Chegg (CHGG) 30 Oct 232023 Q3 Earnings call transcript

Greetings, and welcome to the Chegg's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Tracey Ford, Vice President of Investor Relations and ESG. Please go ahead.

Good afternoon. Chegg's XXXX joining Call. for you Third Conference Quarter Thank and Dan Andy On are Co-Chairperson CEO; today's call Officer. Rosensweig, and Financial Brown, Chief

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we and measures. present will non-GAAP During financial GAAP call, this both

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over turn to the I Dan. call will Now

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content. We and to each also share let connect plan students other to

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over a ahead. we be of expect meaningful AI months suite to releasing partnership become also our We BXB the direct-to-student it contributor through and in the continue grow training years to programs skills will see a efforts Chegg and coming

we We continue our next will replacement quarter have to early the much his This plans are this from, is future acknowledge Andy year. learners, where aperture serve and plan for widening I I of before. larger to Chegg, hire once hope And unable we a and much we reach to want he before execute the is towards to that of growth over, vision. come audience turn historically as it each to one to retire been

tenure his over revenue XX online that during than have I am the grew deeply a last over guided more learning us incredible leadership, through contributions we X has at from rental Andy has $XXX business a students his million from in to doing Under supported Chegg. million the our He so, grateful for platform transition our to a annually. digital to digital decade. global physical and, grown made fully XX-year business textbook

and them Andy took would none Andy's is unprofitable. adjusted are vision. without approximately was role year. These on $XXX In profitable been today, fact, in Chegg is EBITDA leadership in Chegg But cash when remarkable million nearly accomplishments, of of have flow million and and $XXX free expected possible CFO, to and generate this the

be I personal forever On mark partnership, and company it the over will to decade. part Chegg this Rosensweig and truly to family. thank turn want left with will guidance over Andy indelible note, that, He his Andy. the and a I on friendship And for has last an of

are for Chegg over to we team extremely past been have and I've Thanks, had the and the accomplished. a best the with. team Tracey IR Diana, those and shout amazing XX-plus an to kind and out proud the of years, Dan, I'm collectively you Also, words. to pleasure work It's big thankful journey what you

You guys awesome. just are

loved worldwide mission-driven incredibly is that company helping millions of opportunity company thank has has brand a learn you. I to an that and the to is industry work integral cherished super with leader, Our by become rewarding, students a future for been that Having exciting. is students a

EBITDA our where was continued $XXX adjusted trends Dan retention Services million good encouraged the positive rate Now Total exceeding by are was as by X.X back mentioned, and revenue and million, quarter, increasing we as a to Subscription rate. business. such QX million, subscribers quarter. and, guidance the take $XXX Chegg revenue driven of during we Pack Study revenue had

primarily in by driven now growth revenue coming supported which strong softness. disciplined at our EBITDA offset XX% Required Skills, the on beat or the this share, in expense which with million strategy, some remain Other versus advertising investments is side, Materials was change as by as quarter well model, guidance, We aligning another adjusted a in $XX revenue and $XX margin. the Skills million, AI-focused

impacted items GAAP our gross onetime income and had We X margin the for quarter. that net

First, of system determined new during content longer we were experience, the and generative that types design certain AI necessary. our no

million, we cost included goods approximately $XX.X $XX.X As a million of included G&A. taken in of and gross of a impacted was which charge which in result, million have sold, margin, $X.X

we other the at debt the gain quarter, discount million income. $XX.X some a was recorded repurchase of of is from recorded a in convertible The our which second outstanding item during of

cash flow, which full continue. and we year free will strong We expect cash free approximately sheet XXXX, for million. flow to $XXX be a have now balance drive significant we And expect

with opportunistically We total $XXX the the outstanding respectively, years. convertible quarter through and both have convertible and investments, $X.X retired We repurchases $XXX billion million, with to million at last value. returning par of X and investors equity, approximately cash over ended million $XXX debt debt of

believe on return flows our that growth across profitability. expand sets offerings and cash the of leverage AI up to model, to operating while us and maintaining our to to ultimately TAM mission and world, balance strong to continue deliver We combination our students sheet our serve the

moving on to Now guidance.

