 Udemy reported revenue of $199.9mn for 2Q25, representing a 3% YoY increase and exceeding its guidance range of $195-199mn. This includes a 1% negative impact from exchange rate fluctuations. Net income reached $6.3mn (3% margin), while Adjusted EBITDA rose to $28.4mn (14% margin). The company’s disciplined focus on operating cost control led to a 7.4% YoY decrease in the cost of revenues, an 8.2% decline in Sales and Marketing expenses, an 18.7% YoY reduction in R&D, and a 19.9% decrease in General and Administrative expenses in 2Q25. Most operating expenses also declined QoQ, except for R&D. These efforts contributed to a positive operating profit of $3.9mn for the quarter. However, tighter expense management raises concerns about growth sustainability. The second quarter typically experiences a seasonal slowdown in consumer monthly average buyers. In 2Q25, the number of monthly average buyers in the Consumer segment declined by 3.6% YoY and 12.1% QoQ. Meanwhile, Udemy Business customers grew by 3% YoY, with a 95% net dollar retention rate, the lowest level in 12 months, suggesting pressure on future revenue growth. The potential growth rate for the company’s revenue remains under pressure. In 2Q25, Udemy reported $70.6mn (-4.3% YoY) in Consumer revenue and $129.3mn (4.3% YoY) in Enterprise revenue. Overall, the company outperformed previous guidance. Adjusted EBITDA improved to $28.4mn, compared to $5.5mn a year ago and $21.1mn in 1Q25. The Adjusted EBITDA margin also expanded to 14%, up from 11% in 1Q25. Stock-based compensation declined by 14.5% YoY to $17mn. The company ended the quarter with $393mn in cash and cash equivalents. Udemy added new corporate deals, including AON Service Corporation (US), Bazaarvoice (US), BIP Services (Italy), The Brick (Canada), CR3 Group (Thailand), iOOCO Solutions (South Africa), Saxo Bank (Denmark). The number of paid subscribers for consumer subscriptions surpassed 200,000. During the quarter, Udemy acquired and integrated Lummi, a technology firm known for AI-driven design tools that enhance course experiences. The company also formed partnerships with Indeed to feature Udemy’s content within Indeed’s marketplace, and with UKG, integrating Udemy Business with UKG Pro and UKG Ready platforms for streamlined enterprise learning management. Leadership changes included the appointment of Ozzie Goldschmied as CTO and Sarah Healy as Chief Skills and Learning Officer. Additionally, Udemy secured a $200mn revolving credit facility to enhance strategic options.  Udemy has provided 3Q25 guidance of $ 190-195mn in revenue and $18-20mn in Adjusted EBITDA. For FY25, the company forecasts revenue of $784-794mn and Adjusted EBITDA of $84-89mn. Management previously stated that the transition from a transactional to a subscription-based model is expected to support top-line growth through improved merchandising and course packaging. However, this transition also introduces risk, particularly in the Consumer segment. The company remains optimistic about the potential of its AI tools and the competitive advantage they provide in supporting its business. While subscription performance has been strong, it has not yet translated into top-line growth. Management reports an improved win rate and maintains a positive outlook for future growth. That said, we have revised our forecasts to reflect a more conservative scenario for both the Consumer and Udemy Business segments. Following our model update, we are lowering our 12-month price target to $10.56 from $12.21 and reiterate our Buy rating on the stock.