over four years . Refer to Note 2 “Summary of Significant Accounting Policies—Stock-Based Compensation” for more information.
As of December 31, 2025, there were 1,000 fully-vested and exercisable SARs outstanding, with a weighted average exercise price of $3.12 .
Employee stock purchase plan— The 2021 Employee Stock Purchase Plan (the “ESPP”) became effective on October 29, 2021. The Company initially reserved 2,800,000 shares of the Company's common stock under the ESPP. Shares reserved for issuance shall increase on the first day of the fiscal year, beginning in fiscal 2023, in an amount equal to the least of 1 % of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, three times the initial number of shares reserved under the ESPP, or a lesser amount determined by the Company’s board of directors or compensation committee. On January 1, 2025, the shares available for future grants under the ESPP automatically increased by 1,474,842 pursuant to the above evergreen provision of the 2021 ESPP.
The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount of 15 % during an offering period. Offering periods are 24 -month periods beginning on the first trading day on or after May 20 or November 20 (defined as the enrollment date). Each offering period has four purchase periods which last approximately 6 months, or the length of time between exercise dates (defined as the first trading day on or after May 20 and November 20 of each purchase period), except that the first purchase period of any offering period is the time between the enrollment date and first exercise date. At the start of an offering period, eligible employees may elect to contribute up to 15 % of their eligible compensation each payroll period during that offering period to purchase shares of common stock in accordance with the ESPP.
On each exercise date, eligible employees will purchase the Company’s common stock at a price per share equal to 85 % of the lesser of the fair market value of the Company’s common stock on (i) the enrollment date or (ii) the exercise date. During the fiscal year ended December 31, 2025, 816,359 shares of common stock were issued under the ESPP.
Under the reset provision, if the closing stock price on the purchase date falls below the closing stock price on the offering date of an ongoing offering period, the ongoing offering period terminates immediately following the purchase of ESPP shares on the purchase date. Participants in the terminated offering period are then automatically enrolled in the new offering period. During the fiscal years ended December 31, 2025, 2024, and 2023, ESPP resets resulted in incremental stock-based compensation expense to be recognized from modification accounting of $2.4 million, $3.6 million, and $5.9 million, respectively, to be recognized on a straight-line basis over the new, respective offering periods.
The following table summarizes the weighted-average assumptions used in the Black-Scholes option-pricing model to estimate the fair value of employee stock purchase rights granted under the new ESPP offering period:
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| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Risk-free interest rate | % | % | % | ||||||||||||||
| Expected volatility | % | % | % | ||||||||||||||
| Expected life (in years) | |||||||||||||||||
| Expected dividend yield | |||||||||||||||||
As of December 31, 2025, total unrecognized compensation cost for the ESPP was $4.2 million, which will be recognized over a weighted average period of 1.8 years.
Total stock-based compensation expense included in the consolidated statements of operations was as follows (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | $ | $ | $ | ||||||||||||||
| Sales and marketing | |||||||||||||||||
| Research and development | |||||||||||||||||
| General and administrative | |||||||||||||||||
Restructuring charges | ( | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | ||||||||||||||
The Company capitalized $6.3 million, $8.4 million, and $9.0 million worth of stock-based compensation expense as capitalized software during the fiscal years ended December 31, 2025, 2024, and 2023, respectively.
