Greg Brown: Yeah, it’s a good question. So we did communicate directly with our instructors this morning with respect to the changes. I’m hosting a webinar as well with our instructors tomorrow, and we’re going to go into a lot more detail there. But what we did share with them — and let me just say, we’ve been monitoring our instructor forms very closely today. There’s a couple of points that I’m going to go into with them, one of which is our instructors are the lifeblood of our business. We don’t have a business without our instructor community, right? So we took tremendous care in modeling and assessing the impact of this change as well as looking back into 2019 in terms of how we executed the change back in ’19, that predated Sarah and I, but how that impacted our instructors.
And what that change was, very clearly, was in 2019, we moved instructor payments for our subscription business, Udemy Business, from 50% to 25% in one fell swoop. As a result of that, one of the instructors that was with us back then made the comment in the community and actually showed his graph that said, back in 2019 when they made this change, they made the same commitments to investing in go-to-market and technology to enable us to grow Udemy Business at an accelerated rate. At the time, I did take a short-term hit. But I’ll show you my graph. Since they made that change, I had more than 6x my instructor revenues as a result of the investments that they had made and the growth of Udemy Business. I believe in this team. I believe in their ability to go do the same thing again.
And that’s a truncated paraphrase version. But — and — but as you can imagine, there’s mixed comments. Some instructors that may be a little bit newer maybe reacted a little bit more emotionally and what have you. But we had a number of instructors balancing that feedback with a little bit more levity and a little bit more experience, a little more understanding around how this change impacted them last time and what the end result has been. And we care about all the responses, because the reality is without our instructor community, again, we’re not here, right? So we did a couple of things to soften the blow, so to speak, in the short term that we did not do last time. One of which is we made this a three-year transition, not making the shift from 25% to 15% in one year.
And the modeling shows us right now that if we execute our growth projections for Udemy Business, that we will actually grow the instructor pool through this three-year transition. And then coming out the other side, we’re off and running and we’re back to significant growth, right? So we’ve done a lot of work. We’ve done a lot of modeling. I’m going to go into more detail with our instructors tomorrow. But I’m very pleased by the response from a number of the instructors that have been with us for a long time that have commented on the impact over the years and our ability to execute a similar outcome here.
Jeffrey Meuler : Helpful detail. Thank you.
Operator: And our next question will come from Noah Herman with JPMorgan. Please go ahead.
Noah Herman : Hey, guys. Thanks for taking the questions. And congrats on the solid quarter. I just wanted to touch a little bit about maybe the linearity you saw in terms of the elongated sale cycles you’re continuing to see. Has that — it sounded like that has improved a little bit. So just curious on how that tracked in Q3 versus Q2 and what maybe you’re sort of seeing on October? Thanks.
Greg Brown: What we are seeing is — it’s a good question. Thank you. In some sectors and segments, we’re seeing sales cycle velocity improvement. We did touch on that in the opening. And so in aggregate, that is the case. But look, the SMB business is still heavily impacted by the macro. And then regionally, EMEA based on everything that’s going on, that Sarah mentioned earlier, geopolitical impact in EMEA. It’s without question, it’s present. And so we’re not, again, ready to call a bottom, but we are encouraged by improving sales velocity, especially in enterprise segments and Asia Pacific as well as in North America and through our channel programs. So there’s — it’s mixed right now, and we’re obviously — we’re monitoring it very closely.
And we’re hopeful that as we move into next year, that for all of us, we’re going to start to see the geopolitical concerns start to wane and get some of that addressed and have a different year next year in terms of the macroeconomic impact.
Noah Herman: Got it. And then just a quick follow-up. I realize some of the comments made around EMEA, but in the quarter, it actually looks like across each region internationally, the growth actually accelerated a bit. So I just wanted to double click and see what’s really driving that, if you can maybe provide a brief breakdown you’re seeing in each region? Thanks.
Sarah Blanchard : Yeah. I think what you’re looking at is the total numbers that you’re seeing in the geo, how that growth is happening, and we did see EMEA growing at about 20% overall. Again, as Greg said, we’re seeing pressure on the Udemy Business side, but what we’re seeing is some strength on the consumer side. And so both of those go into what’s happening. North America enterprise business, as Greg just said, that was strong. We saw a slight improvement in the sales cycle of velocity there as well as APAC. But we do continue — those sales cycles are still longer than historical. So the geo mix that you’re seeing and what’s happening is a blend of what’s happening within UV and what’s happening with consumer.
Noah Herman : Got it. Thank you.
Sarah Blanchard : Thanks for the question.
Operator: And our next question will come from Josh Baer with Morgan Stanley. Please go ahead.
Josh Baer : Great. Thank you for the question. Wanted to just confirm, is it correct that this content revenue share change, it was not contemplated or needed to get to that 15% to 20% EBITDA margin guidance originally?
Sarah Blanchard : Yeah, Josh, thanks for the question. It was not originally anticipated. But we do believe that we’re going to get to that target sooner and 2027. And it also gives us confidence that we’ll be able to get to the high end of the range and over in the years beyond that. So this change really is to allow us right now to really invest in these things that are continue to drive that sustained growth that you see in Udemy Business. And while you base on the macro, we think when that macro starts to clear up, we’ll see a reacceleration again because we are in a really great position to capitalize on that opportunity.
