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

Good day, everybody, and welcome to the conference. My name is Katherine Tait. I'm part of the European media and Internet team here at Goldman. And it's my absolute pleasure to welcome back Dan Rosensweig, the President, Chairman and CEO of Chegg, back with us today. So Dan, thank you for joining us.

Well, thank you, Katherine, and congratulations on your beautiful new baby.

Thank you very much.

Maybe just to start with. I mean Chegg has built an incredibly strong brand with students, with consumers and actually, I suppose, put consumers right at the heart of its educational offering since its conception, really, in sort of contrast with perhaps some of the other models we see in education. Can you talk a bit about how important brand and that sort of consumer-centricity really is in terms of building the products that you have just given that we're -- the sort of branding of this conference is the connected consumer? I'm just interested in perhaps starting at that point.

Yes. Look, we are the ultimate connected consumer. And so in the education industry, you can either focus on the administration, the professor, the parent, the school district or the student. Only one of them allows you to build a true platform company. And platform companies in the world of the connected consumer, in your words, they own the customer, they own the data, they own the credit card relationship, they own the actual channel of distribution and they own their content, or overwhelmingly own their content like some of the streaming services do. So you see the success of Disney+ because they own everything and how quickly they could catch up to Netflix who doesn't own everything. Chegg has built the company based on that concept, which is it's much more difficult to compete with a company like Chegg who can monitor every aspect of the relationship we have with our student who is our consumer to make sure that we're providing a service that they value overwhelmingly. So if we know -- if we have a direct relationship with you, we know what you want, when you want it, how you want it, where you want it and which device you want it, what you use best, how you learn best, and we can increase our personalization over time. So that is what we're able to build as a result of having gone direct, but our philosophy at the time, very simply, if anybody has gone to higher education really anywhere in the world, but particularly in the United States, you realize the school is not built for you. The school is built to protect the professors, to protect the administration. Everything schools do is to take a toll from you. They don't schedule class during convenient times, takes too long to graduate, shouldn't take 4 years. In the United States of America, over -- nearly 50% of all students never graduate, and overwhelmingly, the majority that do it takes 6 years. There's no reason for the system to exist like it exists today when it existed this way 200 years ago. So we said nobody is focusing on the needs of the student. Who is the student? Well, in the United States, their average age is actually 25, not 18 to 22. They're overwhelmingly women. A large percentage of them, 26%, already have children, and 40% of them are working 30 hours a week or more, and they're going to school full time in their estimation and working full time. So you needed a product that was high quality, on-demand, multiplatform, the content is in multimodality, which is it can be in text, it can be in video. You can interact with it on any device at any time of the day. It's incredibly high quality and super low cost. And as a result of that, we've built a brand that has 87% brand recognition in the United States, has grown from 0 customers or near 0 customers to over 1.5 million non-U.S. customers in just 3 years. So if you can serve the consumer, the consumer will serve you. And that's the benefit of the connected economy when you do it well.

Great. And maybe just diving into some of those products that do serve the consumer in such an effective way. Let's talk a bit about Chegg Study. Where do you think we are in terms of the penetration opportunity for that product? I think if you look at sort of take rates, retention rates, they've exceeded your own expectations in previous quarters, reached all-time highs. What are the sort of main drivers behind this? And given that we're sort of kind of coming into something of a period of normalization post the pandemic, should we expect a normalization of those trends, reversion? Like how are you thinking about the trajectory for that going forward?

