For coming along. My name is Tom Singlehurst. I head up, actually, my day job is as a media analyst, based out of London, but I also have responsibility for covering global education for Citi, which is really, if I can be indiscreet, really is my passion. I think it's a really fantastic thematic, and as part of that, I have the absolute privilege and pleasure of being the presenter for Udemy. Before I jump into the introductions, just to say there are disclosures available at the front desk, should you want them. And, they're also available online for those joining us via webcast. It's an enormous pleasure to welcome Greg Brown, CEO, and Sarah Blanchard, CFO of Udemy.
We also have, Dennis, who heads up the investor relations team in the audience. I do want this to be as interactive as possible, but I have, you know, a bunch of questions, which I'm gonna dive into, and I'll come to you guys at various points to see if there are any questions. But, maybe sort of conscious that, you know, Udemy may not be familiar to all of you. So I did want to start at a high level, if possible, and maybe just start very big picture and look at the addressable markets. I was saying to Sarah earlier on, I've sat in on a number of sessions today where people have talked about the importance of training their existing workforces, in particular in areas like generative AI.
I was wondering whether we could just start by talking, you know, big picture about the opportunities, in particular for enterprise L&D, but also in consumer, sort of upskilling and learning. You know, what are the sizes of the markets? What are the growth profiles as you see them?
Yeah, happy to, and appreciate the opportunity to come spend, you know, time with you and, and, you know, talk a bit about the business. We started as a consumer marketplace, for those of you that aren't familiar with Udemy, and it was, you know, back in 2010, and got to a global scale on the marketplace, and then about seven years ago, started selling our content package for enterprise consumption. And rapidly, the enterprise business grew from zero to, which is we're gonna exit this year at $500 million in annual recurring revenue. So it's been fairly explosive growth. And, you know, part and parcel to that is the massive opportunity, you know, the TAM, the total available market.
On both sides, the consumer and on the corporate side, it's, you know, multiple billions in total available market. So, you know, the opportunity is massive. Our orientation right now has been, with the growth we've seen on the enterprise side, to really lean in and invest in the experience for the professional learner, which gives us an opportunity to be uniquely positioned to take advantage of some secular tailwinds that are blowing in our direction, i.e., the move from offline to online, and the move from long-form education and degrees to organizations focusing on skills development, to power their ability to execute against their strategic objectives. And, you know, we sit in a very well position to take advantage of both.
We couldn't be more excited about the opportunity to serve global corporations, as well as making the investments that we're making on the enterprise side and taking those investments and layering those into the experience that individuals have on our marketplace. So, opportunity in both spots, you know, the categories are massive and, you know, the orientation for us is really focused on the enterprise side today.
Perfect. Perfect. And, and one more question at a high level before we sort of dive into some of the more sort of recent detail. But, you know, one of the things that you have been talking a lot more about recently is sort of, I'm gonna call them the sort of ancillary services around the sort of core sort of content proposition, but, things like the Integrated Skills Framework and, and more recently, move into badging. How should we think about that opportunity in the context of that market? Is it-
Yeah, the opportunity around skills is... it's at the forefront, and we really do believe it is a massive opportunity, as organizations now, more than ever, are struggling with, you know, finding ways to understand what skills they have in the organization, to level set, and then identifying the gaps that they have from a skills standpoint, and then coming up with a plan to develop, you know, in partnership with companies like us, a strategy to fill those gaps, and then validate those skills in the form of badging and certification. And then the wraparound is to get insights out of that entire experience, to inform them as to how they can better, you know, serve their employees through the process of upskilling and reskilling. That's the whole Integrated Skills Framework that we're leaning heavily into.
We're not trying to do it all ourselves. We're partnering in some areas, in other areas, we're investing heavily with Gen AI, which I'm sure we'll get to at some point, to develop, you know, rapidly develop capabilities for our instructors, to, you know, evolve and advance the learning experience for all of us within corporations. You know, that is available to us now, in a very short amount of time, that before November 30th when ChatGPT launched, we just didn't have the ability to deliver the capabilities that we do today. So, you know, thrilled to, you know, be at the nexus or the center of what's going on around the skills landscape within corporations, you know, around the world.
