Q4 2021 Chegg Inc Earnings Call

[music].

Greetings welcome to Chegg, Inc. Fourth quarter 2021 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Speaker 1: Greetings, welcome to Cheg Inc. 4th quarter 2021, Arrhenius Coffee.

Speaker 1: At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Tracy Ford, VP of Interest Relations and ESG.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I would now.

Turning the conference over to your host Tracey Ford V P of especially relations and yes you.

You may begin.

Speaker 2: Good afternoon. Thank you for joining Cheg's fourth quarter, 2021 conference call. Today's call are Gan Rosenswag, co-chair, person and CEO in Andy Brown, Chief Financial Officer.

Good afternoon. Thank you for joining Chegg fourth quarter 2021 conference call.

Today on today's call are Dan Rosensweig, co chairperson, and CEO and Andy Brown, Chief Financial Officer.

Speaker 2: A copy of our earnings press release, along with our investor presentation, is available on our investor relations website, investor.chag.com. A replay of this call will also be available on our website.

A copy of our earnings press release, along with our Investor presentation is available on our Investor Relations website, Investor Chegg Dot com.

A replay of this call will also be available on our website.

Speaker 2: We routinely post information on our website and intend to make important announcements on our media center website at chegg.com slash media center. We encourage you to make use of these resources.

We routinely post information on our website and intend to make important announcements on our media center bad diet of Chegg Dot Com Slash Media Center, we encourage you to make use of these resources.

Speaker 2: Before we begin, I would like to point out that during the course of this call, we will make forward-looking regarding future events, including the future financial and operating performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statement.

Before we begin I would like to point out that during the course of this call. We will make forward looking regarding future events, including the future financial and operating performance of the company. These forward looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements.

Speaker 2: We caution you to consider the important factors that could cause actual results to differ materially from those in the full-relooking statements. In particular, we refer you to the cautionary language included in today's earnings release and the risk factors described in Cheg's annual report on form 10K filed with his Curities and Exchange Commission on February 22nd, 2021, as well as their other filings with the SEC.

Caution you to consider the important factors that could cause actual results to differ materially from those in the forward looking statements in particular, we refer you to the cautionary language included in today's earnings release and the risk factors described in <unk> annual report on Form 10-K filed with the Securities and Exchange Commission on February 22nd 20.

'twenty, one as well as our other filings with the SEC.

Speaker 2: Any forward looking statements that we make today are based on assumptions that we believe to be reasonable as of the state. We undertake no obligation to update these statements as a result of new information or future events.

Any forward looking statements that we make today are based on assumptions that we believe to be reasonable as of this date, we undertake no obligation to update these statements as a result of new information or future events.

Speaker 2: During this call, we will present both GAP and non- GAAP financial measures. Our GAP results and GAP to non-GAP reconciliation can be found on our earnings press release and the investor slide deck on our IR website, investor.chag.com. We also recommend you review the investor data sheet, which is also posted on our IR website. Now, I will turn the call over to Dan.

During this call we will present, both GAAP and non-GAAP financial measures, our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release, and the Investor Slide deck on our IR website investor Chegg Dot Com. We also recommend you review the Investor data sheet, which is also posted on our IR website now.

I'll turn the call over to Dan.

Speaker 3: Thank you, Tracy, and welcome everyone to our 2021 Q4 earnings.

Thank you Tracy and welcome everyone to our 2021 Q4 earnings call.

Speaker 3: When we reported in early November , it was a great deal of uncertainty around the fact to the school's evil and the continuing impact of COVID.

When we reported in early November there was a great deal of uncertainty around the back to the schools.

The continuing impact of COVID-19.

Speaker 3: Fortunately, while enrollment's were lower, we saw that schoolwork could eventually pick up so the need for check increased throughout the quarter, helping us exit the year on a higher...

Fortunately, while enrollments were lower we saw that school work did eventually pick up the need for chegg increased throughout the quarter, helping us exit the year on a higher.

Speaker 3: During these complicated times, the tech team has continued to execute extremely well with tech study packs, take rates outperforming our expectations and retention rates reaching all time highs, both of which positively impacts subscriptions, RPU and margins for tech.

During these complicated times.

Check team has continued to execute extremely well with Chegg study pack take rates are outperforming our expectations and retention rates, reaching all time highs both of which positively impacts subscriptions ARPA and margins for Chegg services.

Speaker 3: Our continued investment in content quality, subject matter expansion, personalization and discovery, keep adding more value for students around the world and create even bigger opportunities for CHEC.

Our continued investment in content quality subs.

Fact matter expansion personalization and discovery keep adding more value for students around the world and create even bigger opportunities for Chet.

Speaker 3: Students depend on check and is important part of their learning journey. And the moment that we experience in Q4 is continuing into Q1. This is why we feel comfortable providing 2022 guidance, which Andy will walk you through shortly.

Students depend on Chegg and its important part of their learning journey and the momentum we experienced in Q4 is continuing into Q1.

This is why we feel comfortable providing 2022 guidance, which Andy will walk you through shortly.

As education evolves, so do the learning pathways, which means they're going to be more students, which will require even more.

Speaker 3: so do the learning pathways, which means there are going to be more students which will require even more.

Speaker 3: That is why we are expanding our learning support to reach these students regardless of the path they choose to improve their outcomes.

That is why we are expanding our learning support to reach these students regardless of the path they choose to improve their outcomes through learn.

Speaker 3: So for 2022, our priorities are, one.

So for 2022 our priorities are one to.

Speaker 3: expanded improve the discoverability and quality of our content, the subjects that we cover and further personalize the user experience to make Cheg even better and more valuable.

To expand and improve the discovery ability and quality of our content. The subjects that we cover in further personalize the user experience to make chegg, even better and more valuable for learners to.

Speaker 3: Two, invest in our international expansion, including our newest and exciting edition of Busuu, entering us into the $17 billion digital language business.

Investing in our international expansion, including our newest an exciting addition to boost to entering into the $17 billion digital language business.

Speaker 3: Three, invest in and grow our skills business by offering more courses to partnerships and through our direct-

Great.

That's gonna grow our skills business by offering more courses through partnerships and through our direct channels.

Speaker 3: For add even more value to our existing customers and new customers to bundling, pricing and new offers.

Or have you been more about tour existing customers and new customers through bundling pricing and new offerings. We believe this will enable chegg to reaccelerate growth and meet our financial expectations.

Speaker 3: We believe this will enable CHEC to re-excelerate growth and meet our financial experts.

Speaker 3: As you can see, we have an exciting future ahead of us, and we made some important investments last year to position us for continued growth.

As you can see we have an exciting future ahead of us and we made some important investments last year to position us for continued growth.

Speaker 3: We added new subjects, higher quality content, and introduced personalization through the successful launches of Merd with Check in University.

We added new subjects higher quality content and introduce personalization through the successful launches of burn with Chegg and University together, they help us improve and expand our content, while building better relationships with faculty at the most prestigious institutions around the world in.

Speaker 3: Together, they help us improve and expand our content while building better relationships with faculty at the most prestigious institutions around the world.

Speaker 3: In fact, since Uversity launched, faculty from over 1,300 schools have uploaded almost 80,000 pieces of learning material, including study guides, lecture notes, and quizzes.

In fact since you bursty launched faculty from over 1300 schools have uploaded almost 80000 pieces of learning materials, including study gods lecture notes and quizzes.

Speaker 3: And we have just added new tools to allow faculty to create and upload video content to meet the growing demand from students.

We've just added new tools to allow faculty to create upload video content to meet the growing demand from students and their response to University has been so positive that we expect to double the amount of learning material created by professors on our platform by the time, we roll it out to students in the fall.

Speaker 3: The response to university has been so positive that we expect to double the amount of learning material created by professors on our platform by the time we roll it out.

Speaker 3: in the fall. And as part of our deepening relationship with faculty, we continue to invest in honor shields, both domestically and now globally, to allow faculty to protect the integrity of their exams for hybrid and remote learning environments.

And as part of our deepening relationship with faculty, we continue to invest in honors shield, both domestically and now globally to allow faculty to protect the integrity of their exams for hybrid and remote learning environments.

Speaker 3: Diversity is just one part of our investment in Learning with Chegg, our new personalization platform, that has already dramatically increased student engagement. And by combining our proprietary student data and AI technology, we are better able to predict students' needs without them having to ask. Learners are automatically pushed relevant content, whether flashcards, videos, quizzes, math, or writing support, to give them an individualized learning experience based on their needs.

University is just one part of our investment and learn we check our new personalization platform that is already dramatically increase student engagement.

And by combining our proprietary student data and AI technology, we are better able to predict students needs without them, having to ask learners are automatically push relevant content, whether flashcards videos cuisines math or writing support to give them an individualized learning experience based on their needs.

Speaker 3: We have built a huge moat at Chegg, including the power of our brand, tens of millions of direct relationships, and we have built our own enormous library of content that between all of Chegg's services now exceeds over 100 million pieces of learning material. So we are.

We have built a huge moat at chet, including the power of our brand tens of millions of direct relationships and we have built our own enormous library of content that between all of Chegg services now exceeds over 100 million pieces of learning material. So we're better able to serve our students. We believe we have a unique.

Speaker 3: We believe we have a unique ability to know more about the students need to learn, what they need to learn, and therefore we can deliver it the way they learn.

Bill do you know more about the students need to learn what they need to learn and therefore, we can deliver it the way they learn at best.

Speaker 3: our international expansion continues to be an exciting growth opportunity.

Our international expansion continues to be an exciting growth opportunity for us.

Speaker 3: In fact, we exceeded 1.5 million international subscribers during the year, well ahead of our target.

Fact, we exceeded one 5 million international subscribers during the year well ahead of our target in 2022, we will make more investments in new countries with new subjects, new local languages and with local pricing and with the acquisition of boost to international is becoming an even more significant.

Speaker 3: In 2022, we will make more investments in new countries with new subjects, in new local languages, and with local prices.

Speaker 3: And with the acquisition of Busu, international is becoming an even more significant part of Shed's growth. For those of you who are not familiar with.

Part of check growth.

For those of you who are not familiar with Blue C. We closed the transaction in mid January .

