Welcome to Udemy's Third Quarter 2022 Earnings Conference Call. There will be an opportunity to ask questions after the prepared remarks. Now I'd like to turn the call over to Udemy’s Vice President of Investor Relations, Dennis Walsh.

Thank you, and welcome to Udemy's third quarter 2022 earnings conference call. Joining me today are Udemy's Chairman and Chief Executive Officer, Gregg Coccari; Chief Financial Officer, Sarah Blanchard; and President of Udemy Business, Greg Brown. During this conference call, we will make forward-looking statements within the meaning of federal securities laws. These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated. For a complete discussion of risks associated with these forward-looking statements, we encourage you to refer to our most recent Form 10-K and Form 10-Q filings. Our forward-looking statements are based upon information currently available to us. We caution you not to place undue reliance on forward-looking statements and we do not undertake and expressly disclaim any duty or obligation to update or alter our forward-looking statements except as required by applicable law. In addition, during this call, certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with US GAAP. We believe that these non-GAAP financial measures assist management and investors in evaluating our performance and comparing period-to-period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our earnings release. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measure is included in our earnings press release. These reconciliations together with additional supplemental information are available on the Investor Relations section of our website. A replay of today's call will also be posted on the website. With that, I will now turn the call over to Gregg.

Thank you, Dennis, and good afternoon to everyone on the call. Udemy delivered another strong quarter as we beat expectations on both the top and bottom-line. Total Q3 revenue came in at $158 million, up 22% year-over-year driven by solid execution and healthy customer demand. Udemy Business had another impressive quarterly performance and continued to serve as our leading growth engine as revenue and ARR grew 67% and 59% year-over-year, respectively. On the consumer side, we continue to see encouraging signs of resilience as both our traffic and monthly average buyers increased year-over-year, despite the challenging macro environment. It’s clear that customers across the globe are seeing the value of Udemy's platform for their upskilling and reskilling needs. I'd like to take a slightly different approach for our call today. It's been one year since Udemy's IPO and in celebration of this milestone, I want to reflect on some of our major business achievements. Our team has a lot to be proud of including: first, we've made significant progress toward establishing Udemy as a leading global provider for high-quality learning. As of Q3, we have more than 70,000 courses rated four stars or higher out of five stars. Second, we continue to recruit expert instructors to produce best-in-class and relevant courses and practice exercises. Udemy is home to nearly 74,000 instructors that produce the high-quality courses that Udemy has become known for. Our instructors added an average of almost 5,000 new courses each month and even more updates to each existing content. Third, we are attracting and retaining a growing community of learners worldwide to our platform. Since our IPO, we've added more than 13 million new consumer and business learners, bringing our total learner base to 57 million globally. Fourth, we have dramatically expanded our international footprint. Our vast international presence and localized experience are a clear competitive advantage. We now have nearly 90,000 non-English courses across 75 languages. Fourteen curated international language collections available to Udemy business customers and numerous new partners in APAC and Sub-Saharan Africa. Fifth, we have continued to deliver strong Udemy Business growth. Since our IPO, Udemy Business annual recurring revenue grew by nearly 70% to $350 million as of Q3 2022. Udemy Business now has over 13,000 customers globally. And as forecasted, the mix of revenue surpassed consumer revenue this quarter. Finally, we consistently delivered strong financial results for Udemy's first four consecutive quarters as a public company. As you can see, we've accomplished a lot but we are still in the early innings of a massive and growing market opportunity and only one year into our journey as a public company. There's still much more to do to help instructors, learners, and organizations succeed through the best and most engaging global learning experiences. I'd be remiss if I didn't acknowledge the team effort here at Udemy that makes this all possible. We have some of the brightest talent in the industry and I'd like to thank all of our more than 200 million users across the globe for their hard work and dedication to our mission. Before I conclude, I wanted to highlight a few exciting events that we have coming up this month. Next week, Udemy Business will host our Annual FWD event. Thousands of decision-makers including CLOs, CIOs, and people leaders from some of the world's largest companies will attend the conference virtually to get inspired about new learning strategies. It will be a day packed with key insights and tips from Udemy leaders and customers to help companies upskill and reskill their workforce. Lastly, we hope all of you will be able to join us for our first Investor Day on November 17. During this virtual event, you will hear about Udemy's long-term growth strategy, products, partnerships, financials, and future expectations. We look forward to diving deeper into our business, introducing our team, and sharing more about Udemy's vision. With that, I'll now turn the call over to Sarah to summarize our financial results.

