Udemy, Inc. (UDMY) Earnings Call Transcript & Summary

I'm Nat Schindler, and I am very happy to have Sarah Blanchard, CFO of Udemy. Sarah, Udemy is a relatively new IPO. Just to make sure everybody knows, can you just do a basic introduction of yourself and the company, and then we'll go from there.

You got it. First of all, thanks for having me. It's great to be here. Sarah Blanchard, I joined Udemy about 1.5 years ago, I guess, a little less than 1.5 years ago. And what Udemy is, is it's a really flexible learning platform that allows learners and organizations across the globe to get the skills that they need. And what's really different about our platform is we were founded as a marketplace where anyone anywhere could put content onto our platform, and anyone anywhere could consume that content. And then what we did was all of those eyeballs helped us find the really great content. So the teachers that were really engaging and that had amazing courses. And about 6 years ago, we packaged that up and we started selling it to organizations. And so we really are this global, affordable, accessible skills acquisition platform. We have a -- our enterprise business is $280 million in revenue, growing at 80%. And I think it really speaks to the symbiotic nature of our consumer business and our enterprise business.

Great. And help put this into context for people. I mean I can go onto YouTube and there's probably a million how-to videos to learn something. And then there are guys like Coursera, who have courses. Where do you fit in the spectrum? And how do you differentiate from that group?

Yes. So I think one of the things that really differentiates us is our incentive model for the creators. So we use a take rate model where we share in the revenue across our platform. And so our cost somewhere in the middle closer to Coursera. YouTube is more of a lead gen for us where our instructors will put a portion of the course, and then send learners over to our platform. But our average courses are kind of 10 to 30 hours in length. They run the gamut of everything from how to learn Python, how to code, marketing, finance, you name it, there is even horseback riding on the platform. So it is -- we have 195,000 courses -- we have 65,000 instructors. We're in 75 different languages, 13 of which we've packaged and we have local language packages for our Udemy Business. And so I would call us our content, while we aren't associated with higher education. These are experts in their fields, they're practitioners and the content tends to be exceedingly high from a quality perspective. And what we hear time and again from our customers is that the engagement, the usage on our platform is significantly higher than the competitors. We have one large multinational -- we did a 12-month wall-to-wall pilot against one of our main competitors, and we have 9x the usage on our platform. And so I think that just speaks to the quality of the courses and the content that comes through because we have millions of eyeballs on the consumer side, rating the courses, providing feedback through Q&A and then because we've aligned our incentives with instructors, they are incentivized to upgrade and to continue to publish courses. So it's a very different business model than what's out there.

So then the instructors, the ones that rise the top in your marketplace, they're not necessarily someone with a degree or the whatever. They just happen to be good at selling it or teaching it?

They're really good at teaching it. They know how to do it and they're really good at teaching it. And I think that doesn't mean that there aren't -- we certainly have top university professors that have courses on our platform, but it's definitely not a requirement. We really are tactical skills acquisition and often the best place to learn that from people who have that skill and do it and know how to teach it, and our marketplace allows us to find that. Those people, I call it harnessing the brilliance of the world, like it really allows us to find those people that can help learners get to where they're going.

And as you look at those 195,000 courses, there's everything on there, I could -- I've seen everything on there. So you've -- and in any marketplace idea where you could put anything up, you're going to get stuff that is valuable to businesses and not valuable business. How does the -- do your business clients use that? And I mean, I'm sure all of them say, "Yes, I want my developers learning Python or learning AWS database work. But do their employees also get benefit from the other stuff on their -- the horseback-riding classes, as you mentioned. So how does that -- how do they see the benefit from that?

Yes. So I think a few things. I think, first of all, I think before COVID, enterprises and organizations actually really didn't want as much of the personal development as a part of Udemy Business. But then once COVID happened, actually, they were really asking for us to bring more and more of that on to our platform. So the usage for personal development within the enterprise is not as high as the technology courses, the business courses, the soft skill courses, but certainly, they are using everything. And we really listen to our organizations that we partner with, what is it that they're looking for? What do they need? And really anything they need, it's sitting there on our consumer marketplace. And so as long as it meets -- we're very strict about how high quality the course has to be, how engaging the instructor is with the Q&A and with the learners to make sure that they're being really responsive. And if they meet those qualifications, we'll pull it into our Udemy Business offering.