Speaker 3: We closed the transaction in mid-January, and I want to share why we are so excited about this.

And I want to share why we are so excited about this addition to check that.

Speaker 3: the fast-growing $17 billion learning digital language category.

Fast growing 17 billion dollar learning digital language category.

Speaker 3: is a market that is significant overlap between college students and young professionals around

It's a market that has significant overlap between college students and young professionals around the world in fact, 26% of booths, whose customers selected education as their motivation for language learning and 55% of U S College students report needing help learning a foreign language on the skills front.

Speaker 3: In fact, 26% of Busuu's customers selected education as their motivation for language learning and 55% of U.S. college students report needing help learning a foreign

Speaker 3: On the skills front, we have dramatically increased our TAM through our partnership.

We have dramatically increased our Tam through our partnership with Guild. This partnership gives us access to the largest corporations in the world who are seeking skills based learning content for their employees and these companies are asking chegg to create contact uniquely for them.

Speaker 3: This partnership gives us access to the largest corporations in the world who are seeking skills-based learning content for their employees, and these companies are asking CHE to create content uniquely for them.

The pandemic has been hard on everyone and what became evident to us.

Speaker 3: and what became evident to us, but that students have means well beyond academic skills.

Was that students have means well beyond the academic and skilled support students Trust chat, which is why we launched chegg life to support more of their needs. Our initial areas of focus will be personal finance soft skills mental health and wellness, what's your universal issues for students.

Speaker 3: Students trust Chegg, which is why we launched Chegg Life to support more of their

Speaker 3: Our initial areas of focus will be personal finance, soft skills, mental health and wellness, which are universal issues for students.

Speaker 4: We believe offering the support will help us serve them even better.

We believe offerings support will help us serve them even better.

Speaker 4: The challenges of the last few years have been have had a dramatic impact on all of us, particularly.

The challenges of the last few years have been have had a dramatic impact on all of us, particularly students.

Speaker 4: There is an increasing need for students to learn on their own, so it is no wonder they are seeking academic and professional support, but it's clear they need more help as they take on the rest of life's challenges. Jeg is investing to be there with them on their entire journey, and we are.

There is an increasing need for students to learn on their own. So there's no wonder they are seeking academic and professional support what is clear they need more help as they take on the rest of life's challenges.

<unk> is investing to be there with them on their entire journey and we are very excited about the next chapter of our growth and so grateful for all of you that have been part of the work that had been part of our journey and with that I will turn it over to Andy.

Speaker 4: We're so grateful for all of you that have been part of our journey. And with that, I will turn it over to Andy.

Sandy.

Thanks, Dan and good afternoon, everyone today.

Speaker 1: Today, I will discuss our financial performance for the fourth quarter and full year 2021, as well as our outlook for 2022.

Today, I will discuss our financial performance for the fourth quarter and full year 2021 as well as our outlook for 2022.

Speaker 1: Despite the complexity of the virus and the industry wide slow down at the end of the year, the business performed well during a difficult time and 2021 was another good year for us.

Despite the complexity of the virus and the industry wide slowdown at the end of the year.

The business performed well during a difficult time and 2021 was another good year for our company.

Speaker 1: Total revenue grew greater than 20%, and our adjusted EBITDA margin expanded more than 200 basis points.

Total revenue grew greater than 20% and our adjusted EBITA margin expanded more than 200 basis points.

As we take stock of how far check has come and the opportunity ahead of us the past two years have been truly remarkable.

Speaker 1: and the opportunity ahead of us. The past two years have been truly remarkable.

Speaker 1: Since 2019, Czech services revenue adjusted EBITDA and free cash flow have more than doubled.

Since 2019 check services revenue adjusted EBITDA and free cash flow has more than doubled.

Speaker 1: This, all while investing in future growth, growth initiatives such as learn with check, university, check life, plus expanding into skills-based learning and into international more.

This all while investing in future growth growth initiatives, such as <unk> learned with Chegg University check life, plus expanding into skills based learning and in international markets.

Speaker 5: Additionally, through acquisition, we have made key assets such as Mathly in 2020, and more recently our acquisition of Doosan.

Additionally through acquisition, we have made key assets such as math weight in 2020, and more recently our acquisition of Houston.

Speaker 5: allowing us to expand into new subject matters and geography.

Allowing us to expand into new subject matters and geographies.

Speaker 5: Looking more specifically at our 2021 performance, total revenue grew 20% to $776 million, despite the fact that required materials revenue declined 14%.

Looking more specifically at our 2021 performance total revenue grew 20% to 776 million. Despite the fact that required materials revenues declined 14%.

Speaker 5: This growth was driven by an almost 150 million year-over-year increase in check services revenue, which grew to 670 million, with subscriber growth of 18% to a record 7.8 million per year.

This growth was driven by an almost 150 million year over year increase in Chegg services revenue, which grew to $670 million with subscriber growth of 18% to a record seven 8 million for the year.

Speaker 5: International represented 11% of total revenue in 2021. And while we expect continued domestic growth, international revenue is expected to grow.

International represented 11% of total revenue in 2021 and.

And while we expect continued domestic growth international revenue is expected to grow faster.

Speaker 5: driven by continued organic expansion, as well as the addition of busu, which is currently primarily international.

Driven by continued organic expansion as well as the addition of Blue suit, which is currently primarily international.

Speaker 5: This resulted in an adjusted EBITDA margin of 34% or $266 million, up 28% year-over-year, with free cash flow of $177 million, or 67% of adjusted EBITDA. Both are records for October .

This resulted in adjusted EBITDA margin of 34% or $266 million up 28% year over year with free cash flow of $177 million or 67% of adjusted EBITDA. Both are records for our company.

Speaker 5: As we survey the broader learning landscape, it's clear we have best in class.

As we surveyed the broader learning landscape. It's clear we have best in class margins, our free cash flow margin of 23% is an extreme outlier among education education theaters.

Speaker 5: of three cash loan margins of 23% is an extreme outlier among education peers. And even among the broader.

And even among the broader software and tech sectors, which gives us the opportunity with opportunity to invest in future growth initiatives, while continuing to deliver superior results.

Speaker 5: which gives us the opportunity to invest in future growth in the partnerships while continuing to deliver superior results.

Speaker 5: Looking at Q4, total revenue grew to 207 million, driven by better than expected checked services revenue growth of 6% to 187 million, which led to better than expected adjusted EBITDA of 78.

Looking at Q4 total revenue grew to $207 million driven by better than expected Chegg services revenue growth of 6% to $187 million, which led to better than expected adjusted EBITDA of $78 million.

Speaker 5: Looking at the balance sheet, we ended the year with cash and investments of $2.3 billion.

Looking at the balance sheet, we ended the year with cash and investments of $2 3 billion.

Speaker 5: This was bolstered by the aforementioned free cash flow of 177 mil.

This was bolstered by the aforementioned free cash flow of $177 million.

I'm merely offset by a 300 million dollar accelerated share repurchase or ASR. We entered into in early December and completed two weeks ago retiring approximately 10 6 million shares.

Speaker 5: completed two weeks ago, retiring approximately 10.6 million shares.

We entered into the ASR as we believe there was an overreaction to the temporary headwinds that affected our industry, which caused a dislocation in our share price.

Speaker 5: We entered into the ASR as we believed there was an overreaction to the temporary headwinds that affected our industry, which caused a dislocation.

Speaker 5: We believe this was a good use of our capital, good corporate hygiene, and increases shareholder value.

We believe this was a good use of our capital good corporate hygiene and increases shareholder value.

Speaker 5: Moving to guidance for 2022, the momentum we experienced in late Q4 has continued into the spring rush.

Moving to guidance for 2022, the momentum we experienced in late Q4 has continued into the spring rush.

Speaker 5: We have seen a re-acceleration of growth in subscribers, and our retention rates are at an all-time high.

We have seen a reacceleration of growth in subscribers and our retention rates are at an all time high.

With respect to required materials student usage continues to decline as textbooks have become less relevant.

Speaker 5: student usage continues to decline as textbooks have become less relevant.

Speaker 5: And as you can tell from our prior financials and our guidance, that has become a drag on both growth and market.

And as you can tell from our prior financials and our guidance and it's become a drag on both growth and margins.

Speaker 5: While we continue, while we expect to continue to offer this service, we are evaluating strategic alternatives to provide it through.

While we continue while we expect to continue to offer. This service we are evaluating strategic alternatives to provide it through partners.

Speaker 5: And finally, our full year and Q1 2022 guidance now include the financial expectations for our acquisition of Doosan.

And finally, our full year and Q1 2022 guidance now include the financial expectations for our acquisition of <unk>.

Speaker 5: Also to assist you in modeling all of these changes, we have added to the slide the investor deck on our investor relations website that includes expected revenue and adjusted EBITDA seasonality.

Also to assist you in modeling all of these changes we've added disliked the investor deck on our Investor Relations website that includes expected revenue and adjusted EBITDA seasonality.

Specifically for 2022 we expect total revenue to be in the range of $830 million to $850 million with.

Speaker 5: Specifically for 2022, we expect total revenue to be in the range of $830 to $850 million.

Speaker 5: with check services revenue in the range of 770 to 790.

With Chegg services revenue in the range of $770 million to $790 million in.

Speaker 5: and check services organic revenue growing in the 8 to 10% range.

Check services organic revenue growing in the 8% to 10% range.

Speaker 5: gross margins to be in the range of 70 to 72% as Sheck Services revenue continues to grow and be a larger overall contributor.

Gross margins to be in the range of 70% to 72%.

Check services revenue continues to grow and be a larger overall contributor.

Adjusted EBITDA to be in the range of $260 million to $270 million.

Speaker 5: adjusted EBITDA to be in the range of $260 million to $270 million with DUSU being diluted to adjusted EBITDA by $15 million to $20 million as we invest to scale the

We do see being dilutive to adjusted EBITDA by $15 million to $20 million as we invest to scale the service.

Speaker 5: We are investing in Busuu now to accelerate growth, and we expect it to be break-even by 2020.

Where we are investing induce them now to accelerate growth and we expect it to be breakeven by 2024.

