CHGG - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to the Chegg Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tracey Ford, Vice President of Investor Relations for Chegg.

Tracey Ford

afternoon. Good joining XXXX for call. second Chegg’s you conference quarter Thank and Dan Andy On are Chairman CEO today’s call Officer. Rosensweig, and Financial Brown, Chief copy our press presentation, A investor.chegg.com. earnings with our Investor our release, is Relations Investor along at Web site, available of call of be also this website. available A our will replay on We and at to chegg.com/mediacenter. on make center important site information routinely media site Web announcements Web post our intend on our these resources. We encourage use you to of make

we this report operating as you to risk filings cause that in we update we events. Chegg’s April the results Exchange we XXXX, release or statements with reasonable on differ and begin, including in differ earnings like information our we factors forward-looking those as filed to described included based and those Annual materially would language to forward-looking material refer the that regarding Commission will believe in undertake the as Form actual materially SEC. forward-looking important as from In call, We the new make Securities to Before the the of XX-Q XX, a with statements of to and you other well from future point make to of forward-looking the statements. these on caution statements today’s on Any the cautionary obligation consider that These during that no be are result factors today results the course assumptions that this date. cause risks the uncertainties out are to future performance I future Company. could actual particular, subject to statements events, financial in of forward-looking We could and statements.

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

found GAAP on and reconciliations investor.chegg.com. slide the and to IR investors results be our our deck can found GAAP press in earnings website, release non-GAAP Our

our datasheet, IR We is on posted investor also Web also recommend you site. which review the

over to Dan. call turn will I the Now,

Dan Rosensweig

Thank the first report It and has been our once a everyone. exciting thrilled you, to great raising Tracey, another And are an XXXX as of again are for we guidance half quarter. and welcome we new TAM, result, leverage priorities student strength the that financial for reach, three adding graph our brand. and goals, our of We year. expanding capabilities and full our year. Chegg outlined the key the Meeting

year-over-year a has Our Services will XX% on you executing growth across subscriber reaching team financial stayed Chegg you driven we growth outstanding growth business, in these moment QX, through walk in XX% against greater detail. and our priorities, and focused by results In XX% our delivered revenue total Andy growth.

year-over-year. suggest, brand As the continue remains the our school an areas depth million to students we XX% seem of which the library students, evidenced students, increased million, at value in competencies. of we become of significant QX, enter the ever, and XX% proficiency year, for high over ways and expert education, year-over-year. to add, of Chegg more We our by Chegg capabilities In the increase Chegg create fall seniors content center flywheel offer will Chegg the service. greater with valuing invest most increase with to nearly we in indispensable to and all engagement. momentum. We number expands Chegg in semester more power XX popular breadth our modalities proprietary, expand the with believe time which XX,XXX half is and and an our our the over now and content writing we And of have had solutions the Study and one content an we we continue Writing as lacking the in to writing will answers is underserved both of as textbook is We than of our of that ISBNs usage. Study more and XXX solutions first the in of TAM be XX% the catalogue views Study is the up

already this writing have year. we in citations category providing and QX visits to of added XXX million XXX annual and help to sites are We in were students our million this over

We to importantly, have process be the can believe teach how sources technology of we always people can but, and bibliographies view speed citing write. used technology had that to up the creating that more

know grammar, in as style, platform. And ability XX% of for when writing our that we and allows tools is continue our points Chegg by one across A.I.-enabled A.I. every integrated enhanced validate challenges writing human This as help. to students announced take over us writing. services structure, academic Our strategy to our powerful customers more is students, specific platform, Students which is, acquisition more. services to helping writing it expert of technology and personalized pain from provide as QX, to other the WriteLab, from our sentence their backed an we come address accelerates of to Tutor citing

versus prefer addition, that chat-based we learned have live tutoring. In video-based tutoring, students

Math continue where struggle. tutors allowing another tutoring to to subject a students quality, enabling chat, re-architect to is students more system we leverage and at us high to personalized our So, build area capabilities, very low provide more cost.

understanding increase to and matter designed this Math a school and basic math providing unprepared subjects comprehension high guided, It in them Chegg college. step-by-step college-level learn explanations and in XX% students of like students understand This math helps of for the and learning June high the version concepts school in subject are Solver accelerate desktop calculus, graduates meet difficult To the subscription. math. lack pre-algebra, we service of XX% skills is pre-calculus, by need, U.S. algebra. of help in As to linear and launched

and desktop expand We mobile subjects cover current plan years will the continue to the months of increase to ahead, the half number year. and this we to back in from service the in of