And, we're gonna do everything we can to help organizations take advantage of it.
Very clear. Now, I mean, obviously, one of the themes of this year, frustratingly, has been around cyclicality. I mean, by any measure, you're still delivering very, very rapid growth, but you have started to see some moderation in trajectory relative to your initial expectations. Can you just maybe talk about this, how this has evolved? I don't know whether, Greg or Sarah, you want to jump in on this.
I'm happy to jump in there. So, you know, really, when we think about cyclicality, we've got two parts of the business. We've got the Udemy Business side, and we've got the consumer side. The Udemy Business side is a more typical cyclical business, and so we've seen that in our numbers. We, last year, delivered 68% year-over-year growth, and the revenue was over $300 million in ARR. So just massive, massive growth at scale. And we've seen that come down a little bit as our sales cycles have elongated, you know, as expected in a macro like this. What we've been really happy to see, though, is that the top of the funnel and the top of that pipeline has remained strong. The demand is there, it's just taking longer to get these deals closed through the pipe.
On the consumer side, we think we're seeing some countercyclicality. We have been pulling back our investment on the consumer side pretty significantly over the past four to five quarters, and that business has remained very stable. We keep a close eye on what we call marketplace vibrancy, which is making sure that we are getting the great, fresh, relevant, high quality, localized content that feeds Udemy Business. That has remained very robust. But the continued, you know, stability in that platform, we think is two things: one is a little bit of countercyclicality. Although unemployment remains low, there is some nervousness in the market. And the other is because our marketplace moves with the pace of change, there is a ton of content out there for individuals to learn about AI, generative AI, and those technologies.
We've seen, you know, a massive uptake in that as well.
Very clear. I mean, on the maybe starting on the enterprise side, you talked about lots of demand still at the top of the funnel. Has it been more of a challenge in sort of landing those sort of new prospects, or is it a slowdown in expanding existing arrangements as well?
We've seen both new and expansions and upsells taking longer. So pretty, you know, across the board, some slowdown in the sales cycles and elongation of the sales cycles. We've seen it across regions. A little more in EMEA in Q2 than we had seen. Our EMEA business had remained pretty robust when other businesses were seeing a slowdown, and it took a little longer for us to see the slowdown on that side. But it's been general, but it really is kind of the middle to end of the funnel, where companies, the approval processes are much harder. CFOs are getting involved in, you know, almost every deal.
And companies are just really tight with their reins right now as they're trying to figure out, "Hey, what does this macro mean for us?" But the demand, like we said, like, the demand is there.
Mm.
So it really is just getting those deals from, you know, from the middle of the stage to closed one.
Fair enough. And one final question on this particular topic. I mean, you know, are there any particular cohorts of customer that are more affected than others by industry sector, by geography, or by customer size? Is it big companies or small companies that are-
You wanna take that, Greg?
Yeah. The answer is no. And that... Well, yes and no. We called out Q4 of last year, that we started to see softness in the SMB side, and then that carried over into Q1, Q2, where we did, you know, obviously start to see some softness on the enterprise side. So yeah, it did start on the SMB side, and we have seen it be more impactful on the SMB side.
Mm.
But as far as verticals, I think one of the strengths of our business is that, you know, we don't have any high concentration in any one specific vertical or even a couple specific verticals. We have, you know, a number of verticals, five to six verticals, which we, you know, have demonstrated success on a global basis, executing, providing real, meaningful value. And, you know, that's, you know, it's pretty well documented, but also regionally. There hasn't been, outside of a little bit more slowness or softness in EMEA this last quarter than we had seen in prior quarters, it's been pretty consistent on a global basis. So, you know, nothing, nothing specific to call out there.
