The robust information technology infrastructures, widespread adoption of AI technology in education, and revolutionizing teaching and learning methods are fuelling the online education platforms market.
Amid this backdrop, investors could consider investing in quality online education platform stocks Duolingo, Inc. (DUOL), Coursera, Inc. (COUR), and Udemy, Inc. (UDMY) which are poised to scale rapidly.
Amid the rising internet penetration and acceptance of online education over conventional methods, the demand for online education platforms is set to grow exponentially. This demand has also resulted in wider learning options, technological integration, and increasing investments by companies, embellishing the growth of the industry.
Statista projects revenue in the online education market of $185.20 billion in 2024, where most revenue is projected to be generated in the United States, of $87.51 billion in global comparison. Further, the market’s revenue is expected to exhibit a CAGR of 8.6% resulting in a market volume of $279.30 billion by 2029.
Besides, as more and more companies recognize the influence of artificial intelligence (AI) and its power to transform the education system, global AI in the education market is poised to see significant growth in the coming years.
The global AI in education market size is anticipated to reach around $112.30 billion by 2034, expanding at a noteworthy CAGR of 36%. Factors like the adoption of AI technology, government spending on education, the increasing prevalence of virtual classrooms, and online courses are driving demand in the market.
Given the industry’s robust outlook, investing in fundamentally strong industrial stocks DUOL, COUR, and UDMY could be wise.
Let’s discuss the fundamentals of these stocks in detail:
Duolingo, Inc. (DUOL)
DUOL operates an international mobile learning platform. The company provides courses in 40 different languages, like Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through the Duolingo app.
On September 24, DUOL announced major product innovations, including new features like Video Call and Adventures, which demonstrate DUOL's commitment to leveraging cutting-edge AI to enhance the learning experience for millions of users worldwide.
DUOL also emphasized its investment in music education and announced a partnership with Loog, a leading brand of musical instruments for beginners.
On August 15, DUOL announced a partnership with Sony Music to bring popular songs to its Music course. The new feature is created to make learning music more fun and engaging by incorporating well-known songs into the curriculum.
During the third quarter that ended September 30, 2024, DUOL’s total revenues increased 39.9% year-over-year to $192.59 million, and its gross profit grew 38.5% year-over-year to $140.41 million. The company reported an adjusted EBITDA of $47.51 million, which is up 111.1% from the previous year's quarter.
Furthermore, the company’s net income rose 732.2% from the year-ago value to $23.36 million. Also, its net income per share attributable to class A and class B common stockholders was $0.49, up 716.7% from the prior year’s quarter.
According to the company’s fourth quarter 2024 guidance, DUOL projects total bookings between $244.50 million and $247.50 million, and its revenues are expected to range from $202.50 million to $205.50 million. The company’s adjusted EBITDA is set to be $48.60 million - $50.80 million.
DUOL also updated its full-year 2024 guidance affirming total bookings of $843.50-$846.50 million. Its revenues are projected at $741 million - $744 million. And its adjusted EBITDA is expected to range between $188.30 million and $190.40 million.
Street expects DUOL’s revenue for the fourth quarter (ending December 2024) to increase 35.8% year-over-year to $205.02 million. Further, the consensus EPS estimate for the ongoing quarter of $0.47 indicates an 80.6% improvement year-over-year. Moreover, DUOL topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of DUOL have gained 79.1% over the past six months and 56.8% over the past year to close the last trading session at $347.64.
DUOL’s robust outlook is reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Quality. It is ranked #87 out of 128 stocks in the Software - Application industry.
Click here to access additional DUOL ratings for Growth, Value, Sentiment, Stability, and Momentum.
Coursera, Inc. (COUR)
COUR operates an online educational content platform internationally. The company operates through three segments: Consumer; Enterprise; and Degrees. The company offers guided projects, courses, and specializations, along with online degrees, and certificates for entry-level professional, non-entry level professional, university, and MasterTrack.
On August 14, COUR and Moderna, Inc. (MRNA) announced a partnership to launch mRNAs as Medicines. It is a three-module course designed by experts at Moderna, offering a comprehensive understanding of mRNA medicines, how they work, and their potential applications.
The strategic alliance reflects the companies’ joint commitment to leverage technology for STEM education.
For the third quarter that ended September 30, 2024, COUR’s revenue increased 6.4% year-over-year to $176.09 million. Its non-GAAP gross profit rose 15.6% year-over-year to $98.14 million. The company's non-GAAP net income stood at $16.61 million and $0.10 per share for the quarter.
In addition, the company’s free cash flow grew 23.9% from the year-ago value to $16.74 million.
Analysts expect COUR’s revenue for the first quarter (ending March 2025) to increase 5.2% year-over-year to $177.92 million. The company’s EPS for the same quarter is estimated to grow marginally year-over-year to $0.07. Further, the company topped the consensus EPS estimates in all four trailing quarters.
COUR’s shares have increased 17.7% over the past month and 4.5% over the past six months to close the last trading session at $8.20.
COUR’s clear prospects are reflected in its POWR Ratings. The stock has a B grade for Growth and Value. Within the A-rated Outsourcing – Education Services industry, COUR is ranked #10 of 20 stocks.
Click here to access additional ratings of COUR for Momentum, Stability, Quality, and Sentiment.
Udemy, Inc. (UDMY)
UDMY is a learning company that operates a marketplace platform for learning skills globally. The company provides skill acquisition, development, and validation courses for organizations and individuals through direct-to-consumer or Udemy business offerings in various languages.
On October 22, UDMY announced a new suite of AI capabilities to help organizations create more dynamic and personalized learning programs at scale. The new AI-enabled features added to Udemy’s Intelligent Skills Platform, including the Udemy AI Assistant, Skills Mapping, and AI-powered learning paths, will deliver personalized learning at scale.
The features offer a comprehensive, AI-powered learning solution to help make skills development easier, faster, and more effective for Udemy’s 16,000 enterprise customers across the globe.
For the third quarter that ended September 30, UDMY’s revenue grew 5.8% year-over-year to $195.42 million. The company’s non-GAAP gross profit was $125.29 million, up 13.9% year-over-year. Its non-GAAP net income of $10.06 million or $0.07 per share reflects growth of 30.1% and 40% from the prior year’s quarter, respectively.
In addition, UDMY’s adjusted EBITDA increased 41.5% from the year-ago value to $11.56 million.
Analysts expect UDMY’s revenue and EPS for the fourth quarter (ending December 2024) to increase 2.8% and 215.5% year-over-year to $194.78 million and $0.06, respectively. Also, the company surpassed the consensus revenue estimates in each of the trailing four quarters.
UDMY’s stock gained 0.8% over the past month to close the last trading session at $8.05.
UDMY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Value and Growth. It is ranked #5 of 20 stocks within the A-rated Outsourcing – Education Services industry.
To see additional POWR Ratings of UDMY for Sentiment, Quality, Stability, and Momentum, Click here.
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DUOL shares were trading at $347.64 per share on Thursday morning, down $5.89 (-1.67%). Year-to-date, DUOL has gained 53.25%, versus a 27.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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