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

Thank you for joining us for Udemy's first customer panel for investors. For those of you that don't know me, I'm Dennis Walsh, Udemy's Vice President of Investor Relations. Today's webinar is part of Udemy's newest initiative, IR Access which will provide deeper insights into our business through multiple online channels. If you haven't done so already, you can sign up for IR Access, e-mail alerts on our Investor Relations website to keep you notified of new blog posts and events. A quick disclaimer before we get started. The views expressed by our panelists today are their own and are not necessarily shared by their companies they represent or Udemy. If you have any questions, feel free to submit them in the Q&A section on your screen, and we'll try to get to as many as possible. With that, I'm really excited to be joined today by representatives from 2 of Udemy businesses valued customers that I'd like to introduce. First, we have Alicia Lopez, Alicia is the Global Head of Learning and Careers at Cisco, where she's held a variety of roles over the course of her 26-year tenure with the company. As Head of Learning and Careers, Alicia leads a global team with a passion to help underrepresented talent, succeed and empower every Cisco employee. We're also joined by Simon Ruszala. Based in the U.K., Simon is the Group Learning Director at Devoteam. As a group lending Director for an international technology consulting company, Simon has over 15 years of experience in instructional design, project management, strategy and team leadership. Welcome, and thank you both, for joining us today. I want to kick off the discussion with just getting a little bit of background on both of you. So maybe, Alicia, let's just start with you. Can you tell us a bit about the company for those that may not be familiar, the size, sector, your role, how large your organization is? And what are some of the primary objectives that your team is focused on achieving.

Sure. Yes. Thank you for having me here, Dennis. So Cisco Systems is a technology company. We are about 85,000 employees globally. And we have about 30,000 folks in the engineering organization, which I know Udemy plays a big part in. So some of the big things for us this year is really bringing the focus around careers and the aspirations of where people want to go, and what ties into that is the skill development. So learning as the base. We are a skills first company. And so we're trying to move towards pedigree and college degree that those things don't have as much meaning, but again, it's more skills and capability. And so we're really trying to force -- move the needle on hiring for skills and capability. And so I'm excited that we're able to partner with Udemy on many things around skill and learning and development.

And how long have you been a Udemy business customer and which products is your company using?

Yes. So 2018, we're using the main Udemy, although we are piloting Udemy Pro in May. So we're going to have a pilot with about 100 folks to see what the reception is of that and if we can roll that out as well.

Excellent. And Simon, how about you?

Dennis, thank you. So I work for a company called Devoteam, which is a leading consulting firm, and we really focus on digital strategy, tech platforms, cyber security and business transformation. We have a very clear vision, which is tech for good. We're a midsized company with around 10,000 employees and growing very rapidly, and our 10,000 employees are across Europe and the Middle East, around 24, 25 countries, and we've got about 25 years of experience. As I mentioned, we're very tech focused, but we do have a business and [ strategy arm ] when we combine them together. My role is the Group Learning Director, and I'm working directly with the C-suite in our headquarters in Paris, even though I'm based in the U.K. Our primary objective as a consulting company for Devoteam is really to [ future-proof ] or workforce. As we know the average skill lifetime is maybe 18 to 24 months and accelerating, meaning that we need to continuously learn to stay relevant in the evolving tech landscape. We have another priority, which is really to grow our top talent. Talent density is something that we're very hot on, and we know that to be relevant for our clients and be competitive that we have to have the best of breed. And in addition to all of this, we aim to elevate ourselves as being a more mature learning company by the end of 2024.

That's great. And so -- and how long have you been in to be a business customer and what products do you use?

So we have a number of our countries 3 or 4 years ago using Udemy in some instances, and they were using Udemy enterprise. But in 2022, we did a global review of learning platforms. and we chose to adopt Udemy Business Pro for a large proportion of our employees across many countries. Udemy was chosen really as it was closely aligned to how we choose to learn and our tech guys around certifications and reskilling. And really, we'll develop -- we're developing our strategies alongside Udemy and others. For us, we're continuously demanding for tech skills, and we're accelerating to certify our employees on highly desirable tech topics, especially linked to the hyperscalers, AWS, Microsoft, Google. And we're looking at ways to use the success of our first year in 2022 to see how we could offer licenses to everyone. So at the minute, we're on around 35%, 40% of employees and we'd like to offer that to everyone.

Excellent. So there was a recent study from Deloitte, and they found that 90% of [ exact ] skills are becoming even more important to the way organizations are defining work, deploying talent, managing careers and valuing employees get only 1 in 5 orgs are adopting skills-based approach to a significant extent. So I'd love to just kind of hear generally from both of you and maybe Alicia starting with you, can you talk about the strategy for workforce skills development? And what are some of the challenges that you're trying to solve today?