Okay. So your Udemy consumer business, which you've had for years has become this consolidator of who's good, who's a good instructor that you can then sell. How do you get supply for that business? How did you get up to the level of content there that you have to able to feed out and find who's good?

Yes. So I think -- we think of it as like our content generation engine. And I think what -- many years before I joined Udemy, what was really smart was they started in technology so Eren Bali founded the company, launched in technology first, found some people who knew how to and certainly themselves like teach some of these skills, put some courses on and within a very short period of time had 1 million learners on the platform. And I think when you have that kind of scale, then you -- it starts becoming this self-feeding that flywheel starts going. And so when that happened in English, then what we'd see is in different countries the English courses would start gaining popularity and that would start taking off, then we would seize the market with someone who would go in and help get the local language content started. We knew which courses were most important and which ones you needed to start with. And so we would either partner with English instructors and have them partner with foreign language individuals who could help teach that course or just find people to bring it on themselves. Once you get a few hundred courses, that flywheel just takes off and we don't have to touch it anymore. So it's very low lift. Right now, we do -- we have a what we call a gap strategy, where every once in a while, there'll be something that the marketplace isn't bringing us. And to give you an idea of scale, it might be 300 to 400 courses a year out of the 195,000 we have, where the marketplace doesn't get it itself, and we'll reach out to an instructor that's in an adjacent spot. We'll say, hey, there's demand here. There isn't supply, do you mind building a course there? And because we've aligned incentives and because we're really close partners with our instructors, they do that and then those courses take off and they get -- they monetize it.

And do you have to spend anything to do that? Or is it simply just say, "Hey, this is an opening, you should go fill it."

Usually, we don't have to spend anything. So it's pretty rare that we have to spend something to get something started. It really has taken off. And the creator economy, it's phenomenal. There are people who just -- they want to have side businesses. They want to have a business that is their own. And so there's actually a lot of people looking for a place to do things like this, and they find Udemy.

Great. Now let's go a little bit more deeper into Udemy Business. I've kind of seen that as your real -- the golden goose here. I mean it's growing at 80%.

Yes.

It's holding that growth. COVID, no COVID, doesn't seem to make any difference whatsoever. What are the -- do you walk through the economics of that model and how you get it towards real profitability?

So right now, we're still in expansion mode from a go-to-market perspective, we launched first in North America, then we started building EMEA, APAC, just starting in LatAm. But in all of those regions, we are still expanding because what we're seeing is like that top of the funnel and that pipeline is just massive and continues to grow. And we can talk about the reasons why I think that's happening. But when you think about profitability and how do you get to profitability, it's a few things. One is getting those go-to-market numbers to be really productive. So making sure that you have great sales management, great sales processes, great sales enablement, they're ramping according to their progressive quota. And as a larger portion of your go-to-market team is ramped and they're delivering that quota, then you're going to start seeing that from a bottom line perspective. The other thing is we were a one-trick pony. We had Udemy Business that we were selling. Well, last year, at the back half of the year, we launched Udemy Business Pro, which is, we call it, immersive learning experiences. So it's workspaces, labs and assessments. First built out -- we first built out one technology vertical. Now we're expanding to other technology verticals, then we'll expand outside of technology. And then we acquired a company in Q3 called CorpU, which is a cohort-based leadership development company. And so we'll have those sales team that as a whole is becoming more and more productive because we have less new people as a percentage and they'll be selling more than one product.

All right. Let's look a little bit in the size of the market for UB? You've talked about a $200 billion online market -- online learning market. Okay. How much of that is UB? And really where -- what are the customers that you really see that benefit from this?

