Unicorn of edtech Udemy priced its IPO at $29 per share, which was at the high end of the company’s IPO range. The firm was valued at roughly $4 billion at its IPO price if we used a basic share count, and a few hundred million more if we used a fully diluted share count in our valuation estimates. The Udemy IPO may appear to be excellent news for edtech. After all, the business sold more than $420 million worth of stock at a price that was higher than its ultimate private-market price when it went public Nonetheless.
As of the time of writing, Udemy’s stock has dropped $1.80 per share, or little over 6%, in trading today, In terms of IPO results, that is hardly the kind of first-day success that CEOs hope for. Neither are investors. We wanted to make a few remarks on the final accounting of the Udemy IPO, as it has been prepared so far, after following the company’s financial growth and pricing in detail.
Reuters estimates Udemy’s valuation to be $3.7 billion, despite recent trade falls. Udemy earned revenues between $125.7 million and $130.9 million in the third quarter, according to its own forecasts. Udemy now has a $523.6 million annual revenue run rate. In other words, Udemy is worth 7 times its current sales.
That is a lot lower than we would expect for software companies that sell to other businesses. The company’s relatively flat sales in 2021 compared to 2020 are likely to to responsible for the low figure compared to SaaS norms. However, dampened growth prospects for the next years are also a concern, and edtech in a post-pandemic setting, at least from the standpoint of an investor mindset, might be a factor.
Sure, Udemy’s pivot to selling to stickier and potentially more lucrative organizations is a positive thing, but the company’s stock looks to be stuck in second gear until this shows to unlock net revenue growth. Crunchbase estimates that the eventual private-market price for Udemy will be $3.25 billion. It is now valued at $3.3 billion, according to PitchBook. Regardless, the firm was able to outperform its ultimate private pricing, only by a little margin.