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13. Net income (loss) per share
The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except share and per share amounts):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Numerator: | |||||||||||||||||
Net income (loss) | $ | $ | ( | $ | ( | ||||||||||||
| Denominator: | |||||||||||||||||
Weighted-average shares used in computing net income (loss) per share | |||||||||||||||||
Basic | |||||||||||||||||
| Dilutive effect of awards issued under equity incentive plans | |||||||||||||||||
Diluted | |||||||||||||||||
Net income (loss) per share: | |||||||||||||||||
Basic | $ | $ | ( | $ | ( | ||||||||||||
Diluted | $ | $ | ( | $ | ( | ||||||||||||
The following potentially dilutive securities were excluded from the computation of diluted net income (loss) per share because the impact of including them would have been anti-dilutive:
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| RSUs, PSUs, and restricted stock | |||||||||||||||||
| Stock options | |||||||||||||||||
| Contingently issuable shares under ESPP | |||||||||||||||||
| Total potentially dilutive securities | |||||||||||||||||
14. Segment and geographic information
The Company’s Chief Executive Officer is its CODM. The CODM reviews separate financial information for the Company’s two
The Enterprise segment primarily generates revenue by selling subscription licenses to a variety of enterprise and government customers. The Consumer segment primarily generates revenue by selling access to course content directly to individual learners. The CODM assesses each segment's performance based on segment adjusted gross profit. The CODM uses segment adjusted gross profit during the annual budgeting process and considers budget to actual variances on a monthly basis when making decisions about the allocation of resources to each segment.
Segment adjusted gross profit, as presented below, is defined as segment revenue less segment adjusted cost of revenue. Segment adjusted cost of revenue includes content costs, customer support services, hosting and platform costs, and payment processing fees that are allocable to each segment. Segment adjusted gross profit excludes amortization of capitalized software, depreciation, stock-based compensation, and amortization of intangible assets included in cost of revenue, as the CODM does not include the information in his measurement of the performance of the operating segments. Additionally, the Company does not allocate sales and marketing expenses, research and development expenses, and general and administrative expenses because the CODM does not include the information in his measurement of the performance of the operating segments. The Udemy platform supports the operations of each segment.
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The CODM does not use asset information by segments to assess performance and make decisions regarding allocation of resources, and the Company does not track its long-lived assets by segment. The geographic identification of these assets is set forth below.
Financial information for each reportable segment was as follows (in thousands):
Fiscal Year Ended December 31, 2025 | |||||||||||||||||
Enterprise | Consumer | Total | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Content costs | ( | ( | ( | ||||||||||||||
| Customer support | ( | ( | ( | ||||||||||||||
Other segment items (1) | ( | ( | ( | ||||||||||||||
| Segment adjusted gross profit | $ | $ | $ | ||||||||||||||
Fiscal Year Ended December 31, 2024 | |||||||||||||||||
Enterprise | Consumer | Total | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Content costs | ( | ( | ( | ||||||||||||||
| Customer support | ( | ( | ( | ||||||||||||||
Other segment items (1) | ( | ( | ( | ||||||||||||||
| Segment adjusted gross profit | $ | $ | $ | ||||||||||||||
Fiscal Year Ended December 31, 2023 | |||||||||||||||||
Enterprise | Consumer | Total | |||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||
| Content costs | ( | ( | ( | ||||||||||||||
| Customer support | ( | ( | ( | ||||||||||||||
Other segment items (1) | ( | ( | ( | ||||||||||||||
| Segment adjusted gross profit | $ | $ | $ | ||||||||||||||
(1) Other segment items for each segment across all periods presented consisted of payment and mobile processing fees and costs associated with hosting digital content.
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The following table provides a reconciliation from segment adjusted gross profit to net income (loss) before taxes (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Segment adjusted gross profit | $ | $ | $ | ||||||||||||||
Other costs of revenue (1) | ( | ( | ( | ||||||||||||||
| Sales and marketing | ( | ( | ( | ||||||||||||||
| Research and development | ( | ( | ( | ||||||||||||||
| General and administrative | ( | ( | ( | ||||||||||||||
| Restructuring charges | ( | ( | ( | ||||||||||||||
| Total other income, net | |||||||||||||||||
Net income (loss) before taxes | $ | $ | ( | $ | ( | ||||||||||||
(1) Consists of amortization of capitalized software, depreciation, stock-based compensation, and amortization of intangible assets that are included in cost of revenue but excluded from segment adjusted gross profit.