Yes. One of the things that I found most interesting since I've been a part of Udemy is how broad-based are the organizations that we can partner with. So we are getting traction across industries, technology, professional services and financial services are kind of our largest, but it is literally every industry. We have customers that are 5 people, 5 employees. We have customers that are hundreds of thousands. It is any size and really it's completely global. So -- we just -- we've had a partnership with Benesse in Japan for a few years. It's one of our fastest-growing markets that's been great, but we just signed a partnership with a company in Korea, and we're launching there and a partnership with a company in China. And so building out those local language collections, which again is like very inexpensive for us, and we'll be going there. So it really -- it's amazing how broad-based this content is and how applicable it is to so many different organizations in so many countries, so many industries at so many different sizes.

And how many of these -- how many of your organizations that you're selling to are taking it and rolling it out to a small group of a developer group, might be a small team? And how many are you doing it at the HR level are saying, "I want my whole organization to have this as this will stop -- this will help everybody marketing through finance to tech?

Yes. So right now, we have a land and expand model. We want to go in any way we can get in. We're in only 10% of the seats in the companies we work with. And right now, it's about 50-50. It used to be heavier when we would go in through the CTO organization first. But now it is about equally split. And many times, even the CHROs, the learning development, Chief Learning Officers, they will want to launch with an organization or a few organizations. We love either launching and proving ourselves. We love doing pilots against the competition. One of our strengths is how engaging this platform is, how high the satisfaction is amongst the employee learners. And so it kind of runs the gamut, but there's a lot of expansion opportunity. We have many, many large-scale, wall-to-wall opportunities with high activation rates. So there's a lot of runway for us right now even within existing customers.

Well, let's reflect through that sales cycle. Start from the sales guy making a call and how it works to getting the UB customer. Do they -- if they come in, as you said, you're at 10% of penetration within those organizations. Is it a test and learn usually? And how long is that process?

It can be pretty fast, actually faster than we expect sometimes from an expansion perspective, but I'll give you an example of EY. So EY started with us in 2017 with 24 licenses. And by 2018, they had 100,000 licenses and the following year, 200,000 licenses. And then they added another 10,000 for some of their alumni. Then they asked us to do badging within their organization. So anything from people learning decision science, AI, leadership skills, you sort of name it. And then -- now they have a program, they have some masters programs that they're launching and Udemy -- they've asked Udemy to be a part of that. So the land-and-expand motion, we focus on get the initial either pilot or contract done, get in there and prove it, because through the engagement, through the employee satisfaction, that expand motion can happen pretty quickly.

So if you look at right now, your growth, I guess you're doing about 80% year-over-year growth in UB. How much of that is expanding within the enterprises? And how much is new logos?

Both. So we added about 1,000 logos this last quarter. We added $40 million in ARR. We are -- our net dollar retention is 120% overall, 127% for organizations that have more than 1,000 employees. So lots of new organizations and lots of expansion within existing.

All right. So obviously, in this hyper growth mode, you're not losing many customers at this point, everybody does to some degree. What -- why would someone move off the platform or pilot and not get further and expand?

Yes. So a few things. One is like an acquisition. Acquisitions happen and then sometimes, they're not focused on learning and development or whatever they're doing. Sometimes an executive sponsor will change and then executive sponsor will have a history with one of our competitors that they move them to. Those tend to be sort of the biggest reasons that we would lose someone. For the most part, we get in there, we show the value. Customers love us, employees love us. And so I think our net dollar retention sort of speaks to that. We do have a large like self-service and small to midsized business. And so you'll see a little bit higher churn there. I think that's just a little more natural when you have customers that you're not touching.

And do you -- going back to that $200 billion market opportunity, I know that's existing online education. How much of -- what do you really think the opportunity is if you look through all the organizations, I mean why wouldn't most of the Fortune 500 or Fortune 5000 want to have something like this? If the skills acquisition helps retention and helps improve skills for your employees.

Yes. And meet their business outcomes?

Yes.