Yes. There's a lot in that question. I appreciate your optimism that we're approaching normalcy. I don't think we know when we're approaching normalcy is. And -- but in terms of the key question, which is where are we in penetration, which is an indication of where we're going to be for growth. Outside the U.S., we're really at the inception. I mean we have just started. And the fact that we can grow from 0 to 1.5 million in 3 years gives you a sense, gives us the comfort of just how big it can be and how quickly it can be and what the growth rates can be. Now when you realize that the outside of the U.S., it is probably 3x the size of the market that we're counting big time on us having the ability to grow outside the U.S. But inside the U.S., we only have about 25% penetration. So we have increased penetration of our core services. We've been able to show that we've been able to increase our ability to take the take rate up, which is the percentage of people taking a higher priced product. So we're going to have subscriber growth outside the U.S., continued subscriber growth inside the U.S., but in the U.S. you're going to see an increased growth of revenue, of profits, of cash flow because the service itself just keeps getting more profitable. And that is because our renewal rates are at an all-time high. Cancels are at an all-time low. The take rate of Chegg Study Pack, which is $19.95 versus $14.95 is at an all-time high. And the renewal rates outside the U.S. are starting to catch up to the renewal rates inside the U.S. So depends on what number you're looking at for growth, but there will be subscriber growth as well as probably accelerated revenue and EBITDA and cash flow growth in the United States.

Great. And maybe just touching a bit more on the international expansion. What's -- what are the sort of key markets that are driving that? What's your strategy in terms of rolling that out further? I know when we spoke previously, you were sort of almost surprised at the markets that it was accelerating the most in -- that hadn't necessarily been part of your initial push, but actually, the demand was just there, and it just sort of grew from there. But would love to hear a little bit more about those international expansion plans.

Yes. No, it's a great point, and good memory. So in the United States, COVID affected our business on the upside less than it did outside the U.S. And what I mean by that is what really affected our business in the U.S. on the upside was our clamping down on account sharing. We had always said for every 1 customer that use us, 4 or -- paid us, well, 4 or 5 were using us. We've done extensive work, and that really elevated the U.S. And it was coincidental with the timing of COVID, but it allowed us to do it faster. But outside the U.S., what COVID did was when students were forced out of campuses, they went to the Internet. And outside the U.S., there really hadn't been a service like Chegg. And so they discovered us. And as they discovered us, they used us more and more and more. And similar to the U.S., you get incredible word of mouth. So it really depends on which countries went on the Internet first to look for material. And as you point out, we got really big in South Korea. We got really big in Turkey. We got really big in the United Arab Emirates, places that we would not have focused on. Where we are deliberately focusing on, as you can imagine, would be big population countries. So India, Indonesia, Mexico, believe it or not, the Philippines. What we see is huge demand at the top of the funnel and not as strong a conversion yet in the funnel. And we know the reason for that is because we're only now starting to present payment options: one, in local currency; two, being able to take the local credit card; and three, U.S. prices, which is we've been charging around the world are too high for many of those places. The good news is since everything we would sell would be incremental margin, we have plenty of room to get the prices right, and that's what we're testing this year. And I expect that would be a big boost in '23, '24 and '25.

Great. And you touched on this in the sort of answer to the first question, but you've talked a lot about one of the key priorities to be providing more personalization for your customers. You obviously launched Learn With Chegg earlier this year. Can you talk a little bit about what this means in practice? What is that really offering students? And how does that sort of build on the broader strategy that you've been laying out?

