Welcome, everyone. Thanks for joining our day to talk about online education and our e-learning summit. Greg Brown is with us, CEO of Udemy. Greg, really appreciate your time. And, maybe for those that don't know the story, as well, give us a 40,000-foot view of where you see the company going at this point.
Yeah, Brent, great to be with you. Appreciate the opportunity. I'll tell you what I'll do is I'll give you a little background for those as you just mentioned that aren't familiar with the business, a little background of the company and then where we're going. The way to think about Udemy is as a comprehensive skills development platform focused on both tech and professional skills development. There's a lot that's been written about the fact that skills are the new currency for organizations, and effectively defining how work is done, how talent is deployed, and with respect to managing careers and value in employees.
As we're seeing automation and technology innovation accelerate in with the changes in the workforce, it's a growing need for more flexible training to continuously reskill and upskill workforces to keep up with the pace of change, which, as we know, gets faster almost every day. Udemy's a bit unique in that we've got a marketplace model that is our content generation engine that enables us to connect 69 ,000,000 learners around the world with over now 75,000 instructors around the world developing content in their chosen domain, discipline, language, and context, which now has led to over 220,000 courses on our marketplace. Then from there, Brent, we actually curate the best of the best content that's applicable for the enterprise, and we package that up and sell that to organizations from small, medium businesses all the way up to the largest enterprises in the world.
In that content array, we have 25,000 courses that cover all topics and categories, you know, supporting over now 16,000 customers around the world. We're very international in terms of our presence. Over 60% of our revenue comes from outside of North America, and over 80% of our traffic comes from outside the U.S. On the marketplace itself, we support 75 languages. Within the Udemy Business collection, we support 14 languages, that is, again, supporting our organizations and enterprises. Layered on top of that content generation engine have been a lot of investments over the last two years in developing a platform of learning modalities to bring that content to life and enable our instructors to develop to develop very unique learning experiences, whether it be on the technical side of the house where immersive learning is very desirable and additive.
So you've got assessments, labs, workspaces, to create a very dynamic, immersive learning experience. And then you've got soft skills and power skills, which have been a big investment for us. And then we've got management leadership, cohort-based management leadership development capability, which is, you know, a very unique way to bring teams through a learning experience, as a cohort, but on platform. So we, we truly have built out a platform of solutions, that we invest heavily in, in enabling organizations to leverage in developing strategies to develop skills.
The marketplace, Greg, you talk to is incredibly massive relative to anyone else in the industry. What makes you special? How did you be able to create this versus others? Some may say you're the Amazon of education, or whatever analogy you want to use, but this has been, obviously, an incredible achievement. What is that special sauce that's really giving you that ability to create that scale?
Well, I mean, the special sauce started with the vision of our founders 14 years ago that was very simple, that there should be a platform, a marketplace that would enable anybody anywhere in the world with expertise and a desire to publish content and create content, to be able to bring that content to life in a marketplace and expose it to anybody else in the world. And it's a very basic, fundamental concept around democratizing learning. And Eren and our co-founders, embarked on that, as I mentioned, 14 years ago.
And so, you know, what that has enabled is a flywheel now that continues to spin faster and faster in a very dynamic way so that when new technologies like ChatGPT and generative AI come to life, you know, you see and I mentioned this on our earnings announcement two months after the earnings announcement, we had over 100 courses developed on our platform and already released, and we curated 25 of those courses in that two-month period from November 30th, 2022 to when I had that earnings announcement across all of our competitors. There had only been one course published, one, across all of our competitors. So, you know, it really is a sustainable competitive advantage for us that we have this global marketplace that enables the most innovative, dynamic creators in the world to develop content and publish that content.
And then we have the opportunity to serve that up to enterprises to give them the ability to stay ahead of the pace of change or stay at least stay up with the pace of change. But in many cases, it is ahead because our creators have relationships with Amazon, Google, OpenAI, and what have you. So they're developing their content. So it truly is released sometimes even before the next rev of their technology comes to market. So anyway, you know, the marketplace is very, very special, and it is our one thing.
On the enterprise side, you've mentioned, you know, approximately 10% penetrated today. You got 90% to go. Maybe talk about this opportunity for you going forward, how you're setting up your team, what the opportunity ahead looks like, you know, US, global, anywhere you'd like to go on the enterprise would be great.