Thank you, Gregg. Udemy had a strong first quarter and we exceeded expectations for revenue and adjusted EBITDA margin. Total Q3 revenue of $158 million came in above the high end of our guidance range of $153 million to $157 million. The 22% year-over-year increase was driven by continued momentum and execution in our Udemy Business segment which consistently performs well across a broad array of verticals and geographies. The recent strength of the US dollar against major international currencies has reached levels we've not seen in decades, and our diverse geographic footprint exposes us to foreign exchange or FX headwinds. As a result, the year-over-year increase in total revenue includes a negative impact of 5 percentage points from changes in FX rates. As we move down the P&L, note that all financial metrics are non-GAAP unless stated otherwise. Q3 gross profit was $92 million, up 27% year-over-year. Gross margin was 58% or an approximately 220 basis point improvement from Q3 of 2021. This margin expansion resulted from the continued revenue mix shift to Udemy business, since content costs as a percent of revenue are lower for that segment. Given this shift, we also experienced an increase in customer success costs to support our growing roster of Udemy business customers. Total operating expense was $109 million, or 69% of revenue, compared to 57% in Q3 of last year. During the quarter, we continued to invest in key focus areas, as planned, while furthering operational efficiencies. We are employing a disciplined approach to managing costs across the entire business, while keeping an eye toward achieving profitability. Sales and marketing expenses were 43% of total revenue, compared to 39% for the same quarter last year. During Q3, we continued to shift our marketing investments to Udemy Business, where we are experiencing strong growth in ROI by expanding our global go-to-market and enterprise marketing capabilities. As always, we are committed to disciplined and efficient marketing spend, while also investing where we see clear sustainable growth opportunities. R&D expense was 14% of revenue compared to 12% in Q3, 2021. We are making strategic investments in areas that will be most impactful and that we believe will generate an attractive return for our business. This includes continuing to build out our comprehensive learning platform for corporations. That platform is powered by highly rated content, proven product features and machine learning models from our consumer marketplace, which also provides powerful data and insights in terms of a robust lead gen engine. In addition, we are rolling out immersive and personalized learning experiences, including labs and assessments, and also investing in the ability to guide learners through their journey. For example, last year we launched Udemy Business Pro. This new offering enables customers to evolve their technical skill development with in-depth learning experiences for employees. UPro features Udemy paths, skill assessment, workspaces, and hands-on labs across the most critical and sought-after skills in cloud computing, software development, data science, and DevOps. We continue to build hands-on labs with real-world scenarios and increased our total number of labs by nearly 50% since last quarter. We believe these investments will provide more tangible outcomes, ultimately increasing engagement in LTV over time. Finally, G&A expense was 12% of revenue versus 7% a year ago, primarily driven by an increase in costs associated with operating as a newly public company. On the bottom line, net loss in the quarter was $21 million, or negative 13% of revenue. Adjusted EBITDA loss was $13 million, or negative 8% of revenue, well ahead of our guidance range of negative 14% to negative 12%. Moving on to cash flow and balance sheet items. We ended the quarter with $494 million of unrestricted cash, cash equivalents, and marketable securities. On free cash flow, the ongoing growth of Udemy Business, which fundamentally has a better free cash flow margin compared to adjusted EBITDA margin, was offset by increased DSO and changes in working capital funding, resulting in negative $90 million of free cash flow for Q3. Now, turning to our results by segment. Starting with our Enterprise segment, or Udemy Business, we grew Q3 revenue to $84 million, or an increase of 67% year-over-year, which includes a negative four percentage point impact from changes in FX rates. As Greg mentioned at the start, Udemy Business accounted for 53% of revenue in Q3, surpassing the consumer segment as a majority share of total revenue. We ended the quarter with over 13,400 Udemy Business customers, up 40% from a year ago, and annual recurring revenue of $350 million, up 69% year-over-year. Udemy business is proving resilient against a challenging macro environment. The opportunity continues to be massive, as the systems around the world are seeking to upskill and reskill employees to achieve business outcomes more effectively by leveraging Udemy's platform. As a result, we continue to see an increase in new and expansion deals, demonstrating that customers see the value that the Udemy platform can bring to their businesses, even in challenging times. During Q3, we closed the most deals over $1 million in our history, and revenue for multi-year deals accounted for over 40% of Udemy Business revenue, which increased 135% year-over-year. In total, we added more than 900 new domestic and