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

Welcome back, everyone. My name is Brent Thill with the Jefferies tech team. We're back with our Education Online Summit. I'm really happy to have with us Dan Rosensweig, CEO. He's served as the CEO for the past 11 years. Prior to that, he was the CEO of one of my favorite video games on the planet, which I still have, which is Guitar Hero, and was COO for Yahoo! for 5 years. Dan sits on the Board of Adobe, which is another top pick of mine, Rent-the-Runway and Adviser Board for DonorsChoice.org, a non-profit. He's also a senior adviser for TPG, and an adviser to Kleiner Perkins and Bond Capital. Dan, really appreciate your time. Congrats on an incredible run. And I think you've said this a lot, that the commitment to this company has been one of the longest commitments you've had to accompany. And that's by just the sheer market opportunity size and excitement in what you're doing, helping students, as you say, learn to earn.

Maybe just to jump in to talk about -- last year was unprecedented, how we think about -- you think about the world and education over the next couple of years. Just set the stage in what you're seeing from your perspective.

Yes. Well, thank you, Brent. Thank you for the opportunity, and thanks, everybody, for joining. So there's a couple of ways we can slice this and we'll go at it whatever way you want, which is companies during the pandemic and coming out of the pandemic, based on their industries, is the question we usually get asked. But I would start with a broader view of -- we have believed, since we started Chegg in its new direction, which is to become a platform basically to build software that solves students' biggest problems and allow them to master the subjects, to learn it and to advance so that the time, energy and money they were spending wasn't wasted. 50% of college kids -- high school kids don't go on to college because the opportunity isn't available no matter what. Even if you made it for free, it's still not available because the average age of a college kid in this country now is 25, 26% of them have a child. The average online learner is a 30-year-old woman with both a job and a child. And so the current education system has been inappropriate for the modern economy for a long time, but it has been protected like most institutions for a long time. And what we always believed was that more people were going to have to learn more things, going to likely have to pay for it on their own, going to need to get support that is scalable, is going to need to do it on demand because they can't really take the time to go to the physical location at an undesired time. And that they were going to in order to be relevant to the modern tech-enabled economy, which does not mean they have to be an engineer, I want to separate that out. United States graduates almost no engineers compared to China. It's like 1 in 10. It's embarrassing. But our belief is that you need to be employable in the tech-enabled economy. And that the modern system wasn't working, and the numbers prove it. 43% of those that went, didn't get a degree, 44 million Americans at $1.6 trillion in debt, 40% of them aren't paying it. The average -- the #1 job that people go into when they graduate college is sales where there's no major. So we just believe that this was inevitable. And the pandemic, Brent, all it did was expose all of this for what it is. And so people keep wondering, are we stay-at-home stock? I don't even know what that means. But we look at companies the same way you guys look at companies, which is there were companies that were doing extraordinarily poorly before the pandemic, and the pandemic made them worse. And we know hundreds of examples, retail is an example. Then there were companies that were doing extraordinarily well, but the pandemic stopped them in their tracks. But when they come out of it, they're going to have much more of a V shape. And I'm on the Board of Rent-the-Runway, which will be exactly that. We can already see, as mask requirements go away in certain cities, the pop in subscription growth. And then -- people think of them as cruise ships and theme parks and hotels because you know people are going to use them. They just couldn't during the pandemic. And then there's where Chegg was which is, I think, the best category, which is we were accelerating growth before the pandemic and the pandemic just accelerated it more. And post the pandemic, it's not going to go back to the way that it was. Because the issue for Chegg was never whether you're physically on a campus or at home, the issue for Chegg was an acknowledgment that what we do is what students need and schools cannot offer it, and do not offer it. And then outside the U.S., it was students for the first time, when they were forced off-campus, discovering Chegg because there really aren't any competitors in a significant way in any individual country to Chegg. So when they found us, they've been back at school, except for the U.K., and the business is going phenomenally well. So that's sort of my introduction to all of this, Brent.

Yes. I mean, to your point, I mean, I think what's been most incredible from our perspective is just the incredible growth with profitability. There are very few companies that can produce both, and you've been able to produce both last year, over 50% growth and a 30-plus percent EBITDA margin...

