Chegg (CHGG) 4 May 202020 Q1 Earnings call transcript

Company Profile

Participants

Tracey Ford	Investor Relations
Dan Rosensweig	Co-Chairperson and CEO
Andy Brown	Chief Financial Officer
Doug Anmuth	JPMorgan
Jeff Silber	BMO Capital Markets
Ryan MacDonald	Needham & Company
Stephen Sheldon	William Blair
Brent Thill	Jefferies
Mike Grondahl	Northland Capital Markets
Alex Fuhrman	Craig-Hallum
Josh Baer	Morgan Stanley
Brett Knoblauch	Berenberg Capital

Call transcript

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Operator

Greetings. And welcome to the Chegg, Inc.

First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Instructions] [Operator

Ms. this introduce recorded. Investor your Chegg. go reminder, my is Relations is Please to pleasure host, ahead, conference a It being now for As Tracey Ford,

Ford.

Tracey Ford

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

on A presentation A our available at website, media investor.chegg.com. website. is replay also chegg.com/mediacenter. our this our Investor and press will make at important along release post our earnings of announcements routinely available copy with on investor call of information our our We website website to Relations center be on intend

encourage also resources. to these of We make you use

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

in described included SEC. XX, XX-Q to Exchange annual materially Commission other consider with differ could today's actual to that the cause earnings XXXX, the refer statements. cautionary our factors filings particular, important the risk to on as the Securities release and factors you the report Form February with language and Chegg's filed and you the we those well results as In in from caution forward-looking in We

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

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

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

you website. our recommend is review posted sheet, which data the IR also also investor We in

turn to will Now, Dan. the I over call

Dan Rosensweig

and unprecedented living we a moment call. facing. to challenges Thank to QX XXXX want everyone tremendous an is acknowledge you, Tracy, take Chegg's through society earnings the time We're and welcome our to that

to give professors are the we students. themselves institutions, for first the curriculum their of thank to able all to the administrators, First, heartfelt were who want way in who caregivers, all responders, to also harm's and our us. to putting online thanks continue I rapidly workers, want shift frontline and supporting

All of adversely than by more some have us been impacted others. much COVID-XX,

that performing With employees our be now the to that impacting our at economy system, report families able effects ripple our and accelerated and Chegg education we level. an is feel our to business healthy, and their many are fortunate

all well. We of today are also hope that healthy, you and listening in safe

and prioritize seamlessly In remotely our the students. impact health mid-March, able COVID-XX, work we and up as of families. our We products set services continue started teams navigating our to then wellbeing providing Chegg move the of employees to quickly we and to and their we're to

that able technology to transition fact we in investments of were our adaptability and is made infrastructure. have the we a so testament The the effectively our to employees execute this

been have of future. our More investments and our meet increased of our important our the importantly, to grows, our continue it needs the in we as sheet, to able due business strength and to retain make balance staff, business

underserved must seek students, a now elsewhere. are and company, institutions appreciate first there on As can student that their support we many depend for help who

their students, do where to network why Our access all partnered most with can semester. our providing the is to we need we together, Chegg students help finish which the most study in their path goal help free in we during this to crisis to is them Verizon, are

their COVID-XX beyond of affecting academics. goes However, for many students, the impact just

of fear jobs able many when they not find the to their jobs, them graduate. may lost and some have Some losing be

as thankful possible many as wrapping need workforce. are our get skills we to prepare to the through post-COVID-XX to help efforts students them recognize as the responsibility So up we they our

Specifically, expanding this working increasing summer. to we access substantially which reduce scholarship later are to prices to and our our we curriculum, plan out we roll are even further,

is students the in get high goal diverse has to of more increase need to access been Chegg’s to skills support, in-demand they economy. to risk our backgrounds all demand today's help with content Our to always while more compete learning quality students. vision to the lowering on financial

are the global world to in their a around and our are teams company We committed investing community.

our to food proud are like for on we employees, crisis. are our during with up who non-profits, support have along issues So stepped insecurity focusing this

schools help. to To-date, their $X had on the bags to by already we campus COVID-XX. so impacted communities we food feel students of can students access and million we effects that help committed our have to As close, when fortunate local lost many this provide approximately

