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

Good afternoon, everyone. This is David Lustberg with the Jefferies software Internet team. Thanks again for joining us for another session. Today, we have Dan Rosensweig, President and Chief Executive Officer at Chegg. In 2010, Dan Rosensweig joined Chegg with a vision to transform the popular textbook rental service into a leading provider of digital learning services for high school and college students. By leveraging technology, mobility and connected networks, Chegg now offers a full suite of high-quality, low-cost, personalized and on-demand education resources that help students maximize the return on their investment in education. Dan, I was a Chegg user myself not too long ago at Penn State, and thank you personally for all the help that you provided me and a lot of my classmates. But thanks again for joining us. Super excited to have you.

Well, thank you for having us, David, and very nice to meet you, and I'm glad you were a customer and a satisfied customer.

Although Dan, I will say, I was actually one of the -- your [ bad ] customers. I was back in the day when 10 students could use the platform at once, which you guys have patched and I think makes a lot of sense, right. But I guess, let's -- to jump in, we'd love to hear about what you guys -- I think most people on this call should know about Chegg. But maybe for those that maybe don't, tell us about Chegg and what you guys are doing? And maybe briefly walk us through how learning and education have changed over the last couple of years through COVID, and what you kind of envision the future will look like?

Yes. Well, there's a lot there. So let me start by thanking everybody for joining. And it is -- when you think about Chegg, you want to think about those people who are putting their hands up who are trying to improve their lives through learning, through education and who want and need and we believe deserve a better outcome. And so what Chegg does is we provide services online that are on demand. They are affordable, incredibly high-quality, that helps students and learners navigate the challenge of the traditional learning system and increasingly the nontraditional learning system. So offline, online, hybrid, degree-based, not degree-based and now global. So whatever it is you are studying, which you need to master the subject and get better equipped, you can come to Chegg and we can help you. And as we grow, we continue to add more content, more subjects, more services and increasingly global, where we're able to help students around the world really focus on business, STEM and all the related subjects around it. We don't focus a lot on literature or religion or politics. Those things are harder to scale domestically and globally. And so if you're thinking about Chegg, what you want to believe is that there are more people who are going to need to learn more things over a longer period of time. And they're going to be doing it increasingly on their own with less support from institutions, their governments, their families. And they're going to need something that's on-demand, affordable and personalized that actually helps them master the subject. So David, as you said, you were a user. So you know that essentially what we do if we were to short it into an elevator pitch, other than financially, the number one reason people drop a class or drop out of school or don't graduate is they get stuck and they have nobody to help them get unstuck. And that's what we do.

Yes. No, I think that makes a lot of sense. And I think the one thing we've seen during the pandemic, right, is a lot of changes in students' behavior, right? And not necessarily just the students' behavior, but maybe the way that higher institution is working, whether it's more pass/fail, less graded assignments. But talk about some of those college and student behavior changes that have emerged from COVID. And again, things like taking lighter course loads, easier course loads with fewer graded assignments, talk to how you anticipate student behaviors will change over time and how that change will impact Chegg's business.

Yes. I mean, very fair question. And I don't think we fully know that student behavior has changed in any meaningful way. What's changed is institutions' behavior. Therefore, the students need to respond to it. And what I mean by that is very few schools, almost no schools, were prepared to teach online, either completely or in a hybrid manner. And during COVID, obviously, everybody rushed to be able to do that and were ill-prepared. And so you had old test. You had old test questions. You had issues over cheating. You had students protesting against the price of college versus the price of on-campus. You had students protesting proctoring. So you had a lot of confusion. And ultimately, I think, the permanent changes that have come out to this is both students and schools have come to appreciate that online is here to stay. It's only going to become a bigger part of what people do. That it needs to be invested in. And that if done correctly can scale better, can be more affordable and can be just as good, in many cases, as the combination of either hybrid or learning in person. That the challenge with learning in-person is it's very expensive, specific hours, doesn't scale very well and has taught to sort of the medium and not personalized, whereas online can do those things. So I think the permanent condition is that students are going to demand to have greater flexibility, same way employees are demanding now greater flexibility. Beyond that, I think what you're referring to is when COVID started to look like it was waning, prior to Omicron and then Omicron came, students that were going back on-campus full time for the first time in a year, 1.5 years were taking fewer classes, taking easier classes, not focusing on their major and actually not really attending or not being assigned very many things. That changed about midway through November, after we reported our earnings, where there were more students who suddenly realized that they were being assigned more things and even if they were pass/fail, they needed to pass them. And so Chegg began to grow quite significantly more than we expected again and that momentum is carried over in large part to '22, which is why we were able to give our guidance. So I think what you're going to find is what we do is more important and more relevant and more sustainable. The other thing that we saw, during COVID was that international expansion of Chegg went from 0 to about 1.5 million subscribers in 3 years because students that were forced off-campus outside the U.S. who historically had -- not had a good alternative to learn from online or get support for online discovered Chegg through all the work we had done in translation and indexing and starting to invest in being able to take credit cards outside the U.S., local currency. And all of those things helped us build a very large international business very quickly. And I think you're going to see what we do continue to be globalized.