And improving our EBITDA margins by 200 basis points. And shockingly, to me, try to find another edtech company that's profitable. You can't. So going direct to the consumer instead of selling to the institution allows you to own the customer, own the data, watch their behavior, improve your product, own the channel of distribution so you're dependent on nobody or any time lapses to improve what you do. And we own 100% of our content so that we can improve it without anybody's permission. And that's always been where the future has been going. But in education, in particular, the ability to be real-time, live, know what the student wants and be able to provide it and get them unstuck has been the magic that is Chegg. And then there's a network effect. The more students, the more questions that get asked. The more questions that get asked, the better we can respond to more students. Plus it gets indexed and searched. So more people type in more questions, more people discover us. Cost of customer acquisition goes down. So it's like $0.91 of every incremental dollar goes to the bottom line on our Chegg services products.

Yes, it's pretty incredible. I guess the question, you had brought this up earlier. Are we a stay-at-home stock or COVID stock? There are a lot of questions about -- we've asked and we spoke with Chip, who you know at 2U, we spoke with other leaders in education this morning. And I think the view is that this is a permanent shift. This isn't a stay-at-home phenomenon. This is permanently ingrained in the way that we're going to learn going forward. And I'm just curious if you can extrapolate on what's giving you conviction behind that? Why this is not just a 1- or 2-quarter phenomenon, that this is a multi-year or multi-decade phenomena?

Yes. So the question is, like if you're Netflix, the question is are more people -- when people go back to the workplace or they don't have an excuse to be working and being home, are people going to watch as much and need as many subscriptions? Or Peloton, are you going to ride as much? I think, as a Peloton user, I'm going to. Like I'm addicted to it. But the mistake that people make in education is education didn't stop. It was just the physical location of where the person getting educated that changed. And what I think Chip is referring to, and I believe him to be right, is that institutions -- before the pandemic started, our research showed that students weren't all that high on online learning and professors were against it. So our research now shows that 75% of all students want at least a hybrid system where you can do both. Because why should you have to go freshman year to take all these courses you don't want that you can't get into at really expensive rates, and more and more students are taking them at community colleges and then transferring them in to save money and not have to waste time, or community colleges where it takes a whole day to take a single class or half a day to take a single class. So we also know that at the beginning of the pandemic, the professors hated online learning. They probably still hate it now, but 50% of them now agree that they can teach as well, and you can learn as well online as off-line. And the unit economics for colleges are going to be disastrous. If they think people are going to continue to pay these exorbitant rates, force you to live in a dorm, force you to pay for a food service, force you to pay $3.50 every time you take money out of the school when the average age of the student is 25 in this country. So the top 50 schools, they can invent time. If you're a Harvard, Stanford, you can do what you want. But almost nobody goes to those schools, right? It's less than 20% of the population go to those kinds of schools. The rest of them go to state schools and community colleges. And so this was inevitable. This is something where the empire will try to strike back for a while, but the students will reject it. And the best statistic I can give you is the 2 largest colleges in this country are actually the 2 fastest-growing colleges in this country. And you know what they have in common? They are 100% online. It is Western Governors and Southern New Hampshire University. And where colleges were flat to down and community colleges lost 500,000 students, they gained 30%. So the facts are the story that we're telling. And then if we just look at our own business, all the world went back to school with the exception of the U.K. and our business did not slow down outside the U.S. Schools in the U.S. physically did hybrids and our business continues to accelerate. So we're just following what we believe to be the inevitable and the facts keep backing it up.

That's great. I think, look, there are so many different drivers in your business, international, the Study Pack. There's so many incredible opportunities. And I'm curious if we can just drill in, and maybe we just start with international because there's been a lot of interest there, how you would lay out the next 2 to 3 years as it relates to beyond the U.S. and how you want to go and address that market.

