Chegg, Inc. (CHGG) Earnings Call Transcript & Summary

Hello, everyone. Welcome to the next fireside chat session at the Needham Growth Conference. I'm Ryan MacDonald, the software and ad tech analyst here at Needham. And it's my pleasure to introduce you to Chegg's CFO, Andy Brown, today, who's going to be joining us for about a 40-minute fireside chat. Hey, Andy.

Hey. Good morning, Ryan. Happy New Year.

Happy New Year. So everyone that's listening in, we'll run about 30 minutes of Q&A, and then we'll leave about 5 to 10 at the end for audience Q&A as well. [Operator Instructions] So to jump right in. Andy, why don't you -- for those less familiar, why don't you do a brief overview of the Chegg business?

Yes. So I guess for those of you that are really old to the -- or not so new to the business, we started out simply as a textbook company, we're now a subscription services company. And that's the real high-level thing. But If you think about Chegg today, we're really focused around 2 areas, one is academic learning and one is skills-based learning. I'll talk more about academic learning because that is the core of the company today. We're at scale, although we still believe we've got a lot of room for growth. And then we've recently, more recently, entered the skills-based area. But on the academic side, we're a subscription business. We still have some of the legacy textbook stuff, but it's such a small part of our business. Unless you ask a question, I'm not talking about it. But the fundamental core, we've got 3 core subscription businesses that we deliver to students. And when you think about Chegg in total, we service in the neighborhood of 40 million students across the globe today, right? Some of those people are using our free services like writing and, to some extent, math and some other things that we do. And then we have, call it, in that 5 million to 6 million range that are actually paying for service. Historically, those subscriptions were based in the U.S., but more and more those subscribers are now coming outside the U.S. as we embarked upon implementing our international strategy at the beginning of 2019. So let me just walk through the product so everybody is completely familiar with the core products today. The core product and our largest subscription today is a subscription that's called Chegg Study. And Chegg Study is in its very simple terms -- and maybe to step back, it's really more an [ algos ]. I call it, too, like Amazon Prime. If you remember when Amazon Prime came out, Amazon Prime was just 2-day shipping, which at the time sounded like a great thing. But if you think about your Amazon Prime subscription today, it's much more than 2-day shipping, right? You've got music. You've got video. You've got movies. You've got Amazon Fresh. You've got ding, ding, ding. And over time, as Amazon has added that capability, they've increased the price. I think the first price for 2-day shipping was $79.95, and I think I'm paying something over $100 today for all of the other stuff, including the 2-day shipping. But Chegg Study is like that. Chegg Study started out very early on, and the subscription is $14.95, and it's been $14.95 forever, since it started. And that was -- it started out as textbook solutions. It was helping kids that were studying in their textbooks. They got to the end of the chapter, there were problems the author wanted them to solve. And what we provided early on and we continue to provide is that step-by-step solution, how you solve that problem. 10 years ago when we introduced Chegg Study, I think we had 400 or 500 titles that we had. Today, it's 35,000 or more titles. So it's just expanded exponentially. But that was the beginning of Chegg Study. And what we've done, just like Amazon Prime, we've added capability upon capability. And so the first capability we added was Expert Q&A, and that was added 5, 6 years ago, where the ability for a student to come onto our platform and not just see the textbook solutions, but the ability to ask a question and one of our experts will answer it for them. And it could be related to the subject matter we have in textbook or could be out of it. Most of our textbook solutions are around STEM and business. We then added -- we added video instruction 3 years ago. We're in the process that we've started to add things like practice tests and assessments about 18 months ago, and we're still in that. But the bottom line is that's Chegg Study and it's more focused around the college students and, to some extent, student -- high school students that are taking college prep courses. So that has become a big help for students on campus. And literally, millions and millions of students use it. And most pay for it. We still -- we've had account sharing, I know you'll get -- potentially get into that. So that's Chegg Study. It's become a very massive service on campus. And starting in 2019, we started to offer that international. We can get into that. But international has just become another big opportunity for us as we move over the next 5 to 10 years. Second service is what we call basically Chegg Writing. And it's not a -- it's Chegg Writing, but we've got multiple sites that offer it. Things like EasyBib and Citation Machine and Cite This For Me and so forth. That's a freemium service. It's $9.95 if you do the upgrade, but it's a freemium service and we've got like 30 million students that use the free part of the service, and then we have several -- many hundreds of thousands that upgrade to the service. And the free service is very simply you upload your paper and it will automatically create citations and then the bibliography for you. If you want things like -- and it also checks for things like plagiarism and sentence structure or grammar. If you want that type of capability, that's the $9.95. And then the third subscription is Math. We started to develop our own Math subscription several years ago. More recently, we purchased a company that we desired to purchase for many, many, many years, and we wouldn't have done the development if they were available for sale at the time, but we purchased a company called Mathway. And so now we've got much more scale in the Math area. And then last but not least, as many of you will know that are listening, we've bundled those services together, so Chegg Study, Chegg Math, Chegg Writing, Chegg Math, and we've bundled those together -- I'm sorry -- and Chegg Math generally is $9.95 a month also. There are some differences on Mathway, but because we haven't gotten around to the price rationalization, but $9.95. So you bundle those together, call it, $15 and $20 for the 2 subscription, we bundle it together for $9.95, what we call Chegg Study Pack. So that's the core of the company today. Mostly up until 2019, U.S.-based. Since 2019 and certainly accelerating in 2020 is we're significantly more international. And our belief, my belief, is that as we continue to penetrate international, international should be over time, not immediately but over time, be a big -- should be bigger for Chegg than the U.S. is because the opportunity is bigger. So I'll stop there.

