Great. Thank you, everyone, for being here today and for joining the fireside chat with Payoneer. I'm here with John Caplan. John currently serves as CEO and Director at Payoneer, a financial technology company empowering the world's small and medium-sized businesses to transact, do business, and to grow globally. John is an executive, investor, and entrepreneur with a track record of scaling companies. Prior to joining Payoneer, John was President of North America and Europe at alibaba.com, the cross-border B2B business unit of Alibaba Group. In this role, he helped lead its transformation into one of Alibaba Group's fastest-growing and most profitable business units. John, thank you for being here. Pleasure to see you.
It's awesome to be here. Thank you so much for having me.
To start, John, can you provide for folks a quick overview of Payoneer and why does Payoneer exist?
Yeah, so thrilled to do it and really glad to be at the conference. It's great to see the energy at the conference. Payoneer is a 20-year-old business. We just celebrated our 20th anniversary, which we're very proud of. Our mission is to connect the world's cross-border businesses to the rising global economy. We are on the ground. We have customers in 190 countries and territories. What we're working on doing is taking the complexity out of cross-border payments, the complexity out of cross-border accounts receivable and accounts payable. We offer a sophisticated but yet simple-to-use global account for cross-border businesses. That creates a financial stack. That financial stack enables businesses that are doing business anywhere to anywhere to have the tools they need to compete, whether it's using our card products or our workforce management, newly acquired business.
100% of someone's international AR and their international AP funnels through the Payoneer account. We are a business that had 42% revenue growth in the last two years, turned the core business profitable. We have teams on the ground in 35 countries. We're a business with momentum.
Excellent. John, you've been with the company almost three years now. What initially attracted you to Payoneer? Why did you join? Tell us about how you came to work here.
Yeah, so if you scratch me, I bleed entrepreneurship. I really care about helping entrepreneurs achieve their business dreams. I'm passionate about entrepreneurs. I'm particularly passionate about those that are competing cross-border. In most of the world, when you start a business, you go global from day one. You're either sourcing human capital or capability internationally, and you're selling your goods or services internationally from day one. I think that's largely misunderstood by folks in the U.S., where you can get rich between Boston, Philadelphia, and New York. There's enough consumer demand right here at home in the U.S. to drive a business success. In most parts of the globe, to be successful, you're participating in the global economy.
When I had the incredible opportunity to come join Payoneer, what I saw was a unique set of assets: regulatory assets, product and infrastructure assets, a brand that is well-loved and respected by entrepreneurs around the globe. If we were in Manila right now, 5,000 people would be in this room. Payoneer is synonymous with entrepreneurship around the globe. The ecosystem of relationships the team had put in place with bank partners, with big marketplaces around the world, like Amazon, Coupang, Walmart, Etsy, or Airbnb, really created a platform that I saw that could be expanded to be a bigger business. When I arrived, the company had 20-some-odd % share in what is considered the marketplace payouts business, which is a $300 billion market. Payoneer largely innovated and created the industry to help global sellers participate in Western marketplaces.
There was an even bigger opportunity in front of the firm. That bigger opportunity really was cross-border payments for B2B, for SMBs, and emerging markets. Those four themes, when we looked at the assets Payoneer had assembled, those four themes we were uniquely positioned not just to innovate in, but to capture significant market share. That's what has been powering our growth. We've put in place changes inside the firm to go after it. We have an extraordinary executive management team. The people who are leading Payoneer are the best entrepreneurs I've ever had a chance to partner with. Together, we're really excited that we're in the earliest innings of what is a very big and exciting growth trajectory for the firm.
In the last three years, the market's evolving rapidly. It's changing every day. How has the company evolved since you've joined? What are some of the things that excite you going forward?
Yeah, I think the first and sort of the most central thing that's happened is that we've evolved our strategy at Payoneer from a one-size-fits-all approach to a much more focused customer go-to-market and product and pricing strategy. We have shared this in our disclosures. We have 2 million active customers. We love all of them. We get 11 million applications a year from people around the globe who want Payoneer accounts. We are very focused on the B2B customer, the customer that needs a comprehensive set of financial solutions, both on AR and AP. Those customers are generally larger. Their entities exist in multiple geographies. Their headquarters might be in Ho Chi Minh City, but they have an operation in Dubai and in Colombia and in Turkey. That is not easy for a 50-person organization. We just celebrated, as I said, our 20th anniversary.
We had a customer here in the United States. The firm's called IA Blueprint. Beau Pilgrim runs the business from Louisiana. Beau helps U.S.-based insurance companies and insurance agents outsource part of their operation to the Philippines. He uses our Payoneer Workforce Management product to both manage employees around the globe and pay contractors around the globe. It is incredibly exciting to see how our business is growing because we are expanding the suite of services we offer and who we offer it to. We delivered 20% revenue growth in 2024, well ahead of the medium-term targets we had and much greater than our 2023 5% revenue growth. We have unlocked significant leverage in our business. Our headcount has largely remained flat for a couple of years now. We have taken the business from money-losing to money-making.
We have great momentum, disciplined focus on driving profitable revenue growth, and lots of opportunity and runway in front of us.
That's great. Payoneer, since you joined in the last few years, you've built out the management team. You've invested in the business. What are some of your proudest accomplishments in the last few years since you joined?