Yes. So think of it this way. The 50% of the world's population is below the age of 30. So if you take the U.S., it being an older nation and 300 million people, there are significantly more learners outside the U.S. than inside the U.S. And normally, you think, yes, but they're different, countries are different. Well, it turns out the curriculum, the universal curriculum for any country now who is trying to become a more modern country and build their economy is STEM, which is really where Chegg focuses. We don't focus on religion or local science or those things. And as a result of that, we can be successful in every country because we're not in any political climate. What we didn't know, which has been an unbelievable benefit to Chegg, what we suspected was the top 5 publishers in the U.S. actually write the curriculum. I'm not sure if everybody understands that. Professors don't really write their own curriculum. The textbook is the curriculum. And so it is universal curriculum, whether it's taught at Harvard or whether it's taught Arizona State University. And you could debate over the brand name and the professor and those things, but globally, it's the same 5 publishers. So the curriculum that we've been supporting in the U.S. is actually relevant to any STEM or business course outside the U.S. Now there are some subtleties. Obviously, language is not a subtlety, but language is one of the differences, and we're working on translation. So what we've discovered is the way we built our business in the U.S., which was expert Q&A, step-by-step solutions and videos, all around subjects that people are required or desired to learn; and multi-modality, the ability to sort of get on demand immediate help for overwhelming value of $14.95 or $19 95 and index it in search, every time somebody asks a new question, is a universal success formula for us. Which is why we went from 0 to 190 countries in 2 years and why we said, for the first time, we're going to have over 1 million subscribers, paying subscribers, paying the same money that they pay in the U.S., outside the U.S., and almost none of those are students that were sent home. They're all from the country, studying in the country they're in. Because the curriculum is the same. So the first concentric circle for Chegg are English-speaking STEM students in every country. The next one is non-English proficient STEM students in those countries. And that's why we're working on 2 things: instant translation. So if a new question gets asked, that question gets translated into every language at the same time and put out at the same time. So it's universal everywhere. The second thing is converting all of the content we have in translating into local languages. So we look at it and we say, just the English-speaking countries are about half the size of the U.S. So we think our international business over the next several years will actually be larger than the U.S. business will be. And then -- so when people look at international, they worry. They look at historic companies, and they say, well, gee, Netflix needed to set up a whole company in those countries. We do not. We do not have anybody in any of the countries that we're in, with the exception of India because we had them there before. They don't actually do the site for India [ there ], our content. We have 725 people there. The second thing is the content doesn't really have to be localized in any significant way. We already have all the original content that most of the people that want and need already can get from us. We just have to translate it, and we can fill in little pockets. And all of that -- so our work is really technology, translation, and the e-commerce capabilities more than anything else. So there's no mystery to what we have to do. We don't have to guess what they want because they ask it. And then we just have to be able to answer it. So our expert network now is now geared towards not just U.S., but the whole world. And that is why we used to do 7 million questions a year that were brand new, and we thought that was a lot. Well, last year, we did about 17 million and 25% of them were from countries outside the United States. So the Chegg formula turns out to be universal, which is why we're growing at the rate that we're growing and as profitable as you identified because the model doesn't have to change. It's unique. I've not experienced this before. But think of it a lot like the Google search engine, which is people come to us to get unstuck, same way they want to search to get unstuck. We are software more than anything else, and that's why our margins are so high.

The skills-based learning is kind of near and dear to my heart as a finance undergrad that learned computer science on -- in a bus in Minneapolis going to Piper Jaffray. That's how my career got started. I didn't go to school for computer science, but that's why -- how I ended up on Wall Street, being a Microsoft developer, and I learned it myself. So this is near and dear to my heart, and I agree with the direction you're taking this. I guess everyone's asking, in skills-based learning, what the next leg of this journey is and where this ultimately ends up over time?