I think one thing that we are overcoming is maybe historically some of those solutions haven't had the kind of engagement that we're seeing. And the outcomes like people are looking for outcomes, and that's what we're working hard to deliver. But I think that companies who want to get ahead and stay ahead, that growth mindset, we all know as individuals that having a growth mindset tends to lead to success in life, I think it's the same thing for organizations. And so the organizations that are earlier on the adoption curve of really thinking about that, thinking about their employees and thinking about how online skills acquisition can be so much more cost efficient and measurable than these in-person -- like historical in-person classes. I think it's kind of foolish to not think about this as a huge part of you achieving your business outcomes that you're looking to achieve.

When you sell -- and this is -- I got to think that they -- you have a different sales process. As you've said, you've moved more and more away from CTOs and more, and more to organizations -- and more, and more to HR organizations because of the value. How much is the great resignation and other concerns about retention, how has that affected how people are looking at that?

Yes. I think there's a few societal tailwinds that are kind of in our favor. I think the great resignation is one. So it's about employee retention. I think that the future of work where things used to be in person, and now they're not and how do you keep your population engaged in this remote, flexible, whatever you want to call an environment now is really important. I think the move towards skills-based is another critical trend that we're really well suited to take advantage of. There was a study that came out by HBR that showed that a huge portion of tech jobs now, job descriptions are actually not even requiring degrees anymore. And so when you think about where society is going, we're really at the sweet spot of a lot of these. And we put out a study a few months ago that we had an organization that launched Udemy and a few other locations and none of the others, and they had a 38% decrease in attrition where Udemy had been launched. And so the great resignation is one piece of, hey, how do you keep your employees? How you engage them? And how do you keep them focused on delivering those business outcomes? I think at the same time, digital transformation. The only way to sort of keep up with the pace of innovation and the acceleration in technology innovation, actually is to have this marketplace. Like a publisher model cannot keep up with how fast technology is changing, our marketplace keeps up with it naturally. So there's a lot of, I think, trends all going in the directions that are helping us feel really good about this long-term durable high growth that we think we're going to see in Udemy Business.

That's great. Well, let's turn a little bit to Udemy consumer, which, as you said, is your content generation engine.

Yes.

Pre-COVID, you were running, what, very low teens growth in that business as it spiked up and then it spiked like crazy [ during COVID ]. You've had some tough comps and you came out your -- it's not come back as far as we -- as people thought, but it's sitting in the right around kind of flattish or a little down right now. And I think you quoted Zoom fatigue as a potential. But what's going on there? And how does it come out of this COVID weirdness.

Yes. So I'm not sure we're out of the COVID weirdness yet. I think that many of us can agree that like Zoom fatigue is real when we do studies that's happening. But I think there's some other factors that are also playing into top line. So you'll hear all the consumer tech -- or the consumer bellwethers right now, they're talking about this top of the funnel conversion suppression. We're seeing that as well. So our traffic is really stable. It's maintained stability. But what we're seeing is a little more suppression top of the funnel in EMEA. I think not surprising, given the conflict that's going on there. Actually, APAC is doing really well from a conversion perspective, and North America is kind of a little bit in the middle. So I think visibility in the second half is maybe we don't have as much confidence in the second half as we would have maybe had a quarter ago, given what's happened from a macro perspective, but it's reasonably stable. What's most important for us is that, that content generation engine is healthy. We added 4,000 instructors this last quarter. We're still publishing 5,000 courses a month. We added 850 local language courses Udemy Business. And so really, it's about balancing like being really thoughtful about your marketing spend and writing out what right now is a tough consumer environment. And at the same time, we're investing in things on our platform that are really applicable to Udemy Business, and really applicable to the consumer side and driving an increased LTV on the consumer side through our subscription offering, which is in beta testing. So the consumer business, I think it's tough right now. Traffic remains strong. I don't think we can really change consumer sentiment and buying behavior and just kind of remains to see what happens with the macro. Probably some countercyclicality, we'll see, if unemployment raises.

Given that the Udemy consumer is the content creation engine. It runs at a pretty nice gross margin still with 55%...

50s, yes.

