10-Q 1 udmy-20240930.htm 10-Q udmy-20240930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number              001-40956
Udemy, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware27-1779864
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer Identification No.)
600 Harrison Street, 3rd Floor
San Francisco, California
94107
(Address of Principal Executive Offices)(Zip Code)
(415) 813-1710
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par valueUDMYThe Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.          Yes ☒  No ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                      Yes ☒    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer  ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒
As of October 25, 2024, 145,901,417 shares of the registrant’s common stock were outstanding.


Table of Contents
Page

Summary of risk factors
Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report titled “Risk Factors.” The following is a summary of the principal risks we face, any of which could adversely affect our business, operating results, financial condition, or prospects:
•We have a history of losses, and we may not be able to generate sufficient revenue to achieve or maintain profitability in the future.
•We operate in an emerging and dynamic market, which makes it difficult to evaluate our future results of operations.
•     Our results of operations may fluctuate significantly from period to period due to a wide range of factors, which makes our future results difficult to predict.
•     Our growth may not be sustainable and depends on our ability to attract new learners, instructors, and organizations and retain existing ones.
•     Our platform relies on a limited number of instructors who create a significant portion of the most popular content on our platform, and the loss of these instructor relationships could adversely affect our business, financial condition, and results of operations.
•     If we fail to maintain and expand our relationships with Udemy Business (“UB” or “Enterprise”) customers, our ability to grow our business and revenue will suffer.
•     We operate in a highly competitive market, and we may not be able to compete successfully against current and future competitors.
•     The market for online learning solutions is relatively new and may not grow as we expect, which may harm our business, financial condition, and results of operations.
•     Adherence to our values and our focus on long-term sustainability may negatively impact our short- or medium-term financial performance.
•     Failure to effectively leverage our strategic partnerships to market and sell our products could impact our ability to increase brand awareness and grow our revenue.
•     Changes in laws or regulations relating to privacy, data protection, or cybersecurity, including those relating to the protection or transfer of data relating to individuals, or any actual or perceived failure by us to comply with such laws and regulations or any other obligations could adversely affect our business.
•     We may be unable to adequately obtain, maintain, protect, and enforce our intellectual property and proprietary information, which could adversely affect our business, financial condition, and results of operations.
•     We could face liability, or our reputation might be harmed, as a result of courses posted to our platform.
•     Intellectual property litigation, including litigation related to content available on our platform, could result in significant costs and adversely affect our business, financial condition, results of operations, and reputation.
•     The trading price of our common stock may be volatile, and you could lose all or part of your investment.
i
Special note regarding forward-looking statements
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these terms or other similar expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Form 10-Q include, but are not limited to, statements about:
•our expectations regarding our financial and operating performance, including our expectations regarding our revenue, costs, monthly average buyers, number of Udemy Business (“UB”) customers, UB Annual Recurring Revenue, UB Net Dollar Retention Rate, UB Large Customer Net Dollar Retention Rate, segment revenue, segment gross profit, adjusted EBITDA, and adjusted EBITDA margin;
•our ability to successfully execute our business, growth and operational strategies, including our operational efficiency initiatives;
•our ability to attract and retain learners, instructors, and enterprise customers;
•the timing, impact, and success of new features, integrations, capabilities, and other platform enhancements by us, or by our competitors to their offerings, or any other changes in the competitive landscape of our markets and industry;
•anticipated trends, developments, and challenges in our industry, business, the markets in which we operate, and broader macroeconomic environment;
•the size of our addressable markets, market share, and market trends, including our ability to grow our business internationally;
•the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs;
•our ability to develop and protect our brand and reputation;
•our expectations and management of future growth;
•our expectations concerning relationships with third parties;
•our ability to attract, retain, and motivate our skilled personnel, including members of our senior management team;
•our expectations regarding the effects of existing and developing laws and regulations, including with respect to taxation and privacy, data protection, and cybersecurity;
•our ability to maintain the security and availability of our platform;
•our ability to successfully defend litigation brought against us;
•our ability to successfully identify, execute, and integrate any potential acquisitions or strategic investments;
•our expectations regarding our income and other tax liabilities;
•our ability to effectively manage our exposure to fluctuations in foreign currency exchange rates; and
•our ability to obtain, maintain, protect, and enforce our intellectual property and proprietary information.
Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” and elsewhere in this Form 10-Q. Moreover, we operate in a highly competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
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The forward-looking statements made in this Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
Investors and others should note that we may announce material information to the public through filings with the Securities and Exchange Commission, our website (udemy.com), press releases, public conference calls, public webcasts, and social media, including our corporate and our Chief Executive Officer’s social media accounts on LinkedIn and X. We encourage our investors and others to review the information disclosed through such channels as such information could be deemed to be material information. Please note that this list may be updated from time to time.
Market and industry data
Certain market and industry data included in this Form 10-Q has been obtained from third party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications, government publications, and third-party forecasts in conjunction with our assumptions about our markets. We have not independently verified such third-party information. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed in this Form 10-Q in the section titled “Special Note Regarding Forward-Looking Statements” and in Part II, Item 1A, “Risk Factors.”

