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United States securities and exchange commission logo
June 23, 2021
Gregg Coccari
Chief Executive Officer
Udemy, Inc.
600 Harrison Street, 3rd Floor
San Francisco, California 94107
Re: Udemy, Inc.
Draft Registration
Statement on Form S-1
Filed May 26, 2021
CIK No. 0001607939
Dear Mr. Coccari:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Prospectus summary, page 1
1. We note references to
your revenue growth throughout the registration statement,
including at pages 1
and 3. At each instance, please balance discussion of your revenue
growth with disclosure
of your net losses for FY2019 and FY2020 and accumulated
deficit.
2. Please revise, where
appropriate, to clarify the meaning of the terms "contextual bandits"
and "deep learning."
Gregg Coccari
FirstName
Udemy, Inc.LastNameGregg Coccari
Comapany
June NameUdemy, Inc.
23, 2021
June 23,
Page 2 2021 Page 2
FirstName LastName
Integrating our UB offering with employees' workflow, page 6
3. Please clarify the meaning of the statement that you intend to "expand
[y]our offering to
integrate with existing employee learning-and-development workflows."
Successfully executing on our land-and-expand strategy, page 6
4. We note the relatively low percentage of total available seats
contracted for in your
enterprise customer base. Please clarify, where appropriate, why you
believe that this
relatively low percentage is indicative of a promising growth
opportunity rather than a
lack of customer interest in this product.
If we fail to maintain and expand our relationships with enterprise customers,
page 17
5. Please file your material agreements with enterprise customers, if
any, and describe the
material terms of such agreements.
Our platform relies on a limited number of key instructors, page 17
6. Please reconcile your disclosure about your reliance on a limited
number of key
instructors with your disclosure throughout the prospectus about your
broad range of
courses and instructors. In this regard, your risk factor disclosure
appears to contradict a
competitive strength emphasized in your disclosure narrative.
We operate in a highly competitive market, page 17
7. Please reconcile your disclosure in the third paragraph of this risk
factor about competitors
soliciting your instructors with disclosure elsewhere in the
prospectus that content creators
are required to enter into exclusivity agreements. In this regard,
please expand your
discussion of the breadth, scope, and limitations of the exclusivity
clause.
The COVID-19 pandemic could affect our business, page 19
8. Please revise here and elsewhere as appropriate to quantify the
increase in your sales
during the pandemic, as well as pandemic-related expenses. In
addition, please
specifically address the likelihood that your revenues may regress to
the mean and/or such
expenses will not decrease once the global pandemic ends.
We may need to change our pricing model for our platform's offerings, page 20
9. We note disclosure throughout your prospectus about your artificial
intelligence, machine
learning, and learner incentives. Based on this disclosure, it appears
that you believe your
analytics provide useful insight into optimizing customer engagement.
Accordingly,
please revise your prospectus for consistency with your statement in
this risk factor that
you have limited experience determining optimal prices and contract
length for your
platform's offerings.
Gregg Coccari
FirstName
Udemy, Inc.LastNameGregg Coccari
Comapany
June NameUdemy, Inc.
23, 2021
June 23,
Page 3 2021 Page 3
FirstName LastName
Business, page 82
10. We note your reference here and in the summary to an "aligned
incentive model" which
incentivizes instructors. Please revise to explain the incentive
structure. Specifically,
describe the incentives that are offered to your instructors (other
than customer feedback),
the specific behavior that is encouraged, and the pecuniary benefit
(or otherwise) that is
realized by an average instructor under your incentive program. If the
incentives are, as
suggested in the third to last paragraph on page four, limited to
customer data and metrics,
please revise your disclosure to remove any implication that the
incentives available to
instructors are monetary bonuses. On the other hand, if you incentives
are, in fact,
bonuses payable in addition to standard fees earned by instructors per
course, please
disclose. For example, we note disclosure in the second-to-last bullet
on page 87 that you
reward instructors for being first to address in-demand topics. Please
explain.
Industry, page 82
11. Please revise under the sub-headings "Relevance" and "Breadth" to more
fully describe
the strengths and weaknesses of the so-called publisher model. While
it seems that your
discussion relates to shortcomings related to hard copy publishing of
text books or other
written materials, your disclosure does not say so explicitly. To the
extent that the
publisher model includes digital information published on free or paid
learning websites,
it is unclear why you believe publishers would not be able to react
quickly to changing
landscapes and updated information. Please explain.
Our Solution, page 84
12. Please revise to disclose the cost, length and features of your
various subscription models,
including termination features. In addition, please disclose your
retention and renewal
rates.
13. We note your reference in the final paragraph of this sub-section on
page 85 to immersive
learning experiences. Please revise, where appropriate, to explain
what these experiences
entail, their significance to your business model, anticipated growth
opportunities, and
current pricing. While your current disclosure indicates that
immersive learning
experiences are premium services, your disclosure lacks specificity.
Please revise
accordingly.
Global distribution and reach with strong brand value, page 87
14. We note your disclosure that you are adept at quickly and efficiently
entering new
markets. Please revise, where appropriate, to explain the process by
which you select new
markets and expand into them, discussing relevant costs and milestones
as applicable.
15. Please revise, where appropriate, to quantify the significant earnings
potential available to
instructors. In this regard, we note disclosure at page 63 that your
approximately 56,000
Gregg Coccari
Udemy, Inc.
June 23, 2021
Page 4
instructors earned $161.4 million in 2020. Please disclose the mean and
median earnings
per instructor.
Unmatched content generation engine, page 87
16. Please revise to substantiate your statement that your content
generation is unmatched or
revise to express this sentiment as your belief. Make corresponding
revisions throughout
the prospectus, as appropriate, to remove or substantiate claims that
your services are
unmatched, unparalleled, or similar comparative terms.
Sales and Marketing, page 91
17. Please revise to disclose the terms of your material agreements, if any,
with consumer,
enterprises and instructors, including strategic partnerships.
Executive officers and directors, page 95
18. Please provide a professional biography for your chief executive officer
for the past five
years, including from 2017 to 2019.
Index to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Deferred Revenue, page F-16
19. We note your disclosure Remaining performance obligations include
unearned revenue,
multi-year contracts with future installment payments and certain
unfulfilled orders
against accepted customer contracts at the end of any given period.
Please clarify for us
in further detail the nature of each of these performance obligations.
You may contact Aamira Chaudhry at (202) 551-3389 or Joel Parker at
(202) 551-3651 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Daniel Morris at (202) 551-3314 or Lilyanna Peyser at (202) 551-3222
with any other
questions.
Sincerely,
FirstName LastNameGregg Coccari
Division of
Corporation Finance
Comapany NameUdemy, Inc.
Office of Trade &
Services
June 23, 2021 Page 4
cc: Tony Jeffries
FirstName LastName