• Enterprise focus for higher profitability: The management is sharply reallocating resources to target large enterprise customers, which already account for 75% of Udemy Business revenue and are characterized by stronger unit economics, higher retention (108% NDRR), and significant upsell potential. This focus could drive accelerated margin improvement in the long run.
• Resilient instructor engagement and content vibrancy: Despite changes to the instructor revenue share, no top instructors have opted out, ensuring sustained quality and quantity of course offerings. This continued instructor commitment supports platform vibrancy and long‑term content leadership.
• Operational efficiency and margin expansion initiatives: Udemy is actively implementing cost-saving measures—including a targeted $25 million in annualized structural cost savings—and expects notable improvements in adjusted EBITDA margins, underpinning a bullish outlook on future profitability.

• Consumer weakness: Multiple Q&A responses highlighted that after a strong Q1, consumer conversion rates notably slowed in May and June, suggesting persistent weakness in the consumer segment, which could continue to suppress revenue growth. [Index 7][Index 22]
• Extended deal cycles in enterprise: Executives noted that enterprise deal closures are taking longer and yielding smaller-than-expected deals amid a challenging macro environment, which may delay revenue acceleration and expansion of ARR. [Index 21]
• Operational execution risks from strategic shift: The deliberate reallocation of resources toward large enterprise customers may result in transitional execution risks and potential neglect in other segments like SMB, which could negatively impact short-term performance. [Index 8]

1. **Enterprise Strategy**  
   **Q:** Why target large enterprise now?  
   **A:** Management is deliberately shifting focus to large enterprises to capture stronger unit economics and drive faster, scalable profitability in the current macro environment, basing their decision on robust data and pipeline performance.  **[1607939_UDMY_3395631_9]** 

2. **Margin Expansion**  
   **Q:** How will margin improve by 2026?  
   **A:** They expect a gradual, near-linear margin expansion driven by **650bps** gross margin improvement from revised instructor revenue shares and operational efficiencies, targeting **$130–150 million** adjusted EBITDA by 2026.  **[1607939_UDMY_3395631_5]** **[1607939_UDMY_3395631_14]** 

3. **Enterprise Penetration**  
   **Q:** How to boost large customer penetration?  
   **A:** By aggressively increasing penetration within their existing enterprise base—currently less than **10%**—management sees a **$1.5 billion** opportunity through more effective upselling and seat expansion.  **[1607939_UDMY_3395631_3]** **[1607939_UDMY_3395631_11]** 

4. **Consumer Conversion**  
   **Q:** Why did free-to-pay conversion slow?  
   **A:** Although Q1 conversions were strong, lower conversion rates in May and June have been attributed to ongoing macro challenges, despite improved traffic from low-cost marketing initiatives.  **[1607939_UDMY_3395631_21]** **[1607939_UDMY_3395631_22]** 

5. **SMB Impact**  
   **Q:** What about service to SMB customers?  
   **A:** Even with the strategic pivot toward larger enterprises, management reassures that they will continue to serve SMB customers efficiently while reallocating resources to higher-growth segments.  **[1607939_UDMY_3395631_8]** **[1607939_UDMY_3395631_10]** 

6. **Sales Transformation**  
   **Q:** Will you add new sales leadership?  
   **A:** They plan minimal leadership changes; instead, they are reallocating and refining their existing sales teams to focus on enterprise deals and improve execution gradually.  **[1607939_UDMY_3395631_19]** 

7. **Instructor Retention**  
   **Q:** Has the payout change affected instructors?  
   **A:** The change has not driven any top instructors away; ongoing positive engagement and strong sentiment confirm that instructor relationships remain solid.  **[1607939_UDMY_3395631_10]** 

8. **APAC Update**  
   **Q:** How is APAC performing overall?  
   **A:** While there is some softness in parts of APAC, markets like Japan are performing well under renewed leadership efforts, with optimism for future growth.  **[1607939_UDMY_3395631_14]** 

9. **Upsell Drivers**  
   **Q:** How will upsell be accelerated at clients?  
   **A:** Management is expanding their product suite and sharpening their enterprise sales approach to drive upsell opportunities in a largely untapped customer base.  **[1607939_UDMY_3395631_17]** 

10. **Sales Retraining**  
    **Q:** Is there ongoing sales retraining?  
    **A:** Yes, additional training is being implemented on the fly to enhance the team’s capability in engaging enterprise clients, ensuring continuous improvement in deal velocity.  **[1607939_UDMY_3395631_19]**