Udemy, Inc.

Good day and welcome to Udemy's third quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Dennis Walsh, Vice President, Investor Relations. Please go ahead.

Thank you. Joining me today are Udemy's Chief Executive Officer, Hugo Sarazin, and Chief Financial Officer, Sarah Blanchard. During this conference call, we will make forward-looking statements within the meaning of federal securities laws. These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated. For a complete discussion of risks associated with these forward-looking statements, we encourage you to refer to our most recent Form 10-K and 10-Q filings with the Securities and Exchange Commission. Our forward-looking statements are based upon information currently available to us. We caution you to not place undue reliance on forward-looking statements, and we do not undertake and expressly disclaim any duty or obligation to update or alter our forward-looking statements except as required by applicable law. During this call, certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements, which are prepared in accordance with U.S. generally accepted accounting principles referred to by the SEC as non-GAAP financial measures. We believe that these non-GAAP financial measures support management and investors in evaluating our performance and comparing period-to-period results of operations in a more meaningful and consistent manner. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release. These reconciliations, together with additional supplemental information, are available on the investor relations section of our website. A replay of today's call will also be posted to the website. With that, I will now turn the call over to Hugo.

Thank you, Dennis. I'm proud of the Udemy team for making solid progress during the quarter on our priority to accelerate subscription revenue growth across the entire business. As a result, consolidated subscription revenue grew 8% year over year and now makes up 74% of total. We are building a more durable business that delivers predictable and recurring revenue that creates more value for all stakeholders. For Q3, we beat our revenue guidance and delivered our 15th consecutive quarter of better than expected adjusted EBITDA. Our team continues to execute with discipline while we make investment in our future growth. Udemy business segment revenue increased 5% year over year, and we generated 7 million of net new ARR. These results exceeded our expectation and signal our underlying strength of our enterprise business. In our consumer segment, we surpass our full year paid subscribers target and revenue from subscription increase an impressive 43% year over year. When people subscribe instead of just purchasing one course, They engage more, learn more, and realize better career outcomes. Bottom line, subscription customers are our best customers. That's why growing that piece of our business faster is our top priority, and we are seeing strong momentum across both segments. Our market position is built on a unique strategic foundation of two businesses. each independently compelling and highly complimentary. We combine the depth and stickiness of enterprise relationships with breadth and innovation velocity of a global consumer marketplace. On the enterprise side, companies are heavily invested in AI transformation. However, they are struggling to demonstrate ROI because many haven't developed the core workforce capabilities required to extract value from their investments. On the consumer side, we're addressing a different but complementary need. Individual learners must become AI native and require comprehensive support that leads to career advancement. In order to meet the needs of both organizations and individuals, a skill acceleration platform must deliver measurable outcomes. There are four critical pillars of Udemy's platform, which bring the best of AI and humans together to deliver impactful results. These include, first, skill acquisition through course collection tailored for a specific role. That's the traditional Udemy value prop. Skill mastery through hands-on practice using lab, workspace, and role-play experiences. Third, skill validation through assessment and certification. And fourth, skill amplification through human connection and expert guidance. Our integrated approach is transforming learning from a one-time event into a continuous skill-building engine that delivers strong ROI and learner outcomes. Our platform features AI learning path, AI assistant, AI-generated assessment, AI-assisted content creation, and MCP capabilities. Udemy enables organizations to build their own content and custom paths, develop their own AI role plays, and deliver just-in-time reskilling through integration with their existing LLM and their LMS and their LXP system, creating stickiness. We are in the midst of the most important workforce evolution in generations, with nearly 60% of global professionals needing new skills by 2030. Udemy is aiming to be the natural extension to traditional education, bridging the gap from what a learner already knows to the new skills the market demands. While LLMs excel at answering questions, Udemy excels at changing behaviors and building skills that drive real impact. We do this through structured learning journeys with measurable progress, human expertise, and community support that learner cannot get from AI alone. We are building an enterprise-grade workflow integration that embeds seamlessly into how organization actually operates that translates into business outcome and career development. Our comprehensive platform also enables organizations to manage their talent development strategies, track progress