Geographic information
Revenue: The following table summarizes the revenue by region based on the billing address of the Company’s customers (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| North America | $ | $ | $ | ||||||||||||||
| Europe, Middle East, Africa | |||||||||||||||||
| Asia Pacific | |||||||||||||||||
| Latin America | |||||||||||||||||
| Total revenue | $ | $ | $ | ||||||||||||||
The following table presents the percentage of revenue recognized in countries that individually accounted for at least 10% of total revenue for the periods presented:
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
United States | % | % | % | ||||||||||||||
Japan | % | % | n/a | ||||||||||||||
n/a - did not meet 10% threshold for the given period.
Long-lived assets: The following table presents the Company’s long-lived assets, which consist of tangible property and equipment, net of depreciation, and operating lease ROU assets, by geographic region (in thousands):
| December 31, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
United States | $ | $ | |||||||||
| Rest of world | |||||||||||
| Total long-lived assets | $ | $ | |||||||||
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15. Restructuring charges
2024 Restructuring— On September 11, 2024, the Company committed to a restructuring plan aimed at driving greater operational efficiencies through the reduction of organizational layers, optimization of the Company’s go-to-market organization, and relocating certain roles to lower cost locations (collectively, the “2024 Restructuring”). The 2024 Restructuring impacted approximately 280 of the Company’s global workforce, primarily those located in higher-cost regions, such as the United States, as well as those within the Company’s sales and marketing and research and development functions. Of those impacted, approximately 57 % had no future substantive service requirement as of the communication date, while the remaining population provided services as employees during retention periods to assist with transition and training that were substantially completed by March 31, 2025.
As a result, the Company recognized total restructuring charges of $18.3 million. Of this total, $1.6 million was recognized into expense during the fiscal year ended December 31, 2025. The majority of the charges recognized were personnel-related costs, consisting of one-time severance payments, salary and wages earned over required retention periods, and other benefits.
For impacted employees with no future substantive service requirement, restructuring costs were recognized in-full as of the communication date. For employees rendering services through a retention period, one-time severance costs settled at the end of the retention period were recognized as restructuring costs on a straight-line basis from the communication date to the end of the required retention period. Other direct and incremental costs were recognized as incurred.
2023 Restructuring— On February 13, 2023, the Company communicated to its employees that in response to current macroeconomic conditions and to further streamline its operations and cost structure, it would reduce its global workforce by approximately 10 % (collectively, the “2023 Restructuring”). As a result, the Company recognized restructuring charges of $10.1 million in the first quarter of 2023, primarily consisting of $8.9 million of personnel expenses such as salaries and wages, one-time severance payments, and other benefits. The Company also recognized $1.2 million of stock-based compensation expense on the communication date, resulting from impacted employees having no future substantive service requirement but continuing to vest into their equity awards during legally required retention periods as well as certain modifications to enable additional vesting after impacted employees’ termination dates. The restructuring plan was completed in the third quarter of 2023.
Restructuring charges are presented as separate operating expenses within the Company’s consolidated statements of operations. The following table summarize activities related to the restructuring liabilities recorded in accrued compensation and benefits in the accompanying consolidated balance sheets (in thousands):
| Fiscal Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
| Restructuring charges | |||||||||||||||||
| Settlements | ( | ( | ( | ||||||||||||||
Ending balance | $ | $ | $ | ||||||||||||||
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
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Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2025. The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included in Item 9A of this Annual Report on Form 10-K.
Changes in internal control over financial reporting
There were no changes to our internal control over financial reporting that occurred during the fiscal year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent limitations on the effectiveness of internal controls over financial reporting
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. However, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Udemy, Inc.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Udemy, Inc. and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 19, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
San Francisco, California
February 19, 2026
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Item 9B. Other Information
Securities Trading Plans of Directors and Executive Officers
During the last fiscal quarter, no director or officer, as defined in Rule 16a-1(f) of the Exchange Act, adopted terminated
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Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders or in an amendment to this report.