Yes. So let me give you the end state, which is not where we're at, but what -- the rationale, the business rationale, but what the student will experience. So the end state is if we know what class you're taking and we know the professor and we know the school, we can actually provide for you on day 1 your entire support for curriculum. We'll know the timing of when this professor teaches. We'll know the materials that they focus on. We'll help you get extra time back in your life to be able to master the concepts that the professor is going to need you to master in order to be successful in the class. And you're never going to have to ask for it. It will simply come to you. So if you think about the things that we consider personalization today, we look at our music playlists. We can build them ourselves, which is a form of personalization, or they'll build a radio station for you based on your primary artists and then find artists that are similar to that based on other people's usage. We're going to go one step further, and we're going to know the exact usage of that exact class. And no one else can do that. That will be pretty remarkable and game-changing for most students who don't have time, who've never had support, who don't have help, who can now not have to guess but know in advance, use their time wisely to master subjects, learn the kinds of questions they're going to have to get really good at. That's the end state. The state we're at is we have so much content. We have billions of items in our math and writing products. We have 70 -- nearly 75 million items in Chegg Study and Chegg Study Pack. And the initial step is to organize rather around the textbook but around the class and then help you discover content that we already have that is relevant for you in all the formats we have it in, whether it's video, whether it's step-by-step solution, whether it's Q&A. It doesn't matter. So the first part is awareness and discovery, organized in a way that's more beneficial for you than just the textbook because decreasingly so, people are using textbooks, but the courses are still being taught. So that has been -- the initial stages of that have been really successful, one, student signing on, but two, we can already see the desired business result, which is increased engagement, increased loyalty, which essentially means better retention, longer lifetime value, greater profitability of each customer because the customer is getting more value with us not having to take the rates up. So that's the business objective. But the end state is literally for us to be able to help a student in advance know what they're coming up against and understand what they have to master and help them master it even before it's assigned. And that's pretty exciting. And then you can imagine in nondeveloped countries, it can actually become curriculum that can educate people to be able to be -- to get STEM jobs or business jobs. So the long-term value of what Chegg is going to provide, and we have a -- we don't think quarters and years, we think decades because we realize that education is massive. When you realize that 50% of the world's population is below the age of 30 and they're going to be learning more on their own, more on the Internet, more on devices, we're going to be at the forefront because we have all that data and content. And truthfully, nobody else does.

Yes. And I suppose sort of linked to that, you've been expanding the business. I know last year, you made an acquisition in the language learning space with Busuu. What drove this decision specifically? I suppose this is a sort of an additional sort of end market for you, obviously, having gone into the sort of skill side as well from your sort of academic legacy business. Yes. Can you talk me through, I suppose, that shift into language learning and how that sort of fits into the sort of broader Chegg strategy?

Yes. So let's go with the broader Chegg strategy is for growth. So organically, we've already discussed that we are nowhere near the end point in terms of our subscriber growth. And then we'll have pricing power and revenue growth and ARPU growth and yield growth. And so the core business is in really good shape with the exception of just the uncertainties around the COVID period. But overall, you see us continue to not only grow but to increase our profitability. And we broke out on our last earnings call that if you look at the core Chegg before Busuu, that we're suggesting that our EBITDA margins are going to grow to as high as 36.5%. And our free cash flow, even with Busuu, is going to be over 50%. There is no other edtech company that is profitable, certainly nowhere near the level of profitability and cash flow that Chegg can produce, which it gives us the power to continue to invest in the future. But when we look to expand, we look at 2 things: how can we provide more benefits to our existing customers? And how can we expand to where our existing customers are going to grow into? So if you look at skills, we said all kids going to college are going to need some form of job skill. And then students that have graduated or didn't graduate but use Chegg are going to need increased job skills. Makes perfect sense. Language, interestingly enough, is the hybrid across all of it. 55% of Chegg U.S. students say they want or need to learn a language. 26% of Busuu students, which are overwhelmingly in Europe, say, they are students already. And then on top of that, if you look at one of the #1 things that professionals need to learn, it's language. If you want casual gamified learning because you're taking a trip, you'll use something like Duolingo, which is a phenomenal product. But when you need to learn it to either get a grade, pass a class or get a job or get an international job, you're going to use something like Busuu. And so the fact that we can market it directly to our existing customers, and they'll like it, and we can expand to where our customers are going to go professionally, gives us the benefit of both the strategic legs that we're looking for more to our existing customers and grow with our customers and pick up customers we don't currently have. And so when you look at Chegg non-U.S. and now Busuu, we have nearly 2 million paying customers outside the United States from 0, 3 years ago. And so we really like this acquisition. The timing of it had to do with the fact that we've known Bernhard and his team for over 6 years. We visited the Busuu offices. He's visited the Chegg offices. We meet all the time. We talk all the time. Language has become very popular. There was another company looking to buy it, didn't like that company, called up and asked if we -- if he would rather -- Busuu find a home like Chegg, which is high growth, high margins and aggressive and positive and student first. And his business looked great. After 9 years of building the business, he finally hit his stride. And so the timing was great. So that's why the timing was what it was. We only closed on January 13, but we're ecstatic. And it's growing faster than core Chegg is right now.