Speaker 5: And finally, as we have stated in the past, we continue to have healthy free cash flow conversion, which we expect to be in the range of 50 to 60 percent of adjusted EBIT.

And finally as we have stated in the past we continue to have healthy free cash flow conversion, which we expect to be in the range of 50% to 60% of adjusted EBITDA.

Speaker 5: Moving to Q1 2020, we expect total revenue between $200 and $205 million, with checked services revenue between $183 and $188.

Moving to Q1 'twenty 'twenty, we expect total revenue between 202 hundred $5 million with Chegg services revenue between 183, and $188 million gross margin between 71, and 72% and adjusted EBITA between 56 and $58 million.

Speaker 5: gross margin between 71% and 72% and adjusted EBITDA between 56 and 58 million.

We believe the future of Chegg is much brighter than the many successes we have experienced in the past.

Speaker 5: We believe the future of CHED is much brighter than the many successes we have experienced in the past.

Speaker 5: Over the past few years, we have become a clear leader in the education space and already have many of the assets to extend our leadership.

Over the past few years, we have become a clear leader in the education space and already have many of the assets to extend our leadership position.

Speaker 5: We also have an operating model and a capital structure to invest in and add assets that few, if any, in the sector can afford.

We also have an operating model and a capital structure to invest in and add assets that few if any in the sector can.

Speaker 5: But the biggest and most valuable assets we have are our dedicated employees, driving our student first mission, without which none of this is possible.

But the biggest and most valuable assets, we have our dedicated employees driving our students first mission without which none of this is possible.

Speaker 5: giving us great confidence as we enter 2022. With that, I'll turn the call over to the.

Giving us great confidence as we enter 2022.

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

Speaker 1: Thank you. And at this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Thank you and at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

Speaker 1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment, please, while we poll for questions.

Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Our first question comes from the line of <unk>.

Speaker 1: Jeff Silver with BMO Capital Markets. Please proceed with your question.

Jeff Silber with BMO capital markets. Please proceed with your question.

Speaker 6: Thanks so much. I appreciate it. I wanted to first focus on what you mentioned about required materials. I know that's where the company initially started, and you held on to it. You kept on saying it was more kind of a marketing strategy to get your name out. You obviously don't need that anymore. Why just not cut the cord and get out of that business totally?

Thanks, so much I appreciate it.

I wanted to first focus on what you mentioned about required materials I know, that's where the company. Initially started and you held on to it do you kept on saying it was more kind of a marketing strategy to get your name out you you, obviously don't need that anymore, why just not cut the cord and get out of that business totally.

Speaker 4: Well, good question. This is Dan.

Well a.

Good question this is Dan.

Speaker 4: mostly because millions of students still use it.

Mostly because millions of students still use it.

Speaker 3: And to be frank with you, our concern is if we don't do it, then publishers will raise the prices again on students. But our expectation is that we won't own the business anymore. We'll simply offer it through partners so that students can continue to get their textbooks on us, and we can use our audience to make sure that the prices stay low.

And to be Frank with you. Our concern is if we don't do it then publishers will raise the prices again on students, but our expectation is that we won't own the business anymore will simply offer it through partners. So that students can continue to get their textbooks on us and we can use our audience to make sure that the prices stay low.

Speaker 3: So, you know, it has, we never believed we'd be in it for this long to be honest with you. That's why we transferred to a digital company years ago. But it's the value of textbooks in the college marketplace are declining and so we don't see any reason to be in it any longer than we need to be and so we're working on those opportunities now. We just like to make it available to students, but if that doesn't work out, then we may end up exactly.

So you know it.

And hence we never believed we would be in it for this long to be honest with you. That's why we transferred to a digital company years ago, but.

But it's the value of textbooks in the college market place are declining and so we don't see any reason to be in it.

Any longer than we need to be and so we're working on those opportunities now we just like to make it available to students, but if that doesn't work out then we may end up exactly where you sit.

Speaker 6: Okay, that's fair enough, I understand. Let me shift over to check services and I wanted to ask about competition. You have this great slide in your deck where you talk about the unated brand awareness. And techs always come out on top, it's still very strong. But when I compare this to what we saw, I think in prior quarters, you've got a couple companies like Quizlet and Khan Academy that have moved up. Quizlet pretty dramatically. Are you seeing more competition in the marketplace in the next row, what are you doing?

Okay. That's fair enough I understand let me shift over to Chegg services and I wanted to ask about competition you have this great slide in your deck, where you talk about the.

You need the unaided brand awareness and tagged always come out on top it's still very strong, but when I compare this to what we saw I think in prior quarters, you've got a couple of companies like Quizlet and kind of cat I mean, they have really moved up quizlet pretty dramatically are you seeing more competition in the marketplace and if so what are you doing about it.

Yeah. The answer is we're really not look quickly serves the high school market.

Speaker 4: Yeah, but the answer is we're really not. Look quickly, serves the high school market, and we serve the college.

And we serve the college market. So we don't really see overlap in fact, where an advertiser on quizlet because they help drive plenty of customers to us when we look at our own internal.

Research and overlap between Quizlet and other companies all the other companies, we do not find there's significant overlap between our customer and theirs and.

Speaker 4: We do not find there's significant overlap between our customer and theirs. And, you know, we, what we provide is high quality expert. You can be certain that the solutions are correct.

What we provide as high quality expert you can be certain that our solutions are correct and that's why students value us and I think that's why you saw sort of resurrect our growth because when when I.

Speaker 3: And that's why students value us. And I think that's why you saw sort of resurrect our growth because when academics became important again, check went up and that's what we expect. And so we're seeing growth at their...

Academics became important again check went up and that's what we expect and so we're seeing growth not where we're seeing growth at their expense not the other way around and calm Academy. It's just video base really for high school students that are trying to master certain subjects, but more importantly for test prep and that's not what we do so they're very.

Speaker 4: not the other way around. Khan Academy is just video-based really for high school students that are trying to master certain subjects, but more importantly for test prep, and that's not what we do. So, they're very insignificant in terms of competitors to us at the moment. And so, there are people that can use Quizlet and use Chegg, but they usually use the free version of Quizlet.

Theyre very.

Insignificant in terms of competitors to us at the moment.

And so there are people that can use quizlet and used chegg, but they usually use the free version of Christmas.

Speaker 6: Okay, that's really helpful. Thanks so much for the call, Isaac.

Okay. That's really helpful. Thanks, so much for the color.

Beth.

Speaker 1: Our next question comes from the line of Ryan McDonald with Needham and Company. Please proceed with your question.

Our next question comes from the line of Ryan Macdonald with Needham <unk> Company. Please proceed with your question.

Speaker 7: Hi, thanks for taking my questions and congrats on a nice quarter here. And I'm curious what you saw in fourth quarter. We obviously see an incremental nearly 300,000 subs on the platform. So, riskier is that come primarily from just real strong success internationally? Or did you see a shift in seasonality of when maybe students within the US came on and were using the platform more actively? Yeah, great question.

Hi, Thanks for taking my questions and congrats on a nice quarter here and I'm curious what you saw in fourth quarter. We obviously see you know an incremental nearly 300000 subs on the platform I'm. Just curious is that come primarily from just real strong success internationally or did you see a shift in seasonality of when maybe Steve.

Since within the U S came on and we are using the platform more actively.

Yeah, Great question look if if.

Speaker 4: If I were a Monday morning quarter backing us, what I would say is in November , we knew what we knew. We didn't know where the bottom was. The bottom thank goodness was not nearly as low as we thought and the bounce back came much sooner than we thought. And all of that is good, but essentially enrollment didn't change. What change was, there was a sudden...

If I were a Monday morning, Quarterbacking us what I would say is in November we knew what we knew we didn't know where the bottom was the bottom. Thank goodness was not nearly as low as we thought and the bounce back came much sooner than we thought and all of that is good but essentially enrollment didn't change what change was there was a sudden.

Speaker 4: reinvigoration of the focus on academics and when that happened we picked up. So you can call that seasonality, you can call it that students going back from COVID and going to all the football games and getting used to seeing each other again and the work started later. I can't tell you exactly what the reason was from that perspective but our internal numbers show that there was just a dramatic increase.

Reinvigoration of the focus on academics and when that happened we picked up so you can call that seasonality you can call. It that students going back from Covid and going all the football games and getting used to seeing each other again in the work started later I can't tell you exactly what the reason was from that perspective, but our internal numbers show that there was.

Just a dramatic increase.

Speaker 3: somewhere, obviously, after their last report, which was November 1st. So, some part first week of November or so, as you start to get it towards midterms and finals. And thank goodness that momentum is absolutely carried over into Q1, which is why we felt comfortable about giving guidance. And our guidance is stronger than I think anybody expected, including us.

Somewhere obviously after their last report, which was November 1st in some part first week of November So as you start to get it towards midterms and finals and thank goodness that momentum has absolutely carried over into Q1, which is why we felt comfortable about giving guidance and our guidance is stronger than I think anybody expected including us.

Speaker 8: And maybe just to follow up, you know, a question around Busuu, obviously a nice, interesting expander of your TAM and moving into the language learning market.

And then maybe just a follow up.

Question around boost you obviously have a nice interesting expander of your Cam and moving into the language learning market. Traditionally you really when you bought something you've kind of left it alone let it operate in and sort of get used to the operating the business model or operating in new market can you talk about when you're thinking about the assumptions for 2022 for boost to our <unk>.

Speaker 8: Physically, when you bought something, you left it alone, let it operate and get used to the operating, the business model or operating in a new market. If you talk about when you're thinking about the assumptions for 2022 for BUSU, are you continuing to do that first year, let it operate out of its own, learn the business a bit more? Does that assume some beginning of some cross-selling of BUSU into the Core Check Base?

You're continuing to do that sort of first year, let it operate on its own where in the business a bit more does that assume some beginning of some cross selling you know a boost he went to the court shack base. Thanks.

Speaker 3: What we have in the forecast assumes BUSU is BUSU. Now.

What we have in the forecast assumes booths, who has boosted.

Now what we do for integration.