Perfect. No, no. It's good. It's very good background. Let's start on the pandemic. I mean I'm sure it's a conversation you've had commonly over the past few months. But -- and we'll split it into 2 pieces as we analyze this, the academic business and the skill business. And so starting with academic, obviously, you saw some really healthy usage trends. But why don't you go over how the pandemic and the shift to online learning really impacted adoption usage trends as you progress from the spring and into the fall semester for the core Chegg Study business?

Yes. So there were 2 core dynamics that we saw as a result of the pandemic, really. And I think to frame this from an overall standpoint -- and Ryan, you've been with us for some time and you've heard me say this repeatedly or Dan say it repeatedly. And that is if you're betting and investing in Chegg, you're betting on what we term the inevitable. And that is that it's inevitable. And we've been saying this literally years and years and years, so this isn't anything new. That it's inevitable that more and more educational services are going to be online. They're going to be on demand, right? If you think about students today, everything else in their life is on-demand right? It's movies. It's purchasing. It's -- everything is online. It's on-demand, excuse me. And so the services we provide are on-demand. We can access them at any time, anywhere, from any country, in your living room, all of those things. And so with that backdrop, what we saw was 2 core things that happened. One in the U.S. And what we saw in the U.S. was that as kids went off-campus, in-home, we saw 2 dynamics in the U.S. One, the obvious -- and we saw -- actually, we saw one dynamic that applies to both U.S. and global. And that is those support services that are on campus were no longer available, right? You don't have the math lab, the writing lab. You don't have the TAs. You don't have the tutors. You can't access them. And therefore, it's natural that students will go online to find how do they get help with their education. And across the globe, whether it's the U.S. or those students that often relied upon those on-campus help systems found companies like Chegg, not just Chegg but companies like Chegg. And certainly, we benefited from that. And we do believe that as we think to the future, that continues to benefit us because I think students will then begin to realize that actually on-demand help is actually better than having to worry about is the tutor or the TA available between 4 and 6 p.m. Do it at 2 a.m. on Chegg or things like that. The second dynamic we saw was account sharing, and I'm sure that's a question you will likely ask or somebody will ask. And that is as kids went off-campus, in the U.S. specifically, now this is very U.S.-specific, is that account sharing really revealed its kind of ugly head, right? And what we believe we saw was that -- is what we call that ability to proximity share went away, right? Because you can imagine the proximity sharing would be -- you've got kids on campus, can I share your Chegg account, can I have access to your Chegg account, things like that went away. And those kids that relied upon Chegg that weren't paying for it subscribed, right? And so what that did for us internally was accelerate a technology development that we had originally planned for '21, this year. And that is we had originally planned to implement device management technology, an MFA, multifactor authentication technology -- blah, blah, blah, my tongue is not working. MFA as I will call it, something we were doing -- we're planning on in '21, we implemented in the fall of '22, first with device management and then with MFA. What does that mean? What that means is that prior to August 17 of this year, if you subscribe to Chegg Study, you can access it with as many devices as you want. And unfortunately, we had some bad actors that would access it from 5 or 10 devices in a week. Obviously, that's not a normal use case. I mean a normal use case is 2, maybe 3, if you've got a tablet and a phone, and obviously the desktop or a laptop. So what we implemented when we did device