Yes, absolutely. And specifically on the international expansion, right, I think it's hard to ignore what you guys have done there and we'll certainly touch on that in a few minutes. I wanted to address a question that I think a lot of investors have. It's a question I get often, and hopefully we can use this as a time to kind of clear the air on this question. Is that a lot of investors are asking about the subscriber mix of students coming from whether it be community college or a state school and private school, but is there any color that you could help provide to describe the subscriber mix? And maybe even helpful as well would be how that subscriber mix has changed over Chegg's last 10 years?

Yes. Look, I think the way to think about it without overthinking it is to say we are representative of the entire college market. So the smallest percentage of students go to where everybody on this call went to or your kids go to, which is 4-year private colleges. It's about 20%. So that is the smallest subset of colleges. So don't think of college as where you went. Think of college as where America goes, which is 70-some-odd percent go to state schools. 2 giant states, Florida and California, have massive community colleges. California has almost 2.5 million students at one point that went to community college. To date, county schools in Florida are the second largest one. So you realize that a huge percentage, 15% or more, go to community colleges in this country. And Chegg index is exactly what you would expect. We indexed at community college and state schools, the largest schools in the country, more. We have higher penetration. And at the 4-year private schools, we have excellent penetration, but it's probably 5 or 6 percentage points less. And it doesn't really affect our business much because not very many people go to Harvard or go to Darwin. When you add up the collective of the Ivy League schools and the Patriot League schools and Stanford, you're talking about a couple of hundred thousand students out of 20 million. So it's not a large number. Now the reason that question gets asked and we ask it internally is a very smart question is, I think, people want to understand that as the economy goes back to more normal employability, will Chegg see growth due to the fact that more students will be going back to school? So the way to think about it is when the economy is super strong and we have high employment or low unemployment and wages are up, you see 4-year state schools and community colleges decline in enrollment because those people, very savvy, go get and make the money. What most people on this call again maybe don't appreciate is that 40% of students in this country are working 30 hours a week or more while they're at college anyway. That's the group that goes and takes as much money as they can and then comes back to school and the economy goes down. And so as you predict what's going to happen in the second half of the year, then you can gauge whether or not you think that the enrollment is going to go up in any substantial way. Our plan assumes nothing changes from what we're seeing now because we just can't predict it.

Got it. No, that's super helpful. I appreciate the color. And I wanted to ask about the opportunity for price increases. I know you guys have talked about -- you haven't raised your price of the core Chegg Services subscription in over a decade. I know you introduced Chegg Study Pack, which is higher priced, but not really a price increase. Talk about how you think about pricing today in the U.S. and if you think there's an opportunity to raise prices in the near term, like other consumer subscription-based companies have, including Amazon, Netflix.

