Udemy (UDMY) Q4 2025 earnings review
Merger Rescue: Profitable but Shrinking
Udemy ended FY25 with a landmark achievement—its first full year of GAAP Net Income ($3.8M)—but the top-line story has deteriorated. Q4 revenue declined 3% YoY to $194M, marking a reversal from growth to contraction. The Enterprise growth engine stalled (+3% YoY), and the deliberate pivot in Consumer caused a sharp 14% drop in that segment. These struggles render the standalone narrative moot: Udemy agreed to be acquired by Coursera (0.800 share ratio). Consequently, no guidance was issued.
🐂 Bull Case
The pending all-stock merger with Coursera creates a dominant player in the learning economy. For Udemy shareholders, this mitigates the risk of trying to re-accelerate standalone growth in a toughening macro environment.
Operational discipline is real. Udemy swung from an $85M Net Loss in FY24 to a $3.8M Net Profit in FY25. Adjusted EBITDA margin expanded 700bps YoY to 12% for the full year.
🐻 Bear Case
Revenue growth has turned negative (-3% in Q4). The 'Udemy Business' engine, once growing at 18% (FY24), slowed to just 3% in Q4. If the merger fails, Udemy is left with a stalling business.
The pivot to subscriptions is eating revenue faster than expected. Consumer revenue dropped 14% YoY in Q4, accelerating from a 9% decline in Q3. Transactional revenue is evaporating before subscription recurring revenue can fill the gap.
⚖️ Verdict: ⚪
Neutral. The operational improvements are impressive, but the standalone growth story has broken. The investment thesis now rests entirely on the Coursera merger arbitrage and regulatory approval.
Key Themes
Merger with Coursera
Udemy entered a definitive agreement to combine with Coursera in an all-stock transaction (0.800 Coursera shares per Udemy share). Existing Udemy stockholders will own ~41% of the combined entity. This consolidation is a defensive move to create scale and efficiency in a crowded EdTech market. The deal is expected to close in H2 2026.
Enterprise Growth Decelerating Rapidly
Udemy Business (Enterprise) revenue growth has nearly flatlined. Growth decelerated from +18% in FY24 to +3% in 25Q4. Net Dollar Retention (NDR) stabilized at a concerning 93% (down from 98% a year ago). While Large Customer NDR is better at 97%, the segment is no longer offsetting consumer weakness.
Subscription Transition Working (on Metrics, not Revenue)
The shift to recurring revenue is optically working but financially painful. Consumer paid subscribers doubled YoY to 343,000, and subscription revenue in that segment jumped 53%. However, this wasn't enough to stop total Consumer revenue from falling 14%. The company is successfully trading 'dollars for quarters'—swapping high-volume one-off sales for lower-volume recurring streams.
AI Content Demand
AI remains a bright spot in product engagement. Enrollments in AI content grew 120% YoY in 2025, with learners logging 700 million minutes. While this validates the platform's relevance, it has not yet translated into an acceleration of the top-line revenue numbers.
Net Dollar Retention (NDR) Erosion
NDR for the total business has degraded significantly over the last year, dropping from 106% in 23Q4 to 93% in 25Q4. This indicates that churn and downsells are outweighing expansions, a critical issue for a SaaS model relying on 'land and expand'.
Other KPIs
Reversing. A massive improvement from the $85.3 million loss in FY24. This validates the cost-cutting measures and efficiency programs undertaken throughout the year, proving the business can operate profitably.
Stable/Decelerating. Up 4% YoY. While technically growing, the pace has slowed dramatically from the double-digit growth seen in prior years. Net New ARR in Q4 was $12.8M, an improvement from $7M in Q3, but still modest.
Accelerating. Significant improvement from $38.3M in FY24. The company has successfully turned its revenue stream into cash generation, bolstering the balance sheet to nearly $360M in cash and equivalents.
Guidance
Due to the pending combination with Coursera, Udemy did not provide financial guidance for Q1 2026 or the full fiscal year.
Key Questions
Enterprise Growth Floor
With Udemy Business growth slowing to 3% and NDR sitting at 93%, have we reached the bottom of the deceleration, or is contraction possible in 2026?
Consumer Transactional Runoff
Consumer transactional revenue collapsed by ~$15M YoY in Q4. Is this rate of decline expected to persist, and at what point does subscription growth mathematically offset this drag?
Merger Regulatory Risk
Given the consolidation of two of the largest players in the online skills market, what is the management's assessment of antitrust scrutiny in the US and EU?