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PART I.
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Udemy, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
September 30,December 31,
20242023
Assets
Current assets:
Cash and cash equivalents$204,563 $305,564 
Restricted cash, current
100 3,329 
Marketable securities
152,546 171,372 
Accounts receivable, net 81,164 92,555 
Prepaid expenses and other current assets24,778 20,924 
Deferred contract costs, current44,861 38,584 
Total current assets508,012 632,328 
Property and equipment, net3,320 4,439 
Capitalized software, net33,275 31,388 
Operating lease right-of-use assets11,833 5,691 
Restricted cash, non-current1,115 659 
Deferred contract costs, non-current32,276 35,790 
Strategic investments— 10,311 
Intangible assets, net2,656 5,223 
Goodwill12,646 12,646 
Other assets3,772 2,721 
Total assets$608,905 $741,196 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$4,273 $2,506 
Accrued expenses and other current liabilities25,459 27,778 
Content costs payable36,299 40,277 
Accrued compensation and benefits32,179 24,332 
Operating lease liabilities, current4,689 5,825 
Deferred revenue, current299,955 279,414 
Total current liabilities402,854 380,132 
Operating lease liabilities, non-current7,424 1,124 
Deferred revenue, non-current2,364 3,000 
Other liabilities, non-current6 48 
Total liabilities412,648 384,304 
Note 7 – Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value - 950,000,000 shares authorized; 146,691,638 and 157,166,360 shares issued and outstanding as of September 30, 2024, and December 31, 2023, respectively.
1 2 
Additional paid-in capital991,176 1,076,508 
Accumulated other comprehensive income
202 80 
Accumulated deficit(795,122)(719,698)
Total stockholders’ equity196,257 356,892 
Total liabilities and stockholders' equity$608,905 $741,196 
See accompanying notes to condensed consolidated financial statements.
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Udemy, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue$195,417 $184,722 $586,623 $539,392 
Cost of revenue72,362 77,264 221,888 229,903 
Gross profit123,055 107,458 364,735 309,489 
Operating expenses
Sales and marketing85,997 76,492 260,288 233,520 
Research and development32,976 30,307 96,607 90,829 
General and administrative22,266 22,155 74,299 71,112 
Restructuring charges11,275 — 11,275 10,263 
Total operating expenses152,514 128,954 442,469 405,724 
Loss from operations(29,459)(21,496)(77,734)(96,235)
Other income (expense), net
Interest income4,732 5,542 15,655 14,758 
Interest expense504 (124)424 (464)
Other income (expense), net
(185)122 (11,077)(2,181)
Total other income, net5,051 5,540 5,002 12,113 
Net loss before taxes(24,408)(15,956)(72,732)(84,122)
Income tax provision(863)(811)(2,692)(2,924)
Net loss
$(25,271)$(16,767)$(75,424)$(87,046)
Net loss per share
Basic and diluted$(0.17)$(0.11)$(0.49)$(0.59)
Weighted-average shares used in computing net loss per share
Basic and diluted149,179,826 151,307,963 152,867,160 148,392,636 
See accompanying notes to condensed consolidated financial statements.
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Udemy, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)


Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net loss
$(25,271)$(16,767)$(75,424)$(87,046)
Other comprehensive income (loss):
Foreign currency translation gain (loss), net of tax
65 (32)33 (48)
Change in unrealized gain (loss) on marketable securities, net of tax181 18 89 219 
Total other comprehensive income (loss)
246 (14)122 171 
Comprehensive loss
$(25,025)$(16,781)$(75,302)$(86,875)
See accompanying notes to condensed consolidated financial statements.
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Udemy, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
(unaudited)
Common StockAdditional
Paid-In
Capital		Accumulated
Other
Comprehensive Income (Loss)		Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance—June 30, 2024151,682,337 $2 $1,022,147 $(44)$(769,851)$252,254 
Stock-based compensation— — 25,531 — — 25,531 
Exercise of stock options204,178 — 480 — — 480 
Vesting of restricted stock units1,901,210 — — — — — 
Shares withheld related to net share settlement of equity awards(776,148)— (5,560)— — (5,560)
Repurchases of common stock(6,319,939)(1)(51,422)— — (51,423)
Other comprehensive income (loss)— — — 246 — 246 
Net loss— — — — (25,271)(25,271)
Balance—September 30, 2024146,691,638 $1 $991,176 $202 $(795,122)$196,257 
Balance—June 30, 2023149,845,546 $1 $1,015,851 $(48)$(682,683)$333,121 
Stock-based compensation— — 25,659 — — 25,659 
Exercise of stock options1,178,316 — 3,839 — — 3,839 
Vesting of restricted stock units1,637,602 1 — — — 1 
Other comprehensive income (loss)— — — (14)— (14)
Net loss— — — — (16,767)(16,767)
Balance—September 30, 2023152,661,464 $2 $1,045,349 $(62)$(699,450)$345,839 
Balance—December 31, 2023157,166,360 $2 $1,076,508 $80 $(719,698)$356,892 
Stock-based compensation— — 77,164 — — 77,164 
Exercise of stock options2,350,902 — 857 — — 857 
Vesting of restricted stock units5,283,495 — 113 — — 113 
Issuance of common stock under employee stock purchase plan554,039 — 4,533 — — 4,533 
Shares withheld related to net share settlement of equity awards(3,590,881)— (25,465)— — (25,465)
Repurchases of common stock(15,072,277)(1)(142,534)— — (142,535)
Other comprehensive income (loss)— — — 122 — 122 
Net loss— — — — (75,424)(75,424)
Balance—September 30, 2024146,691,638 $1 $991,176 $202 $(795,122)$196,257 
Balance—December 31, 2022145,013,786 $1 $951,946 $(233)$(612,404)$339,310 
Stock-based compensation— — 79,922 — — 79,922 
Exercise of stock options2,540,719 — 8,616 — — 8,616 
Vesting of restricted stock units4,481,848 1 108 — — 109 
Issuance of common stock under employee stock purchase plan625,111 — 4,757 — — 4,757 
Other comprehensive income (loss)— — — 171 — 171 
Net loss— — — — (87,046)(87,046)
Balance—September 30, 2023152,661,464 $2 $1,045,349 $(62)$(699,450)$345,839 
See accompanying notes to condensed consolidated financial statements.
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Udemy, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September 30,
20242023
Cash flows from operating activities:
Net loss
$(75,424)$(87,046)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization19,515 18,069 
Amortization of deferred contract costs
43,863 34,482 
Stock-based compensation70,264 72,928 
Allowance for credit losses1,026 1,309 
Accretion of marketable securities(6,651)(5,323)
Non-cash operating lease expense3,641 4,468 
Unrealized loss on strategic investments10,311 1,793 
Other1,319 931 
Changes in operating assets and liabilities:
Accounts receivable10,364 20,363 
Prepaid expenses and other assets(5,508)(3,628)
Deferred contract costs(46,626)(45,205)
Accounts payable, accrued expenses and other liabilities5,962 (7,102)
Content costs payable(3,978)505 
Operating lease liabilities(4,523)(5,168)
Deferred revenue19,906 3,887 
Net cash provided by operating activities
43,461 5,263 
Cash flows from investing activities:
Purchases of marketable securities(239,783)(225,536)
Proceeds from maturities of marketable securities265,350 231,300 
Purchases of property and equipment(1,116)(435)
Capitalized software costs(10,247)(9,321)
Net cash provided by (used in) investing activities
14,204 (3,992)
Cash flows from financing activities:
Net proceeds from exercise of stock options921 8,277 
Proceeds from share purchases under employee stock purchase plan4,533 4,757 
Taxes paid related to net share settlement of equity awards
(25,363)— 
Repurchases of common stock
(141,591)— 
Net cash provided by (used in) financing activities
(161,500)13,034 
Effect of foreign exchange rates on cash flows61 (116)
Net increase (decrease) in cash, cash equivalents and restricted cash
(103,774)14,189 
Cash, cash equivalents and restricted cash—Beginning of period
309,552 317,314 
Cash, cash equivalents and restricted cash—End of period
$205,778 $331,503 
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Nine Months Ended September 30,
20242023
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$204,563 $327,974 
Restricted cash, current100 100 
Restricted cash, non-current1,115 3,429 
Total cash, cash equivalents and restricted cash$205,778 $331,503 
Supplemental disclosures of cash flow information:
Interest paid$— $3,186 
Income taxes paid$1,165 $1,337 
Supplemental disclosure of non-cash investing and financing activities:
Stock-based compensation in capitalized costs$6,953 $6,966 
Net change in unrealized gain (loss) on marketable securities
$89 $218 
Operating lease right-of-use assets exchanged for operating lease liabilities$9,779 $— 
Accrued excise tax on share repurchases
$944 $— 
See accompanying notes to condensed consolidated financial statements.
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Udemy, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Organization and description of business
Description of business
Udemy, Inc. (“Udemy” or the “Company”) was incorporated in January 2010 under the laws of the state of Delaware. The Company is headquartered in San Francisco, California.
Udemy is a global learning company whose online platform empowers organizations and individuals with flexible and effective skill acquisition and development. The Company’s learning marketplace platform enables tens of thousands of subject matter experts to develop, distribute and enhance content that reaches Udemy’s broad global audience of learners. Udemy leverages technology, data and insights to deliver personalized and effective learning experiences. The Company further curates its highest-quality content from the marketplace for Udemy Business, which enables companies around the world to offer engaging, effective, on-demand learning for all employees, immersive laboratory-style learning for tech teams, and cohort-based learning focused on leadership development.

