Overall Score

Profitability Returns

Margins remain thin, with TTM EBIT margin at -0.1% and net profit margin at -0.9%.

Returns are still negative, with ROIC at -5.5% and ROE at -3.2%.

Gross margin is healthy at 66.4%, but it is not yet translating into durable operating profitability.

Cash Generation Capital Efficiency

Free cash flow remains positive, with FCF yield at 12.0% and FCF-to-firm at $89.3M TTM.

Capital intensity is low, with capex only 1.3% of revenue and capex-to-operating cash flow at 10.9%.

Cash conversion is solid, with a cash conversion cycle of 27.5 days and operating cash flow coverage of 9.3x.

Balance Sheet Resilience

The balance sheet is conservative, with net debt to EBITDA at -9.9x and debt-to-equity at 0.05x.

Liquidity is adequate, with a current ratio of 1.28x and cash ratio of 0.61x.

Interest coverage is negative because EBIT is slightly negative, but low leverage limits near-term solvency risk.

Moat Competitive Position

Udemy appears to have some brand and platform scale, but the financials do not yet show strong pricing power.

Gross margins are solid at 66.4%, suggesting a software-like model, but operating leverage remains limited.

The business still lacks evidence of a durable moat because returns on capital remain negative.