between Subscription be revenue total revenue $XXX or Services $XXX margin. million, million million adjusted XX% and with $XXX expect EBITDA we and between QX, $XX and margin between and million and between million, gross $XXX to XX% million XX% $XX For

development expect Chegg of In over future a nobody current AI we is believe to will meet the opportunity or than Chegg. embrace there needs the We students to better allow much larger time. closing, of equipped

proprietary industry-leading leadership a an operating future. model sheet the balance brand, have extend strong to our We in and data,

to over for the the that, turn call your With questions. operator I'll

comes [Operator Instructions] Jeff Markets. with BMO Silber from question first Capital Your

remarks, user your it your started base? Dan, how I us September. roll-out a new cohort and the is what's that experience how about you cohort, tell could first hoping with large reach to in was about you the entire In planned here user from and the you bit prepared talked little

Thanks. Yes.

existing obviously, to the new and So it it X goes customers rollout goes to goes to groups, customers.

rollout. went at We we So We're already to now XX% X% started rollout. rollout. XX% at

response the been because up go to has really continues it So positive.

user expect can which we've -- X addition generative AI -- of interface for then things we've you and So able done simpler, more is -- begin over the questions to a able with, to to we done much see is video it. database to coming generate using experts the into easy are answers out in What also million. now to have to our you and is much well, use; what be the we in we've XXX,XXX improved XXX to

what that So out are now. is rolling we

end which next next quarter year change to to even where multi-turn first then of and when chat, the closer this the will year. be user phase coming will we more experience big The the do dramatically of

to positive, been gone which and So in it. it's And from positive. going massive about is [indiscernible] X% -- make why difference to a it's been really to we're we've really growth, future think incredibly XX%. has we Feedback

have there. sorry. you I'm must lost Yes, I

read I'll the So transcript. just

me ask You don't have repeat I apologize. let question. follow-up Actually, just my to anything.

initially can You a more in kind existing bit seeing hitting difference was of new customer of out customers, subscriber customers, if just I when between little and wondering color I and new know perspective. any you signing? and was get we called existing a are mentioned terms ChatGPT was from new

retention. remarks in record Well, prepared the what we're was seeing said we

experience. proven is because is use students others, win ChatGPT student, handily. have give when AI, a designed And and learning answer teaches experience doesn't generative outcomes, we the they specifically that that we for exclusively improves actually and use the So Chegg just and the and

when doing well. retention why so that, see the accuracy you is that's and plus win we and And with combine handily, extraordinarily our students quality,

earlier, we're new the already from test you very to and So for seeing customers positive as the messaging customers. be interface is that the And see they experience. going about seeing start battle the new part the from roll-out new we're first talked user to of already response

the message because, that, we And matter then a now of just right metrics, executing to getting including grow the optimistic getting growth, on of it growth get -- account all out, continue really, to can wanted extraordinarily so again. well we're expand a So it's getting communicated. where start we and account improve to we new getting close to our to product new

excited really where about so to far. we seems are working we're be and So the plan

Next question, UBS. Kunal Madhukar with

on A And One, international on give what be, couple, if you the growth? second could. us competition. be would on a of the could terms again, side of seeing in you're international I side, sense the would international front

how is relevant landscape places And do internationally? in So face like or to competitive [indiscernible] Brazil, your customers and kind content students you of what Mexico?

Sure.

we have international recall, in the really business. front, as you XXXX, international on So didn't an

our of it's Now XX% business. over

we that doubled the COVID, Similar substantial made accounts course of U.S., the we year progress. in during doing of peaked peak we've would COVID. the when So came we number the new COVID be to almost and

as But have course, those numbers down. away, COVID then, gone has gone of

are so great progress. to beginning new in really of And and seeing now to international actually return seeing growth we one look And the places start great that. we're to where of accounts, is we're to progress

that's because we're the able goes expensive. And we're translate so translate build to out pricing. to a step. of AI. finding also up categories relevancy able better, We're more positive And really The right less faster,

goes margins go reduce down, cost So per if as up even pricing customer internationally. will we

been positive. So really that's all

the really say, more is good so the really And in so U.S. now, I right progress. would making great and international, than progress we're even making U.S.