2. Summary of significant accounting policies
Basis of consolidation and presentation— The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation, and all other normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the periods presented have been made.

Segment information— The Company defines its segments as those operations the chief operating decision maker (“CODM”), determined to be the Chief Executive Officer of the Company, regularly reviews to allocate resources and assess performance. For the three and nine months ended September 30, 2024 and 2023, the Company operated under two operating and reportable segments: Enterprise and Consumer. The Company continually monitors and reviews its segment reporting structure in accordance with Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, to determine whether any changes have occurred that would impact its reportable segments. For further information on the Company’s segment reporting, see Note 12 – Segment and geographic information.

Use of estimates— The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the results of operations during the reporting periods.
Significant estimates and assumptions reflected in the condensed consolidated financial statements include, but are not limited to, allowance for credit losses, capitalization of internally developed software and associated useful lives, stock-based compensation, determination of the income tax valuation allowance and the potential outcome of uncertain tax positions, estimated service period for consumer single course purchases, the period of benefit for deferred commissions, the fair value and associated useful lives of intangible assets and goodwill acquired via business combinations, the valuation of privately-held strategic investments, including impairments, and the carrying value of our operating lease right-of-use (“ROU”) assets. Management periodically evaluates such estimates and assumptions for continued reasonableness.
Actual results may ultimately differ from management’s estimates and such differences could be material to the Company’s financial position and results of operations.
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Concentration of credit risk— Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, restricted cash, and accounts receivable. For cash and restricted cash, the Company is exposed to credit risk in the event of default by the financial institutions to the extent the amounts recorded on the accompanying condensed consolidated balance sheets are in excess of federal insurance limits. The Company’s investments that are classified as cash equivalents and marketable securities consist of high-credit-quality instruments and fixed-income securities.
The Company generally does not require collateral or other security in support of accounts receivable. To reduce credit risk, management performs ongoing evaluations of its customers’ financial condition and maintains an allowance based upon expected credit losses of outstanding receivables. The Company had no customers who accounted for more than 10% of total accounts receivable as of September 30, 2024, or December 31, 2023. No customer accounted for more than 10% of total revenue during the three and nine months ended September 30, 2024 or 2023.

Summary of significant accounting policies— There have been no significant changes to the policies as disclosed in Note 2 – Summary of significant accounting policies of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 26, 2024 (the “Annual Report”).
Accounts receivable, net— Accounts receivable primarily represent amounts owed to the Company for Enterprise subscriptions. Also included in accounts receivable are amounts due from payment processors or mobile application store partners that settle over a period longer than five business days. Accounts receivable balances are recorded at the invoiced amount and are non-interest-bearing. Accounts receivable is presented net of allowance for credit losses in the accompanying condensed consolidated balance sheets.
The Company maintains an allowance based upon expected credit losses of outstanding receivables. Management derives its estimate using a variety of factors, including historical collection and loss patterns; the current aging of receivables; geographic and other customer-specific credit risk factors; and reasonable and supportable forecasts of future economic conditions which inform adjustments to historical loss patterns. The provision for expected credit losses is recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations. Accounts receivable deemed to be uncollectible are written off, net of expected or actual recoveries.
Balance at Beginning of PeriodCharged to ExpensesCharges Utilized/Written-off, Net of RecoveriesBalance at End of Period
Allowance for credit losses (in thousands)
Nine Months Ended September 30, 2024$1,270 $1,026 $(1,312)$984 
Nine Months Ended September 30, 2023
$1,528 $1,309 $(1,370)$1,467 
Recently Adopted Accounting Pronouncements Adopted in 2024
There are no recently issued accounting pronouncements that were adopted by the Company during the nine months ended September 30, 2024.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which aims to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses and the chief operating decision maker. The standard will become effective for the Company’s fiscal year ended December 31, 2024, and interim periods during the fiscal year ended December 31, 2025, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the potential impact of the new standard on the Company’s condensed consolidated financial statements.
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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The standard will become effective for the Company’s fiscal year ended December 31, 2025, with early adoption permitted. The Company is currently assessing the potential impact of the new standard on the Company’s condensed consolidated financial statements.
3. Revenue recognition