Yes. So our biggest challenge is with an 85,000 employee base, it's hard to understand the capture of what skills people have. And like Simon mentioned, one of the biggest challenges is not only the evolution of where we need to go to skills, but even the new skills that are introduced. So we're in the tech industry. It's not hot in college anymore, and this is not even sometimes some classes. And so the benefit of even a partnership with Udemy is the real-time learning and how we can continue to grow. And so when I look at the prioritization, it's big now. And so in the past, we've always focused on leaders, we focused on other roles, and it's definitely important because that is the secret sauce, the leaders to move their talent. However, this skills development is so important in that relevancy in order to be relevant in the future. And so what we're really trying to do is ensure that people remain employable but that we're not doing it because they feel that they're behind, but because we're trying to inspire them to want to get there. And so we're really building out where the executives are saying where we need to go in the future, which unfortunately isn't that well because it's changing so fast, especially in the tech world, we can't see beyond 1.5 to 2 years. And so we have to take guesses. We have to take bets and risks and assume we're heading in these directions, train our talent and really get ahead. And part of that is not only in the upscaling part of the proficiency and understanding but it's also the reskilling and how do we introduce new technologies that didn't exist yesterday. And how do we know that they're going to be leading in the future and continue to ensure that our workforce can move towards that.

Yes, I think you mentioned prioritization. So where does L&D fall today? And how has that changed over the last couple of years?

Yes. So L&D, I think this is the year for L&D. I really do think we've earned our seat at the table. There's multiple avenues that when we look to the employee, we talk about retention and attraction and employee engagement. And what we're hearing from a lot of the studies and the research is that employees want career progression. They want to be able to move. They want to go to a company. And so you get to career progression. Is it just about comp. It's not just about your next role, but it's your ability and the skills and what you have as an employee and capability to move across. So for me, I've noticed that I've been at the table, we're having the discussions, and this is the L&D that it is, we can talk about the foundation of skills and the workforce planning from an executive space that the employee is saying what's in it for me? How do I go? And so that demand and shift to employee is very important in understanding that L&D across the company needs to evolve and move up the prioritization.

That's great. And Simon, how about you at Devoteam? Can you give us a little bit of background on the strategy there? And maybe even just how has digital played a role, say, the last 5 or 10 years?

So for us, we're really focused on keeping up with the pace of change. Again, we're talking about the 18- to 24-month window. And so our starting point is how do you teach people to have a growth mindset? How do you teach them how to learn? It's very easy to put tools and learning parts in front of people. But if they haven't got that right mindset, you're going to teach them once and really struggle throughout the rest of the duration. So we're really trying to elevate our people in that respect. Now the second thing is we are a very tech-focused company. So where we use Udemy a lot is for training people on key certifications -- key technical certifications as well as all of the new tech that's coming out so that they've got somewhere where they can learn. But what we've recognized on top of that is that we really have to develop people skills or what we call power skills. And so we're leveraging that and using that and combining it with career development to make sure that people have the skills to be adaptable so that they can move across, have mobility within the business as well as develop their careers rapidly. So I think for us, that's where we're really focusing on from a workforce skills analysis. And in terms of the digital strategy, while previously, it was very much around each country would have their own strategy, they can use their own tools. But what we learned from that is that there's a lack of efficiencies there, whether it's from cost or understanding best practices and sharing. So at that point, we started to look at how do we consolidate. Let's look at the landscape, give a level of flexibility to our countries but at the same time, understand where we can collaborate as a corporation and really share those assets, in which cases was something that we saw with Udemy. And I think what we've learnt in some of these things, when we're looking at our digital strategy, whatever we do with learning, it needs to be data-driven. If it's not data-driven, we're really struggling to prove the benefits to the executive committee in which case, this is such a critical part of what we do and is built into our proof of concepts before we move it forward. And then finally, it's just about that integration. The user experience from learning is that our employees -- our 10,000 employees don't want to go to 15 or 20 different sites. So how do you develop the infrastructure behind that with all of the platforms and the tools you're using to give that seamless and good experience so people want to go and know where to go for learning.

That's great. Thank you. So obviously, over the last couple of years, the macros presented challenges for almost every company in every region and particularly in the tech space, we've seen a lot of layouts happening in the last couple of years, even though we still see unemployment is relatively at historic lows. I'd love to just kind of hear about in this type of environment, maybe Simon, you talk about, have there been any specific changes to your L&D strategy that are just macro-driven?

There is. We're going through another change in 2023. And my initial reaction was to reach out to people in my network and say, what would you expect to happen with learning? And the first thing that they highlighted was, "I've seen whole learning departments wiped out in critical times like this." So you have to take the history of where the priority set in the past. But then actually, as we've assessed especially over Q1, as a company, we've actually agreed on our approach. And we said there's no compromise on value and growth. We are going to invest in accelerating our strategy and that really is a push for greater talent density. Now for talent density, you can hire that in through recruitment or you can develop and you can grow with the academies and what have you. But the cost of people leaving, the cost of not training people, we've seen that actually the investment we need to put in is about developing our people. And so although our OpEx challenges are there and L&D budgets, we do need to be very frugal with our spend. The criticality of L&D within our organization exists as a top priority, and it's about how we focus on that and make sure we're getting the most value for our money. So there's more scrutiny but the investment is still there because we know it's part of our strategy to grow our talent density [indiscernible].