Clearly, schools the online. industry for hit education hard to any had immediately without was and exclusively moving act precedent

required to were remarkable to leave campus home, trends. students As from we some see and learn began

subscribers in of new increase and globally. marked existing meaningful rate new increase We engagement our our saw a saw seeing from and in pattern than we're much early in subscribers substantial domestically expected. take We the both Chegg a a increase we

quite The is our on meaningful. financial impact business

to and to So the I it through turn Andy over to detail our guidance. want Andy? you walk

Andy Brown

Thanks, everyone. good Dan, and afternoon,

and pandemic, a that with rates unusual and lives. unprecedented are is global a the families As people's this destroying, This impact Dan economies your mentioned, profound clearly during at slowing and time. healthy on our safe you is unemployment Along situation. hope remain having

outbreak unfortunately since that COVID-XX believe are Chegg companies the increased a of companies serve as of need virus. direct-to-consumer hurt traditional an result, like being the experiencing digital we and essential are are growth many the While levels

new subscribers as increased these in our continuing account U.S. trends decreased into shift and see Since the revenue we time mid-March, advertising an same efforts business, as our from a by industry-wide evolved slowdown, mix seen success our we sharing services has subscription increase to driven a as at platform, well while with to international QX. our in have substantial and we see

growth acceleration the QX. on the two This XX%. growth having is there's to in strong, points increasing months since started growth X subscriber an additional first The of quarter a XX%. impact acceleration quarter profound mid-March, at continued of The

growth to As expect, be now QX we XX%. than greater subscriber

comfortable While guidance are whether campus, and QX, for will both. trends unknown, start taught school online we schools enrollment or date, there on as providing be many such are

to year. guide it we predict much is momentum is Chegg such, Therefore, of premature half As the the if any it difficult believe our second continue. how first to half update will for

QX as a result you me through QX. With our that and let the for guidance backdrop, walk

grew resulting of million. $XXX For primarily was to This growth driven subscriber $XXX Chegg Services QX, total in XX% revenue revenue million. of XX% by

expected. to our new has $XX logistics strong and rush to as drove partner of transition EBITDA what done adjusted textbook ownership exceedingly well. Required Materials FedEx had ahead a very This strong spring growth we million the topline

sheet, flows a in sheet Looking model, industry at put post are with $X investments. strongest and the we billion and combination cash the quarter in COVID-XX the and balance of We cash position believe balance the ended our education direct-to-student of environment. us the education for best the

incorporates which to changes discussed the QX, the earlier. we environment to Moving

XX%, Services total expect and $XXX gross be million, and $XX million $XX We million. between XX% Chegg to and between between revenue margin $XXX between adjusted revenue EBITDA and and million million, million $XXX $XXX with

home to finance outside coordination by the books, Dan, to statements to over everyone out do offices. first back I took of level our from and and an weekends all financials, auditors reviewed it's this earnings the it to nights shout our and our company want has my The team. because do our and on thank extraordinary want produce call I get a team, close call the turn and time I my to big give Before had detail was to

rock. guys You

With that, here Dan is

Dan Rosensweig

and do you, you rock. Thank thank finance team, our Andy, you

of As across because the asked serve you growth during us globe, dramatic of the from higher education. impact the students on are our from experiencing can is and many numbers, people see time millions what lessons this and its COVID-XX we Chegg have future

so need industry, belief students often the under in learning accelerates that, crisis already already budgets, diminishing reality expanding. that in virtual online, we learning schools were who their is what every the inevitable Our is education. that happening was had now for supported are and The is seeing were higher support by a

But, and the accelerated has almost to move what Chegg has world overnight, XXX% and when online, potential of to revealed around value the The had schools the true offer. that trend have to help education best, they curriculum. numbers is what it need online reflect their learn master and greater even for adaptive students and an that say them personalized, and low-cost, high-quality,

and on trends different is ages. As see future we think of They are more student global. the have many population the more higher lasting of about backgrounds different and we impact diverse continuing. globally, education The socio-economic these

support they the They common skills also need come with in have is, own, are with their from but less because, their learning experiences, for what the on they and is more schools. increasingly online support various fact

skills to careers We – new also low high access variety of the quality over will cost, to access to and their to course students learn a more on-demand, believe need will need online. going skills are need of