Yes, 55%-ish. So a little less than Udemy Business but still quite good. But would you care if that business was never profitable? If it ran breakeven and was just a funnel for content, would it make a difference?

No, that would be fantastic, and would continue to feed Udemy Business, we would be okay. I think we can do better than that because our innovation applies to both, but that can run at breakeven, and it is feeding -- it's not just feeding content, it's feeding leads over to Udemy Business. And it is providing that filtering mechanism to make sure that everything we put in front of enterprises is really high-quality content and then building out that learning platform on top. So that could run at breakeven, and we'd be happy.

Going back on the quality side. Quality flips to the top. This is a great concept for doing this. But some of your competitors might say, but we're -- we have name recognition, we have certification. We have all the trappings of higher education or other things that give them this way to be "higher quality". How do you handle the certifications and other parts that seen -- that both companies and consumers are looking for?

Yes. So I think some companies and consumers will always be looking for that name recognition of some of the higher education institutes that are like sit at the top of the pyramid. I would say a few things. Number one, I think many of us probably went to some of these fantastic higher education, and we had some awesome professors, and we had some professors that weren't as great. And our marketplace allows us to filter out the ones that aren't as great and find the ones who are really great online teaching. But certainly, like I think there's a place for people who want to be associated with that higher education. I think what's more important is kind of what I would call the certifications and the badging. And we've always had some of our largest courses from a purchasing and usage perspective are actually certification courses. It's AWS and where people come to our platform to learn those skills and then they take the certifications elsewhere. It's something we're thinking about. I think from a badging perspective, we spoke about EY and they're having -- they wanted Udemy to do their badging for them. We are getting asked by our enterprises more and more. Please roll out a Udemy badging program. And I think that speaks to the quality of our content and the faith that they have in our solution and what it means. And again, that filtering mechanism of the marketplace, I think, is the reason that, that's been so successful.

So will Udemy badging solution, will that have the weight of a Microsoft certification or an AWS certified? Is it going to be able to carry those much at that point?

I think it could. Over time, I don't think that will happen off the bat. What I will say is there are a lot of people who take the branded certification courses and can't pass a cert and they come to the Udemy course and then they get -- they pass. So I think it's up to us to kind of prove ourselves there. But certainly, like from a broad-based perspective, the amount and the quality and the variety of courses we have, I think there's something that could be very powerful about the Udemy badging program.

Makes a lot of sense. I want to open up to anyone who wants to ask questions to Sarah, just please jump in if you do. If not, I want -- I'll keep going. You're a CFO. I'm going to get a little more CFO-ey.

We do have a...

Oh, we do. Sorry.

It's a great model [ with respect to ] your consumers. So obviously, some of your content creators are going to generate lots of revenue. You have a competitor who just charges [ a big screen ]. What prevents the best of the best, the cream from churning out of your system into something [indiscernible]?

Scale. I think that we, A, our incentives are completely aligned. Our take rate model is pretty generous, and we have such scale that our top instructors are making a lot of money. We've spent $160 million in the start of payments last year. We had 19 people made over $1 million. So I think the model is the reason that, that's been so successful. And if you think about we've got the top instructors the person who's #1 in their category. But we also have #2, #3, #4. There's a lot of great instructors in each of our critical verticals of which there are many, just sort of waiting. So even if they got 1 or 2, I think we're still going to be in really good shape. But we don't really tend to lose the top instructors at all.

Now, that's an interesting question. I mean you got -- because the cream folks at the top, the best guys get the -- these guys making $1 million or more in the category. He's the best, he's great. Why would the second even try to compete? Will he get any -- why would he get viewed? Why would someone go to him or her?

People have different ways they like to learn. They have -- different people speak to them differently. So it's not like the #2 is only making $10. The #2 is still making a lot of money. And many of us have had friends who enjoyed a professor that we didn't or vice versa. That happens online as well. You find the instructors that speak to you that you learn from the best. And so while it's competitive, there's still a lot of room to make a lot of money even if you're not in the #1 spot.