Yeah, I think the proudest thing that I could look at is not just the team we have, the culture we've built, the customer love and centricity in the organization. It's just how resilient Payoneer is. During my tenure leading the firm, we've had the war in Ukraine, October 7, and then the most recent we had the SVB collapse, the most recent event with the tariffs. Payoneer is so resilient and so global and so necessary in the lives of our customers that while short-term macro disruptions are time-consuming, gray hair-inducing things, our business is very strong and resilient. I'm particularly proud of that and the capability our organization has to weather what a weaker firm wouldn't grow through. We're strong, and we're growing through them. I'd say that's one. The second is we're in the earliest stages of our growth journey.
The momentum in the firm is really exceptional. We've shared six-plus quarters of 30% growth in our card product. We had 39% or 37% growth in our B2B revenue in the first quarter, 16% revenue growth overall in our core business in Q1, expanded profitability in the first quarter. We are in the earliest stages of a multi-year growth journey that this team is capable of executing against in a disciplined and focused way. Another particularly proud accomplishment of Payoneer is how we've refined our focus on our customer. We've defined who our best customers are, and we're disciplined about focusing on quality customers. The investments we've made in the SMB-grade financial stack, cross-selling the stack. The data in our platform shows customers who use more of our accounts payable products bring in more accounts receivable and stay longer. Our net revenue retention grows really nicely.
At the end of the day, delivering value for shareholders. In 2023, the firm core business lost $14 million of adjusted EBITDA. In 2024, we generated $14 million of core adjusted EBITDA. Being innovators who are also disciplined on costs and focused on growth, those things together create shareholder value.
Maybe we could talk a little bit about the industry and the competitive landscape. Can you talk a little bit about the industry, what you're seeing, not only in the cross-border payments landscape, but who your main competitors are? Who do you see? I imagine it varies by geography quite a bit. You guys are very global, so it's a pretty fragmented environment. We'd love to hear your thoughts on it.
Yeah, I love this question because people don't realize, I think often don't realize how big the cross-border SMB economy really is and don't understand that in 190 countries and territories, Payoneer is a meaningful part of the export economy and the import economy. We sit at the intersection of what I think are underserved but incredibly exciting areas in cross-border payments. The first is cross-border in and of itself. The second is B2B. Businesses, as the digitization economy grows, as the globalization economy continues to grow, despite the sort of near-term news about the trade war and tariffs, I do think that that news, in fact, brought more eyes on how important SMBs and the cross-border economy is. And then the emerging markets. In India, we shared in earnings a week ago that we're in the process of applying for our license in India.
We are excited about a new partnership that I'm sharing for the first time today with you, with Alibaba.com, where we've just partnered with Alibaba.com to help India-based exporters onboard into the Payoneer account and participate in the cross-border export economy. I think that's a very exciting sort of signal for how necessary India is and how much momentum Payoneer has, both in our ecosystem of partnerships and the value we provide to SMBs around the world. As it relates to who we take share from, really, PayPal is a competitor, but we do a lot of business together. There's enough room for both of us to grow and capture share. We complement one another pretty nicely. We actually are disrupting the local analog bank. 90% of cross-border B2B payments activity is happening between an analog old-world bank and another bank around the world.
They do not have the technology, multi-currency account capability, 24/7 support services. They are built for the old economy. Payoneer is built for the new economy. As you are right, the landscape is fragmented and different. What we do in Argentina may be a little bit different than what we do in Pakistan. At the end of the day, young people and entrepreneurs are changing the global economy and driving the innovation. Those people choose Payoneer as the solution to be their financial solution cross-border.
Yeah. I mean, I can't imagine how much friction there is in setting up a business and selling globally. These answers may seem obvious, but why do you guys win? What's your right to win in the global marketplace? What do you think differentiates you from some of the competitors that you mentioned in the marketplace?
Yeah, so probably the most important dynamic of Payoneer is both that we're global and local. We are integrated into local ecosystems with local customers, with people who understand local traditions, but also have built a global regulatory moat around the business, a brand, payment infrastructure, and capability that enables a business anywhere to do business everywhere. That is a competitive advantage for us without question. I think probably the single most important reason we have the right to win. The next is we're a customer-focused company. The 500-person SMB in Serbia is not getting the attention from a multinational bank. They have multinational financial needs that the local branch of a multinational bank can't serve or won't serve. Payoneer, that is our target customer. We're giving them the support they need. We're part of their we coach the Little League team with them.
We're part of their community. I think that's pretty important. I do think we're so responsive to the needs of our customers that our product roadmap and our innovation roadmap is focused on that unique customer. We had, at our 20th anniversary, I was sharing with you before we got on stage here, that at the 20th anniversary, we had a celebration of entrepreneurship. We brought together customers from around the globe into New York, along with our colleagues and employees, and listened to them talk about how valuable a multi-currency account is. If you're an entrepreneur in Colombia and your customers are in Venezuela, the traditional banks generally charge you 30% to move the money from point A to point B. Our 3% feels pretty good to that entrepreneur.
The fact that he can do it in the palm of his hand in his Payoneer mobile account with all the invoicing capability connected to his Payoneer card so his employees, when they go global on business trips, they can track their expenses, makes doing business easier. We do not help them grow their business by selling their products or price their products. We make the financial activity simpler. The office of the CFO for a cross-border emerging market SMB is not easy. I listened to Bill at René's interview yesterday, and he was talking about how valuable the Build.com product is to US-based SMBs. In some ways, we mirror that around the world.
