Udemy

Investment Idea Details

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About the company

Udemy is a global online learning platform. Any expert can register on Udemy and create his own course from French cuisine to piano and self-defense lessons.

Udemy serves 150 thousand courses for private users and companies. The world’s leading companies rely on Udemy to help their employees upskill on a subscription basis, including Adidas, Toyota, PayPal, Lyft, Booking, Pinterest, HSBC.

The company was founded in San Francisco in 2010. From February through late March 2020 Udemy online course enrollments increased by 425%. In May alone, the company logged 25 million new enrollments, compared to 9 million the previous May, according to Forbes.

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Risks

Udemy faces intense competition from Coursera, Udacity, LinkedIn, which suggests additional risks for the company's long-term business.

Udemy hasn’t disclosed its financial performance. It is unknown if the company is currently profitable and if it shows any tendency toward profitability.

The market may be overvalued. The online learning market is comparably young – there is a chance that analysts and venture capitalists are overestimating the growth potential of this industry.

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Market Opportunities

The global digital education market is expected to grow from $8.4 billion this year to $33.2 billion in 2025, at a compound annual growth rate (CAGR) of 31.4%, according to Dublin market research firm, Research and Markets.

The global e-learning market is expected to reach revenue of over $345 billion from 2020 to 2025, says the Market Research by Arizton.

Surging demand will likely drive revenue above $400 million this year, according to two sources with knowledge of Udemy’s finances. Udemy CEO Gregg Coccari confirmed that number in an interview with Forbes.

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Financials and Valuation

According to Crunchbase, Udemy has raised a total of $223 million in eight rounds of venture capital funding. Its last funding was in February at a $2 billion valuation, price per share is $15.57. In July 2020, Udemy said it would raise $3 billion in financing and had hired Goldman Sachs to work on the fundraising effort.

From March through May, Udemy’s sales were double the total for the same period in 2019, said Coccari.

On the OTC market Udemy shares are worth $25.5, which approximates a valuation of $3.3 billion. The company's projected revenue by the end of 2020 is $400 million, in 2021 – $600-800 million. The market cap in this case will go over $8 billion on the public market. Expected IPO date is 2021. Potential return on investment – 150%.

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