Udemy targets valuation of $4B in major edtech IPO

Online education company Udemy this morning set an initial IPO price range for its upcoming debut.

The San Francisco-based edtech unicorn — backed by Learn Capital, Insight Partners and Norwest, among others — expects to price its IPO between $27 and $29 per share. The company could be valued at more than $4 billion at the upper end of its price range. It’s a modest bump in worth for the company, which was last valued at $3.32 billion during its $50 million November raise.

The pricing comes amid a busy year for edtech IPOs, which has included the public debut of language learning company Duolingo, tutoring marketplace Nerdy, edtech software firm PowerSchool and potentially even Quizlet. 

Let’s dig into where Udemy’s IPO price range puts its potential public value in detail, and then look at new preliminary numbers for its third quarter to see what they can tell us about edtech valuations more generally.

Udemy’s possible IPO valuation

Udemy is selling 14,500,000 shares in its IPO, with an additional 2,175,000 shares set aside for its underwriters, if they so desire to purchase them.

The company will have 139,602,466 shares outstanding, inclusive of its underwriters’ option, when it is public. At its current $27 to $29 per-share IPO price range, Udemy would be worth $3.77 billion to $4.05 billion in its public offering.

Turning to fully diluted valuations, which include fully vested stock options that have yet to be exercised, for example, Udemy is worth more. IPO-watching group Renaissance Capital estimates that at the company’s midpoint valuation — $28 per share — the edtech giant is worth $4.3 billion.

Quick math provides us with a fully diluted valuation at the upper end of the company’s price interval of $4.45 billion.

Each valuation is an improvement on the company’s final private valuation, set during a $50 million late-2020 Series F. At that juncture, the company was worth $3.25 billion, per Crunchbase data.

Does that pricing make sense?

In its new S-1/A filing, Udemy detailed its financial performance through the first nine months of 2021, an upgrade from its first filing that only included data through Q2 of this year.