Yes. A very fair question and the same question that we ask. So we sort of triangulate that question, which is what's missing from the students' ability to be employable in a tech-enabled economy. Because COVID and the pandemic highlighted what was just common sense, which is the 25 million people that lost their jobs were either in small local businesses, or in the service economy, which small local businesses often are, like restaurants. But the tech-enabled economy flew, right? Finance flew, Adobe flew, even Airbnb flew. I mean, it's just -- so if you're a tech-enabled, it's the future. Sometimes I wonder why people don't just bet on the future. What's the future? More people are going to have to learn more things online for a greater portion of their life. And they're going to likely have to pay for it more often than not. And with the tech world, it never changes. What you learned 20 years ago is completely irrelevant today. They don't even have that software, right? It changes that quickly. And so we take the path that says, how does one win in our universe? Well, you win by having the right content. Now the content may not be significantly different than anybody else's. So what differentiates us? What differentiates us is the cost. We're going to be the lowest cost because we don't have to partner with anybody and split the revenue and split the profits. So there are lots of people that went through schools and they're setting up physical locations. We're all on demand, all online. We've doubled our content since we've owned it. We're going to double it every year. We're going to update it every year. Because it's online, you can update it real-time, about whatever changes in the world while you're in that course. But what really differentiates us is the way we support the student. Most people don't understand, and Chip can speak to this better than I do because it's part of his business. Most online schools, the biggest expense they have that surprises people is telemarketers. They have people calling to get you to sign up, they have people calling you all through the semester to stay signed up. And so we don't have any of that. Thinkful had it, we got rid of it. Because what we built on the Chegg side was scalable online learning support, so we're plugging that into our Thinkful course. So imagine if you're a student, it's online, lower cost is the correct curriculum and you get real-time, on-demand help on anything that you get stuck on, no matter what time, day or night that you take it. Nobody else can offer that, no one else is even trying to offer that. So we're plugging in our chat-based tutoring and our Expert Q&A, which we sampled that over the course of last year, 75% of every student that took a Thinkful class used it. And our graduation -- because in the real world, in business, you get rewarded for finding a way to get unstuck. And that's what Chegg is on the academic side, and it's what we're building on the skill side. So for people who say how is Chegg going to win in that space? First of all, there's no winner today. That gives us an unbelievable opportunity. Two, these things are universal. But if you have the lowest price, a brand that people trust -- remember, in my tenure at Chegg, over 50 million students have paid us to help them. So our brand resonates as students graduate and get older. But we look at it and we say, the 50% of high school students that don't get a degree, where are they going to go to learn to earn? They need to be employable in 6 months without extraordinary debt. And they need to be assessed and prove it. And that's what Chegg is building. And honestly, everybody at Chegg believes that over time, that's going to be the biggest business we're in. Because just look how many people, 25 million people alone that lost their jobs during the pandemic, forget all the people that have to continue to update on -- we went from no cloud to everybody in the cloud. And we went from just Amazon Cloud to then Google Cloud and then Microsoft Cloud. And now there's a cloud for HR and Workday, and there's a cloud for Creative and Adobe and there's a cloud for sales and Salesforce. Everybody not only needs to know how to use it, but they knew how to put their companies on. And so it's not hard to figure out what people need to learn because you can see where the job growth is. Just got to make it affordable, give 24/7 real-time support and do it at a price where people aren't bankrupt by doing it. And I think it's going to be the fastest-growing segment of the company once we get all the pieces together. I mean, we're fired up about it, as you can imagine.

Yes. And it seems like with Thinkful, you really started with computer science. It seems like there are so many other sectors that you can go into. And I know you're not here to announce new sectors, but I mean, the -- you can kind of think about just so many categories that you could expand to. I guess the question is -- from investors is, you've always -- you've said this to me in the past, we're very disciplined. We got a lot we can go after. But you've been extremely disciplined and stayed focused on -- maybe just give us a sense of how far and wide do you think you can go in skills-based learning?