Our to the is Chegg to meet needs ability work of incredible due students’ team. our

still built We the our our take that on mission. commitment focus many which our of around virtual permeated they student-first our employees, new offices the has as home passion culture, their at to their are our grateful and maintain for world. dedication It responsibilities has and on from physical is offices

to So them I want all. thank

by part to staying your continue communities to and our your want do to also everyone encourage do I and well. to safe staying home job keep

a as we society, and will this this I our to get summer. and we together progress updating a know As look on you company, through forward

over questions. I turn will this At time, the for operator Thank the you. to call

Operator

coming first Our today from JPMorgan. from Instructions] is question Doug [Operator Anmuth

Your line live. now is

Doug Anmuth

questions. the taking for Thanks Great.

So, maybe two questions.

does needs learning a around shifts just around and curriculum how there across about can about the fall, how Thinkful integration just talk are of realized meet And and off-campus just on for different you're the range of I going how but all expanding product on- to then, Thank preparing you. related the I scenarios, your guess, a curious to and of First, there? that, you the lot at unknowns you're comments the schools is students? more

Dan Rosensweig

Hopefully I Hey, passed. we you're hope Yeah. Doug. well.

off-campus as textbooks. business only good would off-campus if So, is, on-campus affected continue way, it be I would can say what in we share. honestly, the that feels And take of affect a market part our to on-campus,

know So matters. it really I that don't

need and we hybrid. time a be meet But the off-campus, demand Services if is, because fewer very whether business own prepared on-campus, we textbooks to for whether grow, done it's we've to. will Chegg buy they just being, What inexpensive to continue our to we'll do there'll

so What more the going hybrid, see open we in red The out a be if they you're will more states than All will probably will on-campus. of to blue schools the states run they the because believe states. don't, probably, is money. red

community colleges we're will is, students to that. surge they're And So campus. is real any many whether come to source or the in a real how curriculum, from issue is what benefiting other going online Chegg and seeing

we're meaningful prepared goes. of seeing. which we're that other have given a shouldn't the impact So, one momentum regardless or it way But it the way

you So Thinkful think during or on out online, an would and offline is we knew not what to this we was is Thinkful, It that period, when would offline zero. that experienced. wanted online. offline one experiencing it leads having bought only it that business We turns

are So benefiting the fact people classes. taking online Thinkful is from that more

that The thing recognize we not have. students thought our responsibility may second they that is get because they jobs is,

in and been learn to environment technology moving as as they get can their jobs, we're now more have seeing people able People furloughed, the to skills be to they jobs are lost the that have that necessary for post-COVID Thinkful. the rapidly

risk view believe students the is cost the going support, is the win one player. to the the one win that's big. brand lowest the to and establish primary the Our really name, amount the as to We highest content, biggest with greatest of least is Thinkful now and the the quality time

the so amount by on that of we double offer. quarter we're quarter content going And that provide. amount and of We're third fourth the to down doubling the we content

want as are going because We lower students same Chegg student continue way see and see scholarships to to the add prices, to first. they we Thinkful

going significant and we if need pay up they get market to now we're have they classes, continue just fewer share to right do pick to to it. think they risks need to need we these So less,

And both so, as does company we things short-term that it. the want the long-term for the win students result these and of to think a will and in be we

Doug Anmuth

you, Dan. Okay. Thank

Dan Rosensweig

Thanks, Doug.

Operator

Thanks.

Jeff BMO today is coming Capital Silber Our from Markets. from next question

line Your now live. is

Jeff Silber

math great? can been whether if just has beyond down drill the Chegg Thank you within if on could of I'm you products, Study, a Chegg Tutor wondering be much. your us bit some just would color what it's Services your so tool, Chegg tool, any tell we or the Thinkful, just writing different impact

Dan Rosensweig

Sure.