international Udemy Business customers during Q3, notably, with IKEA, Forest, and Samsung Electronics America. Many of our existing customers are increasing their spend over time, driving compelling LTV. Our Udemy Business net dollar retention rate was 117% this quarter, a slight 100 basis point decrease from the prior quarter. The decline in NDRR is primarily due to the smaller businesses that are taking a more cautious approach to external spending, given the challenging macro environment. When you look specifically at net dollar retention for our enterprise cohort, or customers with at least 1,000 employees, it was even higher at 123%, and that cohort's net dollar retention has remained consistently above 120% for the past several years. This level of retention demonstrates both the quality of our content and the continued success of our land and expand strategy. For example, during Q3, we closed several large expansion deals with global corporations such as Tata Consultancy Services, the Permanente Medical Group, and Gale, part of Cengage Group. Udemy Business segment gross profit for the quarter was $56 million, or 67% of segment revenue, which represents a roughly 200 basis point increase year-over-year. The increase was primarily driven by growth in our recent current program, where we record revenue on a gross basis inclusive of reselling fees. In our Consumer segment, Q3 revenue was $75 million, down 6% year-over-year, which includes a negative 6 percentage point impact from changes in FX rates. In spite of those macro headwinds, we are encouraged by the continued resilience we are seeing in our platform. Traffic was strong in the third quarter, with an industry-leading 35 million monthly average unique global visitors, up 7% year-over-year. More than 1.3 million monthly average buyers purchased a course or subscription on our marketplace during Q3, an increase of 4% year-over-year. We are tracking thousands of instructors that regularly add high-quality fresh content. All of this supports the powerful flywheel effect that we get from having a vibrant marketplace, which amplifies the Udemy Business growth. The symbiotic system of these two parts of our business is a differentiated model that we believe will continue to drive total company top-line growth over the long term. Consumer segment gross profit was $39 million or 52% of segment revenue, approximately 120 basis points lower than in Q3 2021. The slight year-over-year decline in Consumer segment gross margin was primarily driven by higher mobile transaction and hosting fees. Now turning to our outlook. Consistent with the last few quarters, we continue to face a volatile and uncertain macroeconomic environment and increasing FX headwinds. Like many other companies, we are also seeing a greater impact on our small and medium-sized customers. Although these forces that are beyond our control may have a short-term impact on Udemy Business revenue. We have increasing conviction that these factors are driving many larger organizations to prioritize cost-effective training, reskilling, and upskilling of their workforces. Udemy Business provides clear value for our customers, is rapidly deployable, and delivers strong employee engagement, demonstrating the immediate impact of our learning platform. Together, we believe these factors provide a certain level of resilience and current cyclicality in our business that positions us well for long-term success. With that backdrop, we expect Q4 revenue to be between $164 million and $167 million or 22% year-over-year growth at the midpoint driven by continued Udemy Business momentum. We expect that Udemy Business segment revenue as a percent of total revenue will further increase from Q3. Given the historic rate at which the US dollar has strengthened this year, we continue to expect foreign exchange to be a headwind in Q4. Assuming foreign currency exchange rates remain constant, FX is expected to impact total revenue year-over-year growth by approximately 6 percentage points in Q4. In addition, we expect an adjusted EBITDA margin of negative 17% to negative 15%. As a reminder, we typically experience some seasonality during the fourth quarter when we ramp up our marketing investments around Black Friday. With that in mind, for the full year 2022, we expect revenue to be between $628 million and $631 million, or 22% year-over-year growth at the midpoint. Lastly, we are raising our full-year 2022 adjusted EBITDA margin guidance to a range of negative 10% to negative 9%. In conclusion, Udemy has established itself as an enduring platform, serving a clear need for organizations and learners. Despite the challenging environment, Udemy Business is expected to continue performing well. Our consumer marketplace is resilient and well-positioned to deliver the content that supports sustainable long-term growth for Udemy Business. We will lean into and invest in our biggest growth opportunities, including shifting R&D and marketing spend towards Udemy Business. As always, we will be prudent with expenses to ensure we generate the greatest ROI possible with a goal of achieving profitability on an adjusted EBITDA basis in the near term. Ultimately, we are as bullish as ever about the long-term opportunity available to Udemy and hope you will continue to support us on our journey. So with that, we'll open up the call for questions. And as a reminder, we also have Greg Brown, President of Udemy Business, joining us today.