So we're going to remain disciplined and focused. So the online support, we told everybody 2 years ago, we were going to start to go into international. We never surprise people with what we're going to do, but we take our time. We get it right. And then what we end up getting is sort of like a V, which is we invest, we invest, we invest. And then if we're right, we get this, and that's what happened in international. In Skills, we took a very small piece of the puzzle, which was Thinkful to learn. What is the right pricing? What is the right pacing? What is the right support that people need? What is the likelihood that they're going to graduate? When they do graduate, how long does it take them to get a job? Then the pandemic came and we were able to learn through those things. So we could add thousands of courses right away, but we're basically, we went from 7 to 14, and we're going to go from 14 to 28. We're going to do manageable levels because this problem is never going to end. It's not like the opportunity will be missed if we take our time. But what we did in 2019 and 2020 was we built the plumbing: technology to scale; the analytics; the marketing; the AV testing. So we will systematically roll things out when we're ready to win in them. But we don't feel like we need to take any unnatural acts to make a number. When people start to enter new segments, oftentimes, it's because they're worried about their old segment. We are not. We have seen accelerated growth. Even before the pandemic, we accelerated our growth from 29% to 35% from Q4 to Q1 a year ago. So we were already seeing the fruits of that labor just in the academic support side. So we are able to do this because we have -- we've organized the company in a way that has academic support and skills. And those groups share common things in the company like marketing and finance and legal and HR and those things. So they're able to focus on building the greatest product and the best subscription services.

Study Pack and password sharing has been a major driver. Can you talk through the runway that you have left in both these categories?

Yes. It's hard to know on account sharing. So what I've tried to help people understand is the way we look at it, and they can make their own judgments on whether they look at it differently. But break account sharing into 3 groups: One is nefarious people who are stealing accounts and then reselling them on the dark web, that was the first thing we went after, and that's why our growth went from 29% to 32%. So we picked up 4% of growth just by plugging that. And you don't want to go into the dark web if you don't have to. But that was -- we found 150,000 accounts for sale multiple times. So you can imagine what that does for our business. So we were able to knock that out. The second thing is also nefarious, which is people stole people's passwords in other places, and they test them in sites, and they tested them on Chegg. And to the degree that they were able to get your password, they sold access to your account to somebody else and you never knew. So -- and there's no risk to the student because it's just us giving away our content for free. And that's what we did last August and last October when we did sort of revamp the passwords and did MFA. So we now limit the number of devices they can use it. And that, more than anything else coincided with COVID, but more than anything else, that's what drove our domestic growth. It wasn't COVID, which is another reason we're not a stay-on stock. The third thing is less nefarious, and this is where COVID really helped, which is -- it's what we call proximity share. So your roommate, your boyfriend your girlfriend, your friend, whatever, you're in the library, you're on the same sports team, you're in the same class. "Hey, can I just use your account?" Well, when you weren't on campus, you couldn't do that [ as usual ]. So everything we built since then has been able to limit people's ability to do that when they went back to campus. And believe it or not, a substantial percentage of students went back to their campuses and rarely enough, they were forced to come back and not even go in the classroom. So they were pushed into pods. And so that was a big risk to us if the stuff didn't work because it would be people in the same classes. And it did work. And so we have -- we -- there's more to go there because our best estimates for every 1 paid, 2.5 were unpaid. And if you look at our number domestically, our number, we're probably -- we probably have 75% more penetration we can get to universally across colleges, because in the last 3 years, the percentage of people that take STEM and business has grown by 50%. The percentage of people that take liberal arts has shrunk by that same 50%. So the -- though everybody is moving in our direction, and that's good for us. So we think we have more runway there. It's hard to quantify it. But CSP, Chegg Study Pack, frankly, it has way outperformed our expectations. And where you're really going to see that is in '22 and '23. And the reason is because we never offered it to our existing base and our existing base was the majority of our customers, and they renew in '20 and '21. And so we're only offering it to new customers and a significantly larger percentage of new customers took it than we expected. And what really shocked us in a great way was outside the U.S., the same percentage of people took the Study Pack over studies. So at 1995 U.S. prices, the same percentage of people outside the U.S. took Study Pack. So you're seeing that in our numbers already. Again, we're one of the few that gave '21 at all, let alone did it in November. Then we upgraded our forecast, including in adding 200 basis points. And if not for the poor execution of our logistics provider on textbooks, we would have raised it another $200 million. And that is because the bundle is becoming a bigger and bigger part of our business, and that's pure profit. So -- but just imagine in '22, when our base is a larger percentage of bundled people who then renew. So we'll be selling more new and our base will be with a large percentage of people that were in the bundle. So that's why Andy says we have so much more room in our profitability, because we already know how the model works. So it has been a really big success for us. Obviously, we have more work to do. We want to continue to add more value. When we started with Chegg Study at 400 textbooks, now it is 53 million questions and is the same price. So we never stop investing because we never want to disappoint the student, and we never want to create an opportunity for anybody to take market share from us, which is why we haven't raised the prices in 10 years.