As investors and shareholders and customers begin to take a look at Payoneer and understand our revenue growth rate, our profitability, our utility for SMBs, the question about the competitive landscape becomes clearer and clearer. There isn't somebody in most of the world delivering the value we deliver to a customer that, without us, struggles.
Yeah. That's a great analogy in serving the market that's not served around the world. One of the topics in terms of the industry that has come up in a lot of our client conversations recently, whether it's a consumer remittance player or if you talk to Visa or you talk to SMB-focused players in the industry, is the evolving role of stablecoins in the industry and how is that going to impact cross-border payments and trade. Can you talk a little bit about that? Have you thought about it? Are you guys focused on it? What are you seeing in the market?
Yeah, I think this is a really exciting opportunity. We're probably one of the best-positioned firms to benefit and capitalize on it. The reason for that is we're trusted at the last mile. We're trusted by the person who has to not just receive the stablecoins but use them and convert them into their local currency. It is a very interesting long-term opportunity and one that we're exploring. In many ways, if you look at the history of Payoneer over 20 years, as our volumes have grown, our balances that we hold with our customers have grown as well: $6.6 billion of customer balances, funds held today. In some ways, we provide a similar utility today to customers in emerging markets who are holding stable fiat currencies.
We think of stablecoins as another form, another payment rail that Payoneer is, I think, best positioned to capitalize on and innovate around and partner with the ecosystem of infrastructure firms who have built really purpose-built infrastructure that can integrate with a platform like Payoneer to bring more mainstream utilization of cross-border stablecoin payments, right? As those use cases develop, that they are deployed by people who are doing real business cross-border, not this sort of peripheral side of it. We continue to talk to partners. There is nothing new to announce today, but it is an important innovation opportunity and one that we think we are uniquely positioned to participate in.
Yeah. Maybe we could switch gears into the macro. There's obviously a ton going on in the market. You saw some of the announcements yesterday on trade. Obviously, there's been conflict with China. There's been tariffs. Those are moving around quite a bit. We get a lot of questions from our clients around how this is going to impact their business. Can you talk a little bit about how the macro is affecting your customers, their business, your business, and what you guys see going forward?
Yeah, so let's start with our customers, which is, as a customer-first organization, let's start with how they're thinking and what they're doing, and then we can go broader from there. It is obviously a dynamic, rapidly changing environment. Entrepreneurs are the most creative, the most focused on finding solutions, and the most resilient. We've had a front-row seat to see cross-border businesses driving change in their own business because of decisions outside of their own control. What sellers and businesses are doing are very specific to what industry they're in, what corridors they trade in, where they source or sell, what margin structures they have in their business, and where they want to invest and diversify. I think I wouldn't paint sellers with one picture. I think it really depends by geography, industry, and margin profiles.
In our financials, we haven't seen any deterioration of our results as a result of the disruption from the trade. We've maybe more gray hair, but no impact in the P&L. We expect our Q2 growth to be in line with our medium-term targets, which I think is a very important signal about how important Payoneer is and where we are in the trade cycle. Sellers in China specifically, where we have a third of our revenue at Payoneer, are exporters from China. We shared last week at Q1 earnings that 15% of our total revenue are China sellers selling to the rest of the world, not to the United States. This is a corridor and corridors to Europe, Latin America, the Middle East, to Australia, where we have well-worn tracks and relationships and distribution.
Those channels will grow because the China-based sellers who are manufacturing high-quality, low-cost goods want to sell them wherever they can. They are focused on expanding their market distribution. They're focused on optimizing their pricing. For the 20% of volume that is on our platform that are China-based sellers to the United States, they're focused on optimizing their pricing, evaluating their cross-border logistics, thinking about their supply chains themselves, addressing their product mix. If you had 100 SKUs January 1, on May 15, looking at the tariff environment to adjust at 30% tariffs or 40% tariffs, what products, what margins are the most important products? Going from 145% tariffs, which is effectively an embargo, to a more manageable tariff environment, what we're currently in during the pause, gives the sellers more, I think, latitude to adjust and manage their business.
Nobody wants empty shelves in the U.S., that's for sure. Those sellers have invested a lot in driving the distribution of their products. One of the things, Scott, that I find really interesting is 43% of the world's consumer consumption happens in the U.S. There is no seller in Vietnam or China or Bangladesh or India that doesn't care about preserving and capturing, competing for that shelf space. They are really focused on doing that. I shared with you the news about our Alibaba.com announcement. We signed a deal with Alibaba.com to offer the Payoneer account to their thousands of India-based sellers on their platform. India is one, if not the fastest-growing global exporting GDP. It's 7% GDP growth or better, 1.4 billion people. We've shared that we're underway in applying for the license there. We're excited about our momentum in India.
We think that's an important geography for us.
Yeah. Congratulations on that. That's a really big deal. Maybe we could switch a little bit to the product. I think you've touched on this before, but you mentioned creating a comprehensive financial stack for your customers. It's very exciting. Obviously, you have a core SMB marketplace business. You're helping these customers with checkout. You're helping them with B2B goods and services, accounts payable. What's really exciting is the workforce management and payroll applications that you have. It's becoming a really big financial stack. What's exciting to you? What's growing fast? Some of the things that you're doing with your customers.
