Udemy, Inc. Fair Value Disclosure
As of December 31, 2025 | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash equivalents(1): | ||||||||||||||||||||
| Money market funds | $ | 123,314 | $ | — | $ | — | ||||||||||||||
Time deposits | 4,005 | — | — | |||||||||||||||||
| Marketable securities: | ||||||||||||||||||||
| U.S. government securities | — | 127,259 | — | |||||||||||||||||
Total assets | $ | 127,319 | $ | 127,259 | $ | — | ||||||||||||||
As of December 31, 2024 | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash equivalents(1): | ||||||||||||||||||||
| Money market funds | $ | 136,771 | $ | — | $ | — | ||||||||||||||
Time deposits | 9,809 | — | — | |||||||||||||||||
U.S. government securities | — | 1,686 | — | |||||||||||||||||
| Marketable securities: | ||||||||||||||||||||
| U.S. government securities | — | 163,844 | — | |||||||||||||||||
Total assets | $ | 146,580 | $ | 165,530 | $ | — | ||||||||||||||
1) Included in cash and cash equivalents in the accompanying consolidated balance sheets, in addition to $104.2 million and $42.3 million of cash as of December 31, 2025 and December 31, 2024, respectively. | ||||||||||||||||||||
| Stock Appreciation Rights | Strategic Investments | ||||||||||
Balance— December 31, 2022 | $ | 462 | $ | 12,104 | |||||||
Vesting and remeasurement of SARs | (161) | — | |||||||||
Exercises of SARs | (253) | — | |||||||||
Unrealized loss on strategic investments | — | (1,793) | |||||||||
Balance— December 31, 2023 | 48 | 10,311 | |||||||||
Vesting and remeasurement of SARs | (34) | — | |||||||||
Exercises of SARs | (7) | — | |||||||||
| Unrealized loss on strategic investments | — | (10,311) | |||||||||
Balance— December 31, 2024 | 7 | — | |||||||||
Vesting and remeasurement of SARs | (4) | — | |||||||||
| Balance— December 31, 2025 | $ | 3 | $ | — | |||||||
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About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.