Udemy’s 2021: Half a Billion Revenue, B2B Revenue Soars, B2C Plateaus
Udemy’s 10K recaps the company’s year, from its finances to the latest developments on an ongoing lawsuit.
As I did with 2U and Coursera, I read through Udemy’s annual report (also known as a Form 10-K) to learn more about the company’s 2021.
The annual report lets us peek into some aspects of Udemy that might not be found in their quarterly updates or marketing materials.
This analysis by Class Central builds on my previous analysis of Udemy’s IPO prospectus as well as my analysis of Udemy’s massive catalog.
Let’s jump straight into details like revenue breakdown, instructor revenue share, monthly average buyers, lawsuit update, headcount growth, and startup investment.
Udemy Revenues
| 2019 | 2020 | 2021 | |
| Total | $276.3m | $429.9m | $515.7m |
| Consumer | $225.5m | $326.4m | $328.7m |
| Business | $50.9m | $103.4m | $187.0m |
| Net Loss | ($69.7m) | ($77.6m) | ($80.03m) |
In 2021, Udemy revenues grew by 21% to $515.7m. The majority of the growth came from Udemy Business (UB), which grew by 81%. UB now accounts for 36% of Udemy’s revenue, compared to 24% in 2020.
This trend is similar to what we saw for Coursera.
The Consumer segment, on the other hand, grew by just 1%.
The increase in Consumer revenue is primarily due to a $10.9 million increase in revenue recognized in the period deferred from course purchases in the prior fiscal year, partially offset by a 7% decrease in monthly average buyers.
For its 2022 outlook, Udemy projects that UB will grow to $300–310m while Consumer will at best basically remain the same with projections in the $310–$330m range.
Already in Q4 2021, UB accounted for 42% Udemy’s revenues and will possibly eclipse Consumer in 2022.
| 2021 | 2020 | 2019 | |
| North America | $199,268 | $168,612 | $113,604 |
| Europe, Middle East, Africa | $168,612 | $139,005 | $88,637 |
| Asia Pacific | $107,924 | $85,847 | $47,047 |
| Latin America | $39,853 | $36,435 | $27,039 |
| Total Revenue | $515,657 | $429,899 | $276,327 |
61% of Udemy’s revenue originates outside North America and Udemy estimates that the majority of its instructors are based outside the US.
No single country besides the US represents 10% or more of the company’s total revenue.
Decrease in Monthly Average Buyers
On average, every month, 1.345 million learners bought a course on Udemy in 2021, down from 1.439 million in 2020.
Similarly to 2U, Udemy enrollments dropped from 1.411 to 1.316 million in Q2 2021. This further gives weight to my theory that Google algorithm might be at the heart of this drop in numbers.
| Monthly Avg Buyers | Avg Revenue per Buyer | |
| 2021 | 1.345m | $20.4 |
| 2020 | 1.439m | $18.9 |
| 2019 | 0.962m | $19.5 |
Another reason for the decline in Monthly Avg Buyers may be the increase in the price of Udemy’s courses. I suspect we will see this trend continue in 2022.
Instructor Revenue Share
One of the trends that I noticed after reading the annual reports of Coursera and Udemy is that platforms are keeping a larger proportion of the revenue.
In other words, an increase in revenue doesn’t necessarily translate to a similar increase in payments to content creators.
In Coursera’s case, I discovered that even though the company’s Consumer revenue increased by $53.3 million in 2021, the payments to Content Creators for the Consumer segment declined.
In Udemy’s case, a 21% increase in revenue resulted in a 9.6% increase in instructor earnings. If both rates were similar, Udemy instructors would have cumulatively made $18 million more.
In 2021, Udemy instructors earned $176.9 million, up from $161.4 million a year before.
$10 Million Investment
In their annual report, Udemy mentioned that in October 2021, they made a “strategic investment” of $10 million in another online education platform.
They didn’t mention it by name, but a couple of weeks ago my colleague @ruima, who reports about the Chinese online education ecosystem for Class Central, shared an article about Udemy’s investment in the Series C for Sanjieke, which is also known as “China’s Udemy”.
Lawsuit Update
Udemy’s annual report also touched on the latest developments in a class action lawsuit filed against the company in mid 2021. The lawsuit alleges that Udemy engaged in unfair competition through misleading discounts. The report’s update signals compromise, with both parties currently favoring arbitration over court, for the time being at least.
Here’s how the report puts it:
“On August 23, 2021, a putative class action complaint captioned Williams v. Udemy, Inc., Case No. 3:21-CV-06489, was filed against us in the U.S. District Court for the Northern District of California alleging violations of California’s unfair competition and false advertising statutes as well as the California Consumer Legal Remedies Act in connection with our pricing practices. The complaint seeks injunctive relief, unspecified damages, restitution and disgorgement of profits. On February 23, 2022, the court granted Udemy’s motion and entered an order staying litigation pending arbitration. The parties are engaged in efforts to resolve this dispute, although, if such efforts fail, we intend to vigorously defend ourselves in this matter.”
Udemy Headcount
As of December 31, 2021, Udemy had 1,238 full-time employees, up from 1,031 employees in June 2021, as reported in Udemy’s S-1, the company’s IPO filing.
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