For everyone that's online, and we have a big crew, you can ask questions on the Wall Street webcasting site. You can also e-mail me at [email protected]. If you have any questions, please feel free to jump in. I'll keep going.

I'll try to answer them as fast as I can so you get as many as you can.

Well, I guess, Dan, one of the things I've asked Shantanu, which you know very well, at Adobe is -- the kind of the consistency of success has been incredible. And I think he has said to me that the success has just made us even more hungry to continue. And I guess the question is, given how well you have done, many have asked like what keeps Dan and the rest of his company going at the speed you're going? Can you just give us your perspective on what -- why this drive and why this commitment has been so long from your perspective?

Yes. We asked ourselves the same question, and the Board asked us the same question. It's a very weird thing. There's been multiple chapters, no pun intended, of Chegg. So the first chapter was the chapter where we were fooled. We were told it was one thing and it turned out to be another. And we had to revamp the entire company faster than we thought and, thank goodness, it worked. Chapter 2 was that transition from a high-cash user to a limited-cash user to a high-growth, high-margin business from a slow-growth, cash-consuming business, from a small TAM to a giant TAM. And that took about 3 years, and we had to do it as a public company. And that was extraordinarily painful. And I think we did it the right way because we followed the Adobe model exactly because Shantanu was a genius, which is we told everybody how our existing business would decline and how our new business would go up, and we let people track them both. So we have been incredibly transparent in every one of the things. What we didn't expect to find and nor did Shantanu to find, because the big thing that Adobe made the decision on was their core business looked like it was being sold to a shrinking [indiscernible]. And so it -- that's my dog, everybody. That's Brooklyn, she loves this story. That he then -- we then realize with Instagram, photo sites and other things and Facebook photos that there were more creators than there have ever been. Well, Chegg took the position, there's more learners than there's ever been. There's more people that need to learn more things. And so what drives us is they need our help. Look, just in the U.S., it is appalling. Colleges have raised their prices every single year. Textbook providers raise their prices every single year. And what's happened is we've got more people who've borrowed more money, way more money than they could ever afford or ever pay back. 40% of them are not paying it at all. They cannot declare bankruptcy on it. 43% of students do not graduate at any time and 80% of people that go to community college that we all bank on, 85% of them get no degree at all. So what we're talking about here is that what drives us is we are a mission-driven company. And the second thing that drives us is something unique to Chegg, which is we keep seeing new vectors of areas that we can solve big problems in the education space. And we believe we have the skill and the resources to do it. So Andy and Tracey have allowed us to have the strongest balance sheet in all of education, which is we have nearly $3 billion. We're not only high-growth, high-margin, but we produce 50% free cash flow for every EBITDA dollar and above. So what if you have the vision, you have the team, you have the resources and the problem mattered, why would you walk away from it when you actually think you can make an impact on it? And that's what keeps bonding the team together. And I think the reason people ask that is because in Silicon Valley, the average length of an employee is 9 months. Well, Chegg, 40% of them are approaching 4 years. The management team has on average now, 9 years. And it's because everybody appreciates the value of education. Everybody has a kid, everybody now, [ with Zoom ], has seen how bad the system can really be. And so that's what motivates us, is we actually have the ability to make an impact on not just hundreds, but millions of people's lives in the future. And they love us for it.

It's great. Nice to see your dog agree as well.

Not everybody is Brooklyn, and she rules the roost. So I apologize.

No, it's great, it's great. The just -- Dan, you mentioned close to $3 billion in cash now. Obviously, that's the company's high to incredible position to be in, and you've been very disciplined with your cash position. There's -- I think we're all witnessing a tremendous number of companies coming to market, right? Nerdy was on earlier, going public through a SPAC through TPG. We're we have never seen this number of companies. And I don't know, again, not all of them are going to make it. But it's been an incredible surge in wave of stories and education that would probably far exceed the...