Our board of directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our chief executive officer, chief financial officer and other executive and senior financial officers. The full text of our corporate governance guidelines and code of business conduct and ethics are available on our website at https://investors.udemy.com/corporate-governance/governance-documents. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendments and waivers of our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions by posting that information on our website address specified above.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders or in an amendment to this report.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders or in an amendment to this report.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders or in an amendment to this report.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders or in an amendment to this report.
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PART IV.
Item 15. Exhibits
The documents listed in the Exhibit Index of this Annual Report on Form 10-K are herein incorporated by reference or are filed with this Annual Report on Form 10-K, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).
EXHIBIT INDEX
| Incorporated by Reference | ||||||||||||||||||||||||||||||||
| Exhibit No. | Exhibit Description | Form | File Number | Exhibit | Filing Date | |||||||||||||||||||||||||||
| 2.1§ | Agreement and Plan of Merger, dated as of December 17, 2025, by and among the Registrant, Coursera, Inc., and Chess Merger Sub, Inc. | 8-K | 001-40956 | 2.1 | December 18, 2025 | |||||||||||||||||||||||||||
| 3.1(a) | Amended and Restated Certificate of Incorporation of the Registrant | 8-K | 001-40956 | 3.1 | November 2, 2021 | |||||||||||||||||||||||||||
| 3.1(b) | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant, as filed with the Secretary of State of the State of Delaware on June 16, 2025 | 8-K | 001-40956 | 3.1 | June 18, 2025 | |||||||||||||||||||||||||||
| 3.2 | Amended and Restated Bylaws of the Registrant | 10-K | 001-40956 | 3.2 | February 27, 2023 | |||||||||||||||||||||||||||
4.1 | Fifth Amended and Restated Investor Rights Agreement by and among the Registrant and certain of its stockholders, dated November 13, 2020 | S-1 | 333-260042 | 4.1 | October 5, 2021 | |||||||||||||||||||||||||||
4.2 | Form of Common Stock Certificate of the Registrant | S-1 | 333-260042 | 4.2 | October 5, 2021 | |||||||||||||||||||||||||||
4.3 | Description of Common Stock of the Registrant | 10-K | 001-40956 | 4.3 | February 19, 2025 | |||||||||||||||||||||||||||
10.1+ | Form of Indemnification Agreement between the Registrant and each of its directors and executive officers | S-1 | 333-260042 | 10.1 | October 5, 2021 | |||||||||||||||||||||||||||
10.2+ | 2010 Equity Incentive Plan, as amended, and forms of agreement thereunder | S-1 | 333-260042 | 10.2 | October 5, 2021 | |||||||||||||||||||||||||||
10.3+ | 2021 Equity Incentive Plan, as amended and restated | 10-Q | 001-40956 | 10.1 | May 3, 2023 | |||||||||||||||||||||||||||
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10.4+ | Form of Performance-Based Restricted Stock Unit Award Agreement under 2021 Equity Incentive Plan | 10-Q | 001-40956 | 10.2 | May 3, 2023 | |||||||||||||||||||||||||||
10.5+ | 2021 Employee Stock Purchase Plan, as amended and restated, and forms of agreements thereunder | 10-Q | 001-40956 | 10.2 | July 31, 2025 | |||||||||||||||||||||||||||
10.6+ | Employee Incentive Compensation Plan | S-1 | 333-260042 | 10.5 | October 5, 2021 | |||||||||||||||||||||||||||
10.7+ | Outside Director Compensation Policy | 10-Q | 001-40956 | 10.1 | October 31, 2024 | |||||||||||||||||||||||||||
10.8+ | Employment Letter by and between the Registrant and Hugo Sarrazin | 8-K | 001-40956 | 10.1 | March 12, 2025 | |||||||||||||||||||||||||||
