Udemy Posts Mixed Q4 Results Amid Pending Coursera Merger
UDEMY INC (NASDAQ:UDMY) reported financial results for the fourth quarter and full year ended December 31, 2025, delivering a performance characterized by solid profitability against a backdrop of flat overall revenue. The report comes as the company awaits the completion of its all-stock combination with rival Coursera, a transaction announced in December 2025.
Earnings and Revenue Versus Estimates
The company's fourth-quarter results presented a split picture relative to Wall Street's expectations. Udemy met the consensus revenue forecast but delivered a stronger-than-anticipated profit.
- Revenue: Total revenue of $194.0 million was essentially in line with analyst estimates of approximately $197.3 million. However, this figure represents a 3% decline from the $199.9 million reported in the same quarter last year.
- Earnings Per Share: Non-GAAP earnings per share of $0.12 surpassed the analyst consensus estimate of $0.095, beating expectations by approximately 19%.
For the full year 2025, Udemy reported total revenue of $789.8 million, showing minimal year-over-year growth. A significant highlight was the company's achievement of its first full year of positive net income at $3.8 million, a stark improvement from a net loss of $85.3 million in 2024.
Market Reaction and Strategic Context
The market's immediate reaction to the earnings release appears muted in after-hours trading. However, the stock has faced significant pressure over recent weeks, declining approximately 20% over the past month. This negative momentum likely reflects broader market sentiment and investor focus on the pending merger with Coursera, rather than a direct response to the quarterly earnings beat.
Notably, Udemy did not provide financial guidance for the upcoming quarters, citing the pending combination with Coursera. The company also declined to host a customary earnings conference call. This lack of forward-looking commentary removes a typical catalyst for stock movement and leaves investors to rely on external analyst estimates. Current consensus estimates project Q1 2026 revenue of approximately $202.0 million.
Key Takeaways from the Press Release
Beyond the headline numbers, Udemy's report highlighted a strategic shift towards higher-margin, recurring revenue streams and significant improvements in profitability.
- Subscription-First Transformation: Consolidated subscription revenue grew 8% year-over-year for the full year to $566.0 million, now representing 72% of total revenue. This shift is central to the company's strategy.
- Segment Performance Divergence:
- Udemy Business (Enterprise): Revenue for the segment increased 6% for the full year to $524.1 million. Annual Recurring Revenue (ARR) grew 4% to $540.0 million, with management noting a stabilization in key retention metrics.
- Consumer Segment: As intended in its strategic pivot, consumer revenue declined 9% for the full year to $265.8 million as the company de-emphasized one-time course purchases. Conversely, consumer subscription revenue surged 44%, and paid consumer subscribers more than doubled year-over-year to 343,000.
- Dramatic Profitability Improvement: The company's focus on operational efficiency yielded substantial results. Full-year Adjusted EBITDA more than doubled to $95.3 million, representing a 12% margin—a 700 basis point expansion from the prior year. Free cash flow was a positive $70.0 million.
- Pending Merger: The report was framed by the pending all-stock merger with Coursera, announced on December 17, 2025. The deal, subject to shareholder and regulatory approvals, is expected to close in the second half of 2026. Under the terms, Udemy stockholders would receive 0.800 shares of Coursera common stock for each Udemy share.
Outlook and Investor Considerations
With formal guidance suspended due to the merger, investors are left to weigh Udemy's demonstrated operational progress against the uncertainties of integrating with a competitor. The strong profitability metrics and successful pivot to subscriptions validate the company's recent strategic initiatives. However, the upcoming merger with Coursera now represents the dominant narrative for the stock, overshadowing standalone quarterly execution.
For a detailed look at historical earnings and future analyst estimates for Udemy, visit the earnings and estimates page.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The content is based on publicly available information and should not be the sole basis for any investment decision.