So whether that accelerated up about so April of came quarter they year. And the we which the is as of it once see in we'll they down everything March, not is and small business. or we're of exception before talked the ad, a in course with seeing and through stabilized pick part

But Chegg Services, Study if growth. you look Chegg at accelerated

three Second to it is two accelerated the quarters point. at be Chegg ahead this of to we bundle expected has where

of you demand been As really has we recall, were but QX, impact that see in than the it we said the anticipated. may significantly going we to higher beginning

International is growing.

about Australia. are always We it the around for English the it England, just because at for not England, the record has was is rest small and world, and the a But size the speaking from business U.K. really rates going accelerated countries coming of France, countries base. world all of

everywhere. a pickup So we're seeing from

overall the of cancels down, can subscribed We've and pick themselves you services renewals this seen On students the as significantly. numbers. go seen side, up, more by up quite utilization engagement tell we've go

every to the is look would on So going metric future at that we right. bet we that into want the for up

Jeff Silber

Okay. That's to great hear.

little Let engagement push metrics. me bit back just the on a

Dan Rosensweig

Sure.

Jeff Silber

you Do of to as time education kind sustainable Do you've know, maybe normalize, some it's engagement back to where goes that to kind thought. quote-unquote, interest take return you think of but you of sustainable? type higher going in to is it kind know some you it's normalcy? think I the if we seen of, was never

Dan Rosensweig

We great expand our And subjects. to and number on We do for way $XX.XX people I the the kept significantly expand We demand. it. do. product the years. invest of reason in is the can price learn. XX continue I at we is because It's nearly

You can do step-by-step solution.

the subjects ask a number you master, from videos and You access a record million a of We're subjects countries. Q&A, questions. number XX which of now you that can to questions can record on to want of watch record number seeing has expert

Chegg's that not we've And is which is another more. built there on tools, U.S. so is as internationally, business If the learning growth, once point the reason particularly we you've experienced is business question the in what the way the it power use no subscriber in it of the believe hit our we time mouth students to was a Chegg schools, the to this started also very look for the what using carefully And of same domestic crafted level tools. students it. by They to they're presented situation international that closed at word is for us their school-by-school. when and has their covered are all first it using online just inflection

add So to no as we go subjects, as go we more where as for go quality is lower my the we is to grade, engagement there's time reason our continues content, up, belief higher topnotch, be response as add more down. grades, for

things. use picked there up labs, we Now, that that are we to like students used and who on-campus tutors other believe services

they they no reason the suggest But will stop can is And given once really the being there's weren't, you the subject, and Unfortunately, how budget that and once $XX.XX, $XX.XX the really bundle, the experience experience you've top if every you they and be once you've see used help or you more first gets is of on amongst that look the cut. services you that for you it. cut use every the higher learned those at better Chegg to the you if the price and we it if even writing you, they that education, master only it indication teaches and sadly it, will and be using get. results state they of which math bought more it

Jeff Silber

so much. very helpful. That's Thanks Okay.

Dan Rosensweig

Yeah.

Operator

you. Thank

from is Company. & Ryan Needham question Next today MacDonald from coming

line now Your is live.

Ryan MacDonald

quarter. excellent the on Congrats everyone. afternoon, Good

Dan Rosensweig

you. Thank

Ryan MacDonald

you, tutoring growing recently for Dan, that mentioned was online fast. on ASU/GSV one webcast an quite first you

I that think around think, X,XXX%, it was is just… you I what said? I'm

Dan Rosensweig

Yeah.

Ryan MacDonald

if that see, initiatives do prepare that the you've the making any …curious stay maybe changes in the in of solution fall -- we tutoring what we for to online? students guess of solution to put sort event to place that you're and I more driving that

Dan Rosensweig

in again, more we it's even the And event Yeah. stay not if online.