Chegg which anticipate the Study experience in single launching a outcomes. writing master of into will access growing have their substantial for all Chegg Services, of to provide fall students combines provide three help subscriptions, with stages Math suite the them can and our offering. to Study, trust EasyBib Plus, Chegg academic very to we and of our their services, started XXXX. and bundle, for we Chegg feel discount. Students first seamlessly in a first math With our the Students time, have we addition that Pack, This we Solver testing early subscription of services the integrated to we help to services the and improve that are math

key opportunity to and products continue points. the will we we to offer pain we address such, services when expand see As an

is shows Our to acquisition be flashcards of StudyBlue. exciting using add XX% of students are in And, the their spirit, online. as research we recent our to example couldn't to accelerate services, of that family most StudyBlue Chegg that more thrilled learning

to school available. believe We we robust serve funnel create our million Our tools with we and and nearly and vision available tools. XXX open more the Chegg. opportunities making to content service will up flash pair in is market that this deeper to expand the the the on comprehensive including students around plan By already, college make content world. and study professional most the easy-to-use high useful grow of is With free free, to it it content currently pieces user-generated our most and that flashcard

go that of XX% we college space, we a all expand learning they to know in better Even continue to to say as students the get job.

test, even the impactful investing beta with are both for reach to students our our just to data our The such ways and to to connect CareerMatch find match which demands us brands We learn students. expanded the with and Mae platform in valuable extension huge more has best the better of and and employers. Chegg which and opportunities which reaches we example. services students led our enable to to partnership our Sallie So, them. proprietary creative adapt utilizes audience, to help is us job approach one of a will

We support to new Chegg Student services Sallie now will Mae years. benefit, Starter next offer or and the Smart access from able Sallie Parent Study Loan platform be Loan, gives Option a now suite with Mae to a three of study borrowers which for the

we an high. for As our future, all-time our mission to passion look team's the is at

key company we talent. mission, outcomes, with to Survey employees; business talents a to of that thanks time improve in Work our its Work. the were and, while a metrics to responses focused By seen in retains attracts and For history, building is the committed to on students and our leverages building distinction to Place that Great participated honored putting Place being as top of first the culture the of across we growth we have Great employees first, the A Chegg's student our certified

and the online, adaptive, to backed help. the We making about We by see opportunity us. learning, tremendous to and technology ahead path on-demand, are of utilize optimistic it transform personalized, affordable, human incredibly internet

to a I turn to to Our goal with accelerate student we getting feel it go for that, is it from the learning to earning. And over time we're will started. just like Andy. And takes

Andy Brown

first good first guidance all results metrics the year great Thanks Dan in the confidence strong our to we a company, half achieved everyone. gives we momentum half expectations. of and key It's us ahead our into of been XXXX. financials the for again with and for afternoon and our carry QX, The raise

take exceeding with in subscription reaching guidance to in second the both Chegg coming expectations. our the gross cost much our we above Materials was due increase margin structure. share $XX.X continued Services resulted to Services increased XX% year-over-year, prior market. of half revenue comparable gross our Materials the incremental of a we and Required line services for its to the straight margin was indicating total XX% to quarter, from subscription million, goes higher declining continue Specifically, services. driven high-end for XX%, fixed This Required demand as revenue strong year-over-year, than the and year, first relatively in by revenue expected Chegg revenue the a

first and drove margin of convertible gross of have the early quarter and a Our balance in one of in EBITDA we in sheets XX% the the We cash education and year. adjusted industry. believe now $XX.X quarter. very EBITDA investments models the strong $XXX bolstered and ended with of by for successful Adjusted strongest offering both the quarter margin million, performance the XX%, for was million. half revenue We operating debt the

QX our look WriteLab results guidance demand XXXX will for contribute StudyBlue. the the in to EBITDA subscribers us continued will year. still while on expenses. subscription allowed The our has adjusted momentum we and guidance recent costs, raising acquisitions services. strong to our revenue services account we the guidance takes and to for into dollars additional As add increasing year, not absorb The several these million acquisitions or but subscription based half These operating updated of the of are of second of

between be $XX.X XX% to As a we revenue and $XX result, million; and margin between with gross QX for $XX.X adjusted revenue between EBITDA million, and Services XX%; million. and $XX $XX Total expect: Chegg $XX between and

above finally, fuel add expansion we of and million For in and between expectations, and believe We sheet, delivered our closing, million the it's EBITDA a XX% strong extend now approximately revenue between to your made platform and with or as to year. XXXX, on our engagement students expect: XX%; million over With $XXX subscription increase TAM. $XX that, momentum the second $XXX In million, our full $XX half. total expand our services. $XX $XXX market our high-end being overwhelming such with the and balance revenue add to we range, the And content acquisitions of adjusted value between I'll we for be this between the $XXX and remain questions. modalities expect Chegg of strengthened first our we half to approximately and to million margin we gross and Services been turn our million; new call these and We XX% opportunity into year video investments CapEx see to XX% margin. the operator to that $XX used continuing

Operator

Silber, Our Instructions] BMO. question. proceed first Jeff Please with your from question [Operator comes

Jeff Silber

the for you to about still and think for started impact pack Study I on I more it's to if going you early business your you but can pick Thanks. was the overall bit much. the bundling year. not us I probably and so little pricing, for you curious products I know next competitive color will you just the Thank am talk did this why be just bundle? what give announcement know Chegg respect wondering do you'd a