Yes. Absolutely. And I think the sort of -- the average customer for Busuu, I know, obviously ranges massively, but is that slightly older demographic of -- I think more than 50% of their paying users are over the age of 30. I know in your other remarks, you've talked about the average student in general being much older than perhaps investors or the general public would naturally think. I mean what does that speak to in terms of, I suppose, the addressable market just generally being a bit older? And how Chegg is sort of positioned in order to capture that?

Yes. Look, lots of people have asked how come Chegg doesn't go younger. First of all, we cover about 70% of high school students through our writing product and our math product and through Chegg Study, but we've always believed the path to high schools is through a parent, and that's more expensive. And you see a lot of those people in those Facebook, Apple wars over customer acquisition. We don't have that, obviously. 85% of our traffic is organic. We have self-motivated people who put their hands up and said, I want you and I need you. And that's been great for our business model. But on top of that, just look at the long-term demographics, particularly for Europe and particularly for the United States. People are getting older, not younger. And so also, there's clearly a move towards learning job skills. And so the primary -- it's interesting because the 2 languages that people learn on Busuu the most are English and Spanish. So these aren't sort of the love and travel languages that people like to learn, which they'll use more of the gamified products. So I think that as we think about the future, we think that people are going to have to learn more on their own, invest in themselves academically and then professionally. And we think job skills and language and other things are the kinds of things that they're going to need to know. And we've got this giant base of people moving into that demographic. And so the crossover makes perfect sense.

Great. And I should just say to investors on the call, I've seen a couple of questions trickle in already. But if you do have questions that you would like to ask Dan, please do add them into the question box in the webcast, and we will try to get to those before the end of the session.

And so I can't see them. So if I don't answer them, it's because Katherine chose not to pick you.

Maybe shifting to, I suppose, current trends. This is sort of partly in lieu of the questions that are coming in. But I mean, obviously, we saw quite a lot of volatility in terms of, I suppose, enrollments, but also just engagement with the kinds of courses that sort of demand those sort of services and the products that Chegg provides over the second half of last year. In Q4, though, we did see those sort of momentum improve. And I think you've talked about that sort of momentum continuing. Can you just give an update on where we are today? U.S. college students, I guess, returning to academic subjects, is that still something that you're confident will persist through 2022?

Yes. So let me just make sure everybody understands the school year. The school year is not a calendar year. The school year really starts late in August, and over 2 semesters goes through until probably mid-May-ish, the bulk of schooling. So when we reported in November where we were sort of punched in the face by the fact that enrollment had dropped -- by the way, we were the first to predict it. But now in hindsight, over 1 million people dropped out of the college market. So we were right. We were just honest about it. Most people wanted not to say it, I guess, but we see it first. It's the benefit of being direct to the consumer. So the second thing, which was just as surprising to us, was -- and by the way, the reason for that is a couple of things. When the economy is strong, people go to work instead of go to school. So the economy in the U.S. was incredibly strong despite COVID or because of COVID, actually. And second is people were paying 3x what they were willing to pay for menial or manual labor jobs. And so people were like, my goodness, I'm dropping out of community college or I'm going to take a break from a 4-year state school where I wasn't going to graduate anyway. They're going to take the money, and good for them. That was a smart decision by them. We applaud it. But it happened in numbers that we hadn't seen before, that no one had really seen before. The second thing that surprised us is those that went back, they really did not take as many courses as they historically take. They did not take the hardest courses in their major. And frankly, the professors weren't assigning any work. We can see it. We can look by school, by subject what they take or what they were requested to do. It was sort of, I guess, the shock of returning to campus. And we didn't know where the bottom was. Well, fortunately, as we reported, the bottom was nowhere as bad as we thought, and the bounce was quicker than we thought. Now what we experienced in Q4, which was a substantial leap, was because -- not because more people were going back, but rather because the rigor around academics has started to return. So the momentum that we're experiencing is a result of increased rigor, and that helps retention, reduce cancellation, ARPU, profitability. We -- our '22 forecast did not assume for the second half of the year, there would be people going back in any significant numbers because we were trying to be prudent. And so we think we're in really good shape for '22. The reality is the world is returning towards COVID being something we have to live with rather than something that dominates us. And a logical expectation over time is that students will have to graduate, they'll have to take their majors, that they will have to pass these courses. And -- but between now and then, our estimates assume that first half of the year would look like second half of the year. So -- I mean like the second half of the previous year. So I think that's what we're seeing.