management, well, we basically limited your subscription to 2 devices. That was it. And then later in the fall, we implemented MFA technology. So that's the dynamic that we saw. And that dynamic, you can imagine, right, I mean in the January of 2020, if a new subscriber came on our platform, they could subscribe and then share that with as many people as they wanted. In today's environment, in January this year, 2021, if a new subscriber comes on board, they can't do that. So it has an ongoing benefit to Chegg. So that's the U.S. Outside the U.S., internationally, this is where it was more -- it was a more of a surprise and, obviously, a very pleasant surprise in that we had focused early -- if you'd ask me at the beginning of 2020 what we were focused on internationally, it would have been 3 to 5 countries. Certainly, the 3 that you can imagine and a couple of other non-English speaking but English-learning countries. And what we saw as a result of COVID, once again going off-campus, is we saw a significant acceleration in that international business to countries that we never thought we would have seen, right? And I'll give you an example of that. I remember sitting, I think it was in advance of the Q2 earnings call or Q3. Tracey and I was sitting down with a person that runs our international business, and we were stunned by how many subscribers we had from Turkey. I mean we would have never -- I mean, like tens of thousands of students are subscribing from Turkey, not 1, not 100, not 1,000, tens of thousands. And so it became obvious to us the opportunity internationally was available to us sooner than we had originally thought. And so what that resulted in, interestingly enough, was us double -- not doubling down, but significantly increasing our investment in that international. In other words, leaning into it, right? So technological capabilities, things like ability to increase foreign currencies in different packaging and different pricing structure. Now none of these are in place today, but we're investing in them. Potentially different websites for those international countries where you have a specific website, which we don't have today. So it could be a .ca or a site for Canada or .co.uk site for the U.K. So we made all of those investments. And so the dynamic really was 2 different things. One, a big -- driven by account sharing in the U.S. and more so the opportunity opening up for us internationally. And we believe that those tailwinds will continue and are supporting our thesis of many, many, many years that it's the inevitable. Education has moved to be more an on-demand, online, environment. And we're clearly -- we've been a pioneer in that space, and we're clearly being a beneficiary.

Yes, for sure. Interesting. And so I mean, as we look at -- maybe we'll start in the domestic business and then move to international. So as we're coming upon the spring semester here, obviously, it's a very similar environment to what we saw in the fall. Many schools operating remotely still and likely to continue that through the semester. But another aspect of this is they're also operating off of a modified schedule, which is what we saw in the fall as well. And so what this is causing is we're seeing more universities starting in mid -- a little bit later in mid-February, skipping spring break and sort of powering through the semester from that perspective. How should investors start to think about the seasonality or how this impacts the seasonality of Chegg's business as we're looking into Q1 of '21 here?

Well, we kind of saw that in the fall of this past year, right? You saw that modified schedule. Kids went home at Thanksgiving didn't go back on the campus. They took their finals. And so all -- as we thought about -- as you know, we guided to 2021 back in November of last year, we took those dynamics into account. So I don't think there's anything that we're seeing that would surprise us at this point. We -- there's certainly precedent with what happened in the fall. Things are fluid. We recognize that. And that -- you kind of got to expect that in this COVID environment. And so that's -- we expect that.