| 10.9+ | Confirmatory Employment Letter by and between the Registrant and Sarah Blanchard | S-1 | 001-40956 | 10.8 | October 5, 2021 | |||||||||||||||||||||||||||
10.10+ | Confirmatory Employment Letter by and between the Registrant and Rob Rosenthal | 10-Q | 001-40956 | 10.1 | November 2, 2023 | |||||||||||||||||||||||||||
| 10.11+ | Employment Agreement by and between Udemy Canada ULC and Ozzie Goldschmied | 10-Q | 001-40956 | 10.4 | October 29, 2025 | |||||||||||||||||||||||||||
| 10.12+ | Consulting Agreement by and between the Registrant and Ozzie Goldschmied | 8-K | 001-40956 | 10.2 | June 11, 2025 | |||||||||||||||||||||||||||
| 10.13+ | Employment Offer Letter by and between the Registrant and Eren Bali | 8-K | 001-40956 | 10.1 | June 11, 2025 | |||||||||||||||||||||||||||
| 10.14+ | Form of Change in Control and Severance Agreement by and between the Registrant and its executive officers | 10-K | 001-40956 | 10.14 | February 19, 2025 | |||||||||||||||||||||||||||
| 10.15+ | Change in Control and Severance Agreement, dated March 11, 2025, by and between the Registrant and Hugo Sarrazin | 8-K | 001-40956 | 10.2 | March 12, 2025 | |||||||||||||||||||||||||||
| 10.16+* | Amended and Restated Change in Control and Severance Agreement, dated November 17, 2025, by and between the Registrant and Sarah Blanchard | |||||||||||||||||||||||||||||||
| 10.17+ | Confirmatory Employment Letter by and between the Registrant and Greg Brown | 8-K | 001-40956 | 10.2 | January 9, 2023 | |||||||||||||||||||||||||||
| 10.18+ | Transition Agreement, dated March 11, 2025, by and between the Registrant and Greg Brown | 8-K | 001-40956 | 10.3 | March 12, 2025 | |||||||||||||||||||||||||||
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| 10.19 | Credit Agreement, dated as of May 30, 2025, by and among the Registrant, as borrower, certain subsidiaries of the Registrant, as guarantors, the lenders party thereto, and Citibank, N.A., as administrative agent and collateral agent | 8-K | 001-40956 | 10.1 | June 3, 2025 | |||||||||||||||||||||||||||
| 10.20§ | Voting Agreement, dated as of December 17, 2025, by and among the Registrant and the Coursera Significant Stockholders | 8-K | 001-40956 | 10.1 | December 18, 2025 | |||||||||||||||||||||||||||
| 10.21+ | Acceleration Agreement by and between Hugo Sarrazin and Udemy, Inc., dated as of December 18, 2025 | 8-K | 001-40956 | 10.1 | December 22, 2025 | |||||||||||||||||||||||||||
| 10.22+* | Acceleration Agreement by and between Ozzie Goldschmied and Udemy, Inc., dated as of December 18, 2025 | |||||||||||||||||||||||||||||||
| 19.1* | ||||||||||||||||||||||||||||||||
| 21.1* | List of subsidiaries | |||||||||||||||||||||||||||||||
23.1* | Consent of Deloitte & Touche LLP, independent registered public accounting firm | |||||||||||||||||||||||||||||||
24.1 | Powers of Attorney (contained on signature page) | |||||||||||||||||||||||||||||||
| 31.1* | Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||||||||
| 31.2* | Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||||||||
| 32.1** | Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||||||||
| 32.2** | Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||||||||||||||||
97.1 | Amended and Restated Clawback Policy | 10-K | 001-40956 | 97.1 | February 26, 2024 | |||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |||||||||||||||||||||||||||||||
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| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
* Filed herewith.
+ Indicates management contract or compensatory plan.
** The certifications attached as Exhibits 32.1 and 32.2 that accompany this Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Udemy, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.
§ Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.