Dan Rosensweig

Okay. Hey, Dan. it's Jeff,

Chegg current on from five asked from into -XX% the price many we the we with previous is So worth years of the with years of share quite when it color But we calls different significantly. also to we've Chegg know said pricing -- testing even we that significant market realize Study. testing and starting prices XX% when at Study have see know we are think stand value expanding this you are growth what

to So in all in technologies the our place, now, case, in reporting we in the test are place, starting e-commerce the it place. capabilities

into point, what expect to don't testing or I we business will of is that but ARPU think idea something up for now we've Study And growth people right. next and able and could $XX. very the because that of are although higher are on staying be high either because than XX.XX That's to we that seen, that We much we've will between different just the XX.XX see rate, Chegg our price our to you believe subscription only to coming already all closer literally sustain not renewal longer pricing. be for and to not continue continues adding be to what and we kind to year. early go keep But of more indicated is with continue That's it change help it the value. on because

over think student we is the ARPU a can raising high ideal more would to bundle for significantly continue growth sustain of be great Chegg the successful, if price. significant instead that be percentage take higher on depending will we have value the but But what Study. So prices overwhelming actually offer only slightly would bundles the

to a excited are so go is this we very think we it. way about So best and

Jeff Silber

just then upside to quarter just be I would what you the specifically? guidance? perspective quarter, went stood a am from your out lot, I you for And in Okay, that your back reported. turning just the relative but through great. where curious know

Dan Rosensweig

heard would Where it much question. sort be cut upside, of so the out I

Jeff Silber

drove XQ upside guidance? the your In what versus

Dan Rosensweig

campuses let We I'll we've together Andy which put name today. strategy ago. recognition So XX% college several start, years into a I'll is go on

First go out digital working. and that's

invest expands to continue in content that and modalities to Second our TAM.

traction not expands; what hoping to having of over expand; traction ago content growth result XX is XX,XXX over so started And were see And questions even the million we're so a more more and And slowdown subjects, if ago flywheel questions several build see now. just think significant has in said to the continues got the significant to we that bigger. as get any years ISBNs, I years we we greater now. two seeing even categories, we've we're that's

a this margins happen because things and and us certain it's our get business, it's the that to very brand that's you the they businesses. or will And those and they one get, Chegg the need opportunity our the recognition, more combination quality feel high think So have get sooner where other more to content, Study other way you students in and significant given playing of campuses pretty on strengths of class. are the of and in expanded recognition word-of-mouth, to people high costs, TAM what's it behind need it relatively to becoming in is they invest if fixed on we it's just and beginning to they're been opinion, that's

So we is the than working flywheel thought. just better

Operator

next question Our your Please First Corey from Analysis. proceed question. Greendale, comes with

Ken Wang

Hey, thank Wang Ken for It's Corey. you. on

all, First on congratulations another quarter. of great

core regards in be offer? maybe wondering the population, school, offer middle-school may on college of you you anything you what outside saw high to just quarter during So within growth qualitative anything commentary can just maybe just can the

Dan Rosensweig

Yes.

great So a it's question.

our into free and global. to enough are the penetration funnel are deeper the now So is writing and and get school, deeper with believe StudyBlue free services and is math and essentially interestingly what high the in which deeper going on we now acquisition we on

subscription-based two apply acquired be over but be EasyBib, we the will technology will So time StudyBlue. great example school, use we going that international see to over imagine for down to versus be We one to expansions. to more we when sooner, we have high being able ad imagine able revenue time the we that --but to

of So still pretty is a you terms ahead us. long we see still in in go, getting because of high, way to monetization growth have of terms great our --we awareness and lot our but news is penetration which our market of reach a

Ken Wang

Perfect, of bit? content just very you wondering StudyBlue rate then maybe at growth? talk the a development helpful. And of also Just how content study about can kind of on you model high level from little the differs a the and can it control kind

Dan Rosensweig

Yes.

what capabilities, years to to of over And been So pieces growth StudyBlue can and -- kinds StudyBlue, have a companies their StudyBlue, team looking deal we've of kinds different the who under accelerate And have this led great user-generated that by we nine UGC million for funded, been different are success find great assets they commitment value. is is space. of with terrific and had years, of by we content. a who content founders, what around we've this is has where terrific have XXX have buying their do who and led discovered been which

So way. think this it about

You're and into we incredible course, of capital content desktop, on and those use be particular content your that. all have with the mobile more ways, one time. marry in, different just And different professional will the of to notes network not, flash by becomes world, that systems. have on to that pieces which which goal which a that comprehensive, the stick and cut real that but it which is the from they have just will way time we the decide of class to upside learn flash as is invest to thousand turn all certainly now top the of of with and be it'll network robust highest phone of flashcards. over on that around this the XX,XXX content can and on, plus the free think specific cards, can the advertising but of the our to things a the be automatically versus service there's one If have want time funnel, expert want have we rights flashcard the we allow do big conceivable content do the we in XXX did cut don't monetize you the of most have our answers we to by subject, quality may day, we most of successful which day, we create students by that students you proliferation you always ways turn all a to then get what that a the subject. class; through have but idea cards to devices to specific be this mobile it those tools you through want We that any it They when to

for which leaders there to our model we this And of that have current expert either answers more able event the say and plus more our they're that because one content is is have it world we've instead just cover World content. the created give So we'll And we war more, content network have of out wonderful. relicense. users one, answering be War you'll specific free or already is professional by it,

answer our yes. a for we our with content. us, really leverage category high growth margins until fix it's is the brand and and So And accelerate the

years mean it. do everything this been we're So are that part to And excited. very buy almost Chris of before for we willing ever become looking fortunate we at at we I bigger. time something was super we've