So I'll go to the answer to the question directly. Do we have pricing power in the United States to raise our prices if we wanted to? The answer is, certainly. And how do we know that? Well, we know it from 2 reasons. One, we test and survey all the time so that our more engaged investors have seen us do price testing. We price everything. So for those who don't know what we do, we have Chegg Study at $14.95. That's our largest subscription service. And then we have Chegg Study Pack at $19.95. Our vision was let's not raise the prices. Let's create even more value and then have a higher priced choice. The good news is what has happened -- as enrollment as sort of starting to stabilize and hopefully go back up again, what has happened is we're getting a very high percentage of our subscribers taking Study Pack. So they're paying $19.95 versus $14.95. And on average, that's $20 to $25 more over the same period of time per subscriber. So it's been quite substantive, which is why the ARPU of the company and the profitability of the company continue to increase. So the fact that, that has been so successful tells us that students are willing to pay for more value. So the second question is, will they pay for $19.95 for everything, and that's what we wanted to do? And the answer is our survey suggests that they absolutely will. So why haven't we done it? We haven't done it because we are still building that relationship of trust and value. And we still think that there is actual growth in the U.S. And as that growth wanes, we will look more seriously at taking the prices up. But it's quite substantial if and when we do because it all goes to the bottom line. So it's a substantial increase in top line and bottom line. There's a time for that, and that time is coming, but it's just not now.

Got it. That's helpful. And I think, right, we've done the work. We've done some survey work. We've spoken with some customers. And I think it's very clear that you guys have pricing power. I mean to the point of -- for $14.95 a month, you have essentially unlimited access, right, to a study helper versus -- I mean, a tutor alone on a college campus could cost you multiples of that for 1-hour session. So I think the value perhaps speaks for itself not to mention...

Yes. I think the most straightforward way that we would think about it is when twice as many people are taking the bundle at $19.95 than we originally anticipated, you know that more people will pay for more value. So that's good. Second is when the value we provide is overwhelming and so renewals that are at their highest rate and cancels there are at their lowest rate, then you know that we have the power to raise pricing. The question is only when is the smartest time to do it.

Got it. Yes. No, well said. Let's switch gears a little bit. You acquired this little language company called Busuu. I don't know if you guys have heard about it. I say that jokingly. We -- Brent and I are using it in our spare time, Brent is learning Japanese. I'm using it to touch up on my Spanish. Talk to the rationale behind that acquisition and how language fits into Chegg's overall learning platform.

Yes. Marvelous question because I think some people are like, did you do that, when you did it because of the sudden slowdown, which will come back and is starting to come back? And the answer is they're unrelated. And the reason they're unrelated is we've been looking at categories like we had in math, like we had in writing. We look at companies that have been around for a while, that have been underfunded, that are well run, that are -- have shown their ability to live through the trials and tribulations. So when we bought Mathway, it was 20 years old. When we bought Writing, it was 13 years old. When we bought Busuu, it was 10 years old. So these are companies that the product market fit is there, and they have finally started to hit their stride in businesses and grow. And in the case of Busuu, obviously, language is becoming increasingly important in a global world. It's a $17 billion TAM of just online language learning. It's a $60 billion TAM for total of language learning. Busuu -- think of Busuu as one of the top 2 players outside the United States and think of it as nascent in the United States. So when we buy something, our hope is that we can leverage what we built to accelerate the growth of that company faster and increase its profitability more than they could on their own. In the case of Busuu in the United States, over -- 1 out of every 2 students says they want or need to learn a language. So we know there's overlap with our existing audience. Then, as we've entered the skills world, we know that people that are learning skills, they're not just learning computer language. They are learning language languages because the world was increasingly more global. And if they're going to work in tech, they're going to need to learn different languages. And so we see an opportunity to offer more value to our existing customer base and to expand our TAM to a larger customer base. And the third part is international. We went from 0 to nearly 1.5 million subscribers in 3 years. Busuu adds another 0.5 million. So we're now 2 million strong outside the United States. And that just gives us a greater platform and greater leverage to continue to market more and better products. So we're incredibly excited about it. We did it when we did it because we've been talking -- we've been looking at the language category for 7 years. We've been meeting with Busuu for 6 years. And he had reached the conclusion that if you're not at scale, you don't really matter on the Internet. And so he wanted to get at scale and he wanted to be part of something bigger and particularly Chegg. And he called up. Others were looking at him. He called up. He said, "Look, we don't like the other players. There's 3 of us in the room and 60 of them. We have always loved Chegg. You guys" -- they've been to our offices. We've been to them. We've met with the management teams for many, many years. And when he was able to show his business was accelerating and his losses were decreasing, we took a serious look and it looked like a great fit, and that's why we did it when we did it.