Yeah. You know, as mentioned, we have now over 16,000 enterprise customers of all sizes, and we are very international and global. That really started with, you know, a land and expand approach with primarily technical content being our tip of the spear where we actually had a strong competitive advantage early on. So we would land on the technical side of the house, enabling, you know, heads of product, heads of technology to continue to develop skills as the new revs and technologies came to market so that their teams could stay up with the latest and greatest.
As I mentioned, over the last couple of years, we've been innovating on our platform and developing a platform of capabilities and learning modalities (pardon me) that really have enabled us to change the nature of the conversation we're having with organizations from what it was originally land and expand on the tech side to now we're actually having conversations with the Chief Learning Officers and Chief People Officers with respect to how, as a platform and the strategic capabilities, the services we bring to bear, we can help them transition to a skills-based organization, which, as I mentioned earlier, really is the direction that the most progressive companies in the world are headed. For them, it's about developing the skills necessary to drive outcomes. And the days of, you know, or, you know, the progressive CLOs just focusing on degrees and experience are now behind us.
And we are very uniquely positioned to be the leader in skills, in the whole skills development transition, based on the marketplace dynamic I just mentioned, as well as the platform of capabilities that we have, which is unique. The array of capabilities we have on our platform is unmatched, right? We've got the capabilities we have sitting on top of a marketplace, which is very unique and dynamic, which really does give us a very sustainable opportunity within the enterprise to help organizations through this transition. So it couldn't be more excited about it. That's the nature of the conversations I'm having when I'm flying around the world and meeting with our customers. It really is about, you know, strategies and capabilities that we have to help them through this transition to really orientate around developing skills to drive outcomes.
And this enterprise awareness, can you speak to how these large companies are finding you, what you're doing in terms of your go-to-market to go after these organizations?
Yeah, it's a good question, Brent. You know, historically, we have not made a concerted effort to invest in elevating the awareness of our brand. That has not necessarily been a primary focus. We made the decision turning the corner on this year with bringing Genefa on board as our CMO and our new head of product and the investments we're making on the product side. And again, with this transition that's happening to a skills-based organization, that now is the time for us to make concerted efforts to elevate the awareness of our brand. And so we're doing that in a number of ways. And really, it is all focused on brand, you know, brand elevation, if you will, or awareness in the enterprise to drive top-of-funnel traffic and to accelerate conversions through the funnel.
but we couldn't be more excited about the partnership that we've established and announced with McLaren Racing. We're doing a lot to activate around races. They've got 300 ,000,000 followers in their social sphere, and they are synonymous with performance and excellence and, you know, have the culture and the mindset that is, number one, very aligned with ours and a commitment themselves to developing skills within the organization. Zak Brown, their CEO, no relation, is a great guy. And he is considered one of the innovators and leaders in Formula One and racing in general and, you know, has expressed a real commitment to developing skills in his organization to help them eke out those tens of seconds that have to be, you know, that end up being the determining factors to whether or not they're on the podium and they're leveraging our platform to do that.
And we're telling that story, and they're actually developing content on our platform now. Their senior leaders are. So very, very interesting, very dynamic partnership. It's early days. But really all to say, you know, the commitment is to elevate the brand, the awareness of, you know, our capability to help organizations, through this transition to a skills-based org and how we're doing that, around the world. And this partnership is going to help us really expose that to a lot more folks and, open doors for us that, you know, that historically may have not been open.
When you think about the enterprise space, obviously, it is competitive. You have a really good position, but many ask, you know, your ability to drive price. And what are the levers that help you gain better economics in the enterprise going forward?
Yeah, I've been pretty clear from the early days, even when I was running Udemy Business and into the transition as CEO, that, you know, we're never going to be the low-cost option in this category. We will be the high-value option. And as we continue to invest in AI-enabled product capabilities by which we just talked about in the last earnings announcement, and there's more to come on that, you know, in the weeks ahead, we're doing a demo day for the analyst community to go deeper into exactly what we're bringing to life this year in the value and impact.
But, you know, as we make these investments, you know, we, you know, are very, very excited about, you know, the, the opportunity to impact learners in a very unique and differentiated way, to give enterprises a toolkit that is going to enable them to upfront develop the right strategies with our customer service and professional services organization to develop the right strategies to deploy our platform, you know, across the array of learning modalities that I mentioned earlier: management, leadership, development, soft skills, power skills, technical skills, and immersive learning, to meet the needs that they have across the organization, versus, you know, some of, you know, some of the folks that we see in market are, are more point-solution oriented. And so again, for us, it's about value creation and driving outcomes across the organization.
