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Udemy Backstage Summary - May 2024
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Chief Executive Officer (CEO) - Greg Brown
- Difficult macroeconomic environment persists.
- Revenue growth: 12% year-over-year, exceeding expectations - goal is to beat this throughout the remainder of the year.
- Udemy Business revenue: $118 million, 24% growth - not where we want it to be but still respectable growth.
- UB customers: over 16,000 on the platform, reflecting 12% year-over-year growth.
- Consumer [incl. Marketplace & Personal Plan] revenue: Down 2% - not ideal but we’ll talk about some of the ways we are going to address - but it was in line with our predictions.
- Large customer base (> 1,000 learners) trends: This group is spending 11% more year over year - this cohort of customers is expanding.
- Strategic Focus and Investments:
- Return consumer marketplace revenue to growth.
- Reaccelerate Udemy Business growth.
- Find new revenue streams.
- We are paying very close attention to Instructor sentiment around revenue.
- We are not where we want to be in regard to Instructor earning.
- We’re confident about the investments that we’re making.
- Our focus is to:
- We’ve brought on a new Chief Revenue Officer Rob Rosenthal to lead UB moving forward.
Chief Marketing Officer (CMO) - Genefa Murphy
- We’ve recently brought on SVP, Consumer Growth - Kaleb Miller - focused on how we make our consumer (Marketplace and Personal Plan) business successful.
- Why McLaren?
- Challenge: Need for a globally recognized brand for Udemy that is synonymous with performance and purpose.
- We assessed different advertising mediums including: TV ads/national and global streaming, large-scale 3rd party events, and Brand/Sport Partnerships.
- Analyzed sports partnerships for global brand awareness: considered Formula 1, Major League Soccer, and Indian Premier League.
- Chose F1 for its global reach. McLaren is #1 with GenZ, women, and top markets: North America, South America, Europe, and the Middle East.
- Plans for in-person activations and learning opportunities at events.
- We also wanted to pick a team that was looking to the future - McLaren has a deep commitment to sustainability and promoting diversity in motorsports.
- Achievements so far through 1 race and 1 event: generated significant pipeline revenue.
Vice President, Customer Success - Caoimhe Carlos
- We have many teams at Udemy who help us land new customers, prove our value as quickly as possible, and then expand the relationship to more learners.
- We have a really broad and diverse set of customers across the globe, but there is still so much potential to expand our learner licenses with those organizations.
- We’re working on tapping into that potential in multiple ways. One new way in 2024 is through our Strategic Accounts Program - a focused initiative that spans the entire business targeting our 300 largest global customers.
- Notable expansions in strategic accounts such as JPMorgan, Toyota, and IBM.
Chief Product Officer (CPO) - Prasad Raje
- Biggest instructor question: how Udemy will be using instructor content with AI
- Coding exercise generation, Practice test answer explanation, Instructor Q&A assistant
- Introducing Udemy’s Generative AI Principles to ensure that whatever GenAI tools we create moving forward are centered around these principles:
- Generative AI features are crucial for Udemy's mission of transforming lives through learning.
- Commitment to using AI thoughtfully and ensuring a win-win partnership.
- Current features do not involve model training or replacing instructors' content.
- Respect for intellectual property rights, allowing instructors to opt-out if you have concerns. Opting out will exclude content from AI features and training but not change other arrangements. Opting out means missing potential benefits of generative AI features.
- Potential new revenue streams with payouts to instructors.
- Assurance of detailed policy implications to be fully clarified by August.
- Opt-out window for instructors to manage content usage effectively.
- Commitment to work together transparently and align with market realities.
(Q&A) Question & Answer
- You said UB revenue is up, but that’s not what I’m seeing in my instructor revenue. From my conversations with other instructors, it is not what they’re seeing either. How can you explain the disconnect here? Where is the money you took from instructors through the revenue share change going?
- The company's revenue growth on both the UB and consumer side isn't meeting expectations yet, including instructor earnings. We are confident that current investments will deliver long-term growth.
