Can Udemy’s (UDMY) Share Buybacks Offset Softer Revenue Guidance?

• Udemy reported third-quarter earnings that exceeded profit expectations and delivered flat year-over-year revenue of US$195.7 million, while guiding fourth-quarter revenue to a range of US$191 million to US$194 million, below analyst estimates.
• During the same period, Udemy completed a share repurchase program, buying back 4.1 million shares for US$29.22 million, which may affect future earnings per share.
• Given Udemy's cautious revenue guidance for the upcoming quarter, we'll explore how signals of potential demand pressure may impact its investment outlook.

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Udemy Investment Narrative Recap

For Udemy, the key long-term belief is that ongoing workforce upskilling and global demand for digital learning will continue to support enterprise subscription growth, even as the Consumer segment faces persistent challenges. The latest earnings report confirmed strong non-GAAP profitability and flat revenue performance, but a cautious revenue outlook for Q4 signals that short-term momentum may be affected by softening demand, particularly among small and mid-sized business customers, a risk that remains material for near-term results.

Among recent developments, Udemy’s completion of a US$29.22 million share repurchase stands out, as it reduces outstanding shares and could positively influence earnings per share calculations moving forward. While this action may temporarily support underlying financial metrics, it does not address the ongoing headwinds in recurring revenue stability or customer churn, which continue to be the most important factors for sustained re-rating potential.

Yet, for investors, the bigger issue to watch, despite moves to bolster earnings, is whether demand trends and renewal rates among SMBs will recover as the company pivots toward upmarket clients…

Read the full narrative on Udemy (it's free!)

Udemy's narrative projects $913.6 million revenue and $75.1 million earnings by 2028. This requires 4.7% yearly revenue growth and a $105.7 million earnings increase from -$30.6 million today.

Uncover how Udemy's forecasts yield a $10.17 fair value, a 59% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided four fair value estimates for Udemy ranging from US$6.02 to US$13.54 per share. Some see upside as Udemy builds subscription-based revenue, but ongoing churn among SMB customers could limit how quickly the business returns to steady growth.

Explore 4 other fair value estimates on Udemy - why the stock might be worth 6% less than the current price!

Build Your Own Udemy Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Udemy research is our analysis highlighting 5 key rewards that could impact your investment decision.
• Our free Udemy research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Udemy's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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