Awesome. That's really helpful color. And you talked about the international, good timing and segue into my next question. So on international, you guys broke out for the first time that in 2021. 11% of revenue is coming from outside the U.S. In spring of 2022, you set to a localized pricing, which will help better fit Chegg's pricing by each country to the willingness to pay. Talk about where you guys are investing on the international side of the business. And what we should -- what students should expect that they'll see in this upcoming year?

Yes. The good news is the growth of Chegg outside the United States got a lot bigger, a lot faster than we originally anticipated. And that's always good. That means the demand for what we do, which is STEM and business, is universal. Those who don't follow the industries closely may not know that the top 5 publishers are the top 5 publishers everywhere in the world or pretty much everywhere in the world. And so we don't have to differ. We do want to translate to local languages, and we do want to be able to answer questions in local languages and that we're investing in. The big miss that we're fixing now is because it happened so quickly. We were not yet prepared to present local pricing. We were not yet ready to take local credit cards. So we were taking what was available for us to take. We now, of course, can take local credit cards. And in only 4 countries are we actually able to present local pricing. The more interesting opportunity -- and that will all be rectified by the end of this year. The more interesting question is, for those that track us and a lot of analysts do, you can see that the top of the funnel is very large for Chegg. In Indonesia, in the Philippines, in Mexico, in India, very large population people, but the conversion is very low. And that is because it's not only presenting in local currency and being able to take local credit cards, but we also have to price appropriately for the local markets. That's all new, and that's all stuff we're working on this year and should make a significant impact towards the end of the year in '23 and '24. And for us, the good news is because it's like software. We essentially have software. You write once, use many times. And so anything that we do, even if the prices are lower outside the United States, is pure upside margin for us.

Got it. Yes. No, that makes a lot of sense. And I think it's by no means a new strategy, right? Netflix, Spotify, They're doing similar pricing strategies outside the U.S. that match the perpetuity of paying each market.

No. David, what is different -- you're right about that. You're absolutely right. What is different, though, is they need to have content specific to every country, so it's very expensive. They also need to have hits, and it's very expensive. We have the content. Translating is what we want to do. We might add some local content, but it's very inexpensive to do. And that's why our incremental margins are $0.91 of every dollar per Chegg Study or Chegg Study Pack. That's why Chegg's margins before Busuu, I think, we put out this year would be over 36%. That's why over half our EBITDA goes to free cash flow. So we're a better business model. They're just in huge, huge markets. But in terms of profitability and cash flow, that's our strength.

Got it. That's a good clarification. And then I wanted to ask, right? So as we go to this localized pricing environment, right? You have 1.5 million existing subscribers today, that will effectively pay you that $14.95 or $19.99 in USD. But as you roll this out, one would think that there's going to be a headwind from your existing subscriber base as you roll out this localized pricing. I guess, is that fair to assume? And I guess maybe my gut would tell me the existing subs today are likely coming from countries that have a higher willingness to pay, given they're already on the platform. But just help us think through that kind of revenue impact that we might see as you roll out localized pricing and existing subs have an opportunity to potentially resubscribe at a slightly lower rate.

Yes. Again, fair question. I think the way to think about it is we are going to roll out lower pricing in countries where we have very few subscribers but high demand. So you're not likely to see us change the pricing in Canada or the U.K. or Australia, which are very much like Western countries and like the United States. Where we're robust, like Korea and United Arab Emirates, Turkey, those are places where you won't see a change. It's really in the very large population countries where they just don't have a lot of money. So we're not imagining a scenario where we're going to be lowering revenue in certain countries before we get it higher again. This will be incremental revenue in countries we don't have a lot of revenue.

Got it. No, that makes a lot of sense. And then to keep it going on the international front. But the plan in 2021 was to go to 1 million subs and you ended the year with over 1.5 million subs. So obviously, well exceeding the expectations. Like you said, it was far quicker than you had anticipated. What were some of the drivers behind that outperformance versus your internal targets? And can you talk a little bit about the growth rate for international in 2021? And how we should expect the growth to look over the next couple of years?