taught service online you We need the And high the and more is is support on or low It's the online help. and fact service. subject tools, imagine, cost demand, that more is students has by are whether there in it's one whether beneficiary, and conceivable curriculum more and offline not, only is that is video can an covers every integrity Chegg quality the solution step-by-step things. incredibly that those by and more

in to we scale is great demand So that our infrastructure which the remarks, now challenge one is do few experiencing the Andy as experiencing, of how continued. a significant pick up but can a the out weeks that pointed we we're sure because has his with we're make March, that last experience, saw that prepared

we're asked, so us system time enough responsive and that and can And any the the challenge within of in we're subject, for that we so response is the minutes in language distance have sure any questions that record seeing request five making data be that. any in from we tutors

follows going So then as supply much demand to to a But demand while. problem when it's in to comes beginning be the for not any marketplace that. two-sided is there's and as supply good see be it going we're the what happens problems a in

nearly do ask if they we've students expanded means and is based have already any can chat question which tutoring, we've live questions asked. So any prefer XX a has database, done the what versus search million that actually time that at to interaction, which

point may at same except know it, trying they're level. nearly it are value those mean, now at trying reluctant another look, they over understand level. I growing They're for for six been the have really been we've we who people is years. has the and else I same been say It renewing because this -- us inflection business XX% for what don't it and to Chegg So believe it that

the results So no faster all out there, people when I I needed it. bundle pleased actually who and the use more bundle asked with people rolling we're students think mean, addition the of see questions, use those it very that the who engagement you the the don't Even bundle.

the it's same that and kind right globally. seeing of So people response we're attracting

Ryan MacDonald

talking the trends obviously, talk in favorable sort that's you there's like of went Can there. kind of just of then about I'm what we through just looked And some demand seeing follow-up, Excellent. into through are to terms as thinking and and you're topics as Thanks. for that March demand late curriculum, subjects what few or you're the expanding April, And what the about there? business? you're that expand then Thinkful, looking

Dan Rosensweig

-- we the don't specifically. I Yeah. business out break

So I'll to be and pre-announce sort of I our want careful there don't plan.

match October. last rates courses than So owned or been it, to in teach, this would which funnel is we're only that conversion to experienced the five since are since sooner. is, top us this ahead they trends seeing But end higher to of we what that ownership. of get there point of can we've try that has attracting are at what expected we've our the see try I and competitors But say higher we

demand also the skills because Chegg probably employable many seeing least for at of time. to is though first for now we're to seeing order What these learn we're there's the classes two crossover audience and in from so kinds times need be people as

increase support Q&A Now, as we in can that to our expensive, tutor and we based remember, the actually is our fewer cost Thinkful the students, and more expert margin. but integrate lower belief customers, so chat is,

one of to businesses just those that we're up timeline it's can the doing everything So we demand. move

Ryan MacDonald

Excellent. very Thank much. you

Dan Rosensweig

Yeah.

Operator

Thanks.

from from Blair. Next is coming Stephen question Sheldon today William

now live. Your line is

Stephen Sheldon

been the the curious the this what way there's like I bundle the hear the to has offer far? was Hi. bundle. and Thanks. maybe great It's then could uptake both about And up it? maybe about Chegg's study any uptake look Verizon so pack for the year the of if are excluding types anything with notable quantify signing to students of that there for

Dan Rosensweig

it and middle. because it, of over the to Andy in the straight terms characterizing down last I'll take turn he one more is then

can we that you the tell is, different. you what So can't we are tell demographics

this take rate been point. upside use better the so and surprise, global, we The than rate only higher that Remember, this at the we point of which it's has to than far. the on now. take months the bundles been expected But the couple has expected through at customers was

whether sustains see So we'll have to itself. it

that their seems side, that But some and move on that be in into. they writing, the with then as into slightly engagement the math math Q&A and writing first thing move and they good cases is and to it better thing the second

these don't early that that's that's see to I It's too trends the to sort just the the And know it's be because if got writing. the and end are math we really better there that. when get way we or were good. to of expecting this But at we any we trend need surprisingly than of assigned people point, things been them expected be is more year, know towards but what as are of

Andy Brown

year Yeah. have I mean, like I that. thought Dan's mean, the half in clearly contribution is Steven, moderate a financial than of point, the to we better we'd to yeah, first performance the

the So see QX have that contribution to the into kind as we would QX. expected we QX of in particularly of get accelerating half, first or starting into maybe we type

