Ryan MacDonald : Appreciate the color. Congrats again.
Operator: And our next question will come from Stephen Sheldon with William Blair. Please go ahead.
Stephen Sheldon : Hey, thanks. Really, really helpful commentary, Sarah, on the margin progression, which I’m sure a lot of investors appreciate. It seems like you’re targeting to hit that long-term EBITDA margin target of 15% to 20% by 2027. Just curious, does this change, impact your view of what longer-term margins beyond 2027 could look like?
Sarah Blanchard : Yeah, it’s a great question, Stephen. And really with this change, that gives us a lot of confidence that over time we’re going to be able to hit the high end of that target. And the industry and what is happening — as Greg just said, this is a massive transformation that we haven’t seen in a decade or two, since like the move to the cloud and that sort of thing. There are so many things that are happening. And our ability to invest and to build out these capabilities that really allow us to serve customers who — as Greg just said, they’re really struggling to figure out, how do I upskill my team? How do I make sure that they can embrace AI and that my business can be really competitive. And so we’re going to be investing more next year. It’s a heavier investment year than we’ll have in future periods as we look to really take advantage of this — these tailwinds.
Stephen Sheldon: Got it. That’s helpful. And then maybe in UB and just thinking about the expansion, I think you talked historically with current UB customers only having 10% of current employees covered under a license. Curious if that’s moved any higher over the last year or so, especially with consolidation of L&D spend that might be going on right now? And is there anything that you need, such as even more content breath, to be able to push that metric higher on the expansion side?
Greg Brown: That’s a really good question, a really good question. The acceleration of consolidation continues to happen. And we’re seeing it accelerate as a result of this massive trend, which we just talked about, to a skills-based org. And in fact, I’ll talk briefly about two of our larger global financial services customers. One, one of the largest banks in all of APAC made a decision to consolidate from four vendors, of which we were one, to one vendor and standardize on a strategic approach to developing AI skills across the organization. Fortunately, we ended up being their selected partner, right? So they doubled the size of the contract. We’re now in process of developing a multiyear strategy to develop AI skills across the organization in a number of capacities, added on Udemy Business Pro to help them on the technical side of the house.
And in addition to that — we talked about our AWS partnership. They were an AWS customer. And that partnership enables us to move through procurement, the whole procurement process in an accelerated pace and benefited everybody involved for us to do this deal through AWS. So the consolidation trend continues. The focus on transition to skills-based org continues. And in terms of our penetration north of 10%, we haven’t seen significant movement in that. I would say modest, right, a modest movement. But in our larger customers, especially in the financial services vertical, we’re seeing significant movement in Fiserv right now. And what we are seeing is — we now have this last year over 100% year-over-year growth in our Fortune 100 financial services customers, of which, by the way, we’re now over 70% penetrated into the Fortune 100 Fiserv sector, right?
So we, for all intent and purposes, locked up by that segment of customers, and they’re investing heavily to upskill and reskill both to develop AI capability and skills development, specifically around cybersecurity and areas that are critical for their compliance and very unique circumstance in that financial sector. So anyway, nonetheless, we’re seeing some vertical momentum as far as expansion as well as we’re seeing a continued trend toward building out that skills-based org capability. And so that deal sizes for us are getting larger. I mentioned the deal was over $100,000. It was our biggest quarter ever. In terms of percentage of deals over $100,000. So there’s good momentum for us there.
Stephen Sheldon: Great to hear. Congrats on the results. Thank you.
Operator: And our next question will come from Jeffrey Meuler with Baird. Please go ahead.
Jeffrey Meuler : Yeah, thank you. It seems like we’ve had a couple of quarters in a row now of better consumer than you were expecting. Just — I guess how much of that is just a better demand environment? And does it — if it continues, does it make you rethink at all, I guess, the ambitions for how you can manage profitability in the consumer segment if the vibrant marketplace remains from a content creation standpoint.
Sarah Blanchard : Thanks for the question, Jeff. So consumer, we have been really pleased with the stability of the marketplace. And as you saw, unique visitors were stable, monthly average buyers were up. We do, though, know that there is some other things that are happening with consumers, like credit card debt is now — it’s creeped up to a high in comparison to where it’s been. And so when you look at, as an example, forecast for Black Friday promotions and that sort of thing, spending is actually expected to be muted. And so in the short term, there continues to be volatility. We think that the consumer business is going to be flat, maybe down a few points. We’re all going to just have to wait and see what that looks like.
But longer term, there are some things that are really exciting that we are building out for learners generally. But first, we build for our Udemy Business learners. And over time, we will be rolling those out on to our consumer platform. And so some of those capabilities, we believe, could start to drive more interest in our consumer. An example of that is the badging and certification. So that ability to take these classes and go out and get that certification and actually share that on the Udemy platform, that capability is coming to the platform. And so things like that help us really shape how we see consumer as over time being an area that we’re going to keep an eye on. Some growth could happen, we don’t think in the near term. It’s a little bit of a wait-and-see still.
But that stability has been great for us.
Jeffrey Meuler: Great. And then just anything you can say about the initial instructor response to receiving the letter and the changed payout plans? And just anything else you’re doing to manage that, including to maybe better inform them on how it can be a net benefit to them beyond the letter that you sent out? Thank you.