Look, without getting into too many specifics, Andy has said before, there is a possibility in several years from now that the non-U.S. business, just based on numbers, should be larger than the U.S. business. So 50% of the world's population is below the age of 30. And as we continue to expand in a country, into languages and into nontraditional pathways, it wouldn't surprise us if we ended up having more subscribers in the future than outside the U.S. than we have in the U.S. That's good news for everybody. I think what the drivers were -- in the U.S., COVID has had more of an impact later in COVID than at the beginning of COVID on Chegg's business, which is Omicron and back-to-school -- not back-to-school and assignments and those things. At the beginning, a lot of the revenue in the U.S. was the result of us really focusing on account sharing, as you point out. That you said 10 of you can use it. Now you can't, right? We have multiple layers of authentification to block all that. That happened to be coincidental around the time of the virus. And we've been saying for months that we were going to do that. So it just -- it was a weird set of timing, and so it could be confused in the U.S. Outside the U.S., however, COVID made a big impact because, as I said earlier, students left campus. They not really thought about going to the Internet for support. But they discovered us because we've been doing work for years. Then what happened is exactly what happened historically in the United States, which is the word of mouth around Chegg is massive. You know it. You went to college, Somebody said, "I'm using Chegg. What is it? Oh, shoot. I need it." That happens everywhere in the world. So it's not so much by country as it is by school it's by country. So you get into a school and that school spirals up. Then people go home on spring break and then they tell their friends. And then they have schools spiral up. So it is why our -- where other people are struggling with the Apple, Facebook wars on ads, we're not because the cost of acquisition for us has been flat to down every year since I've been here.

Got it. That's helpful. And definitely, Chegg -- I can speak to it, right? Chegg is very viral, right. You're in a class and someone mentions that they're using Chegg for this classes. It helped them. I think that spreads pretty quickly throughout the classroom and all of a sudden you got a whole classroom of students that are utilizing the platform. Let's maybe switch gears a little bit. Talk about the vision you have for the education tech platform you're building. You recently announced Learn With Chegg, an enhanced platform that will help you deliver on personalized learning. And just early in this conference that we've been going for a few hours and personalized learning is something that's come up a lot. Talk about how Learn With Chegg tackles personalized learning and why you think that is an important step forward for the platform.

Yes. So there's many versions of personalization. I've been in the Internet personalization game since truly 1997 when I ran ZDNet and we built some of the first ad targeting. And then, of course, we built it at Yahoo! called Smart Ads. But think about it this way. The more relevant something is to you, the more likely you are to like it. The more likely you are to like it, the more value you think it creates. And the more value you think it creates, the more likely you're going to stay with it and the higher you're willing to pay for it. So with music downloads, it wasn't very personalized, except you chose what music you wanted to do. Then came music subscription services and music discovery. And so you have like Spotify and Apple Music and TIDAL and all of those things. In the case of Netflix, it was like you watch this, other people watched this also liked this. That is a form of personalization. Ours will be more sophisticated. In that, what do we know? For 10 years or more, we know everybody who's gone to your school that has used Chegg. We know everybody who has taken the class you're in. We know the textbook you use. We know the chapters you use, in which order, because it doesn't change. We know which questions people get stuck on and which ones they don't because we see them. They come in. And so we are using Learn With Chegg or personalization in a few significant ways, which should improve the business because it improves the quality of the experience for the consumer or the student. First, we have billions of citations in our citations product. We have billions of math algorithms. We have 75-plus million pieces of content in Chegg Study and Chegg Study Pack. So it shouldn't surprise anybody that discovery is a big issue. How do I find more of what you have that I didn't know you had? So step one is increase discovery. Step two is pushing content to you. So what most things do is tell you, if this then this. What we're going to be able to do is to say we know exactly how your class is going to be done. We know which chapters you're going to focus on. So we're going to bring you when you personalize -- here's your class day 1 for the rest of the semester. Here's the order in which you're going to learn it. Here are the things that are going to be important to you. And so you won't even have to ask us or search on us. We will publish it to you. Nobody else has that. As we build out Uversity and the numbers just keep getting better and better and better, and that's our service where we're working directly with institutions and their professors to get content generated from the professor at your school. So we'll also be able to say, here's the study guide. Here's the syllabus, Here's the practice test. So when you sign up for a class, you're going to sign up for Chegg because we're going to be able to help get you through it without you having to figure out how to get through. And that's the level of personalization that really no one's done before. So it's a combination of discovery and programming, and it's super exciting. And on the last earnings call, you might have heard that we said we had record renewal rates and record reduction in cancels. That was driven in some part by the people that were already using our personalized service because they're finding more and more and more value in using Chegg. The last part of that is, as we introduce new things, we'll be able to program it directly to the right people, whether it be academic support or financial support or skill support. So we'll be able to say you're majoring in this. People who major in this go to get these kinds of jobs. We have this kind of skills training. Do you want it? And nobody else will have any of that data or be able to program to it. So we think it's going to be a massive step up over the next 3 to 5 years.