Deferred revenue— Revenue recognized for the three months ended September 30, 2024, from amounts included in deferred revenue as of June 30, 2024, was $152.8 million. Revenue recognized for the three months ended September 30, 2023, from amounts included in deferred revenue as of June 30, 2023, was $143.4 million.

Revenue recognized for the nine months ended September 30, 2024, from amounts included in deferred revenue as of December 31, 2023, was $252.9 million. Revenue recognized for the nine months ended September 30, 2023, from amounts included in deferred revenue as of December 31, 2022, was $242.9 million.

The below table presents a summary of deferred revenue balances by reportable segment (in thousands):
September 30,December 31, December 31,
202420232022
Deferred revenue:
Enterprise$244,713 $220,127 $219,030 
Consumer57,606 62,287 59,249 
Total deferred revenue$302,319 $282,414 $278,279 

Remaining performance obligations— Remaining performance obligations represent the aggregate amount of the transaction price in contracts for performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations primarily relate to deferred revenue as well as unbilled revenue from multi-year Enterprise subscription contracts with future installment payments, as well as unearned revenue from Consumer single course purchases and subscriptions at the end of any given period. As of September 30, 2024, the aggregate transaction price for remaining performance obligations was $532.6 million, of which 74% is expected to be recognized over the next twelve months and the remainder thereafter.

Deferred contract costs— The following table represents a roll forward of the Company’s deferred contract costs (in thousands):
Balance at Beginning of PeriodAdditionsAmortization ExpenseBalance at End of Period
Nine Months Ended September 30, 2024$74,374 $46,626 $(43,863)$77,137 
Nine Months Ended September 30, 2023$65,645 $45,205 $(34,482)$76,368 

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4. Investments and fair value measurements

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring or nonrecurring basis within the fair value hierarchy (in thousands):
As of September 30, 2024
Level 1Level 2Level 3
Assets
Cash equivalents1:
Money market funds$160,819 $— $— 
Time deposits6,445 — — 
Marketable securities:
U.S. government securities— 152,546 — 
Strategic investments— — — 
Total assets
$167,264 $152,546 $— 
Liabilities
Accrued expenses and other current liabilities:
Cash settled stock appreciation rights
$— $— $4 
Other liabilities, non-current:
Cash settled stock appreciation rights— — 6 
Total liabilities
$— $— $10 

As of December 31, 2023
Level 1Level 2Level 3
Assets
Cash equivalents1:
Money market funds$266,692 $— $— 
Marketable securities:
U.S. government securities— 171,372 — 
Strategic investments— — 10,311 
Total assets
$266,692 $171,372 $10,311 
Other liabilities, non-current:
Cash settled stock appreciation rights$— $— $48 
(1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets, in addition to $37.3 million and $38.9 million of cash, as of September 30, 2024 and December 31, 2023, respectively.
The Company’s money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company’s investments in U.S. government securities are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are directly or indirectly observable. The Company’s strategic investment and cash settled stock appreciation rights are classified within Level 3 of the fair value hierarchy because they have been valued using significant unobservable inputs for which the Company has been required to develop its own assumptions.
A summary of the changes in the fair value of Level 3 financial instruments, of which vesting and remeasurement of stock appreciation rights (SARs) and impairment of strategic investments are recognized in the consolidated statements of operations, is as follows (in thousands):
10
Stock Appreciation RightsStrategic Investments
Balance— June 30, 2024
$16 $— 
Vesting and remeasurement of SARs(6)— 
Balance— September 30, 2024
$10 $— 
Balance— June 30, 2023
$30 $10,311 
Vesting and remeasurement of SARs(4)— 
Balance— September 30, 2023
$26 $10,311 
Balance— December 31, 2023
$48 $10,311 
Vesting and remeasurement of SARs(31)— 
Exercises of SARs(7)— 
Unrealized loss on strategic investments— (10,311)
Balance— September 30, 2024
$10 $— 
Balance— December 31, 2022
$462 $12,104 
Vesting and remeasurement of SARs(183)— 
Exercises of SARs(253)— 
Unrealized loss on strategic investments— (1,793)
Balance— September 30, 2023
$26 $10,311 
The Company evaluates its strategic investments for impairment at each reporting period. This evaluation considers several potential qualitative and quantitative impairment indicators including, but not limited to, the investee's financial metrics, whether there were any significant adverse changes in the economic environment or general market conditions of the geographies and industries in which the investee operates, and any other publicly available information that may affect the value of the investment. The Company determined that qualitative indicators of impairment existed as of June 30, 2024, and therefore performed an assessment of the fair value of its investment.
The fair value analysis involved the use of significant observable and unobservable assumptions, including the investee’s forecasted financial condition in relation to its outstanding obligations, ability to secure additional funds through various alternative scenarios, and a dual market and income approach involving revenue multiples of publicly traded peer companies and financial forecasts provided by the investee. Based on the assessment performed as of June 30, 2024, the Company recognized an impairment loss of $10.3 million during the second quarter of 2024, such that the carrying value of its strategic investments was reduced to zero.
The cost basis of the strategic investments is $15.0 million. In addition to the $10.3 million impairment charge recognized during the second quarter of 2024, the Company previously recognized impairment charges of $1.8 million during the second quarter of 2023 and $2.9 million during the third quarter of 2022. There have been no observable price changes in orderly transactions for identical or similar investments of the same issuer during the periods presented.