Operator

Raymond Please Kessler, comes question James. next question. from proceed your with Our Aaron

Aaron Kessler

couple on Yes, the questions. Congratulations hi, guys. quarter,

update First, on maybe just growth. tutor

around that are next CapEx on capitalized specifically the the there? remarks or platform the tutoring of on software? think over there And about mentioned about Thank to I you. few XX how just how forward you change I I students an during but chat based XX are thoughts looking outlook think preferred longer-term guess should the total just years? maybe think update you just we kind going

Dan Rosensweig

Dan. it's the Aaron, CapEx. talk and about Hey, start will Andy I'll

they offline online, that or live the necessarily On talk as what the stories phone, video, it could objective no not market take like very live. who it well the start or video, prefer based, it doing tutoring has kids video was Instagram one large was chat something be monetize to the to you one audio on put more and the student has anybody do which tutor not where side, mirror system was over and where live me they're give we noisier, place if it. talk that we they more first in dorm, it's as so would in their --my and discovered They're to snapchat me. lessons time. getting sort is And that surprise that tutor discovered either to to killing to by they they're it's built actually the to at or tutor but a so they the live or around idea they in for a the them prefer are Often really to you time. was from of they coach they let TA friend while But wanted in them meaning Kills than used a chat to library. asynchronous they like times can written a plan like What do and it's guidance or typing. me treat actual more a are be we that's way thumbs they're be multitasking, a exclusive or they with not do my they

so which over which tutor the significantly opened how does model or change channels we've of time. So now are is sessions part growth important more that chat our because accelerated really to based, quite your XX% question have up led but that the of

were pay six higher to can $X.XX not the able four or tutor take little a margins a five the tutoring the they That chat. going and students more the us significantly multiple while a as time via rather than it's at to for but same we tutor to it on can allow five will minute. time bit to if will because tutor time. also a The single the at tutor over at students still architecture values take rebuild So be which students one make a

just opens the So tutors. growth growth up we stream, more both one much think growth to much more can than to dashboard where streams time much student more a necessary more a valuable stream, bigger it they and tutor a and that. it's the have profitable keep the -- takes track students And for all one for ultimately have tools at lucrative this the build much a time, to that's of

that's and been so And year really is our we've on till working August building what May XX so. or

next money tutors don't the in execute we're and So doing this actually what a way really can love driven excited by starting at demand until which semester. lot it's in they take it sometime because we that really fall because that they time. on it about imagine during we it a student more so lot, students make a build because we now. more period because a we're of be But can build to is off fully we robust summer But lot don't coming

Andy Brown

Andy. Aaron, so this Okay, yes, is

it's the historical is sense, On invest a CapEx, is on XXXX. that piece with the CapEx where yes, and if than look Having as XX% it's diligent video as lower -- future forward grown two our are very content as take have the get would is that's at at has you to revenue. continued we whether students, look content the our a CapEx first content, CapEx. One But are to thing were future, what ROI I'm that, that as rate do than just in XX% going Q&A. retention, there does something value question, does CapEx in past, as you forward, beyond anticipate the at approximately anticipate we on into subscribe it typically term rise but said whether would we if has we do of it's rate as we about. the textbook So, in. move growth revenue. said look look looking we And far actually into content a we Whether the which but components total as things and companies total but our and lower to drive solutions, reminder We'd we drive at that, our that as do guidance focused every one does we an when it that a you having we not of

Operator

question. comes from Doug question Morgan. Please your next J.P. Anmuth, with Our proceed

Doug Anmuth

taking for couple. thanks a had questions. I Okay,

learning materials First a take year noting obviously this you're you why early did and can talk us kind kind of study go out to weeks opposite how there from path the back about year what a bundling XXXX that. in years walk but you early driving you it's materials are the the few ago testing long And this you that then out there be you is much well. cross then of questions and was how second, of at school and and you as services of required into anything starting Thanks. as kind do think on that can about the seeing through of guys point for selling required one between to get roll maybe that seen just us half they actually comfortable

Dan Rosensweig

questions. good Yes, detailed

start and sell the me first into get Let with cross the bundles.