I think the one thing that I will say that we're all very, you know, happy about, and that is the durability of our business from a gross retention perspective. We don't report the numbers, so, you know, we won't go into the details there. But I will say that we have seen really no material degradation from a gross retention perspective, which tells us a lot about the value and impact that we're having as a partner on our customers' business through a, you know, very difficult macro. Because if that was not the case, those gross numbers would be coming down, and they're holding very, very solid and stable.
Makes a lot of sense. I was... I mean, links exactly on to what I was going to ask about, which is mitigation. You know, in the context of what you've just said, is this something you feel you need to actively manage by changing pricing or changing the approach to customer success? Or is it just a question of keeping calm and carrying on in terms of working through the current environment?
There's a fair element of just staying calm and being balanced in our approach. But, you know, there's no question that we know when the macro started to hit, you know, we invest heavily in customer success and the relationship we develop with customers. And, you know, when they start coming to us and they're having challenges of their own, you know, we showed as much empathy and as much understanding and willingness to partner with them to, in some cases, you know, restructure relationships. And, you know, a lot of that would be extending, you know, a multi-year contract even further out to potentially, you know, help them maneuver a short-term challenge that they may be having.
So, you know, that's something that, you know, we have done and, you know, on a case-by-case basis, you know, we'll evaluate going forward. But, but there's no material changes that we have implemented that are a massive deviation from our go-to-market approach. We're the high-value solution in the category. We're not the low-price solution in the category, and that's not gonna change. We've got breadth on our platform that substantiates real, meaningful value in a variety of different areas, be it immersive learning, leadership development, as well as soft skills, power skills, you know, on top of what we've historically been strong at on the IT side... and there's real meaningful value we're delivering.
You know, we're doing our darndest to make sure customers understand that value through a very difficult macro to justify a buying decision, but we're staying the course primarily.
I mean, and it's worth saying in that context, we're still talking about a growth rate in the low 30s for this year, and-
That's right
Consensus is sort of-
I mean-
Then-
To your point, I mean, we just exited Q2 at 36% year-over-year revenue growth, and the first half of the year, 41% revenue growth. So very, very healthy revenue growth. On an enterprise business, it's gonna exit this year roughly in the range of $500 million in ARR. So, you know, you know, again, very proud of what our team's been able to accomplish through a very difficult environment. And, yeah, again, even more reason why we're focused on staying the course and making sure that you know, customers are getting max value out of our solutions, but we're not deviating from what got us here.
Makes a lot of sense. So, you know, I, I suppose the question is, you know, well, it's worth emphasizing as well that that's a lot better than a lot of the peers. So, you know, what, what, what's driving this superior growth? Is it the nature of the content, the fact that it is, a much bigger, much more adaptable sort of, you know, content library? Or is it the go-to market strategy and the customer success, or is it some of the new initiatives and, and skills that are making a difference, or is it all of the above?
It... You know, it's a combination of all the above. You know, it does start with the content that our marketplace generates, and that, you know, we've got 75,000 instructors around the world generating content at the pace of change. And, you know, one of the last earnings announcements we talked about... In fact, it was last announcement, the fact that there's 1.4 million courses that have been consumed on our platforms just around ChatGPT alone since it launched this last November, which, you know, is massive, you know, massive uptick and uptake of what we all know is a transformative technology. And we also talked about the fact that, you know, we've got more courses on our platform than all of our competitors combined with regard to ChatGPT.
So, you know, it really does speak to the value and impact of the marketplace and our ability to deliver content at the point by which technology is evolving and changing, and that really persists across our entire platform, that example. So yes, content without question. Our go-to-market engine, we invest heavily in customer success and, in tough macroeconomic environments, customers, without question, you know, want and need to lean into a partner that is investing in their success long term, and that has always been our approach, and that continues to pay dividends. And, you know, then you look at the breadth of our platform, right?
