How does Udemy make money?

Most revenue comes from individuals buying courses, but Udemy's enterprise leg is growing quickly

Online education marketplace Udemy was the first winner of our Vator Splash competition all the way back in 2010. 

The company, who's name is a combination of "you" and "academy," hence its original tagline, "academy of you," allows instructors to build online courses with videos, PowerPoint presentations, PDFs, audio, ZIP files and live classes. Meanwhile, courses on the platform can be accessed either through its direct-to-consumer offerings, or through the company's enterprise platform, Udemy Business (UB).

There are currently over 49 million learners on the platform, over 64,000 instructors, and over 185,000 courses in 75 languages. Since inception, more than 73 million users have registered with Udemy. It also has over 8,600 UB customers from around the global, including 42 of the Fortune 100.  

"Our mission is to create new possibilities for people and organizations everywhere by connecting them to the knowledge and skills they need to succeed in a changing world. Our marketplace platform, with thousands of up-to-date courses in dozens of languages, provides the tools that learners, instructors, and organizations need to achieve their goals and reach their full potential," the company wrote in its S-1 filing with the SEC. 

Udemy makes the majority of its revenue on the consumer side, at the moment, but its the enterprise side of the business that's growing quickly.

On the consumer end, revenue comes from enrollment fees paid by the customer for individual courses. The instructors set the price of their course, so they can be as low as $19.99 or as high as $199.99, and once the student has completed it, they get lifetime access to that course, even if the instructor later unpublishes the course.

The company also offers subscription plans as well, including Udemy Pro, in which designed specifically to help students accomplish their IT certification goals. When subscribed to Udemy Pro, which costs $19.99 a month, they get unlimited access to the subscription’s content. There is also the Personal Plan, which is a general subscription with access to thousands of courses in hundreds of course topics, including IT, web development, soft skills, business, marketing and design. 

"Consumer learners come to Udemy for relevant, affordable, and high-quality content. Our global platform helps address the learning objectives of over 41 million consumer learners, which include reskilling or upskilling, enhancing soft skills, and personal enhancement," the company wrote.

"Consumer learners can purchase lifetime access to individual courses on our online platform or they can subscribe to a consumer subscription offering. We analyze data gathered on our platform to better determine our learners’ most relevant needs, helping us match them with relevant courses and learning paths, driving higher satisfaction."

In 2021, revenue from Udemy's consumer arm totaled $331.2 million, or 64% of the total $518.2 total the company brought in for the year. That represented a 1% increase from 2020. 

On the Udemy Business side, companies, non-profit organizations and government agencies buy subscriptions for their members and employees so they can have access to Udemy's course catalog, as well as additional features and functionalities like single sign-on, analytics, and strategic learning path management functionality. Subscription fees are primarily based on the number of license seats.  

"Out of our platform’s deep content catalog, we have curated over 11,000 of the most highly engaging and relevant courses, purposely selected to meet the needs and standards of these companies, organizations and agencies. We undergo a rigorous selection process across a wide set of criteria in determining the courses that will be offered as part of our UB offerings, including learner feedback and rating, relevancy of topic covered, quality of the content, and instructor experience," wrote Udemy.

In 2021, Udemy Business brought in $187.0 million, up 81% year over year, for 36% of total revenue.

While the majority of revenue is still coming from the consumer side, in the coming year, the company is expecting nearly an even split: it's projecting little to no growth for consumer revenue, with expectations of revenue between $310 and $330 million, while Udemy Business is expected to grow another 70% in the coming year, for between $300 and $310 million in 2022. 

Udemy went public in October 2021, raising $412 million. It's now trading at $13.74 a share, down 52% from its $29 IPO price. 

(Image source: udemy.com)