Our first question comes from Rob Oliver of Baird. Please go ahead.

Great. Thank you, guys, very much for taking my question, and good afternoon. I had two. My first was for Greg Brown. Greg, continued strong performance on Udemy Business. I'm curious, obviously, a couple of big countervailing trends here; on one hand economic headwinds, which you guys have mentioned. On the other hand, really seems like companies are buying into the value proposition of Udemy Business. I was wondering if you could talk a little bit about those two trends, what you're seeing in the macro, and if there was any change in linearity throughout the quarter, particularly towards the end of the quarter? And then, I had a quick follow-up for Sarah.

Sure Rob. Thanks for the question. As far as trends are concerned, I remain pretty consistent with respect to further consolidation of enterprise organizations moving more of their spend from offline to online. And we saw that again this quarter reflective in the net dollar retention we saw at 123% on the enterprise side of the business. An example of that is, one of our large multinational financial services firms went through a consolidation effort with multiple vendors in different areas of the business. They went through the consolidation effort to standardize on one platform to enable them to across both tech and business skills more efficiently at a more effective cost per learner, driving upskilling and reskilling. We were fortunate to come out on the right side of that and that netted out to a three-year contract of just under $1 million a year. We’re seeing more and more of this type of consolidation as we move further into the recession. We do expect growth to remain durable across our enterprise business, and that’s just an example.

Great. Yes, that's super helpful color. Thanks, Greg for that. And then Sarah, just a question for you. You guys outperformed again on the bottom line. So, a really nice job on the cost side. I know last quarter you guys also called out sort of a stabilization in the consumer business at a lower spend rate. Is that consistent this quarter? I know more stabilization but have you guys found ways to drive that consumer business at a lower spend point in terms of marketing? Thank you.

Thanks for the question, Rob. Yes, so we're really pleased that we were able to exceed guidance again on adjusted EBITDA. A few things are going into that. Obviously, we're managing our expenses closely. But as you called out, we are being really careful with our marketing spend on the consumer side. We raised our ROI targets. Even in raising those targets and reducing spend, we're really happy to see traffic up across the board. So just continue to see positive signals. We're really encouraged by the resilience and we're cautiously optimistic going into the fourth quarter.

Great. Thanks again, guys. Appreciate it.

Thanks, Rob.

Thanks, Rob.

Thank you. Our next question comes from Ryan MacDonald of Needham. Please go ahead.

Hi. Thanks for taking my questions and congrats on a nice quarter. First one for Gregg Coccari. Consumer, it's great to hear about the resiliency in the business. I'm curious as you look globally in areas or regions that are being maybe more significantly impacted by recessionary pressures, rising layoffs, et cetera. Are you seeing any pockets of strength or that resulting in learners coming back onto the platform to perhaps create a bit of countercyclicality on the consumer side of the business so sort of driving more reskilling in that environment?

Yes Ryan, thank you for the questions. We've actually seen a lot of strength in every region. The traffic, which is our leading indicator, was up 7% but it varies by country. We have some pockets that look particularly good. Japan was very strong on the traffic side. The US was good. Germany was pretty good. The UK was down a little bit. So, it's a little bit mixed but overall, we're very happy with what we see. On the learner side, we've got growth overall in our monthly active learners but in both the new and existing. So, we're driving more new buyers or existing buyers and we're spending less money. So, we think it’s showing some countercyclicality to the business.