And so how deep would you say you go within categories? Or is it -- do they differentiate and become more specialized, if they realize they're not showing up there, they need to move off and hit a different area of this topic?

Yes, it's super interesting. So we will sometimes see someone who has been tapping at a category so across a number of like smaller verticals within a category. And then someone will creep up and be really good in one of the verticals, and then they'll start losing market share. And so that healthy competition actually will feed both of them. But again, at this scale, there's kind of enough to go around. But certainly, like it's going to be hard to knock off the #1. If the #1 is upgrading their courses, they're keeping up with what's happening, they're responding to feedback like it's going to be hard to do that. Yes.

Anybody else want to get any questions? Well, Sarah, as I look at this business, right now, you said you're going to get to more than 50% UB this year.

Yes, Q3.

And by Q3, yes. On a bookings basis, and -- or even on a cash basis, you've got to be long since there because you're selling annuals and you're recording 1.5 months of growth in a given quarter or 3 months of each customer in a given quarter.

Annuals and multiyear, I would say. Our percentage of multiyear deals has just been expanding very rapidly over the past few years.

So your [ loan ] sits there on a bookings base. You're way bigger in UB than you are in -- you couldn't be if you're growing 80% on a quarterly basis. So on a revenue basis. When does that push to profitability? And what kind of real margins can you see given that you're at, what, 65% gross margin on the UB business?

Yes. So a few things. profitability, probably a few years out again because we're still expanding our go-to-market team. We've increased investment in that lowering platform that I spoke about that sits on the content engine. And I think that's really important for us. And sort of we are launching things like skills, graphs and competencies and taking this phenomenal content that we have and helping people reach their career goals in a very different way than they have historically, and that takes some investment. We're also investing in some of the stuff we're doing around the personalization of the AI aspect as we build out career paths within Udemy Business and within our consumer subscriptions. And so I think overall margins in the long run, kind of the 15% to 20% EBITDA margins because we are very protective of the take rate that we share with our instructors. Our secret sauce are these phenomenal people that come on and teach these courses. And so with the 37% take rate on the consumer transactional business with 25% in Udemy Business and 25% on consumer subscription, our gross margin is going to grow over time as the business mix shifts. And then what we'll be building is additional higher-margin products, more specifically on the UB side, but also consumer. That will drive gross margin. But I don't think we're going to be at 85%, 90% gross margin business. That's not who we are because that instructor take rate is so important to why we're so successful.

So if I had to put in context, you got a 15% to 20% EBITDA margin on a business that is roughly 65.

I think 65 to 70. So it would be adding...

65 to 70, which is roughly 20 points below a software company, which would say they are a 35% to 40% at full margin potential, right? So it's basically your payment out, you're like a SaaS company, except for the payment of the creators.

That's right. That's right.

Wanted to do that comparison, this is SaaS. Say that word.

You like the numbers. Yes, SaaS.

Sorry.

We do get a lot of questions about what is your go-to-market team on the Udemy business side and it's like it's a SaaS go-to-market team, exactly what you'd see in enterprise SaaS businesses, that is what we do. Yes.

And I think just -- we honed on it earlier but to really push on this. Yes, you have [ EMI ] doing a couple of hundred thousand seats. But are you -- how much of your base right now is small and insights businesses versus the enterprise? And where do you think that goes over time?

Yes. So from a customer perspective, heavier weighted towards the SMB. Makes sense, right? From an ARR perspective, very much heavily weighted towards the enterprise. And I would say the enterprise business is growing faster than the SMB, although they're both growing really nicely. We think about our business by segment, by region, and we are seeing growth in every region, in every segment, like across the world. But again, we're landing larger and larger deals. The ARR per logo continues to go up quarter after quarter, after quarter. The percent of deals that are multiyear continues to go up quarter after quarter, after quarter. So kind of all things trending in the right direction.

Sounds good. Anybody else want to jump in with questions? All right, I can keep going.

Yes. Yes.