We're the only provider in the category that has content with the richness that I just described, an immersive learning solution around, you know, labs, workspaces, and assessments, to complement the needs of the IT arena within an organization. Then you've got management leadership development, which we just acquired our way into that category about a year and a half ago. The breadth across our platform, the quality of the content, and the go-to-market motion, and how we support our customers, I think, really leads to the success that we've had.
Very clear. Maybe this is a good time to start talking about Gen AI. I mean, obviously, there is Gen AI as a topic that will fuel demand, which you've addressed already. One topic that comes up a lot is the potential for Gen AI based capabilities to help with things like, you know, learner support-
Yeah
... and, which could be massive. And then obviously, there's a productivity play. Can you just talk about that, sort of, those sort of secondary drivers or opportunities in the context of the Udemy business?
There's no question. Our opinion is Gen AI is gonna be transformative in the field of education, and, you know, we've been leaning in well before, you know, ChatGPT was announced in November. We had already been making our own investments for about eight months prior to that. And, you know, those investments are in a variety of different areas, and they're starting to have meaningful impact. One is within our own company, in terms of completely rethinking about how we develop product and company, how we service our customers in terms of customer success and customer service. And, you know, everything from finance and legal, we're really trying to do everything we can to leverage, you know, Gen AI, to get operating leverage within our own business, and then take those learnings and take those to our customers. Right?
So we're educating them on, you know, what great looks like in terms of what we've been able to figure out within our own four walls, figuratively, as well as what we've learned from our customers. And take that knowledge and those insights to the 15,000+ customers that we have, and help them along that journey with respect to how they're thinking about Gen AI. And then, with respect to the, you know, the capabilities we're delivering to our instructors, you know, I talked recently about on an earnings announcement that it was about six months ago, we released, you know, the first capability, which was, developing coding exercises.
And then fast-forward the last earnings announcement, in three months, we had mentioned that the number of coding exercises that were developed in the first half of this year was more than what was developed the entire year of 2022, as a result of the capability that we enabled our instructors with, to actually literally hit a button and in seconds generate a coding exercise that took hours prior to that. And then we've got you know, semantic search, which is what we're calling Smart Search, that is now live on our platform. So we've got a very aggressive and steady cadence of Gen AI capabilities that are in real-time transforming the learning experience for our learners as a result of the tools we're providing with our instructors.
So, you know, again, 75,000 instructors around the world at scale. Whenever we release these tools, all 75,000 get access, and then start using these tools to embed that expertise and knowledge in the learning that they're delivering. So it really is transformative, and it's happening fast, and it's happening now.
Yeah, that makes a lot of sense. And Sarah, I mean, I suppose it's a sensitive subject, but, you know, is this a big driver of productivity gains for the organization as well, or is that-
It will be. Yeah, so it takes time to implement these. And obviously we're learning our platform about AI and figuring out the best places and the timing, but over time, it should drive some real meaningful efficiencies.
Mm-hmm. I wanted to briefly talk about consumer. I mean, the enterprise piece is, Udemy Business is so important, and as you mentioned, it's, you know, getting bigger every day. But, you know, on, on the consumer side, it is worth noting that, Udemy, of all the, the ed tech companies that we cover and we track in terms of, web traffic, it's not only got by far the biggest overall sort of user base, but it's been one of the most consistently strong over the last 12 months. What does that tell us about the opportunities for monetization and revenue growth, in particular from international?
It's a great question. So let me walk through a few pieces. The first piece is, as I mentioned, our consumer platform has been very stable, meaning plus or minus a few points of growth on an FX neutral basis for quarters. As we've been significantly pulling back spend, marketing spend and investment on the consumer side, to focus that investment over to Udemy Business. But those investments that we're focused, which are the things that Greg was talking about, about the professional learner experience, personalization, the badging and credentialing, those will be ported over to the consumer business over the upcoming quarters. So it's gonna be exciting to see how that plays out. At the same time, there's very low brand awareness in the category as a whole and with Udemy, and to date we have not really invested from a brand perspective.