that customers that's of the strong the have without ago up It's textbook stay it. a been last good and or take to able sell get get them always year our earlier why they get it conversion, rate. direct cross a the easier be that be to now and time which they know been they're is on it down, goes longer, terms there so XX% able about subscribers know many was improvement those that either And to us between --we they go they digital quarter well, I study confidence it's result end many because want of year, of they the going get to to the get customers usually opportunity call -- each in Chegg so for earlier across that think greater So every as earlier, been going same when us attach because sell being the a they study- we do quarter close their you're what starting yes, summer and gives Services --it's to on overall. gets textbook because becoming bundle, to ARPU or get higher that's continues and it's and most as or over And, subscription always get so right at because if things integrate people both there the when are we better subscription ways. study and just able textbook better, pause XX% those on -- ones of the early were

So effective been brand is us, of growing with both actually has very share textbook I the technology prepared and cross-sell. recognition, business. remarks which it why lot that's a Andy think a that his And it's in going we're ways to our ability the to in and for always now, do

the of questions so and bundles the on question long. two Now you why asked early learnings

far. to the And just is of it us learned Knock that to But our wood and needed thing that working. are the early it, a we just in jinx if and to is so all listening was I on sure those things do ability we do so for important kidding. I'm and early order that. Russians so technology most and I are even bundle monitor very learnings reporting its that the meaning the financial

integrate product, the the is experience. meaning what's second do how you user The thing

fully find different the way the we're we've leverage throwing it designed or just is of aspects product not the one longer. meets to not the And of plan optimal shortly instead is integrated which bundle whether for way out things once plan a of the the be we the will able so the three the all takes to students in which is out, finding at bundle reasons

as testing we're thing and third testing The you test-- we're pricing renewals. then

they out So find one is reasons we to of formally because with transact come takes to January. or we are over it do quarter, whether longer next able the not whatever renew the it that

the because rates continue phenomenally core assume so growth doing this significant that business see well taking our our just don't successful to our and time to because we to is model And growth be need right now. we're

the semesters. sure we in that when user make least That renew. they long stay is model when experience convert, right. two really we just takes want That so of on, the is And how the And that understand at they pricing terms they right. to

if we're So to the start that's to going because like you when until and following want it. over roll we have formal next then year clarity in folks fall why January to up roll greater you you on be we the talk able to really not declare

works. business you a a technology like forever. not It's the day it's how our Spotify Netflix It's you So and that or of not issue. where sell just sell reality

Our test semesters associated with it.

Doug Anmuth

in helpful. that's as roadmap? -- up one and you out it, about Got you Roll more international XXXX the is Follow think ask

Dan Rosensweig

season. May Yes. XXXX go it second The And for say I answer is it's not is isn't half it's is likely yes. through the execution everything fall feel because this roadmap the our like August because literally roadmap for if I we in in of January year,

that pricing pushing now heads the now software all -- ready, messages been focused so can right So out, It's there everybody's getting because are getting we our marketing growing where down the lists so fast. we're all huge ready, phenomenal. the

So more interest already international from we real countries. the seeing organically is are than about interesting English-speaking just thing

us, difficult anything that access makes to Now the currently sites around have don't any to the would prices at certainly world, folks their and we currency. be around dot which for local get it

going are to on we that So work first.

much. UK sure make There the been presentation, on sometimes imagine site then product finding that's and localized and in, yes, the of dot sure adjust countries And we coming content are really interesting dot for in is they're to number students you'll dot you really we It's can all us and the where really and don't Canada, Australia. we their pricing. start are so account making credit just whatever own seeing XXXX for because can CA and their exciting have take cards, a

on And at one about is want represent which them once. all of to of things So it's We exciting. take many the things don't growth growth future being too companies.

Operator

with next your Thill, Please question. Jeffries. from Our question comes proceed Brent

Brent Thill

up approach Good spend time, can the you it a if --you're but live changing the early on paid on Andy. you approach versus your the also how for sense back-to-school just a I year afternoon. your know expectations had you this Dan like super it's give little of a follow looks can for quick product for and your your going went maybe I And past math. fall. us

Dan Rosensweig

Sure.

the consistent that messaging, data using have. approach back-to-school our that's sure that year we to our we part So every make is we want focusing the of are all

years so is don't messaging lists so sure we in what in that our new position, shape, cases our become the the going good is about That and you everything which and out add just exclusively for we're almost season do some So we in amount in of is our Services. around conversion, articulated, what's launch or make wanted. textbooks coming how we really in right like messaging messaging way the it's the of data is the and we it's amount two to some the Chegg services. the we non-existent in almost that disturb last changed really with least is are to map the the and be And have off greatest in the of of

in So this writing the and do it semester for now many versus done will so some we of can have what have past the changes writing users. example, because be

alone to visitors over the year. the course the million XXX have We of product just writing

realize already of do. And the and so product they you them what could how can assume that big most know is,

doing really get new fact messaging. that we is it's the And important so that the things

with don't you messages, now too happens the when many doing executing we're of everything what message of is content overload the about them where do message, So many because messages the how on that. the we timing

place. textbook execution. So on We're in execution, been the plans it's really about all side. execution, The have

before for about I Chegg interesting starts think here. now. to around we've Its tech XX news starts that get good our got days season study is shareholders it for and