As a result of that, we believe we do it better than anybody else, and we believe that we're going to continue to distance ourselves, in the enterprise with respect to the investments we're making. We do believe that, you know, again, as our prices, you know, will invariably, you know, continue to moderate up, as we make these investments, the value creation is going to far surpass any price increases and will give us ability to compete very, very aggressively in the enterprise.
Many investors ask, you know, what the sustainable growth of enterprise is over a multi-year period. How fast do you think the overall market's growing?
I mean, look, you can see what our growth has been. You know, Udemy Business before the macro, you know, we came off 2022 at 68% year-over-year growth and north of $300 ,000,000 in ARR. Last year, 34%, just under $500 ,000,000 in ARR. And so, you know, we believe that we're going to be able to outpace, you know, the competitive set in terms of growth in the enterprise for years to come.
We're very confident that we're going to be able to grow north of 20% in the enterprise at scale, you know, and as the macro turns and we see more stability on a global basis, we, you know, we've actually made the comment in the last earnings call that we expect a back half of the year, that ARR is going to start growing again on our Udemy Business, you know, side of the house. And we expect that to continue, all right? So as far as the TAM, the TAM is massive. You know, again, we've got 16,000 customers today, and we're only, you know, roughly less than 10% penetrated. Every quarter, we close somewhere between 40%-50% of our bookings comes from customers that we've never sold to before. They're new customers to Udemy.
So that's the next cohort of opportunity we have to expand into while we continue to work with our existing customers that are very under-penetrated, to again, again, expand across the array of learning modalities and products we now have on platform as well as seed expansion. So it's early days, Brent, and, you know, there's a lot of runway ahead. The TAM is massive. I arguably there's not an organization on the planet that should not be investing in upskilling and reskilling their employees to develop organizational capability. So, you know, we again, we couldn't be more excited about where we're at.
One of the questions we always get is, who do you see the most in the enterprises or a common competitor that you're seeing, or is it just so fragmented that it's really hard to say?
It's a good question. It is fragmented. It depends on the nature of the RFP and what the customer's looking to accomplish. You know, I would say LinkedIn Learning is probably the competitor we see most, you know, and LinkedIn historically has got great relationships with HR. The recruiting product, we all use it, and we all love it. They've innovated in that area of HR technology and have just done a wonderful job. The learning product is for them, it's a bolt-on, an add-on, if you will, to you know, to the overall suite of capabilities they sell. So, you know, we approach it differently.
This is all we do, focusing on upskilling and reskilling across the enterprise and bringing services to life and that commitment we make, to helping organizations develop the right strategy as well as executing that strategy, leveraging our platform. I think, you know, we definitely bring more services to the, you know, to the party than anybody else. I think we've got a very focused commitment in ways that other organizations may not have as a result. And, you know, again, you know, I like our position. You know, I like where we're at in terms of the value proposition. And, you know, I expect us to continue to win a disproportionate amount of opportunities moving forward, even though at times there is a price disparity.
There's been a lot of conversation around the instructor take rate going from 25% to 20%, falling to 15% in 2026. And so I think everyone says, "Well, that, that, that's, that's great for you. What about the instructors?" and I think your response has been, "We're investing back in the platform to give everyone this great place to be." Everyone asks kind of where do these incremental investments go and, what are kind of the top, top, top ones that you're most excited about?
That's a really good question. And you know, Brent, we're paying a lot of attention to this. We did before we made the announcement as far as making sure that our instructors knew well before we, you know, made the public announcement what, where, why, when and how, around this adjustment. And we continue to do so. You know, as recent as when Sarah and I were delivering the earnings announcement just a couple of weeks ago, our head of product and head of marketing, we're in a meeting with our instructors, walking them through a deep dive into the three AI-enabled capabilities that we're investing in and bringing to life this year.
The response from that meeting was a 96%, you know, survey response in terms of their affirmation and excitement around what we're developing to enable them to continue to develop a very differentiated and innovative learning experience. It's everything from the automated Q&A that we're enabling them with. So today, many of our top instructors spend four hours a day, either them or their TAs, answering questions from their learners. With GenAI, we can automate all of that so that now, going forward, once that is released, GA, those responses will be generated, and then the TA and/or the instructor simply just needs to read the response to make sure there's no hallucinations and send it, right? So, the versus today, they're literally writing each one of those responses from scratch.