And if I can just add in there, Dennis. I think another concept for us is that learning in the past has been seen similar to like a perk. Like the gym, the coffee and the break room, the snacks, like that type of thing. Learning is not. It is table stakes. It is what will make a company successful. And so when the mindset can change at the executive level, it's not a [ despendable ] group. It's not a group that comes and goes as the environment goes. Instead, that's sometimes all the employee has, is that investment in them that care and attention. And so we need to ensure that we're shifting so that this isn't a group that can be replaced because what we're offering to the employee is so much more, and their growth will give back to the company. And so it's not like a soda in the break room, right? This is something different. And so it's not in the perks situation. And then again, it's more table stakes. And as that mindset shifts across the executive leadership team. And if you do cost analysis, we've done cost analysis. And I mean you alluded to it, too, what it takes to have someone leave and move from a group versus retraining them and reskilling them and move somewhere else. But when they leave the company, from a layoff, that's more detrimental. And so from a cost perspective, we can prove that there's a savings to move them. And then that loyalty factor is also amazing. And so again, those are the things we need to bring together. L&D cannot be seen as a perk. It's the same as comp. It's the foundation to who we are and how we're going to exist in making in the future.

That's really, really interesting. So what are those conversations like today when you're thinking about budgeting for L&D and for the rest of 2023 and beyond? I mean, have those -- are they challenging? Are they more challenging today? How are execs thinking about it? How are you having those conversations? And I guess, even generally, for others that might be listening, how can you position this as more of a priority than a perk with executives?

So one of the things we've had in the conversation is getting financed on board. And so the conversations we have with finance is to show the dollar, the research and really look at the studies to say there is a dollar for dollar savings here. Even with the added on kind of culture impact as well. The other part is that I think from a learning and training perspective, it's -- what finance has said in conversations we've had with them is they're rarely -- like to this point, they've never been over budget because of training. And so when you look at the spend across the organization, training and learning is not that general thing that's going to go, "Oh, my gosh, now they might look to cut and they can slice here and slice there and do those things." But again, when you look at the return from that, that's not the place to move from. And we've been fortunate, although we have had a form of reshifts in restructuring, we don't. It's not from a cost savings perspective. It's a divestment in an area and reinvestment. So reskilling is really aligns to that very closely to move talent to where we need to.

Excellent. Simon, anything you wanted to add there?

What we recognized as a consulting firm, we've got over 80% of our employees with our customers. And if we leave -- we did a survey to really understand what is the duration they should be spending with one customer on one topic? And we found out it's around 9 months, up to 18 months. And then our talents want to be diversifying and learning to go onto the next assignment. But to do that, they need to learn new skills. And if we don't do that, we find that they're leaving. And this was happening quite a lot 3 or 4 years ago. And so we've really put some policies in place that says, no, look, we should be as a consultancy, giving our people the learning experiences by moving them from client to client and subject to subject. And to do that, it's very unfair to do that without training them up on the new tech on the new skills that they're going to need to be successful as they transfer from client to client. And so from that perspective, we're in that virtuous circle of going. Now we need to continuously learn and invest for them to be deployed. But at the same time, the return on investment is that we are continuously charging more for these people because they're more talented. So it's how we closely link what we're doing with the investment in learning with sales to return a higher price based on that they're adding more value and impact to our clients.

Right. And so when you look at the entire professional tech space, brand awareness is generally nascent across the board in most regions. So there's a massive opportunity for the space, and we certainly are working hard to drive increased awareness for Udemy with core relationship with ours. So I'd love to just hear before you were aware of Udemy Business, what did your program look like? And do you remember what your first exposure was to Udemy and what was your initial reaction?

Yes. So again, we started in 2018, and we have degreed as our LXP. And there's a fundamental belief we have in our culture, which is, again, learnings personal, learnings yours to keep with you and something to take with you that is yours to have. And so we believe in learner choice. And this became a swell from folks. So we got the, hey, we need to invest. We've been watching Udemy and the ask came from employees. I'm just driven to this, I would like you guys to bring this on board. These are the things we're seeing. This is the experience for having and so we engaged. What we love was the ability to see the broad and the partnership, and it's even gotten better when we've looked at and how do we partner even just beyond the tool and technology itself but create partnerships beyond that. So our first experience, again, was orders came to us and said, we've been watching it, but this was an entry in. We have other learning providers, again, because we look at order choice, so there's multiple use. And so our ask is that how do we learning providers come together, again, with employee knowing that they're looking across multiple areas? But it was -- came [ home broad ] from the employees asking for it the partnership we've been able to build and now just looking at the evolution of where you guys have gone even with the inputs from requirements and what we need and how we're moving as an organization. So we've just been able to be tied really closely with Udemy.

Great. Simon, anything to add there?

Not so much. It goes back to my last point of having a unified landscape of technology platforms and learning. And part of it is our early experience was that when you introduce a platform, it's a tool and people say, what do I do with this? And actually, as it evolves and Alicia -- she talked about having degreed as LXP. It's about your learning strategies and then bolting in certain tools and aspects that go alongside that and how do you mature your learning strategies in parallel with the tools that you're bringing in to complement that. And this is something that we're in that journey, and we're not quite there but we understand where we want to get to. And at a point in time that we're seeing today, this is a challenge with investment, which is, we would love to have that single pane of glass, like degreed offers that links careers with learning, the development and that personalization. But the exact committee, we're working on our learning journey to say now that is a big investment how we move towards that. And it is the data and the testimonies and the feedback from the field that are really helping us shape that business case for hopefully next few years to come.