- We are investing significantly in both the consumer marketplace and UB growth, particularly through product and brand improvements, as well as strategic additions like bringing Kaleb on board.
- We are closely monitoring growth trends within the industry and operational markets, focusing on international opportunities in countries like India and Brazil and channel relationships to maximize opportunities.
2. If an instructor chooses to opt their content out from use by AI products, how long will their content continue to be used before it is removed?
Related, if I opt into Udemy’s AI solutions, does that mean I’m giving up my own rights to (or ownership of) my content as “intellectual property” (IP)?
- Instructors can opt out of the GenAI pipelines during a specific period in late Q3 each year.
- After opting out, Udemy aims to remove the user's content from GenAI pipelines by the end of the year, although it often happens sooner due to automation.
- Opting into AI solutions does not mean giving up rights; users remain the copyright owners of their content.Opting in only grants the company the ability to use the user's content for AI features and capabilities.
3. Marketplace revenue has been declining. Is Udemy still investing to grow the marketplace? You hired Kaleb to focus on Consumer Growth – does that mean growing the marketplace?
- The term "consumer" includes the marketplace, direct-to-consumer individual learners, and personal plan subscriptions.
- Kaleb has recently joined Udemy and is exploring various strategies to attract more learners to the platform including partnerships, improving conversions, driving traffic, and optimizing existing traffic.
- The goal is to grow Udemy's marketplace, with Kaleb already proposing innovative ideas for pricing and partnerships, reflecting one of this year's strategic investments.
4. Udemy doesn’t have anyone with experience as an instructor on its executive team. How can you build a platform for instructors if you don’t have any instructors on your team?
Related, Udemy should consider creating an Advisory Board of Instructors to ensure our voices are heard in the decisions that are being made. Have you considered this?
- The executive team works closely with a dedicated instructor team focused on understanding and improving the instructor experience through surveys and community posts to gain comprehensive insights into instructors' experiences across various dimensions.
- The team prioritizes considering the perspectives of learners, instructors, and organizations in their decision-making process. Instructors act as advisors, and their feedback is critical for Udemy's strategies and plans.
- Continuous participation in events, community activities, and the IP Hub is encouraged to gather necessary information and insights from instructors.
5. You mentioned McLaren has the demographic you want to access with Gen Z, women, and global geographic representation.
First off, what does the current demographic of learners look like on MX & UB respectively? How do they differ?
Also, are you looking to recruit more instructors to the platform that also meets those demographics?
- Udemy caters to a wide range of learners, with marketplace users primarily being Gen Z, millennials, and boomers. Gen Z is entering the workforce, bringing different expectations about learning methods, heavily influenced by their digital native status.Gen Z values online, social, and influencer-driven learning experiences in both their personal and professional lives.
- The UB side has a slightly older demographic, reflecting the multi-generational workforce.
- Demographic trends vary by country, impacting the age range and learning preferences of users.
- The platform actively recruits instructors to match the diverse learner demographics, with around 5,000 new courses published monthly. Many new instructors come from outside the US, reflecting and supporting a diverse community.
6. You spoke a lot about how investing in current UB customers is important for Udemy, but can you share a bit more about how Udemy is driving new sales to the platform as well? Perhaps especially as it pertains to international markets?
- Significant investment is being made in the sales team, placing salespeople in all active regions.
- Around 60% of Udemy's revenue is currently generated from outside North America.
- Focus is on ensuring the right sales personnel are in place across all markets to drive revenue growth.
7. Learners are already asking chatGPT their own questions outside the Udemy platform. Udemy is spending a lot of money to add AI features, but are there concerns that AI will make Udemy irrelevant?
- ChatGPT and Google lack awareness of where learners are in their educational journey and the specific skills they need to build.
- The unique content created by expert instructors is not accessible through ChatGPT and Google, making dedicated platforms essential for effective upskilling.
8. Will Udemy create labs, practice questions, or courses using generative AI in competition with instructors?
- Labs and assessments are created separately and not available for instructors to create on the open market so we don’t think they compete with instructor content.