Massive, massive accelerant not only for the instructors and TAs, but for the learners because the response for a learner is it can be almost instantaneous. So that's going to be dramatic in terms of the impact it has for our instructors. The investments we're making in the AI learning assistant are going to be transformative for the learner as well as the instructor in a number of ways. And that, I'll save and we'll bring that to life on April 3rd, which is when we're doing the demo day for the analyst community. But it's, it's going to help with the curation and personalization of learning paths in a way that we've never been able to deliver nor has anybody else in the category, before we had access to this technology, GenAI.
In addition to the learning assistant you're going to have throughout the entire learning process to be able to ask questions and get insight and get information as you go through a course or a series of lectures and what have you. So that is really exciting because, again, it's going to transform how we engage with the instructors and the learning experience. And then on the front end of it, it's skills mapping. You know, for organizations that they're telling us today spend hundreds of hours, and it can take 6-12 months to actually map across an organization the next skills to the specific jobs and job families in the organization as they're making a transition to an orientation to a skills-based org, we're going to be able to automate all that. And again, we'll show this in the demo on April 3rd.
So all to say, when the instructors saw all this, they, they couldn't be more excited, and energized by the investments we're making. They were going to enable them to, again, innovate in very, very unique and different ways. So all to say, we're paying a lot of attention to our instructor community. Happy to report, I guess the punchline is across our 1,000 top 1,000 instructors, we've only had one instructor indicate that at some point he may remove a selection of courses. Outside of that, we've had no, no cancellations, no customers give us written response that they desire to pull their content out of UB.
So, you know, that's a very strong endorsement for the investments we're making and their belief that our growth is going to continue to be able to outpace the instructor payment changes over time and that their pool their share of wallet is going to continue to grow.
Maybe just switching over to the consumer segment. You know, your vision for the long-term strategy.
Yeah. On the consumer side, you know, we've talked a lot about custom, you know, marketplace vibrancy and that we're not focused on investing into performance marketing, and that remains consistent. But as we remain very, very focused on investing in the professional learning experience and capabilities, like I just mentioned, all those AI GenAI capabilities in addition to badging and certification, although we're initially launching those capabilities into the enterprise, we are going to be porting those capabilities down to the marketplace experience. And the first one that is teed up for this year is badging and certification.
And so we know that there's strong demand in the marketplace for consumer purchases of content associated with being able to acquire a badge, an AWS badge, a Google Cloud badge, or whatever it happens to be on the technical side of the house. Now that we have access to over 200 of the most in-demand badges, you know, that right now are being consumed by our enterprise customers, and we're seeing rapid adoption of our badging and certification capability associated with specific learning paths in the enterprise, we know we're going to have, you know, a strong pull in the marketplace for that, you know, content associated with those badges when we release in the back half of the year on the consumer side.
So all to say, that's one of many capabilities we're going to be bringing down into the consumer experience. As we do that, we surely expect to see revenue grow. We've been very conservative in our approach, and we'll remain so until we actually, number one, get those capabilities launched and start to see the impact. But we know there's demand because we know the professional learning experience in the enterprise is symbiotic and almost identical to what individuals are coming to our platform for on the marketplace because we do know that over 80% of the individuals that come to the marketplace to purchase content are purchasing content for the purposes of upskilling and reskilling themselves, right, for, you know, their job, careers and/or the organizations they work for. It just doesn't happen to be funded by enterprises or by companies.
They're funding it, but it's for professional upskilling and reskilling. We know this. We've got access to that data. We know it to be true. So again, the impact is going to be real. We will see revenue lift over time on the consumer side. We just don't know how much and how fast.
Switching gears to everyone's favorite topic of AI. You know, if you look at every edtech stock, they're all down year to date in a, you know, pretty massively. And I think there's this general fear that AI is going to disrupt how our kids and our grandkids are going to learn going forward. And, ultimately, how this impacts the business models of everyone in the industry. I mean, part of this seems like an overreaction. But I think everyone would love to hear your perspective on what happens over the next three years with AI.
