Education tech company Udemy falls in debut after US$421m IPO

[NEW YORK] Education technology company Udemy fell 5.2 per cent on its first day as a public company, a bottom-of-the-class debut in a banner year for US listings.

Shares of the San Francisco-based Udemy, which sold for US$29 in the initial public offering (IPO), closed at US$27.50 in New York trading Friday (Oct 29), giving the company a market value of about US$3.8 billion.

Udemy sold 14.5 million shares Thursday (Oct 28) at the top of a marketed range of US$27 to US$29 to raise US$421 million.

Accounting for employee stock options, the company has a fully diluted value of more than US$4.3 billion. The company was valued at US$3.3 billion in a private investment last year, according to data provider PitchBook.

In a year in which IPOs have eclipsed previous records, Udemy's is one of only 34 out of almost 200 listings of $200 million or more in which the stock closed on the first day below the offer price, according to data compiled by Bloomberg. Udemy ranked 25th worst of those, excluding blank-check companies, the data show.

Insight's Stake

Udemy's biggest investor is Insight Partners, which with its affiliates owns more than 30 per cent of the company's shares after the listing. Other top shareholders, according to Udemy's filings with the US Securities and Exchange Commission, include MIH Edtech Investments, which is a unit of Prosus NV, and Norwest Venture Partners.

Udemy's revenue for the first 6 months of the year was US$251 million, up from US$201 million the year before. Its net loss narrowed to US$29 million from US$52 million a year ago.

Udemy provides online video courses across a variety of categories, including web development, marketing and business. The company said it had more than 201 million course enrollments last year with over 44 million users globally. Its corporate customers include Citigroup, Jaguar Land Rover, PayPal Holdings and Box.

Coursera, Pluralsight

In the risk-factors section of the prospectus, Udemy acknowledges that it's in a highly competitive market which includes Coursera, Pluralsight and LinkedIn Learning.

Morgan Stanley and JPMorgan Chase & Co led the offering. The company's shares are trading on the Nasdaq Global Select Market under the symbol UDMY.

BLOOMBERG