And maybe even just a little more broad, Simon. In your opinion, what do you think are some of the trade-offs from off-line to online training and where are some of the benefits to doing more of this online?

So this is where -- I love the fact that we have an online training, things like Udemy. But when we look at knowledge retention, this is not about just about learning something from whether it's in person, whether it's on a platform, but it's about having that learning at a point in time that you need to use it because when you apply those learnings, you retain that learning. And then on the back of that, if you can develop it into being a coach or a mentor or a trainer, you really become an expert in what you've learned. And this is where we're trying to build a number of different strategies for people to learn. And Udemy and other e-learning platforms do provide content. As an organization, we are very, very focused at the minute on that peer-to-peer learning. How do you make sure that you're talking about what you're doing that you're sharing experiences that you're taking people on your learning journey and encouraging others? And so we really adopt the 10-20-70 learning aspect where we do have that 10 which is trainer-led and Learning, and we do think trainer-led really does encourage strong development in very complex topics. But really, it's those strategies around the 2020. And what we found is that by talking about it, people just go and explore that self-service, I've got Udemy. Let me just go and have a look. Actually, that's really good 20 minutes of learning there, 1 hour of learning there or I've done enough to say, please, can I do something more formal in this course. So I don't think -- you've got the off-line online. It again goes to that personalization. It depends on how people best learn, how you can help them retain that knowledge and more critically, making sure that you provide it at the time that they need it, otherwise, that retention is going to drop away very quickly.

Great. And Alicia, that's a good kind of transition into the selection process. And it sounds like a lot of employees were using it in the event they brought this to you and your team. So when you're assessing the product, I'd love to just hear about what are some of the key reasons that -- some of the elements that you really liked about Udemy that ultimately you decided to -- the company decided to partner with us? And if there are any specific features that we offer that maybe you didn't see with some of the other competing products that you liked?

Yes. So I'd say that you guys are a leader in the tech topics. And so that was a draw to us. The other part that it's part of -- we talked about the change in the growth mindset is the ability to not be done. And to be able to say, like, here's our product, we're done, this is it. We're constantly progressing. And we're moving with you or there in that partnership. And so when we look at companies who sell in kind of our business in, we're just going to make small little feature changes that's not the direction we want to go. Learning is an evolution, will constantly be growing and very similar assignment on the kind of in-person versus remote learning. It's both, right? It's an [ AM ]. They have to be able to complement. You can do some learning in some tiers, thinking of transformation. It takes a lot of learning because it's a mindset shift. And so it might take reading and different things, but then the ability to come together and have the discussion becomes where the power is. And so I'd say when I look at things that Udemy of where we started in the choice, was we have a few different partners, but where I'm starting to see Udemy come out is that tightness where we have the alignment with an executive sponsor, where we're getting the time in, where we're learning from what Udemy is doing even for its own employees through the Chief Learning Officer, and been able to share that back in sharing the uniqueness. And so for me, when I look for a learning partner, it's not just a tool I'm buying and we look into the partnership and how we're going to continue to grow and be better together and really take into account what we're both after and ensure that that's front and center, and I have seen that with Udemy.

Excellent. And when it comes to considering an expansion with a vendor like Udemy, what are some of the criteria you look at before you would make that decision?

So for us, one of it is we're just what comes in the next. So we're looking at Pro, and there are a couple of things we want to do with the labs and the testing and certifications and proficiencies. And so some of that we're seeing is in the next option. And so as we evolve, we're looking for someone who's ahead of that, who's there with us because if we have to come and ask for it, I feel like the company is not being driving in that space. And so it's a little bit of both. When I come asked, it should be, yes, we've heard that and hear what specifically do you need and then kind of be partnered together. I think the other is the decision on what will we get? Like where do we continue to grow? And again, it's that progression that where is this heading in the integration. For me, one of my biggest challenges is with multiple learning partners. We're also in this world of complexity. And so people want simplicity. Help me choose where I'm supposed to go. And so although we offer a lot of choice and have over 50,000 end users there, they still want to where should I go and what should they do? And so the ability to set up some of those custom categories or learning paths to be able to work with you to say, "Here's what we're seeing is important. Here's where you might go. Here's what you might recommend something." And so those are the abilities we look for and the time changes, right? So requirements from our employees are changing, requirements from our leaders are changing, but it also goes back to what Simon mentioned on the data. What can we learn, what can we learn and the AI will be important on where people are going, what does it ensue this role for these different offerings? Does it take them in a direction and then tying that back in with our own company data to say we're seeing trends, can we help people with potential path? We don't ever want to say go this way because, again, everyone's choice and career and path is different. But if there are some things they could signal like these offerings help took them the direction. So that, again, for us, it's the ability to be innovative, look around the corner before some of these things we have because you're there as well and then being able to help us tell the story from a data perspective. And for me, it's not even to defend it to the executives. It's to be able to show progress in retention, attraction, enable -- and really feel that the company is ahead, and we're moving to where we need to go.