Speaker 3: is obviously the first things you have to do are integrate finance, data, security, all those issues. And those come first because you want to protect the customers. You want to make sure that we can report on all those things. And then our expectation is the first area of revenue synergy will start to come probably in the U.S. because 55 percent of our audience say they want to learn or need to learn language. And we have free access to our own

Is obviously the first thing is you have to do we're in a great finance data security all of those issues and those come first because you want to protect the customers you want to make sure that we can report on all of those things and then our expectation is the first area of revenue synergy will start to come probably in the U S because 55% of our.

Audience say, they want to learn or need to learn language and we have free access to our own customer list.

Speaker 3: And so you can expect that we will start working on that. Remember, the deal only closed mid-January, and we haven't been able to even fly over there because of COVID or them come to us.

And so you can expect that we will start working on that remember the deal only closed mid January and we haven't been able to even fly over there because of COVID-19 or them come to us. So we're going to make sure that we don't.

Speaker 3: So we're going to make sure that we don't interfere with any of the success they're already having. They really started to invigorate their own growth a couple of years ago, and we couldn't be more excited about them being part of our family.

Interfere with any of the success there already having they really started to invigorate their own growth a couple of years ago, and we couldnt be more excited about them being part of our family.

Speaker 4: And I think they would say the same thing. So I think what you see in the current forecast is simply what boosts you in.

And I think they would say the same thing so I think what you see in the current forecast is simply what Bruce who is.

Thanks for the color Congrats again.

Speaker 6: Thanks for the cover. Congrats again. You bet. Thank you.

Thank you.

Speaker 1: Our next question comes from the line of Doug Ames with JP Morgan. Please proceed with your question.

Alright.

Next question comes from the line of Doug Anmuth with J P. Morgan. Please proceed with your question.

Speaker 5: Thanks for checking the questions. Maybe just first, Dan, you highlighted the outperformance in study pack take rates and also retention. I was hoping you could just give us a sense of where you are in terms of study pack adoption and maybe what the mix of subs looks like currently, and then also how to think about retention rates and some of the drivers that are taking them higher, and I just have a follow-up for Andy as well. Yep, thanks, Doug, and how are you?

Thanks for taking the questions.

Maybe just first Dan you you highlighted the outperformance in study pack take rates and also retention I was hoping you could just give us a sense of where you are in terms of the study pack adoption and maybe what the mix of subs looks like currently.

And then also how to think about.

Retention rates in some of the drivers there that are taking them higher and that sort of a follow up for Andy as well.

Yep. Thanks, Doug how are you so.

Speaker 4: Everything, look, when we launched StudyPak, it was obviously before COVID, we didn't know where it was going to go. Without giving any specific numbers, I would say that it's probably twice as successful early on than we thought. So the first thing was to let new customers know that it existed.

Everything look when we launched study pack. It was obviously before Covid, we didn't know where it was gonna go.

Without giving any specific numbers I would say that it's probably twice as successful early on than we thought so far.

First thing was to let new customers know that existed the second was to make sure that they were utilizing a third is to make sure that they start to renew anywhere near the rates that our chegg study customers.

Speaker 3: second was to make sure that they were utilizing it, third is to make sure that they start to renew anywhere near the rates that our check study customers

Speaker 3: have historically been doing which goes up every month, which is wonderful. And we've seen all of that success continue. So that's been a really big boost, and that's why you see constant increase in RPU, particularly with the US customer base. What's also been really positive is that internationally, the take rate for check study pack is very similar to the US, which we didn't expect, and renewal rates are climbing there. So what we saw in the fourth quarter, which is great for...

Has historically been doing which goes up every month, which is wonderful and we've seen all of that success continue. So that's been a really big boost and that's why you see constant increase in ARPA, particularly with the U S customer base, what's also been really positive.

Internationally the take rate for Chegg study pack is very similar to the U S, which we didn't expect and renewal rates are climbing there. So what we saw in the fourth quarter, which is great for.

Speaker 3: For our shareholders, it's great for us, and it really does represent just how valuable

For our shareholders, it's great for us and it really does represent just how valuable chegg is in the minds of students and how much the investment, we're making our content and University and personalization is having an impact as we saw a low Cal.

Speaker 3: check is in the minds of students and how much the investment we're making in content and diversity and personalization is having an impact, is we saw a low.

Speaker 4: cancels, which is wonderful, which meant that people just stayed on because they continue to see the value and they expect to roll over. We had the highest renewal rates, as Andy pointed out. We had record renewal rates, and we're seeing record take rates in the U.S.

Cancels, which is wonderful which meant that people just stayed on because they continue to see the value and they expect to rollover. We had the highest renewal rates as Andy pointed out we had record more rates.

We're seeing record take rates in the U S. A.

Speaker 3: So, everything that we have been doing in terms of improving the quality of the product, the discovery within the product, the amount of content that we have, have all been positively impacting the numbers. And so, over the next several years, you're going to see constant increase in ARPU because a higher percentage of our new customers, a higher percentage of the renewals, will all be paying $19.95 versus $14.95. So, this is all really positive and better than we would have expected it to be.

So everything that we have been doing in terms of improving the quality of the product.

The discovery within the product.

Amount of content that we have have all been positively impacting the numbers and so over the next several years, you're going to see constant increasing our pud because a higher percentage of our new customers a higher percentage of the renewals will all be paying 1995 versus 14 95. So this is all really positive and better than we would've expected at this.

Point.

Got it that's helpful and then.

Speaker 5: Got it. That's helpful. And then, Andy, just as a follow-up on BUSU, you gave some numbers, I think, when the deal was announced a few months ago. Can you just help us kind of understand how those, like, roll into the 22 guidance? How do you think about, you know, deferred revenue impact? And then also, you know, I think you talked about 500,000-plus paying subs to those just kind of...

Andy just as a follow up on <unk>.

You gave some numbers I think when the when the deal was announced a few months ago can you just help us kind of understand how those like roll into the 'twenty two guidance, how do you think about.

Deferred revenue impact and then also I think you've talked about 500000, plus paying subs to those just kind of.

Speaker 9: automatically go into your sub number, what's this going to look like?

Automatically go into your sub number what's this going to look like.

Speaker 5: Yeah, so several questions there. First thing is on the deferred revenues. There's a new accounting standard out there, which allows us actually to capture all of the deferred revenues. And so the numbers we put out there in November .

Yeah. So so several questions. There first thing is on the deferred revenues, there's there's a new standard accounting standard out there, which allows us actually to capture all of the deferred revenues.

And so the numbers, we put out there in November .

Speaker 5: basically hold. We're forecasting the same. That's in our guidance right now. You can see that.

Hum basically hope and so where we're forecasting the same.

So that yes that that that's in that's in our guidance right now you can see that with respect to the.

Speaker 10: With respect to the subscriber number, yes, we'll start reporting out the subscriber numbers in our Q1 report. The 500,000 was an annual number, so once again, we'll be reporting out on a quarterly basis, but those will be included in our subscriber numbers when we report Q1, because that's the first quarter we've done the app.

Subscriber number yes, we will start reporting out the subscriber numbers in our Q1 report. The 500000 was an annual number itself. Once again, we'll be reporting out on a quarterly basis, but those will be included in our subscriber numbers when we are.

When we report Q1, because that's the first quarter, we don't the the asset.

Speaker 10: Okay. And just to clarify, it's similar to your business, right? I mean, the annual number just bigger than any given quarter, essentially, you're saying? Yeah, yeah, yeah, exactly. So when we report out our subscriber number, whether it's an annual basis or whether it's a quarterly basis, it's during that period of time, how many unique subscribers were on the platform. And obviously, it gets deduped across the service lines, but that's exactly how we report it out.

Okay, and just to clarify it's similar to.

To your business or M&A annual number just.

Bigger than any given quarter, essentially you're saying yeah, yeah, yeah, yeah exactly so when we when we report out our subscriber number whether its on annual basis. So whether it's a quarterly basis. It's during that period of time, how many people how many unique subscribers who are on the platform and obviously it gets de duped across the service lines, but that's that's exactly how we will report it out.

Yeah.

Okay. Thank you helpful Mhm.

Yeah.

Speaker 1: Our next question comes from the line of Bryan Peterson with Raymond James. Please proceed with your question.

Our next question comes from the line of Brian Peterson with Raymond James. Please proceed with your question.

Speaker 11: Hi, gentlemen, thanks for taking the question and congrats on the quarter. So first, just higher level enrollment, you know, I'd be curious, what are the longer term expectations there going forward? And, you know, obviously, there may not be much of a change in 2022, but just kind of curious to get your thoughts on how that trend line will look longer term.

Hi, gentlemen, thanks for taking the question and congrats on the quarter or so so first just higher level of enrollment.

I'd be curious what are the longer term expectations there going forward.

Obviously, there may not be much of a change in 2022, but just kind of curious to get your thoughts on how that trend line will look longer term.

Alright.

Okay.

Yeah.

I'm, sorry, I just did you say on enrollment.

Speaker 11: Yeah, just on the enrollment trends, I know that came up last quarter. Obviously, that wasn't a swing factor overall, but I'm looking to, I guess, get your thoughts, Dan, on how you're thinking about framing the enrollment trends, you know, I guess, both domestically and internationally.

Yeah, just on the enrollment trends I know that came up last quarter, obviously that that wasn't factored over overall, but I'm looking to get your thoughts on how you're thinking about framing the enrollment trends.

I guess, both domestically and internationally longer term.

Yeah look.

Speaker 3: Longer term, and we put some of it in our prepared remarks, I think it's probably helpful if I explain to people that we see TEG academic support services, which are TEG Study, TEG StudyPak, obviously math and writing, but those two in particular can evolve to any pathway that any student is taking. So the traditional pathway.

Longer term and and we put some of it in our prepared remarks, I think I think it's probably helpful. If I explain to people that we see chegg.

Academic support services, which you know our Chegg study Chegg study pack, obviously math and writing, but those two in particular can evolve to any pathway that any student is taking sort of a traditional pathways for profit pathways two year schools boot camps doesn't matter.

Speaker 3: for profit pathways, two-year schools, boot camps, doesn't matter. Our expectation is that more students are gonna be enrolled in something. It just may not be the traditional college experience.