We just recently hired our first ever CMO, and there is a massive opportunity to really, you know, position the company, and get our brand out there, because we really are leading this space and leading this transition to a skills-based economy, so lots of excitement there. The web traffic is, you know, is up. It's up 8% year-over-year. It's 34 million monthly uniques last quarter on much lower spend. And what we see is growing international traffic on. You know, 60% of our revenue comes from outside of North America. So there's growth on the consumer side across the globe, but there's also significant growth on the Udemy Business side, because we have, we have content in 75 languages on the consumer platform, and we have 14 local language packages within Udemy Business.
In addition to that, we have some deep partnerships in a few different countries in APAC. The first partnership we did was with a partner called Benesse in Japan. It's our fastest growing company. We have over 60% of the Nikkei 225 localized content, and it's a deeply integrated reseller model. And we have more recently signed up two companies, one in Korea, one in Vietnam, and the early signs there are good that we're gonna see some success there. So there is massive opportunity internationally, especially because our marketplace allows us to really be naturally almost border-free.
Yeah. And it's a... From my perspective, as a global education analyst, you're very much standalone in that, because a lot of the other platforms are U.S. first and foremost-
Yeah
... with international very much you know a second string. The other thing I wanted to talk about, going back to something we raised earlier on, is badging and credentials. And just thinking about, you know, that in a little bit more detail. I'm interested in particular whether that's gonna be, you know, an open system that's based on the Udemy brand and just sort of sits alongside the existing platform, or does it become a like a completely new leg of the business? How should we think about that evolving, and does it involve you building or buying? So-
That's a good question. You know, the concept around validating skills is something that's important for individuals on a consumer platform to get a badge or certificate associated with an assessment that now gives them the ability to again credentialize that they're a level two developer of AWS or whatever it happens to be. It's very important within organizations as well, because one of the... The CLOs, one of the biggest challenges they have is validating what skills they have across the array of functions in an organization, so that they understand what skills they need to develop going forward, so they have the ability to deliver against their strategic objectives. So this release is really addressing a significant gap or really an opportunity for us in that integrated skills landscape and framework that was an unmet need.
How we're doing that is, we believe is, is optimal for organizations, because we're not asking anybody to, you know, to single source from a badging perspective on Udemy badges. What we've done is we've partnered with a consortium called 1EdTech. 1EdTech, effectively what they've done is they've aggregated all of the badges from the top, you know, technology, you know, vendors out there from, you know, AWS, Microsoft, Google, you know, CompTIA, you name it, data science. They've got over 200 badges, the most popular and most sought-after badges. And then, effectively what we've done is we've just enabled learners to port those badges into our platform and to the social platforms if they so choose to make them available, be it LinkedIn or an LMS or an LXP within an organization.
So that it becomes very, very clear and very, very apparent, apparent in a very agnostic way, that what capabilities and skills they have. So, you know, again, we're not forcing a choice. This is, you know, an industry-standard approach, which is what we've deployed and rolled out in the back half of this year. Next year, what we are gonna do is, for those courses like ChatGPT, that there are not badges out there right now, or certifications that are available for anybody. We're gonna fill that gap by developing, you know, Udemy branded badges and certifications in partnership with, in this case, it would be with OpenAI or with whoever that vendor happens to be, so that we can enable that on our platform as well.
We think those in combination are gonna be, you know, the right formula for us as we, you know, really start to think longer term about what the organizational needs are around validation looking forward, right? And again, all these capabilities we're porting down to the consumer side as well. So they'll be available in the marketplace, but hopefully that answers the question. But, we're already getting great feedback from the product as it's been released. We're winning business as a result of launching this capability on our platform. I talked about that in the last earnings announcement, and that continues as a result of the feedback we've gotten from customers, that this is exactly what they were looking for.