That's great. And Simon, I'd love to just hear from you in the same -- you touched on a few, but maybe some of the key reasons that you selected Udemy Business as a partner? And what do you look at or criteria you're looking at when considering expansion?

So we did assess a number of digital platforms. And you always have a checklist criteria of what you're looking for. And when it came to actually assessing them, I got personally involved. I went on a number of courses. I looked at the different user experiences. And at the end of it, as we did our assessment, I stop my hand up and just said, I just don't think I would use it. And I know that isn't something that's in our checklist, but we've got to think about our 10,000 people here. It's got to be simple to use, 3 clicks. You've got to be having the latest technology and not asking like Alicia said, it's just got to be very simple and familiar. One of the things that we said when we asked new hires, and we said, would you use Udemy, would you use Coursera, would you use Pluralsight, would you use [indiscernible]. They all came up and said, "Oh we already use Udemy, and we pay for it. So if you offer it for free, that's a perk. So we went through a number of assessments, but it really came down to that usability. There's nothing worse than having an outstanding roles voice of a platform that no one uses. Now all that you've got to drive the whole engagement offering in which case, then your investment in the platform is multiplied by your investment in your L&D teams. And so when we look at all of those things combined, we said actually Udemy for us provides that right balance of learning, bite-sized learning as well as learning -- or learning to achieve certifications, that's very closely linked to our strategy. And although others provide it, it was just that feel that it wouldn't be adopted. And so for that, that was the swan point for us when we decided to go with Udemy.

Great. And Udemy Business' customer success team is a key differentiator for us. It's something that many investors we speak with are not as familiar since it's pretty unique with our business. The customer success team acts as a true partner and an extension of our customers' team to help shape, execute and optimize learning strategies to achieve business goals. So I'd love to just hear from both of you, when you're building out your program, how strategic would you say it is to have a platform like Udemy Business for skill development aligned with your company's overall goals? We'll start with you, Alicia.

Yes. So I mean, this is the evolution of where we're going. It is the foundation. And so to be able to say that you are looking at new skills, you're moving faster with speed. It is detrimental that we have this partnership. And so when we look ahead, there are a couple of things we're doing at Cisco. One is we're spotlighting every quarter, we're taking 85,000 people offline to 1 to 2 days and focusing on learning and careers and that focus on what they need to do. So topics like resilience, growth mindset, how to be a better leader, transformation, all of these, how to build your own brand and network. And these are things that come in partnership with Udemy and going down technical skills and we look at things from AI to security to Python to any tool or technology that we need to go and building out paths there. The other part is the industry recognition. In engineering, the hardest thing in a tech environment is credibility. You can't just have anyone talking. You have to have credible speakers. And so being able to take the shift from power skills, which are a little bit softer, to more technical skills and have the relevancy of the discussion at the front of the room is important. And so that partner with Udemy, we're partnering on this quarterly event we have called Cisco Illuminate, where we bring everyone together. And we're looking at pathways to bring speakers in from your team to create curated paths that we might start in the big room and then take people off. And so the skill foundation of what skills are relevant and we're learning from the data of what people are taking, but we're also building workforce planning that helps us understand where we need to go from a business perspective. So those things are definitely going to tie and I see an even tighter partnership, which is why we're looking at Udemy Pro as well as we go over the next couple of years.

Simon?

It's quite simple for us. We're a growing company. We're increasing our talent density. And to that, we need to promise that we will develop people that come into our organization as well as the people that exist today. So as part of our strategy over the last 3 years, we evolved our employee value proposition to deliver on that promise. And this is something that our employees hold us to, and we're pleased about that because that does mean that we have to deliver on it. And the reality is without having highly accessible, highly relevant learning content linked to our strategic learning plans, we'd be failing on this promise. And ultimately, we'll be having a huge impact on our customer experience, which just drives down the morale of the employees. So that's really something that we really focus on, and we use that with our executive committee to say let's deliver on this. I think it's also -- we're very good at designing learning programs. And then you get to a point of actually deploying them. And what you don't want is to have a 6-month lag once you figure it out, find a partner and then start to understand how you're going to deliver it. It's when there's a need, there's a need that needs to be delivered on now. And you can develop that program in 6 months' time, but you need to start with something. And for me, what Udemy did as a platform, which just give us a lot of content to say, look, it may not be everything but it will get you started. And you're a consultant. So at the end of the day, there's a lot of resources that we don't pay for that are available to you, whether it's the partner portals, whether it's on the Internet. But actually, it's that technician to really start to understand that learning in a topic that you need as us as an L&D organization really develop something on top of that initial learning. So for us, it's absolutely critical.

And I guess, if you could just build on that. What are some of the -- and maybe at a high level, but what are some of the outcomes that you were hoping to achieve by partnering with Udemy Business?