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5. Consolidated balance sheet components

Cash, cash equivalents, and marketable securities— The amortized cost, unrealized gains and losses, and estimated fair value of cash, cash equivalents, and marketable securities consisted of the following (in thousands):
As of September 30, 2024
Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash and cash equivalents:
Cash$37,299 $— $— $37,299 
Money market funds160,819 — — 160,819 
Time deposits6,445 — — 6,445 
Total cash and cash equivalents204,563 — — 204,563 
Marketable securities:
U.S. government securities152,381 165 — 152,546 
Total cash, cash equivalents, and marketable securities$356,944 $165 $— $357,109 

As of December 31, 2023
Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash and cash equivalents:
Cash$38,872 $— $— $38,872 
Money market funds266,692 — — 266,692 
Total cash and cash equivalents305,564 — — 305,564 
Marketable securities:
U.S. government securities171,296 76 — 171,372 
Total cash, cash equivalents, and marketable securities$476,860 $76 $— $476,936 

Realized gains and losses reclassified from accumulated other comprehensive loss to other income, net were zero for the three and nine months ended September 30, 2024 and 2023.
The Company had no securities in an unrealized loss position as of September 30, 2024 and December 31, 2023. The Company does not intend to sell available-for-sale marketable debt securities in unrealized loss positions, and it is more likely than not that the Company will hold these securities until maturity or recovery of the cost basis. As of September 30, 2024 and December 31, 2023, the Company did not have an allowance for credit losses related to its available-for-sale debt securities due to a zero loss expectation for the portfolio which consists solely of U.S. government securities.
As of September 30, 2024, the entirety of the Company’s marketable securities portfolio had remaining contractual maturities of one year or less.

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Property and equipment, net— Property and equipment, net consisted of the following (in thousands):
September 30,December 31,
20242023
Leasehold improvements$19,064 $19,064 
Computers and equipment8,180 7,770 
Furniture and fixtures4,720 4,705 
Purchased software383 383 
Construction in progress
160 — 
Total property and equipment32,507 31,922 
Less accumulated depreciation and amortization(29,187)(27,483)
Property and equipment, net$3,320 $4,439 
Depreciation expense was $0.7 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively, and $2.2 million and $2.3 million for the nine months ended September 30, 2024 and 2023, respectively.
Capitalized software, net— Capitalized software, net consisted of the following (in thousands):
September 30,December 31,
20242023
Capitalized software$101,796 $85,160 
Less accumulated amortization(68,521)(53,772)
Capitalized software, net$33,275 $31,388 
Amortization expense of capitalized software was $5.0 million and $4.5 million for the three months ended September 30, 2024 and 2023, respectively, and $14.8 million and $12.7 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, expected amortization expense for capitalized software over the remaining asset lives was as follows (in thousands):

Remainder of 2024$5,037 
202516,450 
20269,392 
20272,396 
Total expected amortization$33,275 

Intangible assets, net and goodwill— As of September 30, 2024, intangible assets, net acquired as part of the CorpU business combination were as follows (in thousands):

Estimated Useful LivesIntangible Assets, GrossAccumulated AmortizationIntangible Assets, Net
Customer relationships6 years$5,500 $(2,844)$2,656 
Vendor relationships 3 years4,500 (4,500)— 
Developed technology3 years4,200 (4,200)— 
Tradename2 years900 (900)— 
Total$15,100 $(12,444)$2,656 

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As of December 31, 2023, intangible assets, net acquired as part of the CorpU business combination were as follows (in thousands):
Estimated Useful LivesIntangible Assets, GrossAccumulated AmortizationIntangible Assets, Net
Customer relationships6 years$5,500 $(2,156)$3,344 
Vendor relationships 3 years4,500 (3,528)972 
Developed technology3 years4,200 (3,293)907 
Tradename2 years900 (900)— 
Total$15,100 $(9,877)$5,223 

Amortization expense of intangible assets was $0.7 million and $1.0 million for the three months ended September 30, 2024 and 2023, respectively, and $2.6 million and $3.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The expected future amortization expense for intangible assets as of September 30, 2024 was as follows (in thousands):

Remainder of 2024
$228 
2025917 
2026917 
2027594 
Total expected amortization$2,656 

Goodwill in the amount of $12.6 million was established as part of the CorpU acquisition on August 24, 2021, and allocated to the Enterprise segment. This amount represents the excess of the purchase price over the fair value of net assets acquired. There have been no adjustments to the carrying amount of goodwill as of September 30, 2024.

The Company tests for impairment at least annually, or whenever events or changes in circumstances occur that could impact the recoverability of these assets. No such triggering events were noted for the three and nine months ended September 30, 2024 and 2023.
Accrued expenses and other current liabilities— Accrued expenses and other current liabilities consisted of the following (in thousands):

September 30,December 31,
20242023
Accrued expenses$12,933 $13,773 
Indirect tax reserves2,031 $1,432 
Indirect tax payables7,103 $8,758 
Other current liabilities3,392 $3,815 
Accrued expenses and other current liabilities$25,459 $27,778 


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6. Leases
The Company applies the guidance under Topic 842 for leases of real estate facilities under non-cancelable operating leases.
During the second quarter of 2024, new leasing activities resulted in additional operating lease right-of-use assets of $9.8 million. These activities primarily consisted of extensions to lease terms for real estate facilities through fiscal year 2029. The longest remaining lease term, relating to the Company’s San Francisco headquarters, also has a five-year renewal option not included in the lease term as it was not reasonably certain of being exercised at the time of renewal.
As part of these activities, the Company is entitled to receive $2.1 million in tenant incentives for future leasehold improvements to be constructed by the Company, which was still outstanding as of September 30, 2024. The amount of cash restricted in connection with certain new and renewed lease agreements was also reduced by $2.5 million.
The components of lease costs, supplemental cash flow information, lease term, and discount rate for operating leases are as follows (in thousands, except for percentages and years):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Operating lease costs$1,123 $1,519 $3,928 $4,753 
Variable lease costs$187 $271 $740 $816 
Cash paid for amounts included in the measurement of operating lease liabilities
$5,024 $5,481 
September 30,December 31,
20242023
Weighted average remaining term (years)3.51.3
Weighted average discount rate5.7 %3.9 %
Future minimum lease payments (net of expected tenant incentives) under noncancellable operating leases with initial lease terms in excess of one year as of September 30, 2024, were as follows (in thousands):
Remainder of 2024
$1,027 
20253,014 
20264,072 
20272,231 
20282,298 
20291,166 
Gross lease payments13,808 
Less imputed interest(1,695)
Present value of operating lease liabilities$12,113 