Actually -- Brent, just to fine tune that is since Chegg went public, there hasn't been a single edtech IPO, which is now 7.5 years ago. And this year, as a result of SPACs and our multiple, there could be as many as 10, which is crazy. Historically, in education, they've gone private, right? So Pluralsight just went private. But now you're right, there's an incredible interest in this space because everybody who's sat at home has now understood how bad the system is. It was never designed for a diverse community of people who learn different ways at different levels in different states who have different economic needs. And Chegg is designed to solve that.

When you think now -- I mean, you're not only competing for assets on the private side. You've got SPACS. You've got a lot of other people there, it's competition now for you. Just walk us through your thinking. There's a lot of concern like how are you going to be caught up in a bit more for expensive assets, how you think and you're managing this process.

Yes. So whichever one of my Board members just asked that question, I will respond, which is, look, we are in a blessed position. Why? Because our core business is extraordinary, and it is nowhere near on the declining point of growth, which means that we don't have to do anything to make a number or to reinvent our company. We just did that 4 years ago. So because we did that 4 years ago, we're new. So you ask why are we staying, is because we're just getting started. I mean, this part of the company is only 4 years old. So -- and some of it is even like 4 months old, like Skills. So we don't have to do something to satisfy any number or any goal that we've set. So we can be patient. Second is we've always dealt with ridiculous prices in the private markets, and we've been very disciplined. And we've always found the right asset for us. And we wait, and we're patient. And we know how to execute on it. And a lot of people want to become part of Chegg because they get 2 bites of the apple, they do the transaction and the management team gets to write up Chegg stock if we do well. So a lot of people actually would prefer to become part of Chegg versus some of these other things that you see. But you're right. We don't compete with other companies for transactions. We compete with the public markets via SPAC or the public markets. And I think Andy says it best, which is some of these companies -- we're a company that went public at $12.50. Our first trade was at $11.25. And a year later, we were at $3.15. And look where we are now. I don't know that a lot of these companies have the financial resources or the skill or the assets to do that. So we can be patient and let them go out and then 6 months from now, revisit it and see where their real value is. And if they outperform and they're worth more, then they're worth more, but no one's going to think we're overpaying. But what we won't do is be positioned against [ incentive ] valuations because we don't need to. And I feel fortunate about that. I have been at companies where we felt like we didn't have a choice. But Chegg does have a choice, Adobe has choices. And we just will remain disciplined because we love the assets we have. We love the hand that we have. We see extraordinary growth, extraordinary profitability. And when we find the right asset at the right price that solves a big student problem, where our brand, our reach, our data and our technology could help it grow faster and be more profitable as it's been for Mathway in its first year, as it's been for Thinkful, as it's been for Writing, and as it's been for Chegg Study, then we'll buy it. But we will not -- we're not a company that gets crazy deals. I've been through this too long.

There was a question, Dan, from a client. Can you ask if there's any change in seasonality in the domestic subscriber business as a result of password sharing changes, more hybrid online and in-person? Anything else kind of changing your traditional seasonality that we should consider?

A very fair question. So domestically, seasonality remains the same, just growth rates have improved. So we -- what -- but what has changed is seasonality due to international because different countries have different seasons and different start dates. And so you'll often see tremendous subscription growth for certain things where the revenue won't be recognized until the next quarter. Because if we get somebody in the last 2 weeks of a quarter, we don't really get the money until the next month, month after and the month after. So I would say domestically, we've just seen improved growth rates everywhere. But seasonality hasn't changed significantly that I can tell in terms of subscriber growth. In some cases in revenue just because of the pandemic, I think some schools started a little bit later, but we accounted for most of that when we gave out our guidance because we're pretty efficient at doing that. So I don't think you'll see anything that should surprise you.

And maybe last question for you, Dan, just to kind of close out. Things that you may think are underappreciated that we can't see, as I say, I just sit in the lifeguard chair and watch good swimmers and some bad swimmers like Oracle today.