So we had a number of learning initiatives that we wanted to deploy. Things like power skills. Things like a top talent program. And we've got a very small -- we're a very lean corporate team and we rely heavily on the communities within the country who are also very busy. There's a war on talent. We're trying to retain people, and there's a focus there. So where Udemy have been absolutely fantastic, especially the executive and the customer success team is really caring about our strategy and working with us and saying, look, we can do that heavy lifting for you. We've got industry insights on these topics. We've got a content team. Why don't we provide something to you in 2 to 4 weeks, instead of you having to go back to your internal organization, try and find some resources, justify the budget and that ability to really support us on really on that content creation and understanding what's going on in the industry and giving us that confidence to drive forward has been absolutely fantastic. And so for us, that's really helped us drive that return on investment in terms of going, you haven't just bought a platform, you've bought experience, you've bought industry insights, you've bought aspiring team that are willing to work with you and really get to know your organization. And that, for me, has been hugely valuable as part of our partnership.

Alicia, how about you, any outcomes that you're hoping to achieve? And maybe just building on that, how has the Udemy customer success team been instrumental in helping you to achieve those goals.

So I'll take the first one first. So the outcomes are driving really are to have the employees be a better version of themselves always. And so always push us drive. And so when we look at that, whether that's upskilling and learning a new proficient, giving a greater proficiency in a skill they already have or it's learning a new skill. And so Udemy partners with us and so that partnership comes together because we can itemize some skills we want people to go to, signal what skills are important from a Cisco perspective and ensure and test the proficiency as we're moving. So that's where the growth occurs in the outcomes we're driving towards. Where the partnership comes in, again, is just the ability to sit and be open and honest, the transparency, the investment in time I've gotten from Melissa, just sitting in a room for a couple of hours, and just having the discussions around what are you doing? What am I doing? What are you hearing? And I think, Simon, we talked about this as well, is that ability to learn that we're all having similar problems and what are you doing and what are you doing here? And what does this look like? And where have you struggled and the ability to understand that we can create an understanding of where people are and where they need to grow. So the data, again, is important. But the proficiency, the ability not only to gather the knowledge, but to apply it and test it and ensure that they're moving forward. So that's what we're looking for to drive, again, a better version of yourself as you're continuing to grow in that growth mindset.

Great. So let's talk about you mentioned data and then let's talk about usage within the organization and how you're actually measuring success of the program. I'm just be curious what exactly are you looking at? Are there any specific metrics that you monitor? Maybe, Alicia, let's start with you.

Yes. So I mean, of course, those are traditional usage adoption, but those are really secondary. These just sort of go on to help tell a story. What we're really looking at is, is there a better engagement. And is the usage from this course and this course building towards something as we're trying to look at multiple learning opportunities that employee might take and does that get them on a faster core movement perspective? So for us, it's engagement, it's movement, it's retention and it's attraction. And so those are the 4 main things. And so as we can use the path that we know people who haven't been taking learning can leave the company. Like when they've left, they've hardly invested in learning. But the ones that are staying with us have a learning investment. They're growing. They're here, they're invested at being -- continue to grow themselves. So that's important to us, too. So we're not looking at the typical learning measurements, but we're instead looking at the top level, how does this help from an engagement, retention, attraction and movement perspective.

Simon?

So we have 2 very key learning KPIs from the organization. And they are linked to Udemy but they're bigger than that. So the first one, we do a global survey twice a year. And there's a couple of questions which are really focused on learning and career. Now we have over 70% completion rate, so we can get some confidence in terms of what they're saying. And one of them is, do you have the right learning resources to perform your role and develop your career? And for us, over the course of the last 18 months, especially with the introduction of Udemy across a larger proportion of our people, that has been one of the standout increases over our surveys. So that's one measurement that we look at. The other one is that we do look at certifications as KPI. They're recognized by the industry. They're recognized by our clients. It's that confidence that you've got the skills that you've got. So we look at -- we've identified what are the key referentials that we're looking for. And then going, how many of our population has it and how many do they have? And we use that really in terms of finding the people that need development but sometimes don't stick the hands up. But also, it's -- this is where Udemy really plays a part, that says, actually, we now have the resources to learn any time to fulfill that KPI and that need. And then when we look specifically at Udemy, we are growing on our learning journey and the return on investment is an absolute key one. That grabs their attention. When we're looking at it, yes, we've got the engagement, we've got the adoption, the employee satisfaction is another key one. But as Alicia said, it's the engagement. Are people engaged, are they liking the way they're learning, is the content relevant? And some of the things we're seeing here is we did a survey to say, if you could learn on any platform, even the accrediting bodies content or trainer led, we're finding that people are finding that they like the self-paced e-learning approach. And the content has been really favorable on Udemy for the topics that are close to our organization. So for us, that's been really key. But the engagement is the one that we really focus on from an L&D perspective, because it is really about how do we get them engaged working peer to peers and being fully satisfied with the content we're providing.

And is there any specific impact that you've seen within the organization as a result of using Udemy Business platform?