9. The Udemy app for instructors has not been able to keep pace with the improvements in the web app. I am still unable to get UB details in my app. The revenue reporting is still the same as it was a few years ago for the app.
- Currently, our focus for mobile app development efforts is the learners mobile app across all access points (e.g. Consumer and UB).
10. When will the Skill mapping and AI assistant be available on Udemy?
- Features are currently in alpha testing internally at Udemy.The features are planned to enter beta testing in the second half of the year.
- Selected customers will be included in the beta testing phase.Release to general availability (GA) depends on the feedback received from the beta testing cycle.
11. Will ChatBot decrease consumption of videos?
- The impact is currently unknown and will be assessed during the beta release.There is a trend towards more Q&A chat experiences.
- The chatbot will direct learners to specific lectures for deeper understanding.
- The company aims to learn and evolve based on feedback to ensure a good learner experience aligned with instructor expectations.
12. At the Melbourne and PowerUp events, 30 and 105 current UB customers were invited? Were there maybe some new signings thanks to inviting that crowd?
- These types of events help accelerate deals by engaging senior leaders and leveraging connections, particularly with existing pipeline accounts.
- We monitor the impact on the pipeline 30, 60, and 90 days post-event to measure acceleration or increase in opportunities.
13. Why is Udemy not partnering with medium/large YT creators to promote Udemy as a learning platform and/or the personal plan? I see a lot of channels promoting Skillshare and Brilliant. People are already on YT learning, so the transition seems logical.
- Largest marketing spend is on paid search, followed by Facebook, Instagram, Meta, and affiliate marketing; YouTube follows.
- YouTube is used for top of funnel ads, including banner ads, to increase brand visibility.
- Taking a measured approach to YouTube investment to accurately track ROI and impact on marketplace transactions and Udemy Business pipeline.
Unanswered Q&A from the event:
How do you measure the ROI of the McLaren deal?
We measure the ROI of the McLaren partnershiping in a few ways:
- Firstly for our race activations, we measure the pipeline and ARR associated with the attendees at the event whether those are customers and or prospects - we then track that pipeline to see if there is a meaningful change at periodic points post-event. In addition to this, we also track the contacts that we are able to engage with as a result of a race activation. Enhancing our sphere of influence within an account can help us secure new opportunities, protect existing relationships, improve win rates, and reduce churn.
- In addition, for digital activations, we use UTMs to track the leads and subsequent opportunities derived from the activities.
- We also correlate activation moments with other metrics, such as site traffic. For certain activities, such as social media, we look at the engagement metrics and share of voice associated with McLaren-specific posts / PR elements. From that, we can calculate the estimated cost that the same amount of engagement and/or media coverage would have cost using traditional CPC or paid media engagements.
- These are just some of the examples of how we are measuring the ROI of the McLaren partnership.
There is always an element of art and science in marketing ROI but we are putting in place the right parameters to track spend and return as best possible in the systems we have available and we monitor ROI on a regular basis.
Are there any concrete plans to create brand awareness for the Spanish market already?
Udemy has always invested in several markets including Spain, Mexico and Brazil, and are planning a larger full-funnel push in Brazil later this year.
What are the strategies that Udemy is making to promote Spanish courses so that English / Spanish will have a better balance? What investments & strategies are you taking to capture this market?
Udemy runs Spanish language advertising campaigns in Spanish-speaking countries on advertising platforms like Meta and Google. Our goal is to present the most relevant content to our target audience, taking into account their language preferences.
If brand awareness is high in India and Brazil, what steps are being taken to convert this awareness to revenue?
The steps we take to convert awareness into revenue in Brazil and India include running advertising campaigns across multiple ad platforms, running onsite promotions, investing in marketing infrastructure to improve personalized recommendations for our learners, investing in conversion rate optimization, and investing in improving the learning experience. Ultimately we are making consistent efforts to improve the learning experience for our customers.
$9.99 in 2019 is the equivalent of $11.93 in 2023. Are there any plans to raise the lowest priced courses to take inflation into account?
Raising the floor price isn't currently under consideration, but we have raised our overall price levels considerably since 2019 to account for inflation.