Yeah, you nailed it, right? We want 100% of a business's international AR to flow into their Payoneer account. You sell on 15 marketplaces around the world, consolidate all that AR into your Payoneer account. You sell your goods wholesale, use Payoneer to invoice people around the world. You sell direct to consumer, use the Payoneer checkout solution. All of that international AR flows in. At the same time, we want to serve 100% of our business's cross-border AP needs. Whether that's withdrawing some funds to your local bank because you have to pay your local rent, and you're going to use your local bank account to do that. More than anything, we're focused on helping our customers pay suppliers, pay international employees, use our FX tools to manage currency, and increase the penetration of our card solutions with our global customers.
I think this is maybe overlooked by people, the power of the Payoneer Card franchise, because our AP tools, the growth of our AP tools, 30-some-odd % growth of card usage each quarter for the last six or more quarters, indicates with a platform that has $80 billion of AR flowing through it and just about $6 billion of card spend on it, how much upside we have in our card product. I think you'd understand this. I certainly see it in my own behavior. Once I use a card for my personal accounts payable, it's hard to take it out of my wallet, right? I create loyalty and stickiness around it. We see exactly the same data with our customers.
The more AP tools our customers use, the more AR volume flows into the platform, the broader their network inside of our platform grows, and the better the net revenue retention and logo retention is. AP plus AR and a multi-currency account at Payoneer is, I think, a killer app for cross-border SMBs. The team is our product and edge team is so strong. What they're doing is constantly driving to drive the simplicity, speed, utility, and convenience of the Payoneer application so more businesses can focus on doing business. We feel good about where we are, the investments we're making in the product, and think they will continue to help us capture more share and more share of wallet from the customers we have.
Yeah, it's really interesting. I mean, you see in the office of the CFO, people focused on the enterprise and the mid-market. You have U.S., but what you guys are doing in SMB globally is just a very, we see as a very underserved market.
Yeah, and just if you look at the enterprise companies, the payments firms focused on the enterprise generally see take rate erosion. Payoneer, we've seen 16 basis points of take rate expansion over the last couple of years and continue to see more there. I think that's, again, an overlooked dynamic of our business: 2 million active customers, 560,000 of what we call our ICPs, which is a blunt force definition of customers. The simple way to think of it is a bigger multi-entity cross-border business makes us more money and uses more of our products. We have a lot more runway in front of us with those customers to drive profitable revenue growth with high-value customers and expand our take rate. I think that speaks to the strength of trust that our customers have with Payoneer. They're not nickel-and-diming us on our fees.
What they're actually doing is using more and more of our products.
Yeah, a huge market opportunity. I mean, bigger SMB pool, global, obviously better economics with those customers. They're growing a lot faster than some of the other up-market parts of the market. Maybe I'll open it up to the floor for any audience questions, if there are any. Okay, we'll keep going. You mentioned earlier about your customer base. One of the things you've done successfully is really focus on your ideal customer profile, obviously moving a little bit more to larger customers. You've mentioned that take rates expanding, ARPUs expanding over time. What is it about these larger customers? Are you able to sell more of your products and services, some of which we just went through? Tell us about that target segment.
Yeah, I think our 560,000 ICPs and the multi-entity cross-border SMB is underserved by the financial services landscape, and we intend to serve them. We are very focused on delivering them the products and services they need, whether an SMB that sells on a marketplace, an SMB that sells B2B, or even some of the smaller enterprise partners that are turning to Payoneer because they want to use our platform to handle their payouts globally. What we see is that we're increasingly focused on high-growth, service-oriented, emerging market customers, particularly in places like APAC and Latin America. In Q1, we saw 20%+ revenue growth in APAC and Latin America. Those regions together are a third of our total revenue. The firm overall had 16% core revenue growth.
Given the shifting, reshaping global trade landscape, we think really strong product market fit for us in APAC and Latin America and good tailwinds for our business there. As it relates to ARPU expansion, we're getting smarter and smarter and more bespoke about our pricing and going from a one-size-fits-all approach to a more disciplined look at corridors, customers, geographies, and industries. That's having a positive impact. We've looked at the bundling of our products and services more sensibly so that we can cross-sell more products into our customers in a bundled way. We think we'll see strong take rate expansion over the next number of quarters and years because there is value in what we're providing. We've shown that the elasticity of our pricing isn't having a negative impact either on our customer retention or our customer acquisition.
It feels like today, the more product value we provide for customers, we can charge even more for it.
I think we have a question in the audience.
Yeah, I can speak up here. I'm listening to you, and I'm trying to wrap my head around because I do a lot of work in emerging markets.
Hi. I do a lot of work in emerging markets, and I'm trying to wrap my head around. Are you seeing a big difference now, given the tariff conversation that's happening on the product side, so FMCG products, or the services side, right? Outsourcing technology to India or APAC, right? Where are you seeing the shift, if at all you're tracking that information?
Yeah, we haven't seen a shift in our activity or engagement with our customers by category or by geography. If you're a goods exporter in Vietnam, you're thinking differently about the business, where you're going to sell to, where you're going to hold pallets and container loads of product, similar for a China-based exporter. If you're a services business, in most of the globe, there's lots of opportunity to sell globally and have not been largely impacted by the tariffs. There's been some concern about if a consumer recession happens, what impact that would have on B2B services trade. So far, we haven't seen any deceleration there. Our business and our relationships with our customers indicate that SMBs around the world view macro disruptions as an opportunity for dynamic market share gains because they can move faster than big or old companies.