Needham with MacDonald Next Company. question, & Ryan

subscriber a a quarter. nice of on over start the of can number retention subscriber Andy, you what mean And and into we subscriber on we're you're or luck. next and what maybe seeing of maybe when on on just growth more? see the versus few as just maybe clarify here? that quarters you Dan, best trends the basis show dig seeing what of sort Congrats start do net in you quarter-over-quarter look trough to side terms And think growth. new to count we sort

Yes.

rate than comes So the through an walk we've seen come of staying phrase, and are what much sort of his his which this Andy when a ever renewal on high have. that we rates by little mean incredibly account honor renewing they for up up so longer is, is has coined upon us renewal, retirement. for those bit, they at a higher in I'll subscription math, renewal,

also now out at we're taking significant every expensive as improvement seeing take in And less is version. they're rate And rate, the version. which a more is almost of X X customers same retaining expensive new the the

mechanisms and improve a positive extraordinarily it's of profitability generate positive we're all able business. the really to and flow, are lot is and those So for our free cash why

more opportunity to sell the accounts. to So is start new

We did millions new mean before are we more selling in it's XXXX COVID. I significantly accounts more than year. in a XXXX

year. So new a we accounts still millions of generate

overcome we're capabilities the the a messages with that and going marketing somewhere we particular can't have the the we're we're product incredible out, is COVID took the hit in we trough, growth. trough point approaching -- account have and that and then new What new as around in on do or and which day rise the to We're the we want new you pick it, I think trough. moment. we to think we what that -- that new

day, given we're trough. the at a On

Some above the days, we're trough.

below wanted we're where and from to start a we we're bit grow But little again. there, Some then to days, get the first, to we trough.

the is the entire is again. growth company that invigorate of so to And effort

as to on. that's happen. it, exactly we're in which a need we on executing going variables to have We what's execute But expect we lot of

maybe India you from our talk some the just payment a see to more last of was momentum if And survey that rolling But color. starting quarter, payment can see as and part the stronger supposed of that in August. new you're that you're like new in that big of infrastructure. out in work seems online starting opportunity talked think growth. it on how And some you is there. about infrastructure Helpful India I come international, about an of uptick and international And to to

with Yes, infrastructure Yes, But payment we are did just able pricing seeing second the part not that it's you're but do. the I'll right, first. India, the appropriate we do. we had in start it's also to -- that, which been we've getting to

and also want. what obviously you So is in we what's But an when the really an that prices more version interesting people exactly positive which lower expensive we is increase in uptick we're we of seeing have. conversion, what internationally, take see

rate and now in product or is remaining which you expensive the conversion on very step. margins take before, product, So are the were when to the right the they higher increase take similar a positive more the really what

of Now size objective what the community It's is be, we an we focus of think focus STEM the can be as expand in beyond actually going of roll we on millions. America. even well capabilities, English-speaking think terms India that's increasing got of awareness think our could There's learning, AI it outside Chegg. largest we huge a huge in India. the and to that. a on And That's out

accelerate -- starting sharing Also, and also be time mentioned of we Chegg to viral is expectation that think will build growth. as great a we community, way our to over we're

So say your right seeing that of again, a backs I And would is real India now. work, think, I survey we're highlight what up.

with JPMorgan. Doug question, Anmuth Next

Andy. Smilek Doug. on Congrats Bryan the for on retirement, It's

on that more through you're can I it you shaped just what to your drivers then secondly, shifting season versus And up the can Skill a back-to-school seeing strategy? just how of us are bit, the expectations? so success and there elaborate the And guess, you start, far? walk the Just results from

where line in now I beaten row and the third mean, the our it's own bottom quite quarter well. the on has and Back-to-school substantially. top line a expectations both we've look, on gone

execution been those are in our the doing, So excellent team and all of has results. of that see them reflections you

So in retention ahead the thought number we our we're would that we of we very of say it's where have, original expectations, be well versus numbers. we would our subscribers going in

all And is so news. good this of

The the now. because said, use it we to aperture, is as open opportunity expand AI can Chegg, for I up

exciting And more of ways biggest per years. make larger cost and have in to content the that is We that to really opportunities content seen and add people. one much really a it we've relevant of more growth a lower group and