Absolutely. And I'm sure you probably get this question quite often. But as we look out to an environment, hopefully, past this spring where we're back to a more normalized learning environment or whatever the new normal looks like, what -- how do you feel about the sustainability of being able to retain maybe some of the users that joined Chegg because of the shift to remote learning environment? Do you -- what assumptions are you making when you think about fiscal '21 for potential churn from some of those users?

Well, yes, so it's been interesting, right, as we've kind of got -- the dynamics have changed somewhat. I mean the beauty of our business is we are a subscription business, which I love subscription. This is the first company I've been at where we've being subscriptions. I like subscriptions. It's less transaction like you know what I mean, right? I don't get worried about the last few weeks of the quarter. It's just -- you've got so many renewals, millions of renewals, it's like doesn't really matter. But as far as the dynamic that we have seen regarding retention, and that's obviously something we pay best amounts of attention to, because 10 basis points in retention is millions of dollars to us. Literally, like it's not -- as big as we are today, it's a big thing. So 100 basis points in retention is -- it's big. But we haven't seen a significant change one way or another where I can say it's 100 bps or one way or another, but we're still seeing similar trends on retention. The thing we focus on in retention really is that what we call P1, which is the month 1 renewal. And because once you get past month 1, people just stay on, right? That's -- but no, we haven't seen any significant trends one way or another, to be honest with you. The trends that we saw pre-COVID are, plus or minus, pretty close. It's a little different internationally because it's new, right? And I think there -- but otherwise, in the core U.S., nothing different that we're seeing. So we're pretty confident about what -- once again, I kind of go back to -- we're betting -- you're betting on the inevitable. I just think this is accelerating the inevitable and we will continue to see tailwinds as we roll through '21 and '22, in my mind.

I guess shifting to the international, when we were on an actual stage last year, about 12 months ago, you started to talk about we've got this gradual approach to investment in international to target the U.K., Canada, Australia gradually and target our investments. Clearly, that's not how 2020 played out. And like you said, you saw an acceleration there. But how are you reframing the investment approach? You saw -- talked about sort of a surprise success in Turkey, for example. How are you sort of taking maybe some of the increased demand in specific countries? And now, what's the framework for perhaps the number of countries you're planning to invest in internationally or the strategy that you're taking with those?

Yes, yes. So first thing is I do look forward to maybe doing this on stage and in person next year. Let's see what happens. I do enjoy your conference. But what it's done for us on the international, it really is just -- probably accelerated a couple of years where we thought we would be. As far as -- because you're always -- you make investments and you want to see some level of traction, as it were, on our results. And so what we have -- what we did midyear, probably -- yes, midyear June, we recognized that international could be bigger, could be sooner than we had thought. And we made significant investments leaning into it, as I will call. And we talked about it earlier, in the technology stack. And we're not there yet. When I said we made the investments, they're not done. We're still -- you don't just -- you just -- there's work to be done, but we're making those investments. And we do -- and the reason we can make those investments and if you think -- if you look at our overall financial profile, the beauty of our model is that while we have to make incremental investments to scale internationally and to many other countries. And what we're doing is we're trying to create a -- we are creating. I'm not saying we're trying. We'll be creating a platform that's scalable, not just in one country but for many countries, right? And the reason we can do that and it's not as perceptible to our investors in our financials and as we've continued to expand our margins is because we get significant leverage from the content. Our biggest investment at Chegg, if you look at our single one line that's the biggest, it's content. It's that investing in content, whether it's Expert Q&A, whatever made videos and things like that. The beauty of our content is that STEM is STEM. It doesn't matter whether you're in France, Turkey, U.K., the U.S., differential equations is exactly the same. Now at some point -- it should be at least, and I'm certain of that. There may be -- and one of the technology developments we're doing is being able to translate into multilanguage, not currency. We're doing that, too. So -- but the beauty is those tens -- literally tens of millions of investment that we make on an annual basis are leverageable outside. And therefore, it gives us the ability to invest in this new growth opportunity while still continuing to expand margins. And so it's not like we're having to double down on content and then double down on technology stack and double down on marketing. Yes, we're doubling down on marketing because we think that it's profitable, it seems. And we're doubling -- we're doubling down, not doubling, but like investing in the technology stack. But a lot of the stuff on the content side, it's just leverageable from what we've already developed over the last 10 years. So that's the beauty of our model.