Stephen Sheldon

and make traction kind that you're invest you a traction countries given guess, investments types the changed mean, follow-up, that I I you Good and plan are just so to you I a talk it. you guess, the seen initial then that push you'd then others. more maybe expanding to internationally, of in of bit a hear. those different how And it, three seven countries. has three little I think Got seeing? as the about those just

Dan Rosensweig

dollars. So, What that, in of we content South those in top and the publishers very same let for that about we're of parts that the would us major follow publishers overwhelmingly most which model, published in I first fortunate the Asia. I'll unique understand America, do have a is U.S. Europe I that are that five investors the also closely investment think, I'll the is that Andy say talk sort part, actual

to have – same with. to content base time have are wheel the around cost takes we so terms don't begin publishers to us of to STEM and invest. core the it the a the of reinvent we with in also and that's the is the STEM major the where benefit So world

thing second is have on The working we content. been localized

map of know we add that the parts have gotten What's that other so ever over want next a to years our to would changed this do countries will we demands countries content and little We certain adjust that is and than the at and few country-by-country. we have we a will faster have just bit point. on countries of we that radar efforts faster to than meet the growing expected are continue

the investment overwhelming thing our the real to expert magic third The in response Q&A. model to is is and content

And gets are, don't then asked questions so respond question have to the it. and what to we the first we guess

U.S. So they and -- search economic the countries of indexed those efficiency. incredibly of get just model it's an in drive economic are in strong like more each questions And in then customers. those

model QX, guidance not but the And only the Because is went really the up. so, at outstanding if – look you this up, for went leverage. EBITDA has it's revenue

don't I changing priorities of to Andy, capital. So want if know about talk investment the you

Andy Brown

Dan, made you've No. it. think, I I mean,

you're the -- the clearly I seeing the scale. model think in leverage you of

do investments online. more students and it advantage that believe and can thing not other because that, take have we bringing why we the international point more doing we countries to in that accelerate extent model the The to we’re Dan's and we're of is room in doing, the is,

into the that are that's we're things those – QX. at guidance so for the And baked looking and

Stephen Sheldon

on you. Thank results. the Right. Congrats

Dan Rosensweig

Thank you.

Andy Brown

you. Thank

Operator

coming Thank you. next [Operator Jefferies. Instructions] question Thill from Brent is Our from

Your line is now live.

Brent Thill

Dan. Hey,

you a At understand this You've investments the back move but can't But opportunity. which thoughts see but and that Do improvement. that business? this? you of to some I how you're terms quarter, op XXX bigger margins impact point, M&A current margin this to to you on impact want don't about think any here double feel always make think think guiding you in hiring for continue reshapes run you do points the great obviously offence, about quite this a down I of strong you next can how there's investments basis the we to quarter? it know close into make hinting,

Dan Rosensweig

I we vision can asset. that and what look doesn't quality say that is, want mission as for our the we direct be our our strategy. would In if not, and it highest it primarily So to we change is long what to students, as

and our of And brand commerce that unfortunately and acquire increase and our then, an invested with them, growth our to asset fortunately data can spent lot its and been we or accelerate it's with them. hope if us reach under its a ultimately our technology And undercapitalized. and margin has for and for time them the

outside I billion and the Still $XXX expensive market our most our we as to cap $X to acquisition a think, not is on this arranged Andy you've made been And lines. balance got bigger gone have and those day, Tracy have sheet, seen we've million. very and patient

we're by of we margin slower a in that wrong reason value it don't channel. because as think growth result looking or are have they that, of of the the part of our is so company the they're grow in buying large non-organically the not that companies have part creation And to don't the because

to So, do more haven't likely short-term degree that we're the been can the what model and to which it A can in assets we business their flushed for that accelerate to yet plus growth. do really continue we've out is their doing, looking

asset. every reason. see So looked we'll to careful, at and I and a smart conceivable don't we be continue We think

up didn’t of put You traded, saw we do sale, themselves have things. trade, them some that some some for chose those not to

to We're one we're I if add our know do. to business to don't to do and in that. value core looking The looking want add Andy, change what is we for where, not our students. what we momentum, you to bolters have we for more reasons reasons