Really helpful color there. Maybe my second one for Greg Brown. Greg, great to see the performance on Udemy Business in the enterprise. I'm curious clearly there's a nice seat-based expansion opportunity as customers consolidate around fewer vendors. But I'm curious to hear what impact the newer offerings like Udemy Business Pro, some of this enhanced functionality around skills assessment is having on whether that's creating a differentiation for you in that consolidation process and then does that have any impact on price points per seat?

Ryan, thanks for the question. Yeah. So, we really had a good solid quarter with respect to not only expansion of seats of our on-demand learning product but new products, i.e. cohort learning, as well as UPro. I'll give you an example. One of our large multinational enterprises that we're currently working with from an on-demand learning perspective, identified an opportunity to help them with their emerging leader segment to give them a platform and leverage to be able to educate and upskill the 3,000 emerging leaders on an annual basis. What that netted out to was a two-year contract worth roughly 1.6 million a year on our cohort leadership platform in combination with our on-demand learning engagement that's already underway. So we are seeing a lot more interest and expansion in our additional products and that momentum continues to build. We're really happy with the momentum.

Thanks and congrats again.

Got it.

Thank you. Our next question comes from the line of Stephen Sheldon of William Blair. Please go ahead.

Great to see the growth in multiyear deals. So just more detail on that, are you incentivizing it through better pricing? Just more detail on that.

Yeah, Stephen. So we've made a concerted focus to lead with multiyear deals as a result of the up-leveling both the product platform, as well as the sales motion, selling high to the C-suite and focusing on extended value that we're providing largely in partnership with our customer success team, which is really focused on driving outcomes. Our entire sales motion has evolved and changed over the last year. That really supports what you're seeing now, which is a significant increase in multiyear deals both of on-demand learning and across the platform. We expect that to continue, and it's not happening as a result of price incentives. It's much more around the value and resources we're bringing to bear to act as a trusted adviser and long-term partner in support of the outcomes customers are trying to achieve.

Great. I appreciate that color. And then, just as a follow-up, curious heading into the fourth quarter I know there's usually some moving pieces on the consumer gross profit or gross margin. I think it's usually seasonally weaker during some of the promotional activity. Can you just maybe provide any commentary on what we should be expecting on the gross margin side for consumer in the fourth quarter?

I'll take that question. Thanks for the question, Stephen. So you're right, we do have a big promotion around Black Friday in the fourth quarter and that can put some pressure on our gross margin. So as we continue to see this resilience in the consumer business and as traffic is up and buying is up, we could see some pressure on it. Again, that's a great signal for us because that means we're selling a lot and we'll see the impact of that in the first quarter.

All right, great. Thank you.

Thank you. Our next question comes from Terry Tillman of Truist. Please go ahead.

Oh, great. Thanks. Hi, everyone. This is Connor Passarella on for Terry. Thanks for taking my question, and congrats on a great quarter. Just the first one digging into the demand internationally, particularly in APAC. There's been some really good traction in Japan and South Korea. I know you talked about last quarter, we’ve had a strong pipeline that was building in China. Just curious as to how that's developing and what maybe the key factors will be for determining success in this market? And then I have a follow-up.

Connor, thank you for the question. Yes, as we've talked about before, we're building out APAC with a number of different partners. Japan is a market that's doing particularly well for us. We've been working with Benesse for a number of years, and we're seeing high growth there. The other markets are relatively new. In China, we've built out the collection. We have over 800 courses in Mandrin today, and so we built out the collection, are hiring lots of salespeople, and training them. It’s early days, but we're seeing some nice traction. We've gotten a couple of nice deals already. The same thing has happened in Korea, and then we signed a deal in Vietnam with FUNiX. We've already closed a deal or two there and again are building out Udemy's collection and hiring and creating stuff for people.