So we're up that. about fired

On investment our the last to Skills Guild, we side, and Skills them really growth. we've made of years do the make completion an through way partners, particularly BXB cost, seeing rates quality, work and over we're change couple higher to greater the lower excellent

high. growth So Skills is year-over-year of quite

we're it people we be expect not if where use through business our And employees. the continues expanding but of because to retrain Guild, this very a come customer, indeed. first to we're to than direct our up us going meaningful part are it to they years their expanding that in rather way, to we signed corporations just lay

exactly to as is Study customers, wanted investments make higher $XX, have as Pack in are ARPU. $X,XXX. the we that businesses of that the ARPU average of much Chegg this So kind mean our these I

are going we bullish with on we're really So where Skills.

as it, big Skills is next look at we can and the prepared in remarks, the is, taxonomy. in see we're the building talked take video, you a you opportunity if as about Now

skills the they help do so So top fact, of is kind to their them employable. then they assess that be are really academic master we be can, that need and to help what employable in they college on with kids skills of those learnings want where

AI. that of do because all that wanted possible and much to of combination possible made are always that are are Chegg the These things now we've more

Guild, is direct which that through direct to to through And the BXB so intend we is this go, corporations and student to direction BXB Chegg.

growth all we're building So these future opportunities are now. that

Next question, Baer Josh with Morgan Stanley.

congratulations planned Andy, retirement. on your

savings then longer means, the you to? just large I what systems and provide related from perspective pretty could systems looking means the forward? And on it mentioned cost a was hoping that necessary. the you're the and content that GAAP content some You've what basis referring types to color no charge of on

not call the on of truth or you large, Yes. told. dollars content. be It's over years look that hundreds literally actually of When it, millions XX spent so, last, we

speaking, So that it's relatively hodge-podge of whole bunch that. things a are of there's small, included and different a in

going at something and the starting team took as we're there that of So Chegg to part out, team call result, yes, aspects that are through the what as the, And the to it, it's a as certain new that charge. is Chegg. be wasn't new to the going looking went experience I'll the we and roll be, decided

prepared like And -- like does I relatively of small. as in my most through an the it that, said, cost I going said said I -- impact goods it's From of rolls forward, sold. remarks,

hundred, couple upwards relatively a of of necessary of scheme impact have things. it point small was gross does XXX the But on in it So maybe and nonetheless, margin. basis the

then go And Okay. -- ahead.

I was the point, that going margins. to say, it's just gross to on impact positive a clarify

I'm I'm yes. sorry, Yes, you. choice [ Thank Yes. sorry. poor ].

then I I update on clear. That know. quick clear. was And to Pack. That Study just just get a wanted was

of trends a of pretty adoption positively. about Sort talked couple ways in

and like growth to consistent alternatives Just on to of you ARPU relation still Pack AI driver? room overall, thinking board, about is And a the coming there and behavior Study there? more is new other adoption in out with wondering, then customers sort gen Like it go? as are

going first you're the to question but to of address again, me Yes, let part have of it. last that part that explain just

Chegg XX%. started now had out XX% up rolling and Pack, first we're Study we when take a we about over rate, So to

yes, it we see to as driver. continue a So

product. But happen not people level we with going have now, I that the change is sure are to ultimately I'm of our really doing understood think what

year, Chegg in and experience completely to than to more much global broader, reinventing we be more group of much nature. less relevant in its user the bigger people much a So are a

want that with different on new just students the so access to. to will SKU price likely with up X going points, And maybe X, rather end capabilities but the experience are X depending than

issues helping to address, and students and continue opportunity So we're to we a on other per Skills there's real AI improve ARPU a basis. the customer between that our think

on so pricing. anytime and soon. And are testing expect messaging we that focused I wouldn't

single thing And we the if that the to need do continue the new get getting experience product that I now, most feedback see going as of adding. we've first just you're and out think the I and the the that laid over keep think this user that and year. we out is rest we'll next and of to there. And quarter important of positive see to to course adding we're adding year then