And as you look at maybe some of the countries where you've had some early success, how do you sort of frame that in terms of what sort of countries you're targeting? Where do you see the biggest opportunity as we look into 2021 and beyond?

Yes. We entered 2020 thinking there were 3 countries that are relevant. And it's -- and we're -- the middle of last year and entering 2021, we believe there's, call it, 15 to 20 that are relevant. And in those countries, we've got specific marketing plans, paid marketing. For example, there will be countries over the next year, 2 years, certainly starting this year, where we'll have a local presence, right, because we want to better understand the dynamics in that country. So particularly around what I'll call product market fit. So kind of like product managers, because we would anticipate over time to have country- or region-specific offerings. An example of that would be Netflix, right? I mean if you're in India on Netflix, you -- it's not just the U.S. offering that I have at home, where it's I think it's $15, $16, $17. I don't know what I'm paying, but you can get like a $4.99 U.S.-based mobile device-only. So why wouldn't -- so there are unique differences by region or country and we will -- those are the things where we would -- over time, we will develop that capability and offer those capabilities into those countries.

And as you started -- as you're evaluating the international markets, what's the competitive landscape look like there? I think from -- at least from some of my own initial work, it looks like -- perhaps Brainly has got some scale in Europe, throughout Europe. There's a couple of vendors in India and China. But outside of that, it doesn't seem like there's much. Is it -- do you view any market or markets as crowded? Or would you say that the landscape is relatively benign from that perspective?

Yes. So first thing, relatively benign, but let me kind of explain that. First thing is we're not focused on China and India right now. That's just a different animal. So that's real clear. So everything I say is outside of China and India. And I don't know -- yes, certainly in China you'd have to partner with somebody. Outside of China and India, yes, we don't see a lot of -- we don't see any competition, any meaningful competition for the specific services we offer. Brainly obviously has definitely an international presence. It's a different offering. What we're mainly focused on as we go international is looking into those markets, are there branded B2C companies that we could leverage? So it's more about do they have a brand. Maybe most likely it's a different service than what we have, by the way. But if there's a brand that's relevant in a region or in a country -- we haven't seen it in the core 3 that we started with. But if there is a brand where we could leverage their brand and deliver our services into that country, would we either partner or make an acquisition? The answer is potentially yes. Because we do believe, given the leverage we see in our model and generally speaking, there's benefits for us getting into the market sooner than later. We haven't seen that in the core markets we started with, right? So for the -- Canada, U.K., Australia, we haven't seen that. But as we start to -- continue to expand that, those are things that we potentially look at to drive penetration.

Got it. And then just lastly on international, I probably have to ask this question or people will start complaining. But when do we expect international to potentially be a material contributor? Whether it's a subscriber or revenue, how are you thinking about it?

Yes. That's -- we have a term inside our company where is it big enough to matter, right? And I would -- under that term, it started to become big enough to matter in 2020 and it's big enough to matter in 2021.

Got it. Let's move to account sharing. You touched on it a bit. Since you've added some of the multifactor authentication, I got it, or MFA, that sounded pretty tough, but -- or the device management, what sort of trends have you seen in terms of -- are you able to track sort of users that were sharing that -- and the conversion to actually becoming subscribers? Anything you can talk about there?