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Item 16. Form 10–K Summary
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Udemy, Inc. | ||||||||
Date: February 19, 2026 | By: | /s/ Hugo Sarrazin | ||||||
Hugo Sarrazin | ||||||||
| President and Chief Executive Officer | ||||||||
Date: February 19, 2026 | By: | /s/ Sarah Blanchard | ||||||
| Sarah Blanchard | ||||||||
| Chief Financial Officer | ||||||||
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POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Hugo Sarrazin and Sarah Blanchard, and each one of them, as his, her, or their true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in their name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature | Title | Date | ||||||||||||
/s/ Hugo Sarrazin | President, Chief Executive Officer and Director (Principal Executive Officer) | February 19, 2026 | ||||||||||||
Hugo Sarrazin | ||||||||||||||
/s/ Sarah Blanchard | Chief Financial Officer | February 19, 2026 | ||||||||||||
Sarah Blanchard | (Principal Financial and Accounting Officer) | |||||||||||||
/s/ Sohaib Abbasi | Director, Chairperson of the Board of Directors | February 19, 2026 | ||||||||||||
Sohaib Abbasi | ||||||||||||||
/s/ Debra Chrapaty | Director | February 19, 2026 | ||||||||||||
Debra Chrapaty | ||||||||||||||
/s/ Heather Hiles | Director | February 19, 2026 | ||||||||||||
Heather Hiles | ||||||||||||||
/s/ Jeffrey Lieberman | Director | February 19, 2026 | ||||||||||||
Jeffrey Lieberman | ||||||||||||||
/s/ Marylou Maco | Director | February 19, 2026 | ||||||||||||
Marylou Maco | ||||||||||||||
/s/ Lydia Paterson | Director | February 19, 2026 | ||||||||||||
Lydia Paterson | ||||||||||||||
/s/ Natalie Rothman | Director | February 19, 2026 | ||||||||||||
Natalie Rothman | ||||||||||||||
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FAQ
What is Udemy (UDMY) and how does its business model work?
Udemy is a global online learning company offering over 290,000 courses from 90,000+ instructors to nearly 84 million learners. It operates two main segments: Udemy Business for enterprise subscriptions and a consumer marketplace with per-course purchases and personal-plan subscriptions across 78 languages.
What are the key terms of the proposed Udemy (UDMY) merger with Coursera?
Udemy plans an all-stock merger with Coursera where Udemy stockholders receive 0.800 Coursera shares for each Udemy share. After closing, existing Coursera holders are expected to own about 59% and Udemy holders about 41% of the combined company, subject to customary regulatory and stockholder approvals.
How important are subscriptions to Udemy (UDMY) after its 2025 transformation?
Udemy shifted to a subscription-first model in 2025, making subscriptions central to its revenue. For 2025, 72% of total revenue came from subscriptions, up from 66% in 2024, with the Udemy Business enterprise segment contributing 66% of overall revenue, emphasizing recurring, contract-based income.
What major risks does Udemy (UDMY) highlight in its latest annual report?
Udemy cites risks from the pending Coursera merger, including potential failure to close, litigation and termination fees. It also notes a history of losses, intense competition, dependence on key instructors and enterprise customers, online learning market uncertainty, and possible stock price volatility affecting investors’ holdings.
How extensive is Udemy’s (UDMY) global reach and content library?
Udemy reports nearly 84 million learners worldwide, with about 61% of 2025 revenue generated outside North America. Its marketplace offers over 290,000 courses in 78 languages, including more than 122,000 non-English courses and 5,500 focused on generative AI skills, serving both individuals and enterprises in over 150 countries.
What role does artificial intelligence play in Udemy’s (UDMY) platform?
Udemy uses AI for personalized learning paths, analytics and immersive Role Play simulations. Its Model Context Protocol server lets enterprises connect Udemy learning to internal large-language-model systems, while AI-assisted content tools help instructors rapidly create and update courses, especially for fast-changing AI and technology topics.
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UDMY Stock Data
700.56M
136.21M
Education & Training Services
Services-educational Services
United States
SAN FRANCISCO