I was talking to our sales organization in Dubai just the other day, who we sell, that team sells a lot of marketing services to marketing services companies, our spend management and virtual card products. That team is cooking and doing great. I was talking to our team in Latin America about Brazil and the penetration of our cards product and the momentum we have there. I shared our Alibaba.com exciting announcement, helping India-based goods exporters more quickly participate and sell to the rest of the world by participating in the Payoneer platform. Our Green Channel program in China helps the world's best SMB exporters in China get access to and connect to the marketplaces around the globe. Coupang or Mercado Libre or Etsy or eBay or Walmart basically come to Payoneer and want to meet the best exporting high-quality goods exporters.
Those exporters want to meet Coupang and Mercado Libre and Walmart, and we help make those connections. To date, the disruption from the trade conflict has shown up in the boats leaving China. We see all of that data, but it has yet to show up in Payoneer's financials. You bet.
Thank you, everybody. John, thank you very much for coming to our conference. It's very exciting.
Thank you.
Looking forward to hearing more.
You bet. Thanks, everybody. Thanks.
I'm so used to. Okay, I think we'll get started. Thanks, everyone, for coming today to JPMorgan's TMC conference. I'm delighted to be hosting Udemy, current CEO, Hugo Sarrazin. Thanks so much for joining us, Hugo.
Thank you for having me.
Yeah, so maybe we could start with a quick introduction about yourself, about you to me, and what your reasons were for joining the company recently.
Okay, very good. Let's start with the easy one. Thirty years in tech across a series of different roles, most of it at McKinsey & Company, where I was on the West Coast, serve a bunch of iconic tech companies in the software space, in the service space, in the hardware space, a whole range. I also worked with private equity when they invested in tech, often also in ed tech. I spent the last four years at UKG as the President and Chief Product and Technology Officer, where I helped double the size of the company. It's now almost 15,000 employees. We've had a quarter of a billion dollars of revenue in 2023, the last time that was public. Just to kind of give you a bit of a sense of scale and scope, we introduced eight AI products that are broadly used.
It was a space that was very close to this one. It was in the HCM space, serving CHRO and chief people officers. I got to experience a lot of the end buyer, understanding their issues. I think it's really applicable to the space. In terms of your second part of the question, what drew me to Udemy? A few things. First, there's a personal aspect. There's always a personal story. Both my parents were first in their families to go to university. I saw the impact it had on social mobility. Our family is currently clearly different than what they've experienced. The second piece, I did have the opportunity. I did spend a lot of time in school. I did a PhD in robotics and a bunch of AI stuff back in the early 1990s. I love learning.
I worked also on an advisory basis for the Prime Minister of Canada on the future of education and even at Stanford when they were making the transition to MOOCs. Learning has been a passion play. Reason number one. Reason number two, it is a space that has gone through a lot of change, but hasn't yet fully realized its potential. I was excited by Udemy because Udemy is one of the players that has the broadest platform and could end up being the one that will restructure or frame what this could be. I want to be a part of that. We're going to talk about some of the investment thesis I had behind that.
I was really drawn to the opportunity because I really wanted to do what's right in terms of creating that social mobility, helping a lot of folks realize their full potential, and then do it with a platform that could be very, very powerful.
Yeah, no, that's great. You've been in the CEO role for roughly two months now, but I understand you've had some time to speak with some customers, partners, other key stakeholders of the business. What have been some of your key observations about the company and what is sort of your vision over the next couple of years?
Yeah, so I used to do this for a living. Get into a new company, quickly assess the industry. I did this before I started, and I did this in the last 60 days. What I told the employees on day one, on the first town hall, I said, "Hey, I'm going to be learning. I'm going to spend a lot of time with our customers, our partners, our employees." I did that. I think almost 150 customers, many instructors, something like 250 employees, like a really thorough review of everything and anything under the sun. What I come back with is I was excited before coming. I'm even more excited now. The opportunity is phenomenal. There are both from a market point of view and from what this platform can do. There were things I hoped I could find, and I found under the hood.
The product roadmap is pretty exciting. There's more to do, but there was already some good stuff. The transition to the large enterprise side was in flight. It was exactly the right direction of travel. There was some really exciting stuff we've done to improve the bottom line that's delivering results. That foundation is really, really good. Now, to the second part of your question, where to? Here's where I'm going to get a bit into the investment thesis. There's an overhang on the ed tech space. The overhang is at least in part driven by what people think AI is going to do through this space. Is it really going to bring the cost of content creation to zero? Because you can. You can now today take a PowerPoint chart and dump it into a wonderful tool, and it will create some sort of little talking avatar.
You can put the same PowerPoint into another gizmo, and it will create a podcast for you. That's an overhang. What is going to happen to the space if now you have AI that can do these wonderful things? I have the thesis that actually it's going to unleash a bunch of new wonderful things. I'm going to try to make the case for that and tell you why I think Udemy in that context is well positioned to do that. The first one, it's creating new demand. In the last six months, not six months, 60 days, I spent a lot of time with enterprise leaders, and they're all saying AI is really overwhelming. I don't know how to do the reskilling of my organization. I don't know what it means for marketing. I don't know what it means for HR.
I don't know what it means for finance. I don't know what it means for legal, my frontline employees. Every CEO goes to some wonderful conference and comes back and says, "Hey, I've heard that XYZ is doing some AI amazing thing. Why can't we do the same thing?" Everybody now is like trying to figure out what to do. Every vendor, whether it's Salesforce, ServiceNow, the Googles of the world, they're all coming up with their own version of things. There is a moment in time right now where reskilling is the demand question. That's wonderful because we have 4,000 AI classes on the platform to facilitate reskilling. That's new demand, demand that did not exist a year ago. That's number one. Number two, I think online learning did not fulfill its potential. Full stop. Full stop.