Although let's just say, nobody wants to see Dan in a bathing suit. I think we could all agree on that.

But when you think about like you're in the water, you're seeing what's happening, we can't really see your perspective. But what are the most underappreciated components that we can't see that you're seeing in the -- that Wall Street maybe hasn't fully appreciated.

I think the dot that doesn't really get connected as well as it might be is the more questions that get asked, that are new. Like it's shocking that we have 50-plus million questions, and that 17 million new ones can be asked. What does that mean? It means more people from more places in more subjects are asking more things. That's a sign of incredible value of our service to people that no one else can provide. It also means we're expanding our relevance at a profitable way, now there's the cost of content is actually profitable. Because the more new questions that get asked, they get indexed around the world. And that attracts new customers, which is why our cost of customer acquisition continues to fall. So that metric is a great sign of future growth and future profitability. I think the other thing that is just -- and it's not because people don't understand it, it's because I don't think we've explained it well. But I tried to explain it a little bit earlier today, which is the benefit of the bundle is obviously seen in the fact that we're able to raise our guidance this year already. But it's also a result -- what you're going to see is the profitability in the next few years is just going to get better and better and better because we never marketed it to our existing base. And because we never marketed it to our existing base, next year's renewers are going to be people paying $19.95 versus $14.95. And so our profitability for the future -- again, that's why Andy keeps intimating, we haven't even seen the ceiling yet because the bundle is going to make such a big difference in profitability.

I know that -- I said that was the last one. There was 1 follow-up. And it's the concept around Chegg not being with you just for college, but now the -- is it's lengthening in terms of the relationship. And I think in the past, you've talked about potential opportunities in career onboarding. Jefferies is a huge hirer out of the internship program and bringing straight out of college and kind of this ability for us to see all the top graduates coming in a particular field that we need to fill seems like a tremendous opportunity. I know you talked about it way back when. Is this still an important area for you?

Well, the whole skills concept means that we -- you're already older. So many of you are in community colleges, they can use Chegg or older students that go to online and are already at work. So we believe our -- and 50 million people have already come through, it's probably closer to 55 million at this point. They've already paid for us, they have a relationship with us and trust us to teach them. And so what we believe is in the future -- and this is what your point is earlier, which is how big can Chegg get. So far, we don't have a ceiling. But we believe that more people are going to have to learn more things over the course of their career that are skill related and tech-enabled. Again, not engineering, not coding necessarily. But everything else you need to do to be able to use tech to your advantage in the workplace, including engineering and coding and development and those things, software. So there is no limitation of Chegg's ability to stay with you beyond your academic experience. And the skills is the first path into that. So we think we have advantages by being able to market to seniors in college that need skills, who can afford it. But then recent graduates that we've been in business with, that we know didn't get the skills of the schools that they're at. And then people sort of mid-career who need to continue to upskill. So we just don't see a ceiling yet, but we're not going to be in a rush to do things wrong. We can take our time. And that's the history of Chegg, which is we just do what we say we're going to do, and we put all the costs in there so there's no mystery, there's no surprise, like, oh, we didn't tell you that. Like what we say is what we're going to do and hopefully better than that. But we're not -- we've not run out of things that we can do that will accelerate growth or add more growth.

Dan, really want to say thanks. Everyone was really engaged. We had a large audience on. So thank you so much offering your perspective and congrats on all the success.

Thank you, and thank you all for putting up with Brooklyn. And I'd just -- I'd like to end with what Andy said, which is Chegg's academic support business continues to expand. The skills business will be larger, international will be larger than the U.S. business. And just ask yourself, if you think people are going to need more help on demand, real time, affordably in multiple languages and multiple ways of teaching, then we're the company that is focusing on that. And we're grateful for everybody that's been supporting us. Our largest investors continue to own bigger pieces of the company, and we're grateful for that. So thank you all. And Brent, thank you for such great coverage of us, the good times and the bad times.

Thanks, Dan. Take care. I appreciate the time.

Thanks, everybody.