Doug's question terms for in the attach earlier rate. of As

super SEO is about technology approaches done, we're messaging, the the to messaging, all to done, really days its be got the it's here. been But So be the --we fun going about to pushed. XX products content is before done, all has all the

now literally things, sure monitor messaging, conversion, of up, of making the stay So engagement. about those messaging, frequency kinds all it's product

asked an math time And approach. you it's about it's math. down but just exciting So heads

and are level a the most or number few college. the and it. bought reason global of at main of take struggle it, Plus it's everybody probably we than when proficient I thing. buy students is to with the the that math said obvious enough So high school students the reason part has subject And struggle what was writing math math greatest is so was other any to with

take at so expand reasons as TAM, our said those would the And with reach to for launch for alone well and opportunity create We big desktop. we value our time our more as students.

Chegg X.XX the math been cause able exciting. we we that brand range. the above being has recognition and to price an value we subscribe The and something, and may, will. our a great put is and was never those that the pack for was goal to to but because NPS The and individualized to to subscriptions so do Study brand XX us goal response really First on we quite tools product in of a a did, more that said ways of each be bundle, writing it's sell included to them this people overwhelming of students more Study at learn the Chegg really product bring would identify more although desire it, our our math end higher to two in

of value does, individually positive its we're execution the confident business going on be So right we the something whatever we in picked It's the be And end that it's explaining next subscribers up expect. us, for all significant the great, way pack really impact will our about it is but study it it's by is the positioning, year. that for and out-years goes this what getting about really to a

Brent Thill

Andy. Dan. for Thanks quick Real

X% like QX you're you're down then I up XX% year-over-year guide, Just up at and year. the XX% midpoint think when sequential last

want the any we to or consider clear anomalies just quarter is be conservatism? there this just third good in are old-fashioned So should

Andy Brown

Okay.

So of this okay. word C none

semester how or the at goes, as and no, way semester. time get as semester the we -- know pretty it's much as the --is into we where of We fall how is you September. advance more point now just the Brent. the get the in So, of second fall data the we're We enter year, that's the we we're the right business -- into goes half spring as a winter usual,

year treated we year it the treating we're that, last before no we So and just same the way change.

Operator

Please Northland your Mike Markets. question Grondahl, question. next comes proceed from Capital Our with

Mike Grondahl

part you moving that? of about thanks into hey, successful are junior strategy you guys. a is StudyBlue you and school big and be Sure, Do think thinking high How can your high?

Dan Rosensweig

Well, that reason yes, all huge ask It's students for a time some all our flash you wouldn't have are we prolific the strategy it, single that sure. we do Dan. surveys the part tool tools have obviously is the acquired of time This is or most it sort. and the use of primary because we we and acquired if and

working things per of on professional this this will on when mobile. grow goes stay which ad, the just you content that we're of a these be. our to continue imagine that on vision the things so become for be content relevant few put class And the this too to as will that technologies leading voice ability basis. And the like as is of category can pieces also we something XXX The the we think having future takes their million and important player. years important think not How that for to a we more much global. next that It is for us over

in other reason if no that it the -- itself incredibly students. we're for for value So

bought way pack technology card this your that down to and that things cut on for would way allow by that the be up all be allow a about we offer yes, the you level age be automate content to think just limit. us, can to to not or thing a that them For and used the go the

the necessary that the learn themselves, yes students be be when I get subject, goal competitive, Chegg know do and that skills to the most to to a need And of advance and the mean learn so the master job. things the overarching class, more pass it is they comes to brand

where significantly incredibly So, this to were of reason mean users tremendous where particularly XX business for million years those things actually the think growth. acquire they higher. something you is have that started to like a example things think valuable which team. you content, pretty important of is, forced an that of yes, and the liberate model will are we good we of the part was that all these articulated the us artificial nine doing do be it we it growth how Once I

So we're about super it. fired up

Mike Grondahl

and just Study a on then quick Got Chegg the question it pack.

price open can of it get kind XX.XX to XX.XX. all it is how still for possible that is mean for testing? at of someone I it hey, could or testing the Chegg XX.XX, like I open to or be mean Study mentioned, seems a value that You higher?

Dan Rosensweig

answer we that? rolled Well, So one does out. how it just

have of concept been testing than year. We this the for greater a

of math we pricing only surveys only writing been and just We the a the site. of almost all than But the got testing through year. desktop rolled we've greater have out version to for out,

to because mistakes super should significantly up and the system, years Study, of value know higher we with the know clear. we have all revenue that more already gets we've years price we it actual a that view adaptive, So it's will years be will Chegg that of we've slow, but can modalities what the highest testing that Study price content that will be do higher to be. higher. and The price is We these that And that things be allow after becomes growth necessarily those the clean seen not it be, much the the have more much faster Chegg profits that have, the same through over after might have, but after could not years. the we it taken question points going that answer to and more we we technology in that us

We growth our are the significantly fast still of pace in business.