It was wonderful to change the economics of distribution and create an opportunity for long-form video to be distributed and reach thousands, millions of people around the world. It did not fundamentally change the experience. You choose whether you're a beginner, an intermediate, or advanced, and then you go. We are going to walk you through the same learning experience no matter who you are, what you know, and what your learning experience is. This is where AI changes the game. This is why we have this amazing opportunity to raise the effectiveness of learning. Because now you can start, and I can go through 250,000 courses, reverse engineer using AI, a bunch of assessment that instructor cannot create on their own, create a bunch of assessment, assessment, assessment, assessment.
Start you at the beginning of your journey for reskilling with an assessment, understand where your learning gaps are, then take the curriculum, which is long-form, reassemble it to meet the gaps. That's pretty amazing. I can do massively personalized learning. That experience is better, more engaging. You will complete the classes, which is often the issue that many traditional players have. You will have better learning outcomes. You can deliver a better ROI. My ability now to show up to a business leader and say, "Take this reskilling program. It will be personalized to your need because I'm using AI in a very powerful way. I will create feedback loop. I can introduce it in the flow of work." There are a lot of new things now that AI is creating. That is the opportunity.
Our entire product roadmap right now is made to do one thing, is to take what made Udemy great in this first round, which is this marketplace, the two-sided gizmo, blah, blah, blah, but now inject AI for the creators and inject AI for the learners. That is a huge, huge opportunity. What that allows us to do is this mega idea, at least I think it's a mega idea, is online catalogs are interesting, but not the future. The future is about an AI-enabled platform that will facilitate the reskilling of the workforce of the future. I can deliver an ROI, and I can become mission-critical for large enterprise.
Yeah, so maybe there's a lot to unpack here.
Yes, I just went in to give you the investment thesis in the most succinct way.
No, that's great. I mean, you have recently launched a few AI offerings like Skills Mapping, Learning Assistant. What has been sort of the feedback from those recently?
I couldn't be more proud. I mean, we've only begun, by the way. It is just basic, basic, and it's already a game changer. We can do skill mapping. Imagine this basic, you're a CHRO, and you're trying to figure out what are the initiatives to reposition your workforce from A to B. You need to assess the skills that B requires. You need to assess your starting point, and then you need to connect the two. Nobody can do that today. Nobody. It's amazing. There's a huge opportunity to connect the two and then connect it to skill program, not learning program, skill program. I'm making a very important difference. There's skill acquisition, there's skill mastery, and there's skill recency. Those are three characteristics that need to coexist to deliver the ROI.
The skill mapping stuff right now, people are saying, "Wow, this is a good first step. We're now getting there." The AI assistant, again, very basic. We're able to be within a class, do the whole AI consumption of the thing, and then give you the ability to search through the class. That's pretty good. I mean, wait until what we do next. We're going to go across the whole catalog, and then we're going to do even more because now what we need to create for you both on the consumer and on the business, and it'll be a bit different, and we can go into that difference in a second. We want to have your companion to make you successful in the world.
Instead of being a transaction, it becomes kind of something that sticks with you in the same way that you do not want to cut your Spotify subscription or your Netflix subscription. You want to keep that. That is kind of part of the vision. We need to get to that level of intimacy with you as a person who wants to be successful and needs to learn a bunch of things. That is the tutor. We have recently launched another thing that is really, it is a role play. Literally, is it two and a half weeks now? Role play, we are using AI to create an ability to test certain scenarios. Here, we are not the first one. We did not invent this idea, right? There are other people who do that.
Some people have been working on it in the traditional publisher model, and they got 80, 80 role plays. And a role play is like, "Hey, let's have a tough conversation during a performance review," or, "Let's kind of practice how to run a meeting," right? You can have these role plays. We have this marketplace. What we did is we created in the platform the ability to create role play. Day one, we got 32. Day two, we got 200. After one week, we got 400. Now we are two and a half weeks, we got 1,400 role plays. This is the power of a platform solution versus a publishing. I'm going to keep emphasizing that we're trying to enable the creators to create a lot of these role plays. Will they all be great? No. There's going to be the range of things.
Again, because people can choose, they can vote, we will get the better role plays to make it to the top. We are very focused on making the platform AI-enabled so that we can do role plays, we can do labs, we can do assessment, we can do everything to make you more successful. We are doing it in a platform way. We are very excited. There is more. I will just say one last thing, which is we are at the very beginning. We took, as I said, it is a two-sided platform, one for the creator, one for the learner. On the creator, we took the same set of tools, and now we are making it available to the large enterprise.
If large enterprise can begin to have agency with the content and use these AI tools to create the role plays that are specific to how they'd like to do XYZ in there, then they do custom creation. What you have is stickiness, stickiness, stickiness, stickiness in a way that an online catalog could not deliver.
Are you starting to see some, I know it's pretty recent, but are you starting to see some of these newer tools drive more customer conversations or even maybe some conversions or maybe even expansion of contracts?