Makes a lot of sense. And we're seeing a lot of other platforms. Pearson has Credly, instructors on the stage talking about badging this morning.
Yeah, I mean, it's a very topical, you know, subject for good reason.
Yeah.
For good reason, and you know, we're again, we're doing a lot through partnership that we don't feel like is something that we necessarily have to develop ourselves.
One more or maybe two more questions on sort of new areas of potential sort of growth or monetization. Udemy publish a really interesting quarterly report. It's the Quarterly Learning Index, I think is the name, or at least it gives you know, details on which topics are in demand and currently showing strong growth. And there were two that sort of jumped out for me that I thought were really interesting, both of which could be. It struck me very significant. One was certification preparation.
Yeah.
I suppose there are other platforms where they're actually hosting sort of dedicated professional level content. I presume on the Udemy platform, we're talking about sort of individual instructors doing preparation courses.
Yeah.
Is there any scope for you to formalize your exposure to professional qualifications?
Yeah, I'll take that. For years, learners have come to our platform to prepare themselves for the badge or the certifications that they were gonna go take on AWS or on Google, or on Microsoft or what have you. And, you know, we've been aggregating this insight for a number of years. And, yeah, and our instructors, which we have great relationships with, as you all could imagine, because they are effectively, our content generation engine. So we spend quite a bit of time with them, understanding what demand looks like from their perspective, and where we can help best them meet those demands. And this has been an area for a number of years that has been a growing, you know, you know, opportunity for them.
To develop content that was gonna enable all of us, as learners, to do what's necessary, acquire the insight and the knowledge, to be able to go pass that certification, so we can go get that job that we wanna go get, or we can get that promotion or what have you, that is required, you know, by our organizations. And, you know, and that's something that really was part and parcel to what, you know, drove us to the point to where we need to help organizations and individuals go solve this last mile gap of being able to apply those badges and certifications to the learning that was already happening on our platform.
Makes a lot of sense. The other one that jumped out for me was language learning, in particular English language learning, which there's an enormous amount of sort of volume going through your model through your platform. That—I mean, that is a big market, language learning. It's both business and consumer, it's $10s of billions. Is there any way you can formalize that as well? That was the other question.
You wanna-
Language learning.
As far as formalize the-
No, for-
... or quantify it?
I mean, it's obviously... Once again, I guess there's a lot of individual sort of instructor, sort of volume going through-
Yeah
... your platform, but can... You know, is there any way of sort of, you know-
Yes, like a vertical offering.
Yeah, correct.
Create, you know, a content or a vertical offering.
Yeah, around, around learning.
It's not something that we, we have in the works right now or that we've considered, you know, I think as a standalone offering. But, you know, over time, we, we are gonna be looking at opportunities to create very discrete content bundles to meet specific needs of learners, either, in verticals-
Mm-hmm
... that are very unique and specific, and/or potentially in geographies. Now, we know that, for instance, on our platform, there is a tremendous amount of volume for Chinese, Chinese native speakers to be able to come on and take courses to learn English, right? We know that, right? I mean, that's... And it may have been in that report.
Yeah.
I can't remember who it called out.
Yeah, yeah
... Chinese, but we know that's a, that's a massive, you know, revenue opportunity there for instructors, and they take advantage of that. And that same goes in, you know, the same holds true in a number of countries around the world. So, you know, we think Duolingo does an amazing job at what they do, and we love their, their business. And, you know, we, we've actually, you know, kind of broken down some of the key areas that we think they've done really well and are taking some of those best practices in-house. But in terms of us getting very, very purposeful around creating an offering tailored to English language, language learning, it's not something that we're immediately focused on in the near term.
Okay. A couple of financial ones for Sarah. You know, putting all of this in the context for the push for break even by the end of this year, and then EBITDA profitability from next year, I suppose-
... first challenge for you. I mean, I mean, why is it important to demonstrate that you can deliver profitability in the short term, given you're very well capitalized, and there seems to be a ton of growth opportunities in front of you?