In terms of satisfaction that we're providing something, yes. Subjectively, when we do spot interviews with people, it's -- and again, we haven't got anything formal on this. But they're really happy on the change of going, instead of going on a formal course, 6 weeks after they needed it, they just have something to really get them going. And I don't know how we're going to measure that because I think it's something that's super valuable, but it's that adaptability, that ability to pivot very quickly and that gives people the opportunity to jump on to new assignments, have a bit of career mobility. And that really wasn't there before because you'd be working with your manager and trying to build plans without really having that content that sits behind it. So I know it's objective, but it's something that's super valuable for us.

Alicia, anything to add?

So we don't have anything formal, but it will be something we're looking at. So about 8 years ago, we got word of performance ratings as a company. And so one of the things as we're bringing our performance framework back this quarter. We do want to see the evolution as are there different learning partners that through the relationship and usage as we look back, have that created to better performance, more high-performing, either as an individual to contribution to a team? Do that create more movement? We have nothing formal right now, but it is something we're looking at as we move forward.

And I think you kind of touched on this a little bit earlier, Alicia. How is your team thinking about investments and how skilling or reskilling as a cost-effective alternative to hiring new talent?

Yes. So we've done the cost analysis. When we look at the packages and the evolution, it's a 1 for 1. So there's no savings. We could take someone offline for 6 months, reskill them, pay them and still be at the same amount we would have to give someone a package, let them look for a new job, resource and manage. So from a true cost perspective, it's a no-brainer, we should go this direction. But the benefit you get beyond that, when you look at the ability to go and say that loyalty factor that they'll have that investment and what it helps for the culture even around them to say, well, how? We tapped our talent, and we knew that we were divesting in an area, and we reskill them to go to a different area. And so that's where we're moving in the future. We're just starting that through the process. At Cisco again when we've done our restructuring, a lot of it has been based upon just a divestment in the certain areas where we invest in another area. It's not a cost savings play. And we say this, our [indiscernible] number of 84,000 people is still going to be 84,000 people. We're still hiring. It's just a different way in which we're -- a different organization in which we're hiring in. So those things are important, and so skilling will definitely be key. And even where we're not reskilling in advance of a position because we're looking at a few different models when we might take folks offline for 6 months and reskill them to a new role. But even as they turn into a role because what we're also trying to push is, you can go to a role that you know everything and people often position it that way. [indiscernible] everything you need to do to a role. But I wouldn't want to move to a role that I have nothing to learn. And so I want to go to a role that I know about 70%, and I'm going to learn 30% while I'm there. And so part of it is how do we help those folks moving to roles that they have this growth as well to move? And so that part of being a little bit uncomfortable instead of taking the role you know you're perfect for, why don't you take a role that's a little bit of a stretch and you need to learn and continue to grow? That's where we need to move as the world is that we're not moving to the most comfortable job. And instead, move into one that has a little bit of discomfort for us and, again, challenges us to think better. And so skilling in whether in advance of a role or once you're in a role is important.

That's great. And Simon, what I'll hear from you on we talk a lot about making sure that learning becomes a data habit. What kind of strategies do you use to encourage your workforce to actually engage and take these courses and do this as a regular habit? Is this something that you encouraged during working hours? Or are people doing it more on their own time? Or what does that look like at your position?

So we have a commitment to provide time for learning. Again, it comes back to the challenge of when do you learn. As I say, our clients are quite demanding, and we're growing consultancy. So performance is key. And so you've got this thing of going. You've got a utilization, you've got to learn new skills. You've got to do everything, but what's the balance? And I think from our perspective, no one size fits all this working. But for some countries, you might have a very mature learning organization, in which case they allocate Fridays off and they work with their customers to say, "Look, you're only paying for 4.5 days because if you pay for 5, do you get my person full time and they become irrelevant in 9 months because they haven't learned anything new." So we're really working with the sales team in terms of how to sell our consultants to the clients to allow time to continuously develop and take that new knowledge into the client. The other one really is, and this is one that we are figuring out how to do properly, but onboarding is such a key area to set the right ways of working your mindset. If you can bring them in, in that first 3 months, get them into a regime where they're continuously learning, getting used to the platform and that there's ways that their managers are involved to really help them, learn from them, then that for us is something that we think will continue into their journey into the other team. And so it's -- there's a few global activities we do, such as we try for the deal drop everything and learn. We look at the academies and provide strong recommendations of how to build learning into those first 3 months so that it continues. But otherwise, it really is dependent on the countries, and we give them a lot of flexibility to just go what works for you. And then in our Global Learning Board on a monthly basis, we get them to share best practices around key topics that are affecting the business so that people can adopt or steal with pride or just gain ideas so that they can take that back into their organization and try. But again, it's very difficult to have a one size fits all in the organization we're in.

And Alicia, you talked about employee feedback. I'm just curious what's the employee feedback been like? And anything that surprises you?