Perfect. That's helpful color. And then just on a quick follow-up. So it sounds like another strong quarter for multiyear deals that are continually becoming a larger proportion of total ARR. So it sounds like a lot of multiyear deals are coming from existing customers. Just curious how the cyclical deal looks like for a new logo and maybe how that's evolved over the past few quarters if maybe you're landing more multiyear deals with new logos? Thanks, guys.

Yeah. This is Greg. Look, we're having success across the board both with existing as well as new customers from a multiyear perspective largely for the reasons I mentioned earlier. The sales motion that we're using now is much more orientated around outcomes that the organization is trying to drive aligned with strategic initiatives and strategic imperatives at a corporate level. As a result, the relationships we're fostering by the nature of that are long-term relationships, long-term partnerships, trusted adviser type status. That comes with the investment we're making early on from a customer success standpoint. As a result, customers are going into projects with us with a multiyear horizon in mind. We're starting to see that reflected in the numbers that we're putting out quarter-over-quarter, so you should expect that trend to continue and both on the new business side as well as the existing customer side.

Sounds great. Thank you.

Thank you. Our next question comes from Josh Baer of Morgan Stanley. Please proceed with your question.

Thanks for the question. You mentioned the S&B impact on the net dollar retention rate. I wanted to dig in there. What is the customer behavior? Is it churn or contraction or just less expansion?

Hi, Josh. Now what we're seeing is a slowdown in deals moving through the pipeline to closure. We're not seeing a significant departure in terms of the funnel or opportunities that we have in the pipeline. It’s really just S&B organizations scrutinizing spend and budget as they're going through their buying process. So we're still optimistic that we're going to have a very positive quarter on the S&B side, albeit, we do have some headwinds. We are seeing a little bit of a slowdown, but again it's not as a result of anything other than these organizations being prudent with their spending and ensuring that they're allocating their budget appropriately.

Okay. That's clear. And then just to round that back to the larger enterprises. So you're not seeing that same scrutiny or impact as far as slowdown in deals upmarket. Is that correct?

What we're seeing upmarket is CLEOs in many cases do have constricted budgets. The budget, you know, if they had a $10 million budget last year maybe $8 million this year, but they still have the same imperatives to upskill and reskill their employees to drive towards strategic initiatives that these employees need to be prepared for. They’re doing more learning from offline to online and leveraging platforms like ours to do so, and we're well-positioned to take advantage of that trend. That's what you're seeing right now in terms of the strength on the enterprise side, as I alluded to earlier that consolidation effect. A few reasons why we're in a disproportionate number of the opportunities we're in. You guys are very well aware of the superior content we have both quality and quantity. In fact, this last quarter alone we added 1,900 new courses to the Udemy Business catalog, and that is unparalleled. It puts us in a position of strength. And 1,300 of those were non-English courses, so again, we're investing heavily in our international array of content that's all localized. This gives us a strong position to develop to be the premier provider for many of these organizations that are looking to standardize on one platform.

Great color. Thank you.

Thank you. Our next question comes from Jason Celino of KeyBanc. Please go ahead.

Hi, Sarah. Hi, Gregg and Greg. This is actually Devin Au on for Jason tonight. Thanks for the questions here. First, one I have is on enterprise. I think you talked a little bit earlier, but I just want to get a little bit more color on your pipeline for fourth quarter in the enterprise segment. Any indicators that you're looking at that's giving you that level of confidence and maybe are you seeing more robust pipeline development in certain geos or industries?

Hi Devin, this is Greg Brown. We exited Q3 feeling very good about our Q4 pipeline in line, in fact ahead of what we expected quite candidly based on the macroeconomic conditions. That being said, as was mentioned earlier we have seen some softness and some slowdown on the S&B side in terms of deal velocity. Enterprise business across all geos continues to remain robust, albeit, as mentioned earlier we're not immune to the macroeconomic conditions. We're going to be paying close attention to the leading indicators in our business as we progress through the quarter and adjusting accordingly. But right now, we feel good about the strength of not only the pipeline but the opportunities that are in flight in the sales organization today.