So are price to the to We're students in the because with else by far. that leader giving now opportunity and point. acquiring as optimize to at can, we're to and space, as we the compete optimize around right value not a not looking looking students this around it's many we this space anybody in us

Operator

next Alex Barrington question your Please question. proceed Our from with comes Research. Paris,

Alex Paris

directed of I'm on starting launched fall, guys, but foray I'm forward were more in new with a international call, of you this got the I being XXXX excited to the congratulations the about got the approach. a as result actually bundling kind to next Hi, initial year get not at you looking quarter. least outline school if it, --at your

the You you're got a reposition tutor, you're infrastructure more on then expanding you test beta mentioned building that and market the focus to on chat career match.

Dan Rosensweig

Alex I you run feel call. our of should sort but

Alex Paris

a couple got the study I guess besides bundles I pack? of follow-up unbundling. there So Are on you're questions considering

Dan Rosensweig

So it's question a very time, no. this interesting answer and the is at

are in or we've that of to to we any way The it you've Everything we get very We model before the done too challenges the the and now misleading terms to want very many which we have step. ones is to in right do been to We go we that company, appreciate I close on don't learning things do. and next to what want one how we strong. good don't take focusing shape at time. really So our and on like having be form.

strong. Our and super Tracy balance sheet Andy to is thanks

love rates are growth high. Students Our really our brand.

the We're We well. for have a vision company. extraordinarily clear executing

much at time. to trying is most about one worry we that thing the So do too

at telling these since yet price we're site. to things even guys bundle year So XXXX and in because advance really you us going a on it's points moment, to different out the you're the testing not see in get this we want

be transparent. so And rather we just

always different things have on and So there other countries. opportunities countries depending or are to assets or for we package are in, that desire that we the we launch those that

you're my but going whole done. to until do we're We old that have of things anybody say a to after Semel lot working tell on, what you've don't used Terry boss

Alex Paris

All right, enough. fair

more Chegg of overall, of the leverage the tutor ability much could has profitable and services, of tutor the a within even some it's the change division. margin subscription exciting to on it never because potential create is one fast-growing the segments On fastest-growing this though particularly and given

Dan Rosensweig

higher we're it sharing it it's and close space, we because very to all pay to information back the to you that all of a that's between interactions. you less, exactly right best to same But how time chat successful. it, a lot there, margin have it's the to can growth gotten with them tutor and we forth assuming is the more different that or the but more about human can human charge have BOTS is demand that's and you and there's allows technology lot but lot you what's and with want of There's agree lot people outside we have chat if to higher to accessible a do because student to here clear a much spent go do which voice. business for and have through and being much TAS makes more now based companies a coaching, And things really actually created tutoring We great call. live interesting of do

to things road. we down and fortunately number the get continues Chegg the So will students very ways to of do be big the opportunities the in way us that we which expand think can for can number of

Alex Paris

Okay.

where pre Is it? paid subscription-based Career do to today or service match, this is It quick. doing are test? What real service? going two match a you and Let's you what in for beta be career envision

Dan Rosensweig

and and likely Andy be pay pretty it businesses a But Well, as for in yet. it's is ago businesses will are do what service. the free model not these the said, and the put investment again to in recruiting business which we our we of students to be today, subscription a space, revenue year all will repeat I just a cases model standard

look year. you at performs this when So well our business how

to exceed our including We up investments and able the cost. to their companies other numbers our and able guidance absorb acquire still make fact that and take these are two were we

that's business core thing. working a extraordinarily good is the So well. And

space, we quarters in --very recruiting companies mostly you interested launched focused early know all very, match, beta original Valley career inefficient, in the very we the companies two tech And On at very, the Silicon space large high or alpha for it's very ago. muddled, a the because turnover a students end. are expensive very who names, brand by college know very on all

data that our through matching through fix be that. think we to our we'll able so And and

actually if much likely state money. tell able last these million we've to version XXX path, This school the the we to specific be of instead which corporate the over And is of this we're now this alter classes new the Florida a if and marketplace And job Florida them that they are a is the the It's within functions that. you to be we side going here so learning and used and take so over said beta student We've already about understand sided with it'll I incredibly and are paid which computer we resumes work of want for we're are which six actually to is here, a do. on in version all college. volume of we've on can able be you past, years these that try skills through going and what in ten employers two now or And case them each side. working to student go want excited put you the objective of companies read get specific out in things before state AI. the it. nuances But to do too think hire live learning the much side this to school to when for successful help you're majors

actually they turnover pay So them which reduce more. the make can that to a better and hire student allows

now. the to we're are time through working lot It what the accomplish. we're a because run these of things looking you that's the system. got And to So takes data on

Alex Paris

now a extension last Are Sallie What's it's term. the the extension. offering Great. one more then And different Mae and between contract? services? year you first Obviously, longer