Nothing that surprises me. So in learning in general, I don't know that I have very specific about Udemy, otherwise, other than very positive. But it's the investment in them and paying attention and signaling that learning is important, has been where we bought tons of feedback. I've got -- every week, I get 10 to 12 different messages about employees just saying thank you. Thank you for offering me. Thank you for investing and some of the things similar to Simon, that we're looking at is, how do we make learning more again of a habit and a ritual that it becomes constant in the day. And so learning is important and what I love that Udemy has is this idea of learning in the flow of work, right? Like I have something I'm in the middle of something they need to go on this quick topic, let me go off and then come back. But what I also like is the ability to learn and flow life, like I'm sitting at a ballgame. I'm at a [indiscernible], I'm sitting and waiting for the subway. Where can I get something in this moment and keep my mind and brain invigorated and moving forward. And so we always talk about wellness and employee wellness and ensuring you're taking walks in doing these things and focusing on you, but this is the whole -- all of these things matter in the compilation of who you are to be your best version of yourself. And so I think that evolution of how we bring those things together and what I'm hearing from employees is they love that. And so we've looked at a couple of things even that we're testing and piloting right now. We're going to launch another pilot is the flexible work week. How do we take 4-day work weeks. And you talked about this a little bit, Simon. So then what's the fourth, fifth day? It's really their day, but what I found when we did the first pilot is we spent time reading and catching up and doing things that you never get time to do. And so it allows you to book for a different podcast and you're doing different things and so well you space for that. I also love what Udemy has, which is the 10 at 10 every day at -- to take 10 minutes to learn. And I think that's an amazing feature to port and to tell people. It should be when they need it, but some of us need reminders that, hey, right here, this is important. We also offer the quarterly event. And the other thing that I'd say is one of the things we have in our list to explore and pilot, we as a company, give time to give, as we believe in giving back to the community so every employee gets 2 weeks in time to give and then we get 4 days and a day for me. It's my day to rejuvenate, wellness. One of the other things I'm looking at is do we have days for learning? Are there days that people are going to take time off to go and learn and not feel like they're portal from their job or they have -- they're getting multitask and getting pings that actually can really stay, invest in whatever they're learning in. So we're looking at multiple things to ensure that we make it easier for folks to have the ability to continue with that continuous growing and learning mindset.

And I think it's a great transition to the next question here is how do you see the professional skills development evolving over the next 5 to 10 years?

So the evolving of the skills themselves is skill reinvent themselves, I think, daily. I also think the combination of like what skills used to be, what resilience used to mean, I think, is very different to what we believe it means today, were transformation, and we talked about it was a onetime thing that you have to transform through something. We start dealing with change that was sort of with an end. All of those things now have no end. It's a change and then another change and another change. And so we have to be able to know that we're progressing in that particular sense. Transformation as well, it's different, right? It's different then let's transform and go through this one little chasm in the bank, we're there. It's where -- and then there's the next one and then 5 others laid on top of that. And so it's the ability to manage through all of that and still focus. And so where I see professional skills moving in the future, very similar to technical. It's constant. We have to stay ahead of it. We have to learn fast and quick. And I think the partnership that Simon talked about to the community, how do we push and [indiscernible] this and it's great. Hey, I run this article, but also not to create noise in the system that you're not pushing every article. You're pushing relevancy, so that you help simplify because too much coming at you is too hard to. And so the ability to simplify and curate that for individuals is very important.

So Simon, how about you?

Well, let's take a full stack developer for example. If you tell them what to learn, they're going to tell you where to go. There may be a few topics that are critical for your business, and they'll take them on board but they just understand the tech landscape, they pick up what they need. They learn a new skill. They have their methodologies and their architecture and they just go and learn when they need. Now if you apply that to all the other jobs that we have in our organization, it goes back to that mindset of learning. It doesn't matter what the challenge is. I have the ability to handle that challenging approach and methodology to do it. And I have a platform to be able to get the content to learn. And so for us, we're very much in that thing of going as an L&D department, we can't keep up with the speed of what these people need. We need their insights. We need to give them flexibility and empower them. So it's how do you bridge that gap and really make sure that you're putting enough resources on the table and making them accessible for them to be able to be self-sufficient whilst having a business drive towards our goals. And if we take AI, for example, people are scared of it. But at the same time, when you take something like that, you get your forefront people within the organization, and we can say ChatGPT, for example, we said we are like, wow, this is good. So instead of being scared with it, we asked them to do lunch and learns. We get them to expose what they found those early findings to get people to experiment. It doesn't take long. ChatGPT, I spent an hour on 1 course on Udemy at the recommendation of our Customer Success Manager. Suddenly, I was writing blog articles within 10 minutes. It's something that's going. Actually, let's just make sure that people are encouraged by change and that they shouldn't be scared with it, and we build a mindset and a capability that allows them to adapt. I think that's where -- at the start of this, we said we wanted to be a learning organization. And it's that of a mindset instilled in our people that will prepare us for whatever the next 5 to 10 years holds no matter what the platforms or technology or anything else. And that's what we're striving for at [indiscernible].

That's awesome. And I think this is a really great place for us to end on. So I mean this has been an incredibly insightful discussion. So thank you, Alicia. Thank you, Simon. We appreciate your partnership, and thank you, everybody, who joined us this morning. Keep an eye out for our next vlog and our next event on IR Access. Thank you, everyone, and enjoy the rest of your day.