Great. That's good to hear. And then one more question I have is on EBITDA. EBITDA margin came in in the quarter meaningfully higher. I know that you mentioned benefiting from the increasing mix shift towards enterprise, but were there any sort of dynamics in terms of investments being shifted towards fourth quarter that led to that outperformance? Any other commentary you can provide on that?

Thanks for the question. So as we spoke about we did pull back on our consumer marketing spend, and we're happy to see that the business remains resilient even with that pullback in spend. We’ve also been shifting our spend to Udemy Business and that is our main growth engine. It wasn’t really a shift of spend into the fourth quarter. We typically have some downward pressure in the fourth quarter because of our gross margin pressure we feel with our Black Friday, Cyber Monday promotion that happens. But it wasn't a shift in spend. It's just managing our spend carefully and just making sure we're investing in things that will have the most impact.

Got it. Got it. No, that’s really helpful color. Thank you.

Thanks. Devin.

Thank you. Our next question comes from the line of Brett Knoblauch of Cantor Fitzgerald. Please go ahead.

Hi, guys. It's Alex on for Brett. Congrats on the quarter. I was just wondering maybe on the consumer side has the strength in Udemy Business helped fuel some of the consumer strength you saw this quarter, past maybe people learning using Udemy Business and then going home and getting their own personal account.

Hi, Alex. This is Sarah. Thanks for the question. There's no way for us to really track that but certainly the more access exposure that individuals have to Udemy Business or to Udemy through Udemy Business certainly that probably does have some spillover impact on the consumer side of things. I think as you've heard us say the product is really engaging. And so you can imagine individuals having access to it at work and then going home. Greg, anything more?

Yes. It also works both ways, as we can get a large number of leads for Udemy Business off our consumer platform also. So yes, there's cross-fertilization of both of our businesses. Now that we have two scaled businesses, it works even better.

Got you. Thanks a lot. And congrats again on the great quarter.

Thank you. Our next question comes from the line of Brent Thill of Jefferies. Your question, please.

Thanks. Just on Udemy Business, the resiliency in a tougher macro downturn assuming the macro economists are right and this gets even stiffer into 2023 with the headwinds. Can you just walk through how you're feeling about managing during this downturn? And what is giving you that strength? And then also, if you could just touch briefly on the consumer subscription business and how that's doing and what you're seeing any trends there? Thank you.

Hi, Brent, thanks for the question. This is Greg Brown. Yes. We spend a lot of time with the CLOs within our customer base. Right now, what we're seeing is a consistent thread of continued investment through the downturn, albeit budgets will get compressed as I mentioned earlier. But the need to invest in your employees when going through a downturn like this, when organizations are potentially going flat or even maybe doing some rightsizing, is a strategic imperative. You've got to be able to continue to develop the talent that you have, to sustain you through a downturn. We're hearing that message consistently across our CLOs. We expect further consolidation of platforms. We expect more budget to continue to move from offline to online. As a result of that in our enterprise business, we do feel that we're well-positioned to help organizations as they're going through this transition and are well-positioned to take advantage of the opportunity, especially now with a portfolio of products that is unique and differentiated.

I'd like to just add to that, when times get tough one of the things that companies do is they really focus on operational efficiencies. What that means is digital transformation efforts that are underway or about to be underway. People are continuing to invest in those to drive those operational efficiencies. Our content is so fresh, and it’s able to keep up with the pace of change in technology, that gives us an additional advantage in a market like this. Gregg, do you want to talk about subscriptions?

Yes. You asked about subscriptions. As we've discussed before, we think subscriptions are a very attractive product opportunity for us. Today, we're live in eight countries. We're actually turning on India in the next two weeks. There's lots of testing. We're testing our annual plan, testing local pricing. We’re taking our time and doing it very methodically. We have to be careful that our instructors are being taken care of, that they're making more money along the way, ensuring that we continue to get all the Udemy Business leads. The goal is to make sure that we have a strong value for our learners. It’s proceeding well, and our expectation is to open up throughout 2023.

Thank you.

At this time, I'd like to turn the call back over to Gregg Coccari for closing remarks. Sir?

I appreciate everybody's time today and thank you for your time and I look forward to talking to you in three months.

Goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.