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7. Commitments and contingencies
Noncancellable purchase commitments— The Company has contractual commitments with its cloud infrastructure provider, network service providers and paid advertising and sponsorship vendors that are noncancellable. The Company had $37.7 million worth of future minimum payments under noncancellable purchase commitments with remaining terms in excess of one year as of September 30, 2024, which are expected to be paid through 2027.
Indemnification— The Company enters into indemnification provisions under agreements with other parties in the ordinary course of business, including certain business partners, investors, contractors, and the Company’s officers, directors, and certain employees. The Company has agreed to indemnify and defend the indemnified party’s claims and related losses suffered or incurred by the indemnified party resulting from actual or threatened third-party claims because of the Company’s activities or, in some cases, non-compliance with certain representations and warranties made by the Company. In general, the Company does not record any liability for these indemnities in the accompanying condensed consolidated balance sheets as the amounts cannot be reasonably estimated and are not considered probable. The Company does, however, accrue for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable. To date, losses recorded in the Company’s condensed consolidated statements of operations in connection with the indemnification provisions have not been material.
Litigation— From time to time, in the ordinary course of business, the Company is subject to legal proceedings, claims, investigations, and other proceedings, including claims of alleged infringement of third-party patents and other intellectual property rights, and commercial, employment, and other matters. In accordance with generally accepted accounting principles, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least annually and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. The outcome of such litigation is not expected to have a material effect on the financial position, results of operation and cash flows of the Company. The Company has recorded an immaterial amount related to all outstanding litigation matters in the accrued expenses and other current liabilities caption of the accompanying condensed consolidated balance sheets as of September 30, 2024, and December 31, 2023.

8. Income taxes
The provision for income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into consideration in the relevant period. Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company records a cumulative adjustment to the provision.
The Company had an effective tax rate of (3.54)% and (5.08)% for the three months ended September 30, 2024 and 2023, respectively, and (3.70)% and (3.48)% for the nine months ended September 30, 2024 and 2023, respectively. The difference between the 21% statutory federal tax rate and the effective tax rate was primarily a result of income earned in jurisdictions with higher statutory tax rates, foreign withholding taxes, and tax credits offset by change in valuation allowance.
As of September 30, 2024 and December 31, 2023, the Company has provided a valuation allowance against U.S. federal and state deferred tax assets. Management continues to evaluate the realizability of deferred tax assets and the related valuation allowance. If management's assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which management makes the determination.
The Company recognizes interest and penalties associated with uncertain tax positions as part of the income tax provision. To date, the Company has not recognized any interest and penalties in its condensed consolidated statements of operations, nor has it accrued for or made payments for interest and penalties.
The Company is subject to taxation in the U.S. and various foreign jurisdictions. Due to NOL carryforwards and tax credit carryforwards, the statutes of limitations remain open for tax years from inception of the Company through 2023. There are currently no income tax audits underway by U.S. federal or state tax authorities. In October 2023, the Company’s subsidiary, Udemy India LLP received a tax assessment from the India Income Tax Department, for the fiscal year ended March 31, 2021. The assessment challenged the transfer pricing
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methodology used by Udemy India LLP. The Company believes the proposed adjustment is without merit and will vigorously defend its position; however, it could take a number of years to reach resolution of this matter.

9. Related party transactions
Naspers Ltd. (“Naspers”), through an investment entity controlled by Prosus N.V. (“Prosus”), beneficially owns more than 5% of the Company’s outstanding capital stock. A current member of the Company’s Board of Directors is an executive of a Prosus operating subsidiary, OLX Global B.V. A former member of the Company’s Board of Directors, who resigned in September 2022, was an executive officer of Prosus. Naspers and certain entities directly and indirectly controlled by Naspers are customers of the Company’s Enterprise subscription offering.
Insight Partners (“Insight”), where a member of the Company’s Board of Directors is a Managing Director, has certain affiliates who are customers of the Company’s Enterprise subscription offering. Insight Partners is also affiliated with certain vendors that the Company has contracted to provide technology and software solutions.
Certain members of the Company’s Board of Directors also serve as executive officers for customers of the Company’s Enterprise subscription offering.
The following tables summarize the Company’s related party transactions (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue recognized from services provided to customers
Naspers and affiliates$0.5 $0.7 $1.3 $1.4 
Insight and affiliates0.1 0.5 0.5 0.5 
Companies affiliated with Board members0.1 0.1 0.3 0.3 
Expense recognized from services provided by vendors
Insight and affiliates0.2 0.3 0.6 0.6 