Well, it's -- truth be told, it's difficult, right? I mean we -- back in the day when we were trying to do manual catching of -- up until August of this past year, we did some manual stuff to try to catch those folks that were sharing or selling accounts. And we used to have a term internally called spin-offs, and it was an estimate of what we thought spun-off of the group that we were trying to catch. So it's difficult. The thing that we were most concerned about, however, with account sharing was how it affected our brand and how students embraced us. One of the things we doubled down on when we did the device management, even some of the mental stuff with our customer support lines. We wanted to make sure that we weren't having issues. But the fact of the matter is we didn't. We -- what we found out was that students, generally speaking, recognize that they were cheating -- not cheating. Let me -- that's not a -- that's a different subject. They were sharing. And in fact, what we were doing was not something that was unfair, and we really didn't get any -- actually, I don't recall hearing any perceivable backlash from our students. That was our biggest concern, the backlash from students. And in fact, we even -- we saw many things on social media, particularly Twitter like saying, "Oh, d***, Chegg figured it out." Right? "Now we -- well, I'm going to have to buy a subscription." Because kids are cheap, I mean -- so that was the bigger concern. Otherwise, the rollout of device management and MFA has been, truth be told, smoother than we could have expected -- we would have expected it to be.

Got it. In terms of the Study bundle, obviously, it's been a big initiative and you started to see some really nice uptake for that throughout 2020. And to the point where you actually delivered some ARPU expansion in the third quarter, can you talk about, one, sort of how adoption trends continue to look domestic versus international? And do we expect that ARPU expansion can continue into 2021?

Well, yes, the answer there is yes. I mean we continue to see great results from the bundle. Better in the U.S. than we saw when we were testing it. And then on top of that, international is better than that. So actually, the penetration internationally is better than the penetration in the U.S. And the U.S. is better than we thought. As far as going forward, we're just at the start of the bundle, in our mind. We talk about the Chegg Study Pack, that's -- when a student comes on to our platform, they get 2 choices. They get Chegg Study or Chegg Study Pack. That's it. I much prefer to view this as what are our premium price options going to look like, call it, 2 years from now, 5 years from now. And I've always said this, I've said that my -- our view of success is that at least 50% of our students take a premium priced option, call it, 3 to 5 years from now, whenever that may be. And to do that though, you have to refine the bundle. You've got to keep testing and keep testing. And one of the things that we've been testing since early fall of this year -- and once again, the beauty of being in -- you know this. The beauty of being a technology company, you can test just a small cell or a small percentage of your users coming in. So we've got a small test cell that's been out there, where we actually have a $29.95 option, interestingly enough. So we're offering the $14.95 base, the Chegg Study Pack and then -- for $19.95 and the Chegg Study Pack Live, which includes chat-based tutoring as an option. And there's 2 things there. First thing is part of it is price testing, part of it is do people want live help as part of a bundle. And then the second testing is human psychology. It's our belief that when you give 3 options, people tend to gravitate to the mean. And if more people take $19.95 and some take $29, we just get -- and our goal there is to continue to, a, have greater penetration of a premium-priced option that then results in what you just talked about is increased ARPU over time. And that's clearly our goal, and that's what we expect to happen. Otherwise, we wouldn't be doing it.

Got it. And I guess on the topic of the Chegg Study Pack Live and sort of integrating that live sort of tutoring into a bundled offering, it's been reported that Chegg is planning to shut down the stand-alone tutoring business, I think, at the end of the month here and, again, integrating that tutoring functionality. And is that a link to sort of decision of sort of testing out that higher-priced bundle that might have that live tutoring component in with it and then shutting down stand-alone?

Yes, yes. So we have -- we are winding down or have wound down our stand-alone live tutoring option. We -- it's become very clear to us over time, 2 things. One is, is that the vast majority of our tutoring sessions actually came out of being on an existing subscription, right, like Chegg Study where they just need some personalized help. And so that's one thing. And the second thing is on the stand-alone online tutoring, the market just didn't develop as quickly as we thought for stand-alone. And so what we've decided to do is to integrate either on an ala carte basis, so if you're in Chegg Study, you can get tutoring -- chat-based tutoring a la carte; or as we're testing it right now, testing for it to become part of a bundle. But we will -- I'll say always, but we do believe having that ability to get live help is important to some of our students and so we want to continue to offer it. And so that will continue to be part of our offering, it's just being offered in a different way versus on a purely stand-alone market. Stand-alone is going to be what we call CBLH, chat-based live help, either a la carte within the subscription or as a part of a subscription Chegg Study Live, which we're testing. Whether or not that becomes a regular subscription, don't know. We're testing it, once again.