Got it. That's helpful. And you touched on Uversity. It was my next question, so a good segue in. Talk about the relationship that Chegg is developing with the professors to Uversity and how you expect the rollout of the product to students will impact their usage, retention, subscriber growth? But also I just wanted to tell quickly, I would love to hear about how that connection with the professor is coming together, right? Like I think in my perception, correct me if I'm wrong, this is the first time that Chegg is really like, let's work with the professors and create the content together, right, and working with them more as a partner and kind of bringing them into the ecosystem, but would be helpful to hear on those 2 things.

Yes. Look, so why did we do it? What is it designed to do? And how will we know if it worked? So the primary reason we do anything is to try to get higher quality content, greater discovery, greater personalization and relevance so we can create overwhelming value for the student. So logically, what we provide, although amazing, imagine if you're actual professor or professors from your school and your major were also providing content. That gives the student even greater confidence. So we went out and met with a lot of professors. We surveyed a lot of professors. And what we said was, you produce a lot of content that you don't get paid for. You should get paid for it. The school is not paying you nearly enough. 1.2 million professors annually are adjunct professors. They're not tenured professors. So their jobs are at risk. They get paid like $30,000 a year. They teach at more than one school and more than one class. And the time to prep is not very good and student support is close to zero. So what we've gone out and we've said to any professor that's accredited, who works for this institution, there are certain kinds of content that you create. If you want, and you own the IP, you can upload it, and we'll pay you for it. I can't say we're surprised by how popular it is with the professors, but it's massively popular. So already over 25% of schools have participated in some capacity. Already over 80,000 pieces of content have been uploaded. We said we expect by the sort of third quarter of next year when we roll it out to consumers for it to be over 150,000 pieces of content. I would say that we're even ahead of that pace. Because professors want students to learn, they recognize the value of online. They recognize the value of Chegg and they want to get paid for what they do, and we solve all that for them. When we tested with students, the scores are generally 4.7 out of a 5 for the quality of the content from professors. And what you'll see is more discoverable through personalization. We're going to say, "You're in this class. Here's content directly from professors who teach this class." And if we have them from your school, directly from your school, that will make engagement higher. We'll know it's successful if more people convert, stay on longer, which means better renewals, fewer cancels and a better LTV. And we're only at the inception of it, but clearly we feel very strongly that it's going to be a massive success.

Yes, absolutely. They feel a little envious that this wasn't around during my time at college. I could just think of the opportunities, right? We're knowing that a certain professor has content on Chegg. It is involved, right? Like maybe I want to take their PSYC 100 course or rather STEM 100 course, whatever it may be, versus another professor because I know that they have the content and the stuff out there to help them. I guess to double click on the actual content. It would be helpful to hear what kind of content are they creating? Is this creating notes from lectures? Or is this totally unrelated to the -- necessarily the...

No, no. It's -- we have a menu of what we know students want to see. And that's what we request. They can do stuff from all of it or none of it. If they're offering stuff that's not related to their class but related to a subject, we may also take it. But we're very diligent about what we're willing to take certainly at the beginning. So it's everything you think. It's the syllabus. It's class notes. It's teacher's notes. It's lecture notes. We now have the ability to accept full lecture video. So if the professor wants to post their video, they can post their video. It is practice tests. It is quizzes. And it's all coming directly from an accredited professor at the school.

Got it. That's helpful. And then maybe one more for me, and then I just want to give you a chance to prepare some closing remarks. But talk about the runway you still have left in the U.S. business. I think a lot of -- the bears out there will tell you guys are overpenetrated. I think that argument has been going on for a while, and you guys have continued to disprove that. So you're 18% penetrated against your U.S. TAM. What do you think you can grow that penetration to over time? And maybe talk about what some of the key unlocks might be to help you get that increased penetration.