Yeah. So we've always been thinking about getting to profitability and really driving sustainable, profitable growth. There is a massive opportunity in front of us, and it's about being very balanced in that approach. For this year, we pulled profitability in because that money would not have been as productive. For example, go-to-market teams. Number one, their ability to be productive is lower in a macro like this. And number two, it's really important that sales teams feel like they're winning. There's a human element to keeping your go-to-market team really excited, and so investing more in that, making it harder for them to kind of hit their numbers was something that didn't feel like a good idea right now.
That being said, as soon as we start to see green shoots, we are going to be, you know, putting the foot on the gas thoughtfully because we are gonna deliver a full year of EBITDA breakeven plus next year. Each quarter, though, individually may not be breakeven plus, because we are gonna invest in building up those teams again in the places where we're seeing those green shoots in a very targeted manner. At the same time, there was a lot of investment we did, for example, in G&A to operate as a public company. We're getting leverage off that now, and we expect to continue to see that happen. So it is about running a prudent business, taking advantage of the opportunity, driving that growth, but sustainable, profitable growth over the long term.
Okay. I did say I wanted to make it interactive, and I haven't done that at all. So, I should say, has anyone got any questions? Does anyone want to jump in and ask? We'll wait for two seconds and run a microphone over to you.
Thank you. Just two questions from my side. Just how do you curate your content and how do you effectively ensure the quality is of a, I guess, high standard? And then, you know, can you explain the pullback on investment in the consumer business, you know, just given the comments around its counter cyclicality and the like?
I'll take the first one.
Yep.
We've got a whole team that is focused on content curation for the enterprise collection, and it really starts with ratings and reviews, right? So all of our courses are ratings and reviews. So we see what's bubbling up and what's hot in terms of volume as well as quality. And then our team has—we have a formal process. We'll go in and assess for enterprise readiness and address any issues or opportunities to tighten up the content or the formatting as necessary. And then we have a conversation with the instructor. They have to agree to have that content brought into the enterprise collection. At that point in time, they agree for that content to be exclusive to Udemy, and then we move the content in. So there's a whole process.
It's a well-oiled process at this point by which we go through to assess and then qualify content in.
From a consumer investment perspective, there's really two main areas that we've pulled back. The most significant is, marketing spend, and that's really about making sure that the dollars are generating the ROI that we need. And, pushing some of those dollars from consumer marketing over the Udemy Business side of things because unit economics and Udemy Business are quite attractive. The second thing is the R&D. Historically, our R&D efforts... I joined the company a little over two years ago, and almost all of our R&D efforts were actually around the consumer business optimization of that platform, et cetera.
What we saw was this huge opportunity in what we could do with Udemy Business and the things that Greg spoke about, the personalization, the learner experience, the tools for our Udemy Business customers, the skills framework and how we're really thinking about that. So really switching the context for us over to investing in Udemy Business first, but then taking those investments, porting them over to the consumer side, you know, along a timeline that makes sense for us.
Well, just ask a little bit more, understand a little bit more about the Integrated Skills Framework.
Yeah.
Was it possible for Gen AI, or has Gen AI really opened that up? And what are the challenges in that business?
Gen AI was and is an accelerant in terms of what we can do with the data in a significant way. For instance, benchmarking, you know, your data as a customer against, you know, an array of customers in a similar vertical of a similar size across, you know, our 15,000 customers. That's one example. There's many examples now that we've been able to build into an insights capability or insight. We're developing a standalone product around customer insights that gen AI is a massive accelerant. In addition to that, the whole notion of being able to deliver and develop the types of tools and capabilities that I mentioned, coding exercises, semantic search. We've got a release that's monthly right now of gen AI-enabled tools and capabilities that we're releasing to our instructors.