It is early days. I can tell you that in my conversation, what I am telling you as the narrative here, the arc, people are saying, "Wow, this is a different experience. This is a different story than what we have heard from others." The fact that we can now have agency, it is a pretty big deal. It is a really big deal because L&D teams have been wondering, "Hey, what is my role in this moving forward?" I am like, "Hey, I am here to help you. I am going to make it easy for you to have a different role in this new future where you can bring your expertise, your understanding of the company to make sure that these learning and reskilling journeys are built custom to you." I think this is going to be pretty powerful.
Got it. Maybe we could talk a little bit more about the business segments. Maybe first starting off with consumer, it's slightly over a third of the total revenue today, just below a $300 million run rate. Growth has been sort of volatile in this business, but it's been very anchored towards, like you said, last quarter, a transaction-based approach. It seems like you're really making a big push to shift that over to subscription going forward. Maybe help us understand what initiatives you're taking to revitalize that part of the business.
Yeah, so let me, great question. If I step all the way back, we came from the B2C world, the consumer side. That's our history. That's where this marketplace came from. It was an amazing innovation when it was an innovation. At the end of the day, we kept the model too heavily focused on transaction. That is a hard way to make a living, one transaction at a time. You need to fill the bucket with lots of consumers, and then you need to monetize each one of them and go back to the ones who bought one thing to make sure they bought a second thing and a third thing and a fourth thing. It is really also diminishing the impact of the platform. As I've just told you, with AI, we can kind of be your companion.
We're making a hard pivot towards subscription. Our B2B side is subscription already. Our consumer, 13% of our $300 million is subscription. We want to grow that significantly because, first of all, it delivers a better experience. It helps the end user, the learner, achieve more. Because the economics are different, we have an LTV to CAC, just the economics is much better. It allows us to reinvest for the learners, and it allows us to be very deliberate in the way we choose to acquire and nurture customers. It is a really important shift that we're doing. In terms of initiative, we're doing a few things. You can already go, not this week, this week that's special, but in general, you can now see on our marketplace, we're emphasizing subscription more than we've ever had before. We're changing the way we merchandise things.
Instead of emphasizing all the wonderful one-off, we're going to emphasize subscription. That's one. Two, in our customer acquisition, we're shifting some of the emphasis towards more subscription and nurturing customers from transaction to subscription. There's a lot of proprietary channel for those migrations. We actually know where people live. We know where 80 million people live. We're going to sit down with them and try to make the case. We're also introducing new products and new subscriptions. We used to only have one subscription. It's kind of limited. You either hit the mark or miss. We created Career Accelerators earlier two weeks ago. We have six of them. We're going to monetize that as subscription because, again, we're trying to make it clear we're here to help you achieve your goal.
We have got a bunch of other subscription that are in the hopper that we are exploring, and we are going to introduce a bit later this year. A very important transition for us.
Yeah, on Career Accelerators, it seems like an interesting new offering. You're basically making professional development more accessible for people. What has been some of the early learnings from that? Is there any way to kind of get a sense for how it may impact growth for that segment?
The main idea is be more outcome-focused, even for consumer, right? People want to be successful. They want to be, and as we know right now, the economy is, there's a lot of transition folks from one type of role to another. We want to give people more control. Again, this word, I keep using it, it's a very important word, agency. If you have agency with the outcome, you have more engagement. We're trying to find ways to get that level of engagement and helping our consumer do that. We're assembling a learning path. That's content. It's this, again, the idea of that these different classes together help you move up the ladder and achieve a better outcome for yourself as a career. We're including assessment. We're including badging and recognition.
Over time, we've got a bunch of additional value-added services and merchandising opportunity. I'm not ready to announce them that we're going to introduce along with that. That makes these careers more not just episodic, but ongoing. I mean, if you want to become a cloud engineer, it's not just for three months. It's forever, right? Or for a period of time. It could be multiple years. How do we become that? What kind of additional membership? What additional recognition? What kind of community do you want to be a part of? There's some really, really interesting thing. The feedback so far is actually pretty good. Now, what we need to determine is what are all the different flavors of careers that we want to be supporting? Also, how do we ladder those things up?
How do we bring together folks that are like-minded to participate and help each other and encourage each other?
Maybe the other portion of the business is on the Udemy Business side. That is about a $500 million run rate business. It's growing positively. Growth has decelled, but you're only less than 10% penetrated with UB across your existing 17,000 customers. Aside from macro, which maybe we'll touch on a little bit, how would you sort of characterize the opportunity over the next year or two to really increase the penetration of that 10%?
Yeah, so our enterprise business is growing at 9%. I mean, I wish we were almost at 10%. I could have said double digit, but we did not quite make it. It is growing faster than anybody else in the industry. It is a really, really important part of our business. As we all know, enterprise monetizes at a different rate, and our LTV to CAC there is good. It is already a subscription business, and we like that. And 17,000 large enterprise, nobody comes close to that. Very iconic brands, very large brands. We made a shift a year ago towards five verticals, move up and focus more on large enterprise versus SMB. We are pretty happy with what we are seeing. We got 40 deals last quarter that were more than $100,000. We think that strategy is a winning strategy.
Right now, we're at a moment in time where the opportunity ahead is humongous. The stats that you quoted are the important stat, and we need to figure out, and I'll hit that, 10% penetration in the installed base. That is phenomenal. I've never come across a situation where you have only 10% penetration. It begs the question, why is that? Why is that? There's a few pieces to the answer. One piece of the answer is there are different buying centers in large organizations. We need to do a better job doing the account coverage and meeting all these different buying centers, which I think as we do this transition to large enterprise, we're getting our heads around. The second, until recently, we had three SKUs. That's it. It's the UB Enterprise, UB Pro, or the cohort-based.