Andy Brown

said I just we're we're mean, But says, do to don't anything No. and financial – we'll as need like I we've we meet patience something objectives, If Dan comes outlined buyers, our it. Dan right? needs think, them. specific like but

comes asset as Yeah, great balance we'll a but along. So, use if sheet appropriate. the

Brent Thill

accelerate or of the Did Just that it's a and you tapered you a April see through of follow-up quick spike off? Dan, see the you saw. mentioned evenly you month acceleration, do kind

Dan Rosensweig

my I it our pay up. our March. which more an least in at best than to immediate sustained What and say through allowed will do April, I didn't we say is, prepared remarks Well, is take think us we that we not in saw to I take I And should. up. guidance has uptick what would

reflection fact consensus, the versus So it's we but month remarkable been April? quite have didn't that is guidance, nearly the which during growth of up a the has $XX of million,

Andy Brown

Yeah.

Brent Thill

Thanks color. for the

Dan Rosensweig

Yeah.

Operator

you. Thank

Our from coming is Capital Grondahl Northland question next Markets. from Mike today

line is live. Your now

Mike Grondahl

Yeah. congratulations, Thank guys. you

Dan Rosensweig

Mike. Thanks,

Mike Grondahl

With was and strength start of through Study in March? Pack kind that quarter just Chegg or that whole the did Bundle the

Andy Brown

No. XX. And will really I in to that Dan. before Yeah. at our the started We we bundle. when you mean, see take look March you in strength that, so I were overall numbers fact, can

even Our before middle of we the uptick had saw year-over-year of of at growth sub. -- that March, XX% the we the end

reflected bundle. -- so that also itself in the and And

So April. that's continued the we've seen continued that's quarter strength we throughout into into bundle in the and –

Mike Grondahl

Great. Okay. lot. a Thanks

Operator

Alex from from Thanks. The Fuhrman is coming Craig-Hallum. question next

Your line is live. now

Alex Fuhrman

much very question. taking Thanks for Great. my

marketing reach your the good out mouth, new on-campus the presumably Chegg otherwise? about those and about have through ask education students to to you to of to word opportunity not what's new if of strategy not in a semester the hear you there's a of aren't might students approach who fall, about strategy wanted might hear Just as chunk who

Dan Rosensweig

volume they is. we understanding – right how of we every perspective a we Yeah. the dates of student an wants of have anybody course on- good I a think track I see lay the make recently it. announcement And we insight by every into if and start school sort pretty customers now Look, see least land and get off-campus. we of Fortune in And how at article of market and the there education an where But of that evolving have, it. published the it to given which Magazine, gives and of had

to Do that want I just what think, – it? track key I question. lost on So, the forgot your you just re-ask

Alex Fuhrman

marketing perspective, a from just how? was, question key my -- The Yeah.

Dan Rosensweig

Yeah.

Alex Fuhrman

plan How you yeah? exactly, – do to

Dan Rosensweig

No. Yeah.

asked as the colleges. focused been So have your because, profit said community reason not is been online previous We've calls. you been focused and know, you've for on national on focusing I growth. on that questions We've because we

because year to effort a get they and don't starting relationship so, starting students are in better out see the make to word that not bigger not it. we on-campus, – today other don't as middle when of made you a last all we point mouth, because can we each start And of effort we're using where special build have to

helpful extraordinarily was other deal of customers, see Verizon the with their that. There – give money are opportunities we're we've systems for done. neediest to opportunity we have are working school to But what no who

what the online lot happen where their is terms environment credit a of much in working colleges community is with are cost We per of we so lower. to going think is

you're think I online with price a going school. start to war to see

sort campuses of actually we to It's all end positioned students we've not started environments be on of ambassadors, acts just that's relationships year. but last those with of well something like the something we now. brand So are those started with building in

Alex Fuhrman

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

Operator

is from next Thank Baer Josh coming question from Stanley. you. The Morgan

line live. now Your is

Josh Baer

question account that Hi. the mentioned are the of strong to quarter. bit, efforts subscribers to accounts? you all sharing, Thanks some for that in what have new actually making was the you existing expand been on were has on successful. on come you changes focus hoping could or extent I those is Question a and a congrats

