We turned to Udemy after looking into the Rent the Runway IPO filing today.
Udemy's offering follows the Duolingo IPO which was a success earlier in the year. The company's debut could prove to be the last major edtechIPO before Byjus eventual debut. How well Udemy does in its public offering may impact other players in the market, including extremely wealthy education technology companies.
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How does the company's growth profile look after the tsunami of demand for edtech products has ended?
Udemy is an online learning platform that raised over $300 million privately. Crunchbase data shows that the company was valued at just over $3.2 billion by a $50 million Series F raise in late 2020.
The company's IPO is a significant liquidity event for Lightbank, Insight Partners and Norwest Venture Partners. There are lots of capital staked on its success.
The edtech company has two parts. One part is aimed at consumers, the other at businesses. We need to look at each part of Udemy's business model to understand its health. Also, we want to see how the company's revenue mix is changing and where it leans in recent quarters.
Sound like fun? This one is a must-see. So, lets.
Udemys business during the pandemic
Udemy's revenue grew by 55.6% between 2019 and 2020 from $276.3 million to $429.9million, or 59%, from 2019 to 2020. This is a significant amount for a company with revenues exceeding $100 million. Udemy's total revenue increased by 24.5% to $250.6 million during the first half 2021.
We expected Udemy's growth to slow down after the pandemic, so it is not surprising to see Udemy's revenue decline through 2021. It will be fascinating to see how investors value slower-growing, but more profitable, edtech companies.
Udemy does not make money. It doesn't. It is losing less over time.
You can subtract $20.6 million from the H1 2020 number to get your net income figure, and $16.5million from H1 2021 to get your H1 2021 number. This will bring you to $13 million less in losses at Udemy during the first half 2021. This is a lot closer to profitability than Udemy has been able to achieve in previous periods. It indicates that Udemy had some operating leverage during the pandemic and was able to reduce losses while increasing its revenues.
Mix of revenue
We are going to make an exception to our rule not including marketing-friendly chart in our S-1 teardowns.
