IPO Stock Udemy's Profit Margins Are Better Than They Look

Udemy (NASDAQ: UDMY) is an education marketplace business that went public in October. Marketplace businesses provide a place for buyers and third-party sellers to connect. Because these are asset-light businesses, profit margins are often very good.

If you glance at Udemy's gross margin, however, it might not be as high as you might expect for this kind of business. Yet there's a logical explanation. In this video from Motley Fool Backstage Pass, recorded on Oct. 25, Fool contributor Jon Quast explains that most marketplaces distinguish third-party sales volume from revenue, which makes gross-profit margins look better. By contrast, Udemy doesn't report its financials that way.

Source Fool.com