Dan Rosensweig

thing partner a Sallie they The Clearly, positive most it these more services even it's us, their three better over what is bundle or have offer because whichever the work be to that's them learned we a we want. thing. wanted lot more is Well, And we can Yes. and do a satisfy execute in three-year thing positive to writing terms better that parties. the so very the so or a we at did clearly that have things really service like grateful what's and they how of different to extension they math mark through choice Mae from can time, it students. for and are what as to and also important new years is both is are do like subscription service with they will the for

Operator

comes Rosencrantz, Hallum. next Our with from Craig question. Please question Mark proceed your

Mark Rosencrantz

for great, taking Okay, quarter. thanks question congrats, my stellar another I'll my add and guys,

the revenue revenue you'll more actually have with that kind On regards and assets guidance exhibitions is billing your to generate because a now of Or these only measured more acquired from the not assets? them be a taking ground partial year floor? with approach you'll do

Andy Brown

no. No,

coming super the clear no want two is WriteLab acquisitions. acquisitions, So with StudyBlue. revenue to be on I There and those

down revenue-generating that taking he from remarks, we're StudyBlue while Dan's to it said was recall make prepared a actually you free. the If company, payroll

see no --where those continue we of those capabilities. can out not want to where coming will but that be while taking model you are really So acquisitions. we build revenues cost our EBITDA but guidance, the clearly that's And the that, we absorbing do to from as are however to there be clear, up we the leverage

Mark Rosencrantz

shifting offerings helpful. problems subject in faced, and to How the sections, want eventually? Then start you buckets your where years. current of them over that's would the sections the you reach throughout to compared work a two lot main gears of of put of call developed you great, discussed view to Okay, those and each math kind writing you the

Dan Rosensweig

into people need to up offer, question. places the than what and that's button to AI historically quickly. of that's and two going capabilities And his actually match live explains the computer do the not Good an It's scale would today, where are that product extraordinarily most in it go when the where pretty learning solutions, you on step-by-step Yes. it offer up catch if at the why a in technology solution. And you the there's only but that studies, we can show it what like you teach and this what is math choose you does why click you needs can to you -- actual math time been but And with has they greater obvious were actually way. able so to terrific. increase dynamic writing in

just here not why supposed and to it's it is, things you then is be. why what So and it is they're other it's not it are think what

bot, a where to idea using expands over X able the that as asked and use here can as million what just that, higher it students better and and better get million be and you you chat technology. things Q&A time, keeps it globally by got students voice like just better getting do to about to significantly and questions directly, can offer So we've We've technology we is got use robust network XX questions. publisher and

were writing on think I be and is bibliographies with to far, answer compete you the for So if look would and at citations by difficult my us. best anybody it

If sentence to things, you work those but punctuation we grammar, have we to on high have that structure, a do, work ask we're do. say already a but I lot now more of would more all us of quality, very

because As student at its a how grad areas still recent the subject There ask them like grad, of a of matters. have money. thing near to not skill still learned manage nobody matters of them. school none to taught personal soft subject it's think one matters. none have in any you that wish they subject a the you --that finance finance, personal is if in or Whether about the today We're the of they say that we're XX% job them were what know they are

the So investment experiences terms the beauty making content our in a adaptive versus beauty user of that and XXth level behavior grade the meet differentiation incredible in they We level of can to grade terms we help depth at seventh things level them beauty students others this the them use not of technology, of our somebody and of the and all up. to internet, how but only of for many capabilities, our the that with, span ability level. want to at are the are

because that it far from easier know to do technology do that are to it. we So being how but able is do the making to

the us, So more for enthusiasm each technology that as and I feel and for allows and it. the better even have so we feel as thing offer with if that we much make can data we content

So we're along. plugging

Operator

Dan question Rosensweig we for Ladies closing and call I would the to to reached the remarks. gentlemen, turn -answer the end have of session. -and back And like

Dan Rosensweig

you Well, on thank call. joining earnings us for everybody quarter our second

is As financial the more all of take our hopefully guidance. and you gives About raise on. even the the imagined through that significantly over our on and And to prepared how that year because better first ourselves really be second employees our all rallies great the And mission to remarks, that was this you we submitted never for one but I company. thank of to want work. But this we were going work to it And be selected the our that's how of companies new and on business. model of places into they to know where about that work. deliver the offered even believe deliver to we them; great the to time. places is we our not we Q&A the here than those can that upside can side in tell in it's That their that of believe the and the in by mission we of believe and believe on today by things believe that our number confidence that we us people that three on believe And mission. half working business if company the going And because here be working we're we core things mission. enthusiastic mission. could in can ability things. improve They offer of their results They we colleagues' out, the

and to we're future so started We like are balance follow company. assets Strong sheet, And our good us. gratitude better. a position continuing just strong want the in all thank really feel for more you getting just The is to of them getting express operating to I model, and my now. for

And we'll to forward that we look at half Thanks. QX. of and so end with the second you talk year, to the

Operator

concludes today's This conference.

your disconnect You you for Thank time. your may participation. this lines at

Chegg (CHGG) 30 Jul 182018 Q2 Earnings call transcript