Our expectation is that more students are going to be enrolled in something it just may not be the traditional college experience. So we expect that in the United States will continue to see growth, obviously international we're seeing substantially more growth as you heard from the numbers, we expect it to do over $1 billion. When we started last year and we did over one.

Speaker 3: So we expect that in the United States we'll continue to see growth. Obviously in our national, we're seeing substantially more growth as you heard from the numbers. You know, we expected to do over a million when we started last year and we did over a million five. So clearly what we said about check resonating around the world. the

Five so so clearly what we said about chegg resonating around the world holds true.

Speaker 4: In our guidance, you know, we don't assume any change in enrollment for the second half of this year because we just don't know. So anything that goes up in the U.S. will obviously be beneficial to JEG and to our shareholders.

And our guidance, we don't assume any change in enrollment for the second half of this year because we just don't know so anything that goes up in the U S will obviously be.

Beneficial to to check into our shareholders and I, just think that we don't know enough because of COVID-19 and because of the economy and when the economy is robust fewer people go to school when it's when it's less robust more people go to school and so I don't think the economy, we're seeing.

Speaker 3: And I just think that we don't know enough because of COVID and because of the economy. And you know, when the economy is robust, fewer people go to school. When it's less robust, more people go to school. And so I don't think the economy we're seeing is likely to sustain itself. So I imagine a moment will be better over the next several years, but we're just can't predict it on our guidance yet. So we're being very proven in the second hand piece.

He is likely to sustain itself. So I I imagine enrollment will be better over the next several years, but we just can't predict any of our guidance yet so we're being very prudent in the second half of the year.

Speaker 5: Understood. And maybe a follow-up on BOSU. You mentioned some investments. You know, I know there's an opportunity with new types of content and then, you know, leveraging international and taking their content and selling it domestically. You know, any help on how you're ranking those investments and maybe where we should start to see some of those synergies from those investments? Thanks, Jeff. Yeah, great question.

Understood and maybe a follow up on both of you just you mentioned some investments.

There's an opportunity with new types of content, and then leveraging international and taking their content and selling it domestically you know any help on how you're ranking those investments and maybe where we should start to see some of those synergies from those questions. Thanks, Josh.

Yeah, Great question so.

Speaker 3: BUSU has been growing really nicely outside the US. And, but they have always been a company of incredibly high standards and quality of content and how they teach, but never really have been funded. And so we wanna make sure that we fund.

Bruce who has been growing really nicely outside the U S and but they have always been a company have incredibly high standards and quality of content and how they teach but never really have been funded.

And so we want to make sure that we fund their growth.

Speaker 3: what they would call their domestic market, which is Europe . And make sure that it's being funded at a level that they hadn't been able to fund it in the past because they have so much momentum. And other companies that we know in the US are not there yet. And other companies in Europe don't have anywhere near the funding and had to pull their ideas.

I would call their domestic market, which is Europe .

And make sure that it's being funded at the level that they haven't been able to fund it in the past because they have so much momentum and other companies that we know in the U S are not there yet and other companies in Europe don't have anywhere near the funding and had to pull their ipos. So we want to make sure we allow them to put the foot on the gas in a way that they haven't been able to do it and then priority too.

Speaker 3: So we want to make sure we allow them to put the foot on the gas in a way that they haven't been able to do it.

Speaker 3: And then priority two will, of course, be introducing Busuu with authors and opportunity to the U.S. audience because all of it will be incremental to what the

It will of course be introducing booths, who with offers and opportunities to the U S audience, because all of it will be incremental to what theyre planets.

Speaker 4: So those would be the two biggest areas that we will be helping them with in terms of investing in their futures. Or Dandy pointed out, you know, tech services, Cheg Corr has incredible margin that just keep going up. So we're using that to invest in the growth of Bursu at this point, as we think there's just a huge opportunity in the $17 billion language market.

So those would be the two biggest areas that.

That we will be helping them with in terms of investing in near future. So as Andy pointed out.

You know Chegg services Chegg core has incredible margins that just keeps going up so we're using that to invest in the growth of blue suit at this point, because we think there's just a huge opportunity in the $17 billion language market.

Thanks, Dan.

Okay.

Speaker 1: Our next question comes from the line of Steve and Sheldon with William Blair. Please proceed with your question.

Our next question comes from the line of Stephen Sheldon with William Blair. Please proceed with your question.

Speaker 6: Hey, thanks. It looks like the guidance assumes some modest organic revenue growth acceleration in core gig services during 2022 relative to the first quarter guidance. Is that a fair takeaway? And if so, how should investors think about the factors that could support at least modest acceleration? Would that mainly be easier comps or are there other items or factors that you call out?

Hey, Thanks, it looks like the guidance assumes some modest organic revenue growth acceleration in core Chegg services. During 2022, I think relative to the first quarter guidance.

Is that a fair take away and if so how should investors think about the factors that could support at least modest acceleration would that would that mainly be easier comps or are there other other.

Items or factors that you'd call out.

Speaker 10: Yeah, yeah, Stephen. So, yeah, so we started to see that like, like we'd mentioned in the prepared remarks. We started to see that later in the semester. And so we saw that in our results for Q4. That has continued clearly into Q1. So it gives us

Yeah, Stephen So yeah. So we started to see that like like we'd mentioned.

In the prepared remarks are we starting to see that.

Later in the semester.

So we saw that in our results for Q4 that has continued clearly into Q1. So it gives us it certainly gives us the confidence.

Speaker 10: it certainly gives us the confidence that what we were seeing early in Q4 clearly didn't sustain it, but it sustained as we got into Q1. So that gives us the confidence, particularly for the first, more confidence clearly in the first half of the year. And then we're taking somewhat of a measured approach in the second half of the year for all of the variables that we've mentioned earlier.

You know what what we what we were seeing early in Q4, you know clearly just sustain it but it's sustained as we got into Q1. So that gives you the confidence, particularly for the the first you know more confidence is clearly in the first half of the year.

We're taking you know we're taking somewhat of a measured approach in the second half of the year for all of the variables that we mentioned earlier, but but overall, we're very we're very competent in and and how things are looking from an organic perspective.

Speaker 10: But, but overall, we're very, we're very competent in and how things are looking from an organic perspective.

Got it that's helpful. And then I guess it'd be just be great to get an update on where you're at in terms of providing local market pricing for your subscriptions to drive even stronger international subscriber growth.

Speaker 6: Got it. That's helpful. And then I guess it'd just be great to get an update on where you're at in terms of providing local market pricing for your subscriptions to drive even stronger international subscriber growth. Has that started and how are you thinking about the financial trade offs between lower revenue per sub with making it affordable to more

Has that started and how are you thinking about the financial trade offs between a lower revenue per sub.

With making it affordable to more people.

Speaker 3: Yeah, this is Dan. Really interesting question. So we are

Yeah. This is Dan.

Really interesting question. So we are.

Speaker 3: testing now in the larger countries outside the U.S. And in countries that can afford to pay and have demonstrated that, because you can see by our numbers, it's not like we're not growing outside the U.S., we are. In those countries, we will present it in local currency, but it will still be the same price U.S., give or take. So no trade-off there.

Testing now in the larger countries outside the U S and in countries that can afford to pay and have demonstrated that because you can see by our numbers. It's not like we're not growing outside the U S. We are.

And those countries, we will present it in local currency, but it will still be the same price you asked give or take so no trade off there.

Speaker 3: in countries where it's obvious that there's huge demand because we can see it on the top of the funnel, but conversion is low because either it's not in local language, the Azure not local language or the prices are presented in the US.

In countries, where it's obvious that there's huge demand because we can see it on the top of the funnel, but conversion is low because either its not in local language. The azure not in local languages or prices are presented in the U S.

Speaker 3: or they're too high, those are the countries that we're testing.

Or are there are two high those are the countries that we're testing to try to grow market share over.

Speaker 11: to try to grow market share over revenue per customer.

Revenue per customer there, but all of that will be incremental revenue and incremental process at the company because we have so much margin in that Chegg services business because it's it's write once use many times so.

Speaker 11: But all of that will be incremental revenue and incremental profits to the company because we have so much margin in that check services business.

Speaker 4: because it's right once used many times. So in countries that you can imagine, large countries or countries that are focused on education, like the Philippines or Indonesia or Mexico or other places in South America, there's a huge population of India.

In countries that you can imagine large countries or countries that are focused on education, like the Philippines, and Indonesia, Mexico or other places in South America huge populations, India, we're going to play the price game there because it would all be incremental revenue to us and all of the incremental profits to us it just won't be incremental <unk> from those countries.

Speaker 11: We're going to play the price game there because it would all be incremental revenue to us and all the incremental profits to us. It just won't be incremental, our proof. From...

Speaker 3: But we're testing all of those now to make sure that we have the right discount structure And that we can watch that behavior month after month after month

But we're testing all of those now to make sure that we have the right discount structure.

And that we can watch that behavior month after month after month, because we're not interested in doing that for a single month. We want the same kind of behavior. We've seen in the U S where renewables go up cancels go down engagement increases and we're super excited about all of that it's just taken a while to build because we grew so quickly outside the U S. We werent ready for it but.

Speaker 3: We're not interested in doing that for a single month. We want the same kind of behavior we've seen in the U.S. where renewals go up, cancels go down, engagement increases, and we're super excited about all that. It's just taken a while to build because we grew so quickly outside the U.S. We weren't ready for it, but we spent a lot of time and energy in our engineering departments and product departments and commerce departments, so we're doing all of that work now, and you'll start to see some of that probably in the second half of the year where it'll be more.

A lot of time and energy in our engineering departments and product departments and Commerce Department. So we're doing all of that work now and you'll start to see some of that probably in the second half of the year will be more visible.

Speaker 12: Great, thank you. Yep, but it's gotta be big. I mean, I'm excited about it.

Great. Thank you.

But it's got to be big I mean, I'm excited about it.

Yeah.

Speaker 1: And our next question comes from the line of Brent Thill. Would Jefferies please proceed with your question?

And our next question comes from the line of Brent Thill with Jefferies. Please proceed with your question.

Andy Good afternoon, one of the fallback on Doug's question on those two I, just I wanted to be clear and I think.

