Let’s dig into the relative performance of Udemy (NASDAQ:UDMY) and its peers as we unravel the now-completed Q3 consumer subscription earnings season.
Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
The 8 consumer subscription stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 2.2% below.
While some consumer subscription stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.2% since the latest earnings results.
Udemy (NASDAQ:UDMY)
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Udemy reported revenues of $195.4 million, up 5.8% year on year. This print exceeded analysts’ expectations by 1.4%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ EBITDA estimates but number of monthly active buyers in line with analysts’ estimates.
“Udemy delivered solid third quarter results with revenue and adjusted EBITDA margin above the high end of our guidance ranges, and we achieved a new milestone of over $500 million in Udemy Business Annual Recurring Revenue,” said Greg Brown, Udemy’s President and CEO.
Unsurprisingly, the stock is down 1.6% since reporting and currently trades at $8.33.
Is now the time to buy Udemy? Access our full analysis of the earnings results here, it’s free.
Best Q3: Duolingo (NASDAQ:DUOL)
Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ:DUOL) is a mobile app helping people learn new languages.
Duolingo reported revenues of $192.6 million, up 39.9% year on year, outperforming analysts’ expectations by 1.8%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.
Duolingo delivered the fastest revenue growth and highest full-year guidance raise among its peers. The company reported 113.1 million users, up 36.1% year on year. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.3% since reporting. It currently trades at $311.80.
Is now the time to buy Duolingo? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Chegg (NYSE:CHGG)
Started as a physical textbook rental service, Chegg (NYSE:CHGG) is now a digital platform addressing student pain points by providing study and academic assistance.
Chegg reported revenues of $136.6 million, down 13.5% year on year, exceeding analysts’ expectations by 1.9%. Still, it was a slower quarter as it posted a decline in its users and a significant miss of analysts’ number of services subscribers estimates.
Chegg delivered the slowest revenue growth in the group. The company reported 3.83 million users, down 12.9% year on year. As expected, the stock is down 15.7% since the results and currently trades at $1.50.
Read our full analysis of Chegg’s results here.
Netflix (NASDAQ:NFLX)
Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.
Netflix reported revenues of $9.82 billion, up 15% year on year. This result surpassed analysts’ expectations by 0.6%. It was a very strong quarter as it also logged EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
The company reported 282.7 million users, up 14.4% year on year. The stock is up 20.7% since reporting and currently trades at $829.70.
Read our full, actionable report on Netflix here, it’s free.
Roku (NASDAQ:ROKU)
Spun out from Netflix, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
Roku reported revenues of $1.06 billion, up 16.5% year on year. This number beat analysts’ expectations by 4.5%. Zooming out, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ EBITDA estimates.
Roku pulled off the biggest analyst estimates beat among its peers. The company reported 85.5 million monthly active users, up 12.8% year on year. The stock is down 2.8% since reporting and currently trades at $75.38.
Read our full, actionable report on Roku here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