against their strategy, and validate company-wide skill proficiency with proprietary data to support meaningful outcomes. For consumers, we are embedding personalized learning experiences into subscription offerings to support career transformations. We will enable skill acquisition through engaging experiences and validation through assessments and other services that lead to mastery and ultimately better career outcomes. The future of work requires continuous skill development and AI makes that need more urgent, not less relevant. We are empowering all customers to stay ahead of rapidly evolving skills demand through adaptive, just-in-time learning. We are positioning Udemy to be an essential lifelong learning solution for professionals that drive career advancement with the structure, support, and validation that LLM alone cannot deliver. What is uniquely powerful about our platform is the combination of creating a more human-centric experience of our more than 85,000 expert instructors with AI. Instructors leverage our AI to develop assessment, labs, and role play that adapts in real time as each person is progressing. Innovations like our role play technology are opening entirely new markets in sales enablement and customer support by allowing them to build custom training experiences. Our AI can create realistic and bespoke practice environments tailored to our customers' business. This can include practicing a company sales methodology, rehearsing difficult client conversation, or working through unique compliance scenarios. Building on our proven success in skill acquisition and skill mastery, we are evolving the platform to deliver even more robust and personalized experiences that amplify skills development. This is about human connection that delivers through learning, comprehension, and retention. Instructors can now offer live individual coaching sessions to millions of learners around the world. Soon, we will be launching virtual instructor-led training to allow learners to participate in structured cohort-based experiences. At the same time, this gives instructors the ability to engage with groups of learners simultaneously. These offerings strengthen the stickiness of our platform by creating meaningful engagement for both instructors and learner. They also ensure learners receive the guidance and support that transform knowledge into real-world capabilities. One example of our four pillars in practice is Centific, a leader in advanced AI solution. Centific is leveraging Udemy to build workforce-fluent and collaboration with AI systems. By aligning training and strategic technologies like Snowflake, Microsoft, and NVIDIA with business priorities, Centrific significantly accelerated value creation. The results are impressive. Centrific reduced AI project onboarding time by 20%, increased AI-driven innovation by 40%, and enable content creation to 70% faster with generative AI. This skill-based approach underscores Centific's commitment to continuous learning, operational efficiency, and sustainable competitive advantage. We're evolving our consumer business from selling courses to enabling careers. Our subscription model creates ongoing relationships where invested in the learner's success, not just course completion. This aligns our business model with learner outcome. To do this effectively, we are launching career-focused subscription offering that validates learner with two specific outcomes, first certification journey and second career journey. Let me start first with certification journeys, which will help people prepare for professional exam with personalized learning path, practice test, and exam vouchers in order to achieve universally recognized skill validation. When learners embark on the Comp TS certification journey, which we launch in August, the average revenue per learner increased by 4x. Building on this success, we are partnering with Pearson to create a seamless certification journey for learners. On career journeys, we will structure paths for job readiness that integrates all four pillars through curated courses, hands-on project, and assessment tied to specific roles. Many of these will be co-branded with partners, directly connecting what skills people learn to career growth and higher earning potential. The majority of Udemy's learners come to the platform to advance their career. Our partnership with Indeed is already proving the strength of this alignment, with Learner showing materially higher consumer subscription start conversion rates. We are seeing an average monthly conversion rate of Indeed Job Seeker to subscription that's 16 times better than the Udemy average. From our career and certification journeys to our comprehensive platform capability, everything we're building is designed with one clear goal in mind, supporting the complex needs of our customers and the modern workforce. While AI democratize access to information, Udemy democratize access to career transformation. We are the platform where ambition meets achievement that combines human support with structured learning that delivers validated skill mastery. Whether it is an individual professional seeking to advance their career or an enterprise looking to future-proof their talent, Udemy bridges that critical gap between where skills are today and where they need to be tomorrow. In closing, we are leveraging AI to strengthen Udemy's competitive position and expand our market opportunity. The future of work requires continuous learning, and Udemy is building the infrastructure to power that transformation. The opportunity ahead of us is immense, and I'm incredibly excited about what we'll accomplish together. With that, I'll turn it over to Sarah.