Speaker 13: Andy, good afternoon. One of the fallback on Doug's question on Bursu. I just wanted it to be clear, and I think maybe they come across this clear. When you think of the guide for 22,

And maybe didn't come across as clear when you think of the guide for 'twenty two.

Speaker 13: I think the last comment you mentioned on the last call was BOTU has grown 45 million over 20 percent in 21. So if you apply, you know, slightly lower growth or same growth, you get somewhere between 50 to 55 million. Is that the range if we had to tie it to a specific number?

I think the last comment you mentioned mentioned on the last call was supposed to its growing $45 million or 20% in 'twenty. One so that if you apply and you know slightly lower growth or same growth you'd get to somewhere between $50 million to $55 million is that the range. If we enter tied to a specific number is that is that what you're asking us to put into the model for.

Speaker 10: Is that what you're asking us to put into the model for the year? Yeah. Yeah. When you do... Well, absolutely. When you do the math, we put it into the... We gave you the organic guidance, and if you do the math on that, it's in that 50 to 50... Call it 50 to 55 million range. Yeah. Very specific.

For the year, Yeah, Yeah, when you do what absolutely when you do the math, we put it into the <unk>.

It gave you the organic guidance and if you do the math on that it's in that 50 to 50 call it $50 million to $55 million range, yet very specific okay.

Speaker 13: Okay, great. Thanks for clarifying. And then for Dan, when you talked about what had happened on the strength that you saw throughout the quarter, I'm just curious how you're seeing that carry forward into this current quarter. And are you seeing similar trends as students have come back and they're obviously...

Okay, great. Thanks for clarifying and then for Dan when you talked about what had happened.

On the strength that you saw throughout the quarter I'm, just curious how you're seeing that carry forward into this current quarter and are you seeing similar trends.

Students have come back in there.

We've seen.

Speaker 13: uh... getting back into their their routine that they're becoming more serious to coming back and give us a sense of behavior really help what what you're seeing even as that this quarter started out

Give me back into their their routine that they're becoming more serious they are coming back can you give us a sense of behaviorally, how what you're seeing even is that this quarter has started out.

Speaker 3: Yeah, look, we're already five weeks into the quarter, and the variables that we just didn't know in January was, where do schools start? Would they start on time? Would they start online? Do they start hybrid? Will they start in person? As we said before, it doesn't matter where the student physically is. What matters is their work.

Yeah look we're already five weeks into the quarter.

And you know the variables that we just weren't didn't know in January was with the school start when they start on time, but they start online and they start hybrid when he started person as we said before it doesn't matter whether it's students physically is what matters is is there work to do.

Speaker 3: And so I think, you know, I think people confuse that other companies with what actually happens in our world. What we have seen, again, which is why we can give 22 guidance and give growth guidance in Q1 over Q4, which is not the norm. That's an indication that we're seeing strong momentum.

And so I think you know I think people confuse that other companies with what actually happens at all what we have seen again, which is why we can give 'twenty two guidance growth.

Growth guidance in Q1 over Q4, which is not the norm that that's an indication that we're seeing strong momentum.

Speaker 11: carryover from Q4. So it's not just the carryover, but the behavior has remained the same, which is students have not only renewed and fewer have canceled, but new customers are coming in earlier in the semester. That's all good news.

Carryover from Q4, so it's not just the carryover, but the behavior has remained the same which is students have not only renewed and fewer cancel but new customers are coming in earlier in the semester, that's all goodness.

Great. Thank you.

Yep.

Okay.

Speaker 1: Our next question comes from the line of Marvin Romani with Piper Sandler. Please proceed with your question.

Our next question comes from the line of Marvin Rahmani with Piper Sandler. Please proceed with your question.

Speaker 14: Hi, thanks for taking my question. You know, I know this has been asked before, but I wanted to ask it a little bit differently.

Hi, Thanks for taking my question.

This has been asked before but I wanted to ask it a little bit differently.

Speaker 14: You know, there's certainly been a change in student behavior. You know, on your November earnings call, you were quite bearish on some of the student behavior, but some of the data that we crunched through Q4, there was a.

Suddenly we are not changing student behavior.

On your November earnings call.

You ever quite bearish on some of the student behavior, but.

Some of the data that we we crunched through Q afford there was a.

Speaker 14: Remarkable pickup in Q4, and even with tough comps, we were quite surprised to see the significant uptick in kind of the app downloads and web traffic. Can you kind of outline what the specific areas where you saw strength? You know, was there like particular subject areas, the particular kind of seniors, like what?

Yeah, Mark of a pick up in Q4, and even with tough comps, we were quite surprised to see the significant uptick in.

And kind of the.

Kind of App downloads and web traffic.

Can you kind of a kind of a specific areas, where you saw strength you know was there particular subject area. There's a particular.

Kind of seniors like what.

Speaker 14: I mean, how should we really think of this, and I'm just trying to get a sense of how much flow through we should expect, you know, in the first half of this year from that increased interest in check from students. Yeah, look, I.

I mean, how should we really think of the extent that you know I'm just trying to get a sense of.

How much flow through we should expect.

In the first half of this year from from that increased interest in and check from from students Yep.

Yeah look I I.

Speaker 4: Here's what I would say. I appreciate the question, of course. Difficult for us to be that level of specificity.

Here's what I would say I appreciate the question of course difficult for us to be that level of specificity.

But I think what what we what we take away from it is that the value of Chegg as we've added more subjects improve the quality increased personalization is real and having a really positive impact on our overall business on every key metric.

You were cancels higher renewal rates more people, taking the bundle the bundle renewing at higher rates. Those are all things that we positively affected through excellent execution up and down the line as a check employees, who have really fought through to make sure. The students are getting served.

Speaker 11: more people taking the bundle, the bundle renewing at higher rates. Those are all things that we positively affected through excellent execution up and down the line of the CHEG employees who have really fought through to make sure the students are getting served. As you think about

As you think about the flow through.

Speaker 3: You know, we have been very specific about thinking about our guidance, which is to say we have greater visibility in the first half of the year, certainly into Q1, and that the second half of the year, we are not yet prepared to be, you know, more aggressive, if you will, because who knows what's going to happen over the course of the year. But what this should tell you is when things start to approach normality,

You know we have been very specific about thinking about our guidance, which is to say we have greater visibility in the first half of the year certainly into Q1.

And that the second half of the year, we are not yet prepared to be.

More aggressive if you will because who knows what's going to happen over the course of the year, but what this should tell you is when things start to approach normality chegg grows and it not only grows its very profitable and as I think Andy pointed out in his prepared remarks, there's not another company in the education space that is growing that is profitable that produces crew.

Speaker 3: and it not only grows, it's very profitable. And I think Andy pointed out, it's prepared remarks. There is not another company in the education space that is growing, that is profitable, that produces creed cash flow. We have $2 billion in our balance sheet. I think the takeaway here is that, as things improve, check it.

Cash flow.

We have $2 billion on our balance sheet I think the takeaway here is that as things improve chegg improves.

Speaker 11: which is some companies, it was only the pandemic that improved them. That's not our case. The more people.

Which is some companies it was only the pandemic did improve them that's not our case.

The more people study the more important they take it the more that they have to learn the more they're dependent.

Speaker 11: The more that they have to learn, the more they're dependent, they need help. The fact is the schools don't have the budget, so they don't have the money to provide services and support. And you can see through the strength of university just how many amazing professors there are, willing to help their students learn on demand online.

They need help the fact is the schools don't have the budgets. They don't have the money to provide services and support and you can see through the strength of University just how many amazing professors there are willing to help their students learn on demand online.

Speaker 4: I mean, I'm surprised I didn't get more questions about the fact that we already have over 80,000 pieces of content. We haven't even lost to the consumer yet. And we only announced it at the end of last year. I mean, this just shows you that the real professors understand how important.

I I'm surprised me and get more questions about the fact that we already have over 80000 pieces of content, we haven't even launched it to the consumer yet and we only announced it at the end of last year. I mean, this just shows you that the real professors understand how important.

Online learning support is.

Yeah, Yeah, that's that's super helpful and then.

Speaker 14: Yeah, yeah, that's that's a helpful and then you know the follow up I had for others, you know, we crunch our data, we crunch it separately both from

The follow up I had is the N.

N V Crunch, our data V crunches separately both from.

Our web traffic level, and then from a mobile downloads level.

Speaker 14: from a web traffic level and then from a mobile downloads level. Yep. When you think of these two buckets, you know, web traffic and mobile.

Yep.

Do you think there's still two buckets, you know web traffic and mobile.

Speaker 14: How is how is check being used like you're able to kind of give give us like a split or qualitatively say like you know how many people accessing check why web versus

How is how is take being used like are you able to kind of give give us like a split or qualitatively say like you know how many people are accessing chegg Y O Y a web bushes.

Mobile downloads.

Speaker 3: Yeah, look, what I would say is it depends on the country, of course, and it depends on the service. So, Mathway was much more used on mobile than Chegg was, for example. But what we are striving for and what we see is that once a student downloads it, they use it on both.

Yeah look I, what I would say is it depends on the country of course and it depends on the service. So math way was much more use on mobile and checks check was for example, but I.

What we what we are striving for and what we've seen is that once the student downloads without using some books.

Speaker 11: The truth is a big screen is helpful when you're doing homework, when you have to read.

The truth is a big screen.

It's helpful. When Youre doing homework, when you'll have to read things.

Speaker 11: For math, it really was the input was used by the phone, because the easiest thing to do is just snap a photo of the equation. So what I would say is you're going to continue to see Chegg app downloads be more significant over the next bunch of years, because we're investing now in that product and service. It was a surprise to us for the longest period of time that most people use this on their laptop. It's not a desktop, it's a laptop.

For math it really was the input was used by the phone because easy thing to do is just snap a photo of the equation. So what I would say is youre going to continue to see chegg app downloads be more significant over the next bunch of years, because we're investing now in that product and service. It was a surprise to us for the longest period of time that most people.

I'll use this on their laptop, we don't it's not a desktop it's a laptop but increasingly.

