Udemy (UDMY) Q1 2026 earnings summary

Executive summary

• Revenue for Q1 2026 was $191.4 million, down 4% year-over-year, driven by a 19% decline in Consumer segment revenue, partially offset by a 4% increase in Enterprise segment revenue.

• Net loss increased to $12.6 million from $1.8 million in Q1 2025, reflecting higher operating expenses and acquisition-related costs.

• The company is in the process of merging with Coursera in an all-stock transaction, with closing expected in the second half of 2026.

Financial highlights

• Gross margin improved to 68% from 65% year-over-year, primarily due to a reduction in instructor revenue share and a shift toward higher-margin Enterprise and subscription offerings.

• Adjusted EBITDA was $12.5 million (7% margin), down from $21.1 million (11% margin) in Q1 2025.

• Free cash flow increased to $10.8 million from $7.1 million year-over-year, driven by higher cash from operations and lower capital expenditures.

• Cash, cash equivalents, and restricted cash totaled $253.6 million, with $105.3 million in marketable securities and $200 million available under a revolving credit facility.

Outlook and guidance

• The company expects continued growth in Enterprise segment revenue and subscription offerings, which should further improve gross margins.

• Operational efficiency initiatives are anticipated to reduce operating expenses as a percentage of revenue over time.

• The pending merger with Coursera is expected to create synergies and expand market reach, subject to regulatory and shareholder approvals.