Udemy's Glean Partnership Targets Enterprise Growth Amid Soft Expansion Metrics

What happened

Udemy announced a strategic integration with Glean to embed adaptive, AI-driven upskilling directly into workplace systems, aiming to connect real-time work context with skills development. This move aligns with Udemy's ongoing subscription-first pivot and AI-focused strategy, which has boosted gross margins to 66% in Q3 2025 but revealed softness in enterprise net dollar retention at 93%. The partnership is likely an attempt to address this retention decline by enhancing Udemy Business's value proposition through deeper workflow integration, potentially improving customer stickiness and expansion opportunities. However, Udemy faces execution risks in a competitive market, as such integrations require seamless implementation and may not immediately offset consumer transactional pressures or the concentration risk highlighted in recent filings. Overall, while this initiative could support long-term enterprise growth, it does not fundamentally alter the near-term challenges of low retention and mixed financial signals.

Implication

This integration could help Udemy improve its enterprise net dollar retention by embedding learning into daily workflows, potentially reversing the recent decline to 93% and supporting subscription revenue growth. If successful, it may accelerate margin expansion as instructor revenue share drops toward 15% by 2026, aligning with management's profitability goals. However, the partnership introduces execution risks, including integration complexities and competitive responses, which could strain resources without delivering immediate financial benefits. Investors should watch for updates on UB NDRR and large customer retention in upcoming quarters to gauge effectiveness, as soft expansion remains a core concern. Additionally, the focus on enterprise solutions might divert attention from the consumer segment's ongoing subscription transition, risking further revenue volatility.

Thesis delta

The core HOLD thesis, based on soft enterprise expansion and consumer pressure, remains unchanged as the Glean partnership is an unproven initiative with no immediate financial impact. However, it introduces a potential catalyst for improving UB NDRR, a key watch item; if execution leads to sustained retention gains above 100%, it could shift the stance to more positive. For now, investors should maintain caution, awaiting tangible results in retention metrics and guidance confirmation before considering an upgrade.