Great. And then just a question from -- that's come in on the webcast. Can you give us an update on your thoughts on enrollment trends, I guess, for the spring term but also kind of looking into the full semester? Appreciate, it's probably a little bit early, but any insights to spring?

Well, yes. I mean what I said was there's no way to know what they're going to be for the second half of the year, which is why our forecast, we think, is prudent. It doesn't assume that things get better. Because, remember, we put out guidance in very beginning of March, March 7. And we're only in the first -- only in the spring semester of this year. So I think all estimates, external, suggest that as the economy slows and as people want to go back to getting their degrees, that they will -- there will be more people in the pipeline than were in the end of last year. But we don't know that yet, but all the external estimates seem to suggest that.

Great. And as you start to see students returning to campuses, have you seen a change in terms of the behavior, in terms of engagement, just how people are using your platforms? Or is there not really any change?

We try to articulate that it doesn't matter if a student is off-campus, hybrid -- and hybrid means they're on-campus but might be taking the course online or some of their courses are online and some of their courses are in-person or if they're fully in-person. The use case is the same. These are for students who historically have been ignored, underserved. They're predominantly women. They over-index people of color. They over-index people living paycheck to paycheck. And so we're built for people who need high-quality, low-cost, on-demand support at 2:00 in the morning or 2:00 in the afternoon depending on when their job is or when they have to take care of their child. So the change in behavior isn't how they use us. The change in behavior is just trying to figure out the timing within a semester of when schools are starting or when they have flare-ups or when spring break is or -- those are things that are just new over this COVID time period that I think will return to greater normalcy in the second half of the year.

Great. And I know one of the things that you and I have talked about a number of times on these types of sessions is affordability. I know it's something that you care about a lot. I mean coming out of COVID, we've seen a lot of shifts towards acceptability of digital courses. Coursera prices in general have been coming down. Are you optimistic that as we shift into this period where we need more and more upskilling, reskilling, that actually this is going to become more affordable for students? Or I guess, another sort of point to this, what still needs to be done in order to kind of make that affordability issue less of a hurdle?

Yes. Do I have confidence? I do not. Because you're dealing with entrenched institutions who, despite what you think they're supposed to do, do not focus on the needs of the student. They focus on their own needs. If they -- if institutions really were willing to acknowledge who the student is, that they're older, that they work, that they have children, that they have less money, that they have less time, that they have had less support through their life cycle, that there is significant percentage of people in the United States, for example, where 25% of all college students, English is not their first language. If you know all this, then why have the institutions not accelerated their classes, changed the curriculum, of all the curriculum to be greater balanced between academics and skills, accelerated the time in which you can get -- who can take 4 years off from a life at this stage with the way the world is working to get a degree? Only people who have enough income to do so. And only 20% of students in the United States go to those kinds of schools. So I don't have confidence in the schools. They keep raising their prices. What has been interesting on the skill side, however, is there's been a major transition from direct to the consumer through the corporations willing to pay for upskilling of their own employees. And Chegg is now participating in that in a way that we haven't before, which is through our partnership with Guild, which is off to a really terrific start, which is corporations -- and they have the largest, they have Walmart, Chipotle and Target and health care companies and waste companies. And they have over 3.5 million frontline employees that they directly get to. And we are now programming on behalf of those corporations to their employees through Guild -- so we don't have to have a sales staff, we don't have to have all those expenses, but we get to write the content used many times in many corporations. And that, we think, is a new hybrid model. It certainly is for Chegg, and it is really accelerating to the point where we're super excited about the possibilities. And we really commend Guild for being such an extraordinary company and building these relationships. And we're grateful that they chose us as one of their primary providers of job skills because direct to the consumer is just much harder on skills because there's so much full employment. So I see that as getting more affordable for people. And so I see the demand for that continuing to accelerate.

