On July 30 2025, Udemy announced its new revenue stream inspired by Duolingo, YouTube, and Spotify. It introduced ads to its learning experience in 170 countries.
This is the company’s strategy to drive consumer business growth in their Q2 earnings call. CFO Sarah Blanchard stated that consumer revenue was expected to decline 9% this year. Even B2B revenue, which was Udemy’s growth engine for the last few years, dropped for the first time in Q1.
“Beginning later this quarter, we will pilot programmatic advertising across our free course on udemy.com,” said CEO Hugo Sarrazin. “We believe there is significant opportunity to unlock a new revenue stream through advertising by monetizing our audience.”
The pilot program went live in Q3 and the platform showcased ads in the free course videos. These include three kinds of ads:
- Pre-roll ads – Short ads before a course video starts, for introducing new learning paths, featured instructors, or relevant skill bundles.
- Mid-roll ads – Ads during a natural break in the course, to keep the learning flow, and often based on what the learner has learned.
- End-roll ads – Ads after a lesson for recommending related courses, or certifications.
Based on this, I assumed the ads would promote Udemy subscriptions. But when I signed up for three free courses to check this, the ads turned out to be third-party ads. And there wasn’t a variety of them. The same ads popped up for multiple videos consecutively.
But they weren’t intrusive or interruptive (yet), because they played in the beginning of each video, and I could skip them after five seconds. I didn’t come across mid-roll or end-roll ads.
Udemy’s Ads Strategy (Without Instructor Payouts)
Sarrazin mentioned that the ad program has three phases — the first one, currently live, has ads within course videos. The next one will “monetize different parts of the experience”, which likely means ads will be shown on landing pages, category pages, etc. And in the third one (2026), the company will introduce sponsorships and branded content.
The earnings call stated that the ads strategy aims to “strengthen our upsell motion to our paid subscription offering”. This could mean that ads would also be used to push free users to paid subscriptions.
But in the Q2 and Q3 earnings call Sarrazin didn’t clarify how the ads revenue works for the company or the instructors. He didn’t disclose the revenue that ads are bringing nor did he offer an estimate.
In the ads announcement, the company mentioned that the pilot would include displaying ads on free courses, but instructors won’t be getting a revenue share from these courses since they’ve chosen to keep their courses free.
“As this is a trial limited to free courses, which already do not generate instructor revenue, there will be no revenue share at this time. Any revenue earned during the trial will be reinvested into improving the core elements of the Udemy platform that benefit both instructors and learners, including AI-powered content tools, a better user experience, broader global accessibility, and platform performance.” – Udemy Ads Announcement
The ads announcement comes after the slash in instructor revenue. In 2024, Udemy brought the instructor subscription revenue share down to 20%. Dhawal Shah, the founder of Class Central, analyzed these instructor cuts.
According to his analysis, the company paid instructors $30 million less in 2024, which increased the gross profit by 17% even when revenue grew only 8%. In 2026, this instructor subscription share will come down to 15%.
Even with these changes, Udemy’s Q4 revenue is set to decline, with both consumer and business segments underperforming. While the company expects to grow their subscription revenue in 2026, the stock price fell nearly 12% post the earnings call, now bringing the stock to an all-time low — nearly 82% less than the opening price.
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