Yeah, I've got a strong perspective. And I'll tell you, I saw a video sequence recently with Sam Altman and Reid Hoffman. And Sam was talking about his perspective on the impact of GenAI on education. It's exactly to your point.
I'm very aligned with his point of view on this, which is he does not see a world in the next few years where generative AI, where an avatar that looks like me, sounds like me, God forbid, is going to be able to read a transcript and deliver that transcript and for that experience to be as impactful or even close to as impactful as an experience from an instructor that may, may leverage an avatar avatar and/or, you know, voice recognition, to deliver the content, but to bring that content to life with the stories and the experiences and the context that they have that we all know is what really differentiates a world-class learning experience and the learning that we've all done in university or in high school from instructors that have a very different approach, that may read from the book or read from effectively a transcript and what have you.
We all know what that learning experience is when you have a dynamic instructor that can bring content to life and bring information to life and insights to life in a way that is engaging and enthralling and draws you in and you want to go; you can't wait till that class happens. And that's exactly what I believe and what he believes is going to be the dynamic in the experience with GenAI. So what does that mean? It really does mean that and we're looking at ways of doing this now, bringing the best of what AI enables to enable our instructors to number one, generate content much faster, a transcript, a course that they want to write, right, to use GenAI. I mean, they could generate 80% of that transcript very, very rapidly.
They layer in their stories and experiences and the sequencing and how they want to bring that learning experience to life in the series of lectures and the courses that they're going to bring and publish to the platform. They continue to innovate as they get feedback from learners as to what's resonating and what's not. They adapt and modify just like they do today, but they may be using an avatar and voice recognition to actually dramatically speed up the process of their ability to publish that content. So it really is finding ways to leverage the best of what AI provides, GenAI provides as far as technology advancements and capabilities and enabling our instructors to bring that content to life the way they currently do. That's how we view the world.
And that's what we're focused on enabling and, and really excited about it because, again, look, we've got 75,000 instructors around the world, and if we can enable them with tools and capabilities to more rapidly develop content, update content, and it just accelerates our flywheel and, and accelerates our competitive advantage.
Greg, to end, really appreciate you having us here, you being here. When you think about, just overall long-term confidence in the story, maybe just frame, you know, over the next 3-5 years, your confidence in the franchise and where you're headed.
Yeah, happy to, Brent. As I mentioned earlier, though, look, we're on the front end of some massive secular trends that are in the early innings from the transition from offline to online, digital transformation, the transition from degrees and experience to skills and this whole concept of a skills-based organization or a skills-based economy accelerated by generative AI. And the conversations I'm having with organizations today, the more progressive companies, are investing in this transformation to a skills-based org as well as investing in upleveling the AI literacy across their organization and continuing to focus on, on enabling the skills by function to be developed to efficiently and effectively leverage GenAI to get operating leverage in their business as well as into the products and services they deliver. We're in the early innings of, of all of these transformations.
I think, you know, we couldn't be better positioned to take advantage of it. Today, we are the enterprise leader without question. We expect that we will extend our advantage, and extend, you know, the capabilities on the platform that are going to enable us to drive even more efficient and effective outcomes for organizations. That's really, at the end of the day, what matters. You, you know, I'm telling more and more stories in the earnings call around outcomes that we're able to deliver, as a result of the innovation that we're bringing to the marketplace and the investments we're making on our platform because that's really what, what customers are telling us they want. Yes, the platform and everything is great, but really, to what end? It's about outcomes. I think we're delivering outcomes in ways that are very unique.
And again, with these, these secular trends being early, early innings, you know, there's tremendous runway ahead of us right now. So I would say right now, the if I could snap my fingers and had a magic wand, I think time would be the, the one thing that I would accelerate, you know, to get to back to where we have a stable global macroeconomic environment and that we're operating, you know, a bit more like we were in 2021, 2021, 2022 on a global basis as far as the consistency by which organizations are investing in growth. And I don't mean just in learning and development. I'm talking about a growth period.
You know, because when that happens, you know, you're going to start to see, you know, our Udemy Business, business unit accelerate back again into the, you know, and, and as we've talked about, into the back half of the year and beyond. So for us, it's early innings. The trends are winding our sales right now. Couldn't be more excited about the long-term opportunity for the business.
Greg, really appreciate you being here. Thanks for sharing your story. Looking forward to staying in touch. Thanks, everyone, for joining.
Sounds good, Brent. Thanks for having me. Take care.
Take care.