Udemy slumps after poor guidance; Citi still bullish in the long term

investing.com:

Udemy (UDMY) saw its shares tumble more than 10% in premarket trading Thursday after the company issued disappointing revenue guidance for FQ1 and the full fiscal 2024.

For the fiscal Q4 2023, the education technology developer posted earnings per share (EPS) of $0.02, beating the loss per share of $0.02 anticipated by analysts. The company's quarterly revenue reached $189.5 million, also above the consensus forecast of $186.04 million.

The revenue from Udemy's Enterprise segment, also known as Udemy Business, saw a 27% increase from the previous year, amounting to $114.7 million. This growth includes a 2 percentage point negative impact from year-over-year foreign exchange rate fluctuations.

Udemy Business's Annual Recurring Revenue (ARR) saw a 25% YoY increase, reaching $466.0 million.

Moreover, the Board of Directors has authorized a share buyback program worth up to $100 million.

Looking ahead to the March quarter, Udemy has set its revenue expectations between $193 million and $196 million, missing the consensus projection of 200.2 million.

The company also forecasts a breakeven adjusted EBITDA Margin for the same period.

For the entire year, Udemy projects its revenue to be between $795 million and $810 million, which falls short of Wall Street's expectation of $828.59 million.

In the aftermath of the release, Citi analysts said the FQ4 results “are likely to be received cautiously” among investors.

Although the quarterly numbers were solid, the weaker-than-expected guidance for 2024 is likely to weigh on both consensus estimates and sentiment, they said.

Still, the broker remains bullish in the long run.

“Net/net we still expect the shares to be down but for LT investors this could be an opportunity.”