That's it, three SKUs to try to meet all the needs, all the personas, all the types of workers. That's incredible. It's such a missed opportunity to do basic segmentation based on an understanding of the needs of different populations in a large organization. One of the things we're doing right now is we're going back to the drawing board and saying, okay, how do we create packages that meet the needs of different types of users? The frontline workers don't need a 30,000-course offering. They don't. It's absolutely not what they need. To try to monetize that at the same price as we are trying to monetize a, again, back to my cloud engineer, makes no sense. We are going to do a lot of willingness to pay and appropriate segmentation to cover better the needs in an account. That's one.
The second, we need to recognize where we've come and where we're going as an industry. This industry benefited from this horrific thing called COVID by accelerating an enormous amount of future purchase in a very short amount of time. That is one way to accelerate revenue growth. Now what we need to do is help deliver on the ROI. When we were in the period of COVID, a lot of purchase was done just to kind of offer a thing to the employees that were all stuck at home in their basement or in their studio. It was not an ROI-based purchase. Now, we have a product that delivers a really good ROI, better than the average for all sorts of reasons. We can go into that.
The second way we're going to go after beyond better account coverage, beyond more product-tailored segmentation, is we're going to go make the case for the ROI. We're in an economic uncertain time. Usually, people ask tough questions about your spend. I like our chances when there's a consolidation play in an account. I like our chances because our mousetrap is a stronger mousetrap. We want these conversations to happen because we can demonstrate the engagement. We can demonstrate the learning outcome. We can demonstrate how AI is going to help, or roadmap is pretty powerful. That's the other way we think we're going to move from a 10% penetration to something a bit more reasonable and exciting.
With that, it seems like you're really changing some of the messaging too around consolidation, cost savings. Does that require you to sort of revisit the sales incentives or some of the playbook there?
Yeah, so we're doing a bunch of that in the first 60 days. The first one is really emphasizing, I mentioned earlier that there is right now, this is a moment. This may not have been a moment six months ago, at least when I was at UKG, I didn't hear it from CHRO and Chief People Officer. Now I'm hearing it. There is a moment right now, AI is it. We are changing the messaging so that we can kind of bring to the forefront that conversation and make sure that we merchandise what we're offering to meet that. That's one piece. The second is we are being very thoughtful about the moment of uncertainty and trying to be proactive in saying, we got a better offer. Let me help you, CHRO.
You may not have had to demonstrate the ROI, but we're going to help you because we know we've got a better way to do that. We're going to help you. We are bringing forward a bunch of value engineering tools to demonstrate the value. We are sitting down proactively with our customers to kind of help with that. Yeah, it requires both of these require retooling of the sales plays, retooling of the enablement. We had already made some incentive changes to facilitate expansion. We did not need to do much there. The first two, absolutely.
I think coming into this year, I think we all had a little bit more clarity with the macro where it was headed until maybe some recent headlines in the last month or so. I mean, you delivered, I think, what was like a fine Q1 from a P&L perspective. You are taking a more prudent guidance posture based on some of the signals you're seeing. Maybe just if you can kind of help us understand what are some of those signals and your take on the macro.
Yeah. I mean, Q1, we delivered top line and bottom line. We actually did really well on the bottom line. It was a really good Q1. For the bottom line, it is 10 quarters in a row where we have delivered really to the bottom line. I think the team has done some really, really good work, and I want to kind of call them out for that. Right now, we are not seeing a lot of mixed signal in this moment in time. I mean, sorry, let me kind of rephrase that. It is not affecting the way the pipeline has been built for Q2. That being said, in the conversation, we have things like, I will give you an example. We have a large government account. All of a sudden, the person we were dealing with no longer is there.
They were dodged, if that's a verb. What does that mean? It means that it will take longer to close that thing because the person with whom we were having the conversation just disappeared. There's a bit of that in the water. Not everywhere. We're not seeing it in some geography. We're not seeing it in some sector. It led us to try to be a bit cautious for the second half of the year. We feel confident that those numbers that we guided to, we can achieve. Who knows? Who could have predicted all of this? What happened this week will be different than what will happen tomorrow, and will be different than what will happen. I mean, it is unprecedented times, and we're trying to be conservative.
So far, it's not really impacting pipeline or conversions as of so far?
Q2, we're in really good shape.
Okay. Got it. Maybe just on the, we only have a minute or so here, but maybe just we can talk about international. I know that's also like a nice untapped opportunity to sort of tackle there. Maybe if you can kind of characterize what you're seeing on the international front and ways to expand there.
Yeah. So 60% of our revenue are coming from international. We have the broadest number of language that we cover in our offering, which is great. The opportunity is so big, so big. We do not do local activation. We do not have on the consumer side, in market, folks who are kind of making sure that a marketing campaign in India does not run in the middle of a cricket game. It is pretty obvious stuff. Imagine if we start doing that. On the consumer side, we have a really, really fun opportunity to do full stack in-market activation. On the B2B side, we do have either partners in a country or a sales team in the country. There we are doing the normal motion. We are seeing back to where on a differentiated basis, APAC and LATAM are incredibly robust right now, incredibly robust.
We're feeling really good about that. The diversification we have from a geographic point of view is one of the appeals of the business.
Yeah. I think with that, we just ran out of time. Thanks so much for attending.
Thank you.
Appreciate it. Thank you.