Speaker 6: you know, mobile devices are becoming an integral part of not only how they input, but how they're getting data out. And if you can see our new designs and new personalization make that even easier to do. And we are pushing more towards app downloads than we have in the past. So, I think you'll see that improve. Perfect.

Mobile devices are becoming an integral part of not only how they input, but now they're how they're getting data out and if you can see our new designs and personalization make that even easier to do and we are pushing more towards app downloads than we are than we have in the past. So I think you'll see that improve.

Perfect. Thank you very much.

Thank you for your questions.

Okay.

Speaker 1: Our next question comes from the line of Josh Baird with Margaret Stanley. Please proceed with your question.

Our next question comes from the line of Josh Baer with Morgan Stanley . Please proceed with your question.

Speaker 15: Thanks for the question and great to see the really strong international numbers this quarter. I wanted to ask kind of a follow up to the last two on just student behaviors and toward the NQ4 and NQ1. Just wondering like how you're thinking about Omicron and any impact that that might have had on the student behaviors.

Thanks for the questions and great to see the really strong international numbers this quarter I wanted to ask a.

Kind of a follow up to the last two on just student behaviors.

Toward the end of Q4 and into Q1, just wondering like how you're thinking about one micron and any impact that that might have had on our on the student behaviors.

Speaker 11: Yeah, I can tell you the impact I had on my behavior. I caught it December 22nd and nobody in my family had any symptoms, but I had them all. So I'm not a fan. And actually, you know, but I know the question seriously is, how does it affect our business? One thing that I want to tell you, our data shows us consistently.

Yeah, I can tell you the impact that had on my behavior I caught at December 22nd.

Nobody in my family symptoms.

Symptoms, but I had them all.

So.

Not a fan.

And actually you know, but I know the question seriously is.

Does it affect our business one thing that I want to tell you our data shows is consistently.

Speaker 11: is that where the student physically is does not matter. Because we're an on-demand service that can be used on your phone, on your laptop, it doesn't matter. If you need help, we are there for you whether you're either a hybrid student, a remote student, or a fully in-class student. And every survey that we provide tells us the behavior. The conversion rates, the renewal rates, the engagement rates are almost identical.

Is that.

Where the students physically is does not matter.

We are an on demand service that can be used on your phone on your laptop.

It doesn't matter if you need help with.

Are there for you whether you're either a hybrid students are remote student or a fully in class students. In every survey that we provide tells us that behavior the conversion rates the renewal rates and engagement rates are almost identical.

Speaker 11: So that is not, that's the area that other people ask about. They think because if you're off campus, you're going to use this more. That's not been our.

That is not that's an area that other people asked about do you think because if your off campus youre going to use us more that's not been our experience in terms of absorbing and communicating with the students where it has made a difference is when the actual academic start.

Speaker 11: experience in terms of observing and communicating with the student. Where it has made a difference is when the actual academic

Speaker 11: So if they're delayed, we're delayed is what we learned in the fourth.

So if they're delayed were delayed because what we learned in the fourth quarter.

Speaker 11: So if remember, before all the crime started, Kage services started to pick up.

So if if remember before omicron started chegg services started to pick up.

Speaker 11: Then it hit sort of end of, what, November .

Then it hit sort of end of November .

Speaker 11: on or around Thanksgiving time and so our business had already started to re-accelerate before that.

On or around Thanksgiving time, and so our business that already started to reaccelerate before that.

Speaker 11: And, you know, right now I think we're seeing a decline in most states, a decline in most cities, and we've seen, as Andy pointed out in the prepared remarks, that momentum continues.

And right now I think we're seeing a decline in most states and decline in most cities and we've seen as Andy pointed out in the prepared remarks that momentum continue thank goodness.

Speaker 11: So this to us, the message to us, our belief is that it doesn't matter where the student is, it matters when the student starts to study.

So this to us the message to us our belief is that it doesn't matter where the student is it matters when the students starts to study.

Speaker 15: Great, that's clear. And then one on EBITDA margins and the guidance, I know the margin lower in 22, most of that is from BUSU, and adding that to the model on the investments there, but I think there's still some compression, verse 21, making that adjustment, and just wondering if you could kind of review the longer-term framework for margin expansion. Obviously, margins have

Great that's clear and then one on on EBITDA margins in the guidance I know the margin lower than 22, most of that is from Oslo, and and adding that to the model and the investments there, but I think theres still some compression versus 21.

I'm, making that adjustment and just wondering if you could kind of review the longer term framework for margin expansion, obviously margins have consistently improved for many years just wondering if there's any change to that just given the opportunity ahead and the investments that you're making across across the board.

Speaker 15: consistently improved for many years. Just wondering if there's any change to that, just given the opportunity ahead and the investments that you're making across the board.

Speaker 10: No, no. And in simple terms, as we continue to scale and grow, we would, without getting into specific margins beyond 22, because we're not going beyond 22, but we would anticipate that margins would expand over time. If you think about the core of our business, it's high leverage.

No no and in simple terms as we continue to scale and grow we would without getting into specific margins beyond 'twenty two because we're not we're not going beyond 'twenty, two but we would that we would anticipate that margins would expand overtime.

If you think about or are the core of our business, it's at high leverage right.

Speaker 10: If you think about Chegg Study as a prime example, the content is reusable and reusable and reusable, and therefore, incremental subscribers, 90 cents or more, certainly in the short term, drop to the bottom line. So yes, we believe that we will continue to expand margins over time.

I mean, if you think about Chegg study is a Prime example, you know the content is reusable and reusable and reusable and therefore, you know Inc.

Incremental subscribers, you know 90 central more in the certainly in the short term, but dropped to the bottom line. So yeah. We believe that we will continue to expand margins over time.

Speaker 10: Clearly boosts who's having a small impact on us, but we think it's absolutely the right investment. And like I said earlier.

Clearly Bruce who is having a small impact on us, but we think it's absolutely the right investment and like I said earlier you know what.

Speaker 10: You know, when you look at Chegg in its entirety and for the past several years, we have best in class margins.

We look at Chegg and its entirety for the past several years. We you know we have best in class margins in the sector.

Speaker 10: in the sector. I would argue with you, point out to you that nobody has our types of margins, whether it's the EBITDA margin, or more importantly, free cash.

I would argue with you at that point out to you that nobody has the types of margins, whether it's the EBITA margin or more importantly, free cash flow I mean, our free cash flow margin is better than most and those companies EBITDA margin so well.

Speaker 10: I mean, our free cash flow at Martin is better than most companies, EBITDA at Martin. So we'll continue to grow that, but we're really proud of what we've accomplished over the last several years with respect to growing our profitability.

We will continue to grow that but you know we're really proud of what we've accomplished over the last several years with respect to.

Growing our profitability.

Speaker 11: Yeah, look, I think Andy made it crystal clear, but one of the things that we did was break out Chegg without Boost.

Great. Thank you.

Andy made it crystal clear, but one of the things that we did was breakout chegg without losing too because it really does highlight the fact that our EBITDA margins are going up.

Speaker 11: because it really does highlight the fact that our EBITDA margins are going up from last year.

From last year.

So and that includes the fact that textbooks, probably lose a little bit of money now, whereas in the past either breakeven or make a little bit of money. So I think I think the way to think about is chegg itself before Bruce who continued growth and continued improvement in margins and continued.

Speaker 11: probably lose a little bit of money now, whereas in the past they either were breakeven or made a little bit of money. So I think the way to think about it is Chegg itself before Busu, continued growth and continued improvement in margins and continued improvement in free cash flow, and that's baked into this guidance that we're getting at the beginning of the year, which is really only the beginning of the year. So the business just keeps getting more powerful and more powerful.

Moving to free cash flow and that's baked into this.

This guidance that we're giving at the beginning of the year, which is really only the beginning of the year. So.

The business, just keeps getting more powerful and more fun.

Speaker 1: And our next question comes from the line of Jason Salinas with KeyBank. We will proceed with your question.

And our next question comes from the line of Jason <unk> with <unk>.

Please proceed with your question.

Hey, Andy.

Dan Thanks for fitting me in maybe just two quick ones, maybe first on skills you know in the past we've used M&A to build out these new areas and obviously, you've just acquired boost too, but as you think about building out your presence and skills, how 'bout trickle partnerships play relative to maybe how you use partnerships in the past.

Yeah.

Yeah Fair question so.

Speaker 11: When we first entered the skills market, we knew how big it was, and it is.

When we first entered the skills market, we knew how big it was and in it.

Speaker 11: What's happened during the period of COVID is the direct-to-consumer model sort of grew and sort of froze. You can see that on, you know, Corsair and Udemy and others. And then their B2B markets picked up, but those B2B markets, at least from our experience, have yet to be profitable, and we're not sure if and when they get profitable.

What's happened during the period of Covid is the direct to consumer model.

Sort of brute sort of froze.

You can see that on you know of course here in your to me and others.

And then there are b to B markets picked up but those b to b markets at least from our experience have yet to be profitable and we're not sure if and when they get profitable. So we chose a different path. We said, let's let's take the assets. We have are core strength of being a content creator user experience greater and academic support.

Speaker 3: We chose a different path. We said let's take the assets we have, our core strength of being a content creator, user experience creator, an academic support company that can teach you something and support you, and partner with Guild in this case as our primary partner, but not necessarily our exclusive partner. If you follow them, they have done a spectacular

Companies that can teach you something and support you and partner with skilled in this case as our primary partner, but not necessarily our exclusive partner because if you follow them. They have done a spectacular job of growing their customer base. So they have the largest corporations in the world from Walmart to target.

Speaker 11: of growing their customer base. So they have the largest corporations in the world from Wal-Mart to Target. They just named several in the medical field. And where they're working with partners to supply the academic degree programs, Chegg is actually supplying the skills program.

They just named several in the medical field, and where they're working with partners, who surprised to supply that academic degree programs Chegg is actually supplying the skills programs, they're really cool part of that is that the corporations are working guild and with Chegg. You say this is what we would like to teach our employees.

Speaker 11: The really cool part of that is that the corporations are working with GILD and with CHEG to say this is what we would like to teach our employees. So it's not just a marketplace of stuff. It's know very specifically this is what we would like our employees to know. We build it. We can use it for those companies or any other company.