Got it. I want to spend the last couple of minutes, and we're doing a couple of requests as well from the audience, to dig into the skills opportunity and skills side of the business moving forward. I think the view going into the year was -- or as the year progressed was that higher unemployment would result in more individuals looking to reskill, upskill, and Thinkful is a platform that obviously can facilitate that. What have you sort of seen in terms of momentum of enrollments on the platform? And how is that dictating the investment strategy for Thinkful in 2021?

Well, yes, I think there's a couple of things on the skills side of our business. And just so everybody is aware, we -- our business is organized around academic learning, where we have a president, Nathan Schultz; and then skills-based learning where we have a president and that's John Filmore. On the skills side, yes, we did some things as a result of COVID, where we -- as literally millions of people in the U.S. were starting to be unemployed starting in early March, and I think June is when we reduced our price for many of our classes. So we did that because we wanted to be more affordable for those people that wanted -- felt like they needed to skill or upskill or whatever. And we did start to double down in development of new courses. But I think the broader thought on skills is much more beyond Thinkful. We believe, given the fact that we have tens of millions of students that have graduated Chegg, we have permission given the brand affinity and their love for Chegg as they've exited school, we have the permission to either reskill them, upskill them and, we believe, go beyond that. And so I look at Thinkful as a start of Chegg in skills. I don't look at that as the end game. So I can imagine 5 years from now where we have multiple offerings, kind of like we do on the academic space. It's not -- the playbook isn't a lot different, where we would have different offerings in the skills space, most likely through acquisition, let's be clear. Because if you take a look at all of our academic, other than the textbook business, which we haven't talked about and I don't want to talk about unless you do, everything in the subscription side of the business was through an acquisition at one point in time. And then we grew it much faster than it could have grown as a stand-alone business. So I think that same playbook applies to skills. And so 5 years from now, I can imagine having a multi-hundred million dollar skills business. But it won't just be Thinkful. It will be other assets that we believe, under the Chegg umbrella, can grow much faster and get us to scale in that side of the business much faster than doing it organically. Yes.

And I guess in the last minute, as a follow-up. So do you think that skills business continues to be direct to the consumer or B2B? And if it's B2B, how do you think of the mix or opportunity between sort of higher ed versus traditional enterprise B2B?

Yes. So if you look at skills, generally speaking, the landscape of skills, it's both B2C and B2B. I'll actually look -- in the academic side, if you think about most of the academic companies out there, it's either -- well, there's very few B2C. We're one of the few B2C that's certainly in the public markets. But most of the others are B2I, business to institution. So I do look at -- as you think about skills, I think skills is more likely to be B2C and B2B, not B2I, And if you look at a lot of the companies out there, what they've done is that they've leveraged -- most companies do both, right? So they've either leveraged their B2C capability into a B2B opportunity or they've taken their B2B opportunity and got B2C. So having said that, can I imagine at some point that we're -- as we get more scale in the skills business, can I imagine that, in fact, we have a B2B offering? Possibly. I don't see necessarily B2I. I could be B2I, but I'm saying when I mean B2B I mean more to the business side of that. So yes, could I imagine that? I could imagine that, but we're still early stages in skills. We -- I mean I always kind of go back to where we were 10 years ago with the core academic. We were a textbook company with a dream to be a digital company. So it takes time. And you've got to invest resources. And I do believe that over the next 5 years, you'll see our skills business will be certainly something more than just Thinkful. What that will look like, don't know for sure. But yes, I think we'll be at scale in 5 years. That certainly is my hope.

Well, Andy, they're going to cut us off, but I could spend another 40 minutes with you. But I appreciate the time, as always. An engaging conversation as always. And thanks for joining us today.

Okay. Ryan, thanks a bunch. Take care.