That, I will tell you, last year it was probably four, four releases that were as material meaningful as what we're doing monthly now. So it's a massive accelerant in terms of our ability to develop product and capabilities, as well as provide insights, meaningful insights to customers in ways that we just didn't have the ability to deliver in the past. And we're on the front end of this. I mean, this is—we're still learning every day. I mean, as we've got our team spun up now, as we've really started to tilt investment hard to Gen AI internally, and we've got more folks working on it, we're, you know, we're learning as we're going.
So, you know, we talk six months and a year from now, I'll have a, you know, much more in-depth and a, you know, a very different answer, and we'll be much further along than we are today.
Biggest challenge.
Biggest challenge with respect to gen AI or just in general? Yeah. I think for us, one of the things that we're really focused on right now is making sure that we've got the right partnerships in place, because we're not gonna do all of it, right? So for instance, the assessment side, we're, you know, we're not an assessment company. There's companies out there that we're partnering with that are really, really, you know, they're, they're doing a great job of this, right? Assessments, Credly, and some of the other folks that are out there, that our customers are already working with, that we wanna make sure we plug into and partner with, so we're not having to ask them to work with a different, you know, set of technology, suppliers or vendors.
That we're working with the companies that our customers care most about, to help them assess and understand the skills they've got, do the gap analysis, and then we do a great job of skills development. That's our wheelhouse. The validation bit, we just layered in. I just talked about that as far as validation in the form of badges and certifications. And then that insights that we talked about, that's a new product that we're spinning up, that's evolving rapidly. So, you know, so for some of it, it's partnerships, and other capabilities we're developing in-house. Together, it's that end-to-end, you know, integrated framework that we're really focused on bringing to life for our customers, 'cause that's what they've been telling us for some time, is where the strategic value is, and we wanna be a key component of that. Is that helpful?
Yeah. Perfect. So, because of the IPO, you're extremely well capitalized, and actually, you know, if all goes to plan over the next year or so, cash, even cash burn's not gonna be an issue. So can you talk about priorities for cash usage, and in particular, M&A? M&A, in a way, is the dog that hasn't barked, in the sense that you haven't done much. You've done some, but you haven't done anything really meaningful. So, yeah-
Well, first of all, you know, great question. We're being really thoughtful about it, but we have been actively looking at M&A opportunities, actually for the last 18 months plus. Prices weren't in the right spot, you have to find the right company from a culture perspective, from a technology perspective, you name it. But we're really looking for things that accelerate our product roadmap, help us with additional learning modalities. You can think, you know, people learn not just from looking at a video content, but there's all sorts of modalities out there as this learning landscape continues to shift, as well as international expansion. So, you know, we are, we are actively, keeping an eye on the market and, looking at opportunities, because, you know, we do have a, a healthy cash balance.
We have a great platform to be able to accelerate and deliver that growth.
In the final 60 seconds, key milestones that, you think we should look out for over the next 12 months, that will show us that you're on track and delivering as anticipated. What, what should we look out for?
So I think there's a few things. I think, first of all, you know, continued Udemy Business growth is one of the milestones. It's something we stay really focused on. Some of the capabilities that Greg was talking about as far as advancing that skills framework, very significant milestones, and we'll be laying out more and more information. We just hired a new Chief Product Officer. He's a few weeks-
Mm-hmm.
... in role, so, really more to come on that.
Perfect. Let's-
I'll just add that I think that it's to add to what Sarah mentioned, it's the Udemy Business growth while we maintain profitability. I think that, you know, those are the two keys for us. We're gonna, you know, we're gonna run a profitable, but growing business, with the emphasis being on growing the enterprise business. And yeah, we're very optimistic about our ability to do that, and deliver real meaningful value around the notion of an Integrated Skills Framework. So, as Sarah mentioned, more to come. We have a new Chief Product Officer and new Chief Marketing Officer, both of which started in the last 60 days. So, we're gonna be taking big steps forward, both on branding and positioning the company, as well as product strategy.
Super exciting. Thank you, Greg, thank you, Sarah, and thank you, everyone.