Dan Rosensweig

Okay.

sharing of people that the system impact advantage have we significant successfully at identifying many we array better understanding have the in can ways have of take of those So different year of of part year, we and made the last been and end blocked really all the improvements and in a heavily for the of things. investing account

against power account And quarter to in our anyway sharing. because and actually on prior of out product to a COVID, and remarks have international were that pointed extraordinary his first efforts, is lot the Andy a we of prepared of an path the growth as

identifies to well. moment and an accelerate were is two-step that where our were efforts customers. block us then there on now, And as focusing really customers from -- can abusive authentification opportunity that we we new in focusing to customers, though this gives and now time areas this to existing accelerate it other going on first What we

Josh Baer

the not just means around I'm perspective what And Thanks. wondering partnership. great. Verizon's more customers, on the… Know any That's that there's for but if from Verizon could color give you Chegg's

Dan Rosensweig

You know.

Josh Baer

…economics of the pipeline or the KPIs?

Dan Rosensweig

wanting Internet to they that what which it's at a situation Verizon those of for one to rare they access is things customers. our they do it less where able of do of be was to everybody It's a quarantined to size looking you gets things going their get the where do Yeah. and home, for acknowledge to credit I than and to relationship essential in where series were for who a something -- be company is have XX has contacted or hours, a can

We you've a them paying out that to probably needy of the lot to even broadband, in do a lot agreed of one have on trouble most we students. issue seen their state, immediately wanted focused there's for technology what because was customers, getting

that weren't those So community we one offer to who do so going the to to we any opportunity those it the brands going economics, mentioned students that do college was deal schools, things. it economics was build against needed to our for be and able immediately students, didn't of the our earlier, for online, help of students did online be students the

make anticipated of faster been that right be that positive. wouldn't It's channel And reason it's always so it's collectively, and obviously going hard any to a is impact meaningful than be every way has working now. But no too more it that one much net we've channel particular with so think just going for to early to I There tell. accelerated to be. a

Josh Baer

it. Got Thanks.

Dan Rosensweig

Yeah.

Operator

you. Thank

Knoblauch is Capital. Our next question from today from coming Berenberg Brett

Your line live. now is

Brett Knoblauch

Hi, guys.

and you business. kind year's on Just you how transition be I as margins bit a wondering touch There'll gross this reentered if of a about that guys fascinating? could year we from textbook here. a improvements think know should

Andy Brown

Yeah.

call, X gross the you percentage on importantly, think whole for the more last year, this just about when margin, we change the about about talked and right? So but we anticipated point seasonality, approximately

be has talked you're with QX higher to nothing because and QX, So those likely slightly percentage changed in slightly what got of lower, and quarters, margins from a you it where overall in be you've QX see whereas see call. to seasonality is gross more QX about in and on we associated but services -- revenue bigger the last

Brett Knoblauch

Perfect. Thanks, guys. Thank you.

Operator

the our We like turn reached question-and-answer session. of you. I'd end floor Thank to

back over for to comments. closing any management further

Dan Rosensweig

an on the of the we investors this focus big dedication quality, first I meet low how us and and times first, seeing it making they that everybody. our And in to be. high sure families, prepared I all keep believe acceleration time what back how be needs We've even our subset our the demand, go are These of kept that learn. deliver and Listen, have people be seeing are all having had customers. to just putting Chegg you, on and were which demand not another prices who we is And our a we campus for rewarded of being of affects are to that they before, this great ways global has want focus to differently. can us well, the We for systems industry have students and focused complicated students for can for thank diminishing. could on our support students we're cost, said think to quality no already unfortunately of matter on whether trend. in they though remarks multi-modality going students, the for on high by going

think So the half is look on next we you accelerated as going we This about updating business second to earnings back to work. on what had this in going what's we wish happen get to the And more our always call. and Andy of just to just and we're happened. believe know none forward I how we

you Bye. thank stay in July we'll see and all, August. So safe or

Operator

This teleconference. you. does conclude Thank today's

You lines for a disconnect and participation you your have day. wonderful may at this your thank today. time We

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