And how big could that sort of, I guess, education as a benefit on the corporate side market be? I mean, as you say, I think it taps into the full employment as opposed to just those that are trying to upskill to get the next job, which is a much, much bigger market. I mean how are you thinking about sizing that opportunity?

Well, the good news is we're so early. We're not thinking about sizing. We're thinking about meeting the demand that we're seeing because if you take the relationships that Guild has already built, they already have access to over 3.5 million frontline workers on a nascent business for us. So we've got plenty of years ahead of us just to crack that. But it's interesting because the courses are -- they're in excess -- they're several thousand dollars. It's paid for by the corporation, and it's not the kind of courses that you think people would take. These corporations thought that people would want, how do I use the Internet kind of courses. And we're like, no, they want things that have a pot of gold at the end of the rainbow. They want things that either secure their job better, pay them more or give them access to promotability. And so we see things like cybersecurity being huge. So I think if you think about...

And totally most are in the current environment.

Well, for sure, right? Absolutely. But if you think about just how big that market can be, in the U.S., there's only 22 million or so people in the higher education market. Guild alone reaches 3.5 million people just through the companies that signed up today. So full employability is 150 million people. I don't think 150 million people are all going to want it, but you could just realize how big it is.

Yes. Absolutely. And then I guess in terms of, I suppose, inflation, I mean, you talked about colleges putting up their prices every year. But I mean what impact do you expect from inflation more broadly across the economy to the Chegg business, both in terms of what it might do to your customers and the disposable incomes that they have to spend on education, but also, I suppose, for your own business and your own cost base in terms of wage inflation and tech talent, perhaps you can just, yes, opine a little bit on inflation.

Well, there's inflation, then there is its effect on Chegg or not, and an effect on our customers or not. So there's clearly inflation. There's wage inflation. There's cost inflation. The average person is paying a lot more for everything. Interestingly enough, those companies that are passing that through seem to be getting it. You can debate whether or not people should pass it through if you believe it's transitory. I mean it's not transitory in like 3 months. It might be transitory in 1 year, 1.5 years. That's a different political discussion that you can have. But as a reminder for those people that haven't followed or just an FYI for people who haven't followed Chegg, we've never taken our prices up. So we have been $14.95 for Chegg Study since day 1. There are no supply chain issues with digital services like ours because we own the content, we own the channel. We're not in -- we're not affected negatively by the battle between Facebook and Apple. So our LTV to CAC hasn't gone up. So we don't have a need to pass along cost in order for us to make our numbers. Having said that, we did launch 2 years ago Chegg Study Pack, which is $19.95, which is giving the students the option of $14.95 a month or $19.95 a month. For Chegg, every incremental Chegg Study Pack customer is pure profit to us because those services already exist. It doesn't cost us more to deliver them than if it weren't packaged. What we're seeing despite inflation is the take rate of the Study Pack is higher than anything we would have planned. The renewal rates are approaching the renewal rates of Chegg Study, and our international renewal rates keep going up every day to the point where we expect them to be similar to the U.S. in a much shorter period of time than we originally had planned. Those are all things that will increase top line and bottom line for Chegg without us having to tick up our rates. Now we do get asked from time to time, do we have the ability to take up the rates? Well, the fact that the bundle is so high as the take rate shows you that we -- what we've said, that we