September 30,December 31,
20242023
Amounts in accounts receivable
Naspers and affiliates$0.2 immaterial
Insight and affiliates— $0.2 
Companies affiliated with Board members— 0.4 
Amounts in accounts payable and accrued expenses and other current liabilities
Insight and affiliates— immaterial
10. Stockholders' equity
Preferred stock— In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 50,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors. As of September 30, 2024 and December 31, 2023, there were zero shares issued and outstanding.
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Common stock— Common stockholders are entitled to one vote per share. Shares of common stock reserved for future issuance consisted of the following:
September 30,December 31,
20242023
2010 Equity Incentive Plan:
Stock options outstanding2,208,391 4,621,021 
2021 Equity Incentive Plan:
RSUs outstanding and PSUs(1)
17,394,641 16,738,309 
Shares available for future issuance under:
2021 Equity Incentive Plan9,658,846 4,093,695 
2021 Employee Stock Purchase Plan3,374,376 2,350,803 
Total shares of common stock reserved32,636,254 27,803,828 
(1) For those PSUs in their respective performance periods, the number of shares reserved for issuance is based on the maximum achievement of the corporate performance metrics.
Share repurchase program— On February 14, 2024, the Company’s Board of Directors approved a share repurchase program (the “Repurchase Program”) with authorization to purchase up to $100 million of Udemy common stock. The Board of Directors approved a $50 million extension of the Repurchase Program on May 2, 2024, bringing the total authorized under the Repurchase Program to $150 million. The Company may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The number of shares to be repurchased and the timing of the repurchases depend on several factors, including, without limitation, business, economic, and market conditions, corporate, legal, and regulatory requirements, prevailing stock prices, trading volume, and other considerations. The Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock.
Shares repurchased by the Company are accounted for on the settlement date. Upon settlement, repurchased shares are immediately retired and no longer considered issued or outstanding. The total cost to repurchase shares includes any direct costs incurred, including broker commissions and excise taxes, and is recorded as a reduction to additional paid in capital in the condensed consolidated balance sheets. During the three months ended September 30, 2024, the Company repurchased 6,319,939 shares for an aggregate total of $51.4 million, inclusive of direct costs incurred. During the nine months ended September 30, 2024, the Company repurchased 15,072,277 shares for an aggregate total of $142.5 million, inclusive of direct costs incurred.
Equity incentive plans— In 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan provided for incentive stock options (“ISOs”), non-statutory stock options (“NSOs”, collectively with ISOs, “stock options”), SARs, restricted stock, and restricted stock units (“RSUs”) to be granted to eligible employees, directors, and consultants. The 2010 Plan was terminated in October 2021 in connection with the IPO but continues to govern the terms and conditions of the outstanding awards granted pursuant to the 2010 Plan. No further equity awards will be granted under the 2010 Plan.
The Company adopted the 2021 Equity Incentive Plan (the "2021 Plan") in September 2021, which became effective on October 28, 2021 (collectively with the 2010 Plan, the “Equity Incentive Plans”) and was approved by the Company’s stockholders. The 2021 Plan provides for the granting of ISOs, NSOs, SARs, restricted stock, RSUs, and performance awards to eligible employees, directors, and consultants.
The Company initially reserved 13,800,000 shares for issuance under the 2021 Plan. The amount available for issuance is subject to an annual increase on the first day of each calendar year, beginning on January 1, 2023, in an amount equal to 5% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding calendar year or a lesser amount determined by the Company’s Board of Directors or compensation committee. The amount available for issuance shall also include Returning Shares, which are any shares subject to awards granted under the 2010 Plan that, on or after October 29, 2021, expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest. Additionally, any difference in (i) the number of PSUs reserved for future
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issuance based on maximum achievement of the corporate performance metric and (ii) the number of PSUs issued based on actual attainment are returned to the 2021 Plan.
On January 1, 2024, the shares available for future grants under the 2021 Plan automatically increased by 7,858,318 pursuant to the above evergreen provision of the 2021 Plan.
Restricted stock units and performance-based restricted stock units— The fair value of RSUs and PSUs are determined using the fair value of the Company’s common stock on the date of grant. The Company recognizes stock-based compensation expense for RSUs with service-based vesting conditions on a straight-line basis over the requisite service period for each award, which typically vest over a three or four-year period.
Each PSU conveys a right to receive one share of the Company’s common stock on the date it vests, provided that the number of PSUs that will ultimately vest may vary based upon achievement of the corporate performance metrics at the end of the performance period. During the performance period, Management estimates the number of PSUs that are expected to vest based on the anticipated achievement. If the performance-based vesting condition is considered probable of being achieved, the Company recognizes expense over the requisite service period based on the probable outcome of achievement. If the performance goals are not met, or are considered improbable, no compensation cost is recognized, and any previously recognized compensation cost is reversed. Total stock-based compensation expense to be recognized may fluctuate during the performance period due to changes in forecasted achievement.
During the first quarter of 2024, the Company granted 553,568 PSUs at target to certain executives, with payout achievement ranging from 0% to 150% of target. One quarter of the eligible PSUs vest upon certification of the corporate performance metrics by the Board of Directors’ compensation committee in the first quarter of 2025, and the remaining 75% will vest equally over the following 12 quarters, subject to continual service by the grantee. Achievement has been considered probable since the grant date, and, as of September 30, 2024, the Company estimated a payout rate of 45% of target based on forecasted achievement.
During the first quarter of 2023, the Company granted 645,833 PSUs at target to certain executives, with payout achievement ranging from 0% to 150% of target. In February 2024, the Board of Directors’ compensation committee certified actual achievement against target of 70%. As a result, 450,170 shares were awarded to the grantees, of which one quarter vested in the quarter of certification, while the remaining 75% will vest equally over the following 12 quarters, subject to continual service by the grantee. The difference in the number of shares granted at target and the shares certified by the Board based on actual achievement were canceled and returned to the pool of available for future issuance under the 2021 Plan.
A summary of RSU and PSU activity under the 2021 Plan is as follows:
RSUs OutstandingWeighted Average Grant Date Fair Value
PSUs Outstanding(1)
Weighted Average Grant Date Fair Value
Unvested - December 31, 2023
15,769,577$14.07 645,833$8.89 
Granted 7,809,7279.63 553,56810.98 
Released(5,118,303)14.81 (165,192)8.89 
Canceled(2,141,728)13.69 (235,596)8.89 
Unvested - September 30, 2024
16,319,273$11.77 798,613$10.34 
Awards vested, not yet released - September 30, 2024
13,832$8.77 — $— 
(1) Canceled PSU shares consist of awards forfeited as well as the difference in the number of shares granted at target in 2023 and the shares certified by the Board based on actual achievement.
As of September 30, 2024, total unrecognized stock-based compensation expense related to unvested RSUs was $150.8 million, which will be recognized over a weighted average period of 2.7 years.
As of September 30, 2024, total unrecognized stock-based compensation expense related to unvested PSUs was $2.5 million, which will be recognized over a weighted average period of 1.6 years.
Stock options— The Company may grant stock options at exercise prices not less than the fair market value at the date of grant. These options generally expire 10 years from the date of grant. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for each award, which is generally even over four years.
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The following is a summary of activity for stock options having only service-based vesting conditions under the Equity Incentive Plans:
Options OutstandingWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
(In Thousands)
Balance - December 31, 2023
4,571,021 $5.08 3.23$44,309 
Granted — — 
Exercised (2,350,902)5.43 
Canceled (61,728)7.94 
Balance - September 30, 2024
2,158,391 $4.61 4.58$6,961 
Vested & expected to vest as of September 30, 2024
2,158,391 $4.61 4.58$6,961 
Exercisable as of September 30, 2024
2,153,129 $4.58 4.57$6,961 
As of September 30, 2024, total unrecognized stock-based compensation expense related to unvested stock options was immaterial.
Stock appreciation rights— There have been no other changes to the Company’s SARs compared to those described in Note 12— Stockholders’ equity, included in Part II, Item 8 of the Company’s Annual Report.
During the nine months ended September 30, 2024, 1,558 SARs were exercised at an exercise price of $6.58. As of September 30, 2024, there were 3,000 outstanding SARs worth an immaterial total fair value.
Performance-based stock options— There have been no other changes to the Company’s performance-based stock options compared to those described in Note 12— Stockholders’ equity, included in Part II, Item 8 of the Company’s Annual Report.
As of September 30, 2024, there were 50,000 performance-based stock options outstanding, of which 35,416 were exercisable. As of September 30, 2024, total unrecognized stock-based compensation expense related to unvested Performance-Based Options was immaterial.
Employee stock purchase plan— The 2021 Employee Stock Purchase Plan (the “ESPP”) became effective on October 29, 2021. The Company initially reserved 2,800,000 shares of the Company's common stock under the ESPP. Shares reserved for issuance shall increase on the first day of the fiscal year, beginning in fiscal 2023, in an amount equal to the least of 1% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, three times the initial number of shares reserved under the ESPP, or a lesser amount determined by the Company’s Board of Directors or compensation committee. On January 1, 2024, the shares available for future grants under the ESPP automatically increased by 1,571,663 pursuant to the above evergreen provision of the 2021 ESPP.
During the nine months ended September 30, 2024, 554,039 shares of common stock were issued under the ESPP.
On May 20, 2024, the Company’s ESPP purchase price was reset for the November 2023 offering period. Under the reset provision, if the closing stock price on the purchase date falls below the closing stock price on the offering date of an ongoing offering period, the ongoing offering period terminates immediately following the purchase of ESPP shares on the purchase date. Participants in the terminated offering period are then automatically enrolled in the new offering period. The ESPP reset resulted in an immaterial amount of incremental compensation cost for the reset participants. This amount, along with the unrecognized expense remaining from the original grant date fair value, will be recognized on a straight-line basis over the new offering period ending in May 2026.
The following table summarizes the weighted-average assumptions used in the Black-Scholes option-pricing model to estimate the fair value of employee stock purchase rights granted under the new ESPP offering period:
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Nine Months Ended
September 30, 2024
Risk-free interest rate5.1 %
Expected volatility51.9 %
Expected life (in years)1.3
Expected dividend yield— %