The students creating we've able so pricing. overwhelming key value that and time just done is have value every that And to see the been successful. the we that, be

Next question, Jefferies. Brent with Thill

Andy, the great years. working with you over

just at? little X One spend you where quarter. components of for next multiple the you a that I've to out, kind you margin. a a lot not your to And pretty they're you the do of have margins had in asked guided is infrastructure AI questions of for given right guys build more years of to high obviously really why strong kind infrastructure get keep and years? for You AI the margin next Can the

that update could thinking through the you just here. If you're trade-offs

a margins. let is have highly profitable and we XX%-plus start I This I'll Yes, end Andy with mean, business. a gross flourish.

hard approach years, grow. growth margins to over that even that will we EBITDA to has EBITDA grow the margins get as bigger, XX% as we continue we working we which and bigger return And have out very We path. we'll likely are Andy as to pointed believe

categories the -- we've opportunities spending we last bunch tell the valuable of million of in we held the So see on as are back business not the and $XXX example. years over can cash invest. as in year our produce each to free have our fortunate increased just CEO, spending I investors. students can investing an that as as as things to you, valuable think we We're that this to much flow model is

digital. as think that's ahead how company, EBITDA, now So And free million are growth we it, a going we see Skills, it. to in this with we AI. opportunities do we opportunity $XXX like in to like company value a big flow, with of cash we've look to transformed We I people those invested in company in doing when nearly million it $XXX like did all invested the we in got

a We're cost holding creation. efficient cost not able now back of of creation content the re-purpose to that from costs We're anything of number content just of things were AI. to higher more

we when to So It's we Chegg taxonomies, grow, faster are what systems we see and hard you move to does. I want to processes will. very and that opportunities right. and will it replicate tell These learning complicated get and

results the our in a have We and it, high to students and it. don't get and be don't situation to AI that's has retention. that we where we So want trust way expect experience accuracy where the situation relevancy students such such designed why and user high continue are

I'll other let Andy sort of address any parts of that.

in starving And thing last competitors of We're investment EBITDA to making here quarter. all. point, it's that Dan's is frequently, at a key I and I in remind And AI scale is the business something and No. Dan, our revenue. doing We massive many are think not flow we're we it. free about made think cash you nailed more investments. than the talked big our I team driving we're that

to need in deploy AI capital, we generative it do will we do we we when can new it, so product. our it, And are and and doing

earlier, and beating we'll said goal, that. So business, is back like make growth we our Dan a to do and -- track, appropriate get we're to investments the the absolutely on

Markets. Next Capital Celino Jason with question, KeyBanc

Great.

Can about there, Skill like me. for on you the hear the you customers couple initiatives corporate a particularly to talk just Just the as try go-to-market Nice side. Indeed? to some target

Yes.

fascinating. of sort it's think I So

the that others, was tens product things and of into as that, to had of over even One free students we've have and last Chegg writing that of sure so million many years, I'm used millions we've not students more our that XX the of many of the value we had bunch workplace. versions understood as subscribe of gone the

brand quite is actually our So popular.

beyond XX%, online Guild and we that so we which hard as were with saw we us? our got is as we then Guild business want to with and like, does saw as well, do really began But that online as working people be courses, rates And grow, this do well with Skills. approached because for you Guild whole the education Guild necessarily we can to situation don't take by completion to

build that that lot going have prompted that know tiger that into corporations Chegg. that team Chegg, employees a of to have so a is value that And Chegg, used us

And so how we is started. that got

Colin that group. now who Coggins, hired We is running

be and many first just so time. imagine all responsible what lot to There's honest large making we will of And you. is efforts, he's for over the immediate progress, he's those companies. a of with of Indeed be

that that other difference of companies, build there companies skills, they do have not have content limited and very versus or updated they scope The their may so content be take they and a sell may they their some what Other marketplace what regularly. of for, companies a you if they it package do out have. and we skills

content train that come is on which and for a because and single corporation. for workers, as "Look, now to in become well Chegg as frontline need as as has creator for well we the us space The bespoke say, Guild, to our thing most employees reeducate students or important this." the corporations skills we're is creating they

come on Skills because to offered, it businesses being a stuff. benefit grew company and train can these Originally, was our BXB you this