Yes. So to understand our vision and our mission is to put the student first. So we started with very small subset of academic support, and we continue to expand subject after subject after subject. As we expand to more subjects, the actual available TAM gets bigger. Just common sense. That's what we've been doing since day 1. I don't really -- I can't afford to spend time on what the bears say because they've never been inside our company. And so they're going to say what they're going to say. I'm happy that a lot of the short sellers are being investigated now because you can decide for yourself whether or not they were honest or not. They've certainly been wrong about us for a long time. So -- but the bigger issue for us is we continue to see more and more things that students want. So our growth in the U.S. will come from 3 basic categories. One, there's more subscribers that we should be able to get. Two, there's more that our subscribers need that they'll be willing to pay for. And three, there are more kinds of people that don't use Chegg today that we should be able to bring in. And when we launch Skills, some of that is to sell more things to the existing customer base. Some of that is to expand to an older customer base. When we're launching Chegg Life, which we've talked about in the last few calls, which is creating content and services around personal finance, around mental health and around soft skills, we think all of those are things that will do 2 things: one, provide more value to the existing customer which they should be willing to pay up for; and two, add more customers who are more interested in that than they are academic support. So there's plenty of avenues for growth over the next 3 to 5 years in the United States. It's not going to be even, right, which is these things take time to learn, take time of roll out. And then, of course, is where you started, which is we also have pricing power. So the goal is to evolve Chegg from academic support to full support and to have you go from monthly subscriber to annual member which we provide overwhelming value, but you stay with us all year and you pay more for all that value. And then you stay with us longer because we grow with you as you grow beyond college. That's the broader business vision for how we plan to execute. And every year, what you see is our LTV goes up, our cost of customer acquisition goes down, our profitability goes up and the length of time that students stay with us goes up. And so we've been on that path for a while. It's uneven. Like some years, there's more value being created in the minds of students. Some years we're building. But the plan, over time, is to penetrate so much more deeply because, look, more and more people are going to be needing skills. More and more people are going to need support in mental health and personal finance and soft skills. More and more people are going to need academic support in more and more subjects, whether they go into traditional schools, online schools, for-profit schools, boot camps, the kinds of things we do can expand to be able to support anybody in any stage and we're going to do that.

Great. Well, you kind of stole my thunder on the last question, which was, is there anything that you think investors should take away from the story. And I think you did a good job there, but I'll turn it back over to you one last time. Is there anything that you want investors to make sure they're leaving today with and kind of ingrained in their head?

I think what I just said is probably the right summary, David, as you pointed out. What I would say is that the other variable here is we have a mission-driven company. I've run amazing companies, Yahoo!, Guitar Hero, ZDNet, CNET. I've been blessed to be at a lot of amazing companies with a lot of extraordinary people. Chegg is just like that. The major difference, though, is Chegg has a mission to put the student first, to help students ease one in your words unlock their own potential and their own future. And that means coming in every day becomes even more important for us. And the more people we can serve, the better for us. And so I've been -- this is my 13th year. And I think you can see I've not lost any enthusiasm. Despite the fact that we're dealing with COVID and we're dealing with on-campus and off-campus and stocks going up and down and wars and all these things, when -- we get up every day knowing who we serve, cares about who we are. And you're an example of it, David, which is you love Chegg. I mean, you and I have just met, but it's clear, you love Chegg. You know exactly what it does. You know exactly the value that it creates. And so imagine if you didn't have the support that you had, how much would you love Chegg? And that's who we are. So -- and I've always said to people, don't look at the schools that you went to or you're sending your kids to. Ask any kid if they use no Chegg and use Chegg, their answer's going to be yes. So if you believe more people are going to need more help on-demand, more affordable on more subjects through the course of their lives and careers, then Chegg is a great bet for you. And that's where I'll end it.

Absolutely. And on behalf of myself and the 20 million U.S. students and 1 million other internationally, we thank you guys for everything you guys are doing. And thanks so much for joining us today at the 2022 Jefferies AdTech Conference and for everyone listening. Hope you guys enjoy the rest of the session.

Thank you, everybody. Bye, David. Nice to meet you.

Bye.