So it's not just the marketplace of scope. It's no very specifically this is what we would like our employees to know we build it we can use it for those companies or any other companies.

Speaker 11: And over time, it's going to take several years to build because corporations move slow. And, you know, Guild's got to sign the business, and we've got to build it, and they've got to promote it. But you can imagine it being very high-growth, very high-margin business because we don't have any cost of marketing. It goes directly through Guild, directly to the customer. And many of these skills can be used in our own network, either directly to our audience or with other companies.

And over time, it's going to take several years to build because corporations move slow and you know you always got to sign the business. Then we got to build it then they've got a promoted but you can imagine it being very high growth very high margin business, because we don't have any cost of marketing. It goes directly through guild directly to the customer and many of these skills can be used.

In our own network, either directly to our audience or with other companies. So.

Speaker 11: That is the primary area of focus that we have right now in the skills space is to build out our catalog of incredible.

That is the primary area of focus that we have right now.

The skilled space is to build out our catalog of incredible.

And work with Guild and these largest corporations in the world to teach their employees, what the companies want them to know and and those will all be profitable for us as we scale. So it's really a powerful model for us and one that we worked over a year to negotiate as we began to see the dynamics of the other.

Speaker 3: and work with Guild and these largest corporations in the world to teach their employees what the companies want them to know. And those will all be profitable for us as we scale. So it's really a powerful model for us and one that we worked over a year to negotiate as we began to see the dynamics of the other skills market just change.

Skills market just change.

Speaker 16: And you can see that in all those companies' numbers, which is their consumer business sort of slowed or declined, and they're not profitable yet. That's not the way Chad's run these. We focus on growth with profitability. Okay, interesting.

And you can see that in all of those companies numbers, which is their consumer business sort of slowed or declined.

And they're not profitable yet that's not the way chip from us.

On growth with profitability.

Okay interesting.

Quickly on international you know the new disclosures you know very helpful. You know, 11% you know international subs, so $1 5 million, that's 50% more than what we thought at least not in Italy.

You know framing this maybe more anecdotal comments, but maybe can you speak to how that business grew or maybe stepped up over 2021 .

Speaker 4: Yeah, you're fading there at the end, but I think what you asked is how the business sort of got this big and it sort of stepped up.

Yes, you are fading there at the end, but I think what you asked is how the business sort of got this big and they sort of stepped up.

Speaker 11: You know, they're there. We just what Chegg does, which is support students that are that are putting their hand up and saying, I need to know this. I have to know this. I want to I need help. That is universal around.

You know there there we just what Chegg does which is support students that are that are putting their hands up and saying I need to know this I have to know there's I want to know that need help that is universal around the world, particularly for students who are learning business, where stem which.

Speaker 11: particularly for students who are learning business or STEM, which is what our initial content primarily focused on. For obvious reasons, English-speaking countries became bigger faster, but this is an effort that countries around the world are really promoting their young people, their students, to learn STEM and to learn business.

Is what our initial content primarily focused on so for obvious reasons English speaking countries became bigger faster, but this is an effort that.

Countries around the world are really promoting their young people their students to learn stem into learn business and that has really helped us grow.

Speaker 11: And that has really helped us grow.

Speaker 11: within each country that we're in, but then adding many more countries. So I can't point to one country over the other. I could just tell you that as we get discovered, the same virality of our brand recognition in the US begins to take place in other countries. And so the numbers weren't even bigger than we had imagined. So I...

Within each country that we're in but then adding many more countries. So I can't point to one country over the other I can just tell you that as we get discovered the same morality of our brand recognition in the U S begins to take place in other countries and so the numbers were even bigger than we had imagined so.

Speaker 11: You know, I had a very difficult time in November , but I can see that we've recovered a lot faster and a lot stronger than people thought. And it's because the US is returned international continues.

We had a very difficult time in November .

But you can see that we recovered a lot faster and a lot stronger than people thought and it's because the U S has returned international continues.

Speaker 11: We do extraordinarily well, the quality of our product, the amount of content that we have has improved. Renewals and engagement and reduction in cancels and take rates, so we feel very good about our future right now. Coming from a place where we were just unscrupulous in everything that happened in November .

Doing extraordinarily well.

Quality of our product.

All of the content that we have has improved.

Renewals and engagement and reduction in cancels and grade.

So we feel very good about our future right now coming from a place where we were just given everything that happened in November .

Okay perfect. Thank you.

Yep.

Okay.

Speaker 1: And our next question comes from the line of Alex Furman with Craig Hallam Capital Group. Please proceed with your question.

And our next question comes from the line of Alex affirming with Craig Hallum Capital Group.

With your question.

Speaker 17: Great, thanks very much for taking my question. Just lastly, if I can sneak one in here, certainly sounds like the business recovered nicely as the academic calendar started to heat up closer to final exams. I'm curious if you saw a similar acceleration outside of the US and especially in markets that maybe have a little bit of a different calendar if it was something about that was happening globally or if it was really confined more to places where final exams and midterm exams started to happen.

Okay, great. Thank you very much for taking my question just lastly, if I could sneak one in here.

It certainly sounds like the business recovered nicely as as you know the academic calendar started to heat up closer to final exams. I'm curious if you saw a similar acceleration outside of the U S and especially in markets that maybe have a little bit of a different calendar. If it was something about them.

That was happening globally are for it it was really confined bore to places where final exams and midterm exams started to happen.

Speaker 11: Yeah, it's a terrific question. And what I would say is, I don't know that we know that yet, because we really went from zero to a million and a half in three years.

Yeah, It's a terrific question and what I would say is I.

I don't know that we know that yet because we really went from zero to $1 million of happened three years.

Speaker 11: And so we have to discover the pattern.

And so we have to we have to discover the patterns.

Speaker 3: You know, we have to get our data and analytics the same quality that we have in the U.S., which is when do they come on, what year are they, how long do they stay on, which subjects are they in, we're doing all that work now.

We have to get our data and analytics the same quality that we have them in the U S, which is when do they come on what year are there how long do they stay on which subject to there and we're doing all of that work now, but that's extraordinary growth from zero to one and a half in just a few years and and so we will know the answers to those questions as we go on we.

Speaker 3: But that's extraordinary growth from zero to one and a half in just a few years. And so we will know the answers to those questions as we go on. We don't have that with the same clarity that we have it in the United States right now. But what I can tell you is that all metrics over time, similar to the U.S., get better.

Don't have that with the same clarity that we have it in the United States right now, but what I can tell you is that all metrics over time similar to the U S get better.

Speaker 3: And because we, we, one of the things about owning your customer and owning the data and owning the channel of distribution and owning your content, which I'm not sure there's another company that owns all of that.

And because we one of the things about owning your customer and owning the data and owning the channel of distribution and one of your content, which I don't sure. There's another company that owns all of that.

Speaker 11: allows you to monitor what the student wants, monitor what they use, improve it, add more, get rid of the things that they don't need, and all of those are the reasons that we continue to improve engagement and improve renewals and improve the take rate. So, you know, we just

Allows you to monitor what the student wants water with the us improving add more get rid of the things that they don't need and all of those are the reasons that we continue to improve engagement and improve renewals.

And improve the take rate so are we.

We just.

Speaker 11: international is early stages for us, but it's already doing great as exemplified by the numbers that Andy reported. So I don't have the level of specificity outside the U.S. that I have inside the U.S., but we will shortly. Great.

International is early stages for us, but it's already doing great is as exemplified by the numbers that Andy reported so.

I don't have the level of specificity outside the U S that I have inside the U S. But we will shortly.

Great. That's helpful. Thank you very much.

You bet.

Speaker 1: And we have reached the end of the question and answer session. I'll now turn the poll back over to Dan for close remarks.

And we have reached the end of the question and answer session I'll now turn the call back over to Dan for closing remarks.

Speaker 11: Okay. Thank you, operator. Thank you, everybody, for joining. I think this is between the webcast and the call, the most people we've had. So we're very enthusiastic about the number of people that are taking a look at CHEG again for the second time, maybe more. But as you can see, what we offer matters.

Okay. Thank you operator, and thank you everybody for joining I think this is between the webcast and the call. The most people we've had.

So we're very enthusiastic about the number of people.

They're taking a look at Chegg again for the second time, maybe more.

But as you can see what we offer matters and the number of students that need help is only increasing the amount of budget that states have or schools have to provide support to their students. Unfortunately is diminishing and so online learning online learning support is only going to get bigger and are investing.

Speaker 11: And the number of students that need help is only increasing. The amount of budgets that state tab or schools have to provide support to their students, unfortunately, is diminishing.

Speaker 11: And so online learning, online learning support is only gonna get bigger. And our investment in content and quality and subject matters and personalization and on continuing focus on the student is what continues to differentiate us as a service, which is why we compete extraordinarily well, which is why I have this massive database of content of high quality. We're improving our relationships with institutions and professors at a higher rate than we expect.

And content and quality and subject matters and personalization.

And our continuing focus on the student is what continues to differentiate us as a service, which is why we compete extraordinarily well she's why had this massive database of content.

High quality we're.

We're improving our relationships with institutions and professors at a higher rate than we expected and that we.

Speaker 11: And that, you know, we like others were surprised with what happened in.

We like others were surprised with what happened in <unk>.

Speaker 11: Q3, Q4 time period, but we feel like we passed that and we're back on our way to building a very huge company.

Q3, Q4 time period, but we feel like we we passed that and we're back on our way to building a very huge company.

Speaker 3: And we couldn't do without our extraordinary employees who have stayed with us through COVID, who have focused on the students and we're incredibly grateful for them. We have a mission, we wanna help students improve the outcomes of their life through education and we're just gonna get back to work. So thank you everybody very much. Really appreciate you all for dialing in. Thank you, thank you, operator. Thank you very much.

And we couldn't do without our extraordinary employees, who have stayed with us through COVID-19 , who have focused on the students and we're incredibly grateful for them. We have a mission we want to help students improve the outcomes in their lives through education, and we're just going to get back to work. So thank you everybody very much really appreciate you all for dialing in thank you. Thank you operator.

Thank you. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Speaker 18: Thank you for your participation.

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