AI need or of of from creating the imperative, what Now hundreds and an is dollars And course, a saying, we we've $XX,XXX. of to with the one thousands benefits it's X exactly been is of maybe corporation XX "This and weeks do." becoming weeks X of is to gone

speed personalized ability to has corporations it and greater our the to of do improved. those scale, a specifically bigger needs at So much much

real to progress good starting corporate on we're why BXB. our that's make so own And

And side, how about stabilization play? seeing you're on Okay. things when future or of types the retention come And Great. partners, then in I the of into the when Helpful. think characteristics you are then much that? think what for look partnerships we like about

up Jason, you little broke a bit.

you that talking partnerships. what You're retention asking in were about Is about?

Yes, yes.

others in so really looking and work with ways. different great now So and look, We use have it we with and are DoorDash Tinder examples, X far partnerships us. are Calm to

increase is help access and retain Tinder way retention. Calm the the conversion free get don't deals the students is DoorDash to or the free help if the Chegg. to One on of is free improve other Because them the or can't work they the to

for as being important of numbers whole which quality single but value you've of a the to going retention partnerships the up. are And host most overall reasons, are thing, seen, our It's these it. adding

we ways premium So discussions can in other Chegg and because and yes, with do a and we pack, are by number are to things we of approached people want different And offer efficiently these that a through access students they value things reach to value to students really to have the the ability more college partners the Chegg. they before. than ability that get ever being

be positive you. honest for so And been with us, it's to a surprise

Next James. Peterson with Raymond question, Brian

follow-up question. This little a is [ just have bit for I Jessica ] on of on an Brian. earlier

Or are need? looking terms like cover more In for which -- for you of you, investments are areas areas great in scale AI and are of headcount, having for personnel? you partnerships you considering help Like Skills, are more hiring what AI you like that kind a helps you strategy? for looking are growth

Yes.

invest things difficult which the space. the have earlier what to to the almost year, into so headway of wanted company really that June, we One unfortunate, to decision very our did was XX this we but understand in we made then we the in add able magnitude be to jobs to that jobs back in. we the And of AI eliminate began

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to having quick to rolling further as Great. capabilities follow-up, as are hear. AI you're a are so to That's students Chegg and a could Chegg is with even coach guidance connect out on AI wellness, good they're being beyond receptive AI them -- classes. helps your help. career done Like mental and you subscribed that study keep tools, with Also, on lies like when

The building. we're answer is absolutely precisely yes, what and that's

That necessary. do the From thing the thing most do the you building the we pathways, ability So the single all skills that is obvious most is step to we which academic in skills that valuable are there, convert the and we assess, do. is first have term, short the to support. the

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wanted ago, Chegg. but roll to an and to have years expand way go Well, capabilities. perks XX And return subscription annual X year. in year should not these days new company, the these I a to say. we X/X offered from a joined out the the we there, out ages or that capabilities really think once I of we a annually region We said days When continue on rent there just stay XXX we roll to will we've one other of halfway gotten these things the

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So yes.

with Capital Craig Group. Next question, Fuhrman Alex Hallum

ask go of you in all look are it as competitive a you marketing needed at year? And your to about threat? as AI Or next Has wanted little year, pretty next is the marketing couple emerged same past strategy. I there to to over market the quarters change has should of that differences as we with a customers your playbook? see much how the any into to expect bit

in You can format the in see messaging the expect the to in and differences differences differences and vehicle.

each take one. I'll So

improve any of in without the month, customers opportune up and what we valuable that from millions The students think first you paywall other is will important bringing messaging the messaging message to one come will to it's that X, differentiated able get capabilities. now more the but we we be one Remember, in we a start come because us, That's day funnel. the even new against most conversion. have and into will to

able to environments. be just in relevant because and that do messaging the will we increased intend kinds well to things beyond we want And of is that be we expand course, STEM-B expand funnel to the we categories. the students that now of that funnel the But can use, other should to one

surprise environments environment not like TikTok. don't -- I'm be The I that think will will you

of to produces do ones a now. ones X TikTok surprise get to the for over XXX,XXX people. that million people, you might it So very The well get do very to don't videos that lot know Chegg that well

once that So increase in through us rolled of will more fully, product in effort to and be the the expand out campuses, Chegg's see year. message of you for influencers on we'll will our is big ability terms that what get which the aware they're college who's video show and next we the us aware to product be and message it out of think