Yes. So given the expansion in your team, I mean, if you can grow at 80%, expand like spend in the market, build your team, get bigger, even like layer on more growth. What's a -- what's the right cutoff for you where you think your growth -- your layered amount versus what you can grow on that layer is so much that it will overwhelm the marketing spend that you're building to build that next bit on the layer? So not pure profit but contribution profit to get there.

Yes. So I mean I think the most important thing that we're thinking about actually as far as like how far can we push the growth is that go-to-market engine and how do you make sure that, that is really, really successful. And you can certainly -- you can grow at all costs, which actually means that you're breaking things all over the place and -- that's not the model that we've ever had. It is all about like consistent growth that you can deliver across all of these aspects, all the way from marketing qualified leads at the top of the funnel all the way down to like deals closing. And so for us, like it feels like we are in a sweet spot. We are landing a lot of deals. We're growing really, really fast from a number of customer perspective. We have really strong net dollar retention, really important that you can maintain that customer success model. And then really just making sure that your sales enablement is keeping up, your territory realignment, all those things revenue operations are keeping up with the growth that you're driving. So there's a financial aspect to it. But I think more importantly is the operational aspect and how are you thinking about that business. And we do get asked, should you pour more gas on this? Do you want to grow faster? Could we? Yes. Do we think that, that's the right thing to do? Right now, given an environment and be given we have this well-oiled machine, we know what's going on. We know how to consistently drive significant double-digit growth. I think that's the sweet spot.

80% is significant?

Yes, 80% is -- I think that qualifies, yes.

I see about one other company that has stepped on the gas harder than that, and they can blow up after a while of doing that. So maybe 80% is a good nice round number.

Yes. I think the net dollar retention helps too, right? I think dollar retention that allows you to kind of like continue to fuel that high growth rate, so.

Makes sense. So on the enterprise side, how do you structure your teams on sales to land the customer and then to do the expanded? How much does it -- how much of a sales effort is this expanded? How much of it is just a natural evolution that it seems?

I would say a decent amount is natural evolution. But I think what's critical is that your customer success team, one of the things that we talk about is the amazing collaboration the team aspect of Udemy and how we think about things. It is always a team win. If your customer success team takes that initial land and they run with it, and they help that organization really use all the tools, we have really robust enterprise tools from an L&D admin perspective, help them use those tools. It's a really efficient way to engage your population, get them learning, then actually the sale is a lot easier because they're seeing the benefit. And actually, what happens is there's a lot of pull that's coming from the employees that don't have access to Udemy. So we had a large tens and tens of thousands of employees and auto part supplier that we were working from. And they did a small pilot with us, and they were planning on maybe expanding a year, trying it out, and it was within months that the CHRO came to us and said, we can't wait. Like, what is going on here? People are crying for Udemy. So I think it is about -- it's not just the selling motion. It's getting that engagement and partnering with the organization to help them achieve what it is that they're looking to achieve, the reason that they purchased Udemy in the first place.

Sounds great. I actually got to wonder is there a different -- going back to this question about the kind of personal development learning versus the -- all this versus the obvious Python and Ruby on Rails programming learning, which you would think would be the thing that everybody go for. But in the large organization, the thing that's -- is the personal development the thing that's grabbing everybody and making them yell to their HR that I want access to this that this other guy got?

I don't know if that's the drug, but I think people use it more than they do think. I do think that the practical nature and the ability to search and just like get the answer that you want for whatever problem you're trying to solve. When you're at work, you want to look good. You want to know what it is that you're trying to accomplish and how to get it done. We help employees do that really well. And then I think you have that fun aspect of like, oh, I've learned [ guitar tonight ] along with it, that I think maybe really endears us to some employees. But I don't know that, that's the key driver as well as maybe a combination of the tail.

It makes a lot of sense. Anyone else want to jump in with a question? Okay, guys. Well, Sarah, this has been fantastic. Thank you very much. And keep up with that nice, easy 80% growth. That's a nice place to stay.

You got it. Thanks for having me. I appreciate it. Bye.

Thank you.