As of September 30, 2024, total unrecognized compensation cost for the ESPP was $3.3 million, which will be recognized over a weighted average period of 1.0 year.
Total stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024202320242023
Cost of revenue$1,807 $1,788 $5,277 $5,130 
Sales and marketing7,573 7,646 22,578 23,022 
Research and development7,183 7,045 21,187 19,762 
General and administrative6,839 7,005 21,382 23,806 
Restructuring charges(160)— (160)1,208 
Total stock-based compensation expense$23,242 $23,484 $70,264 $72,928 

The Company capitalized $2.3 million and $2.1 million of stock-based compensation expense as capitalized software during three months ended September 30, 2024 and 2023, respectively, and $6.8 million and $6.8 million during the nine months ended September 30, 2024 and 2023, respectively.

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11. Net loss per share
The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share amounts):

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Numerator:
Net loss
$(25,271)$(16,767)$(75,424)$(87,046)
Denominator:
Weighted-average shares used in computing net loss per share
Basic and diluted149,179,826 151,307,963 152,867,160 148,392,636 
Net loss per share
Basic and diluted$(0.17)$(0.11)$(0.49)$(0.59)

The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations, because the impact of including them would have been anti-dilutive:

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
RSUs, PSUs, and restricted stock 16,806,887 17,858,035 16,806,887 17,858,035 
Stock options2,208,391 7,569,747 2,208,391 7,569,747 
Contingently issuable shares under ESPP387,329 372,763 387,329 372,763 
Total potentially dilutive securities19,402,607 25,800,545 19,402,607 25,800,545 

12. Segment and geographic information
The Company’s Chief Executive Officer is its CODM. The CODM reviews separate financial information presented for the Company’s two segments, Enterprise and Consumer, in order to allocate resources and evaluate the Company’s financial performance.

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Financial information for each reportable segment was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue
Enterprise$126,123 $109,101 $364,319 $305,962 
Consumer69,294 75,621 222,304 233,430 
Total revenue195,417 184,722 586,623 539,392 
Segment cost of revenue
Enterprise33,330 34,784 99,644 101,603 
Consumer31,684 35,371 99,981 107,999 
Total segment cost of revenue65,014 70,155 199,625 209,602 
Segment gross profit
Enterprise92,793 74,317 264,675 204,359 
Consumer37,610 40,250 122,323 125,431 
Total segment gross profit130,403 114,567 386,998 329,790 
Reconciliation of segment gross profit to gross profit
Amortization of capitalized software5,014 4,494 14,783 12,667 
Amortization of intangible assets430 725 1,880 2,175 
Depreciation97 102 323 329 
Stock-based compensation1,807