Okay. That's really helpful.

we've a we've And positive new positive getting way, response already. response customers for that of the really the By really seen on from seen version of seen beginning the conversion are responsible TikTok -- the we've Chegg.

them to hope that So good and things to we're expect we of these things and signs seeing working. work are work, first

Goldman Sheridan question, Eric with Next Sachs.

among there's debate be if AI? deflationary, is sort versus pricing AI whether is longer sort with there I we about this Maybe respect how term offense Dan, big investors know should One I X, thinking of can. that about picture, defense. power inflationary, out something of to

would then to think think So of platform I to more in feeding second, how to sort about AI broader the medium love you pricing And over about capabilities question. long back term. the shorter-term

exit strategy the and language to on Just year language next platform. updates this go as capabilities with we your more any respect on year, and into

Yes. A good questions lot there. of really

try unpack me them. Let to

me let -- first So just thing the to is get the language one.

did turn execution we language get now into territory planned. seeing and positive said we around of are Busuu, initial the as the go and that Busuu not acquired On we one, integration have that And again. and

is good that so scenario. really a And

also in for that prominent through own we're places and Guild, the partnership to it partnership Obviously, X language. are with much are Believe we will the direct grow. for areas Guild the continue as us consumer. areas There its more English not, it's to corporations the And or to because BXB we one growth think language want where Europe have more expand. that's with on

the one in the U.S. the ultimate model Premium then And is

of efforts to year. results are the internally, those those expect course semester of next the things see increasing All in flight now. of then this and And over we

So opportunities, just growth those also like Skills. are

In fact, we consider language a skill.

Chegg, now. we starting think a category So even whole is growth that for category

have pricing power rolled we and area ARPU that the bundle. on pricing we the So we have when power, out shown

took We took said that increase, we of dollar also the was the dollar -- increase we the people increase bundle. the last designed when number that to year,

actually that points, So or was. so what did X our is which by X estimate

decision businesses. don't I as forward, really a for Going AI good extra see charging for

share market I pick Board to up there it conversations and their lot opportunity on company so to I for these pricing. of retain it's have better the sit do a the Adobe, well. think we as And of an

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of think by so SKU improve ARPU pay for that people once see of amount we number the And to improving the we can are provide willing and to and that adding things able become I being higher they Chegg customers. the

But power. So and We've of goal that yes, power. return closer now. We to to every growth, account power have new pricing closer could taken know the that we is more we getting day. which to we're take

right focus pricing. than now primary our of more is that so And

Dan for turn to There are over no Rosensweig to closing the would further remarks. questions. like I floor

We We as let the serve. to serve Andy Listen, love nearly who not them leadership, his we as Yes. Without would be it's with and friendship love my and has working been by of the me ability career. one again honors partnership been. professional and Chegg successful thanking start Andy. of

is again opportunity the AI. and we As is for opened because it more we more of go now to students realize do forward, students for do what up

not we of it the retention ARPU growing, people is that about we mentioned new where accounts. that the And of is COVID-accelerated was you so rate come of and earlier, trough, growing to one adding growing that growth is and time hitting out getting and as really are point sustainable, length and are as

bunch and closer year service, then tens first we get and of we millions the serving see next a of want ourselves to product where as to new we roll students to years. And over get the more out

making Chegg will The anticipate exciting. future we a look of in does the that really future investments ones are difference that So growth. our make we're now big

to row really execution the our for that exceed and producing. the and flow quarter they in of cash third amount we're And proud business. and excited the we're a we're about the increase to did team And beat of

those be I So and going we're come. just working to the very results, and excited on you're to going hard think over years to reporting keep out

for So thank thanks, everybody, Andy, and joining. you,

you. Thank

teleconference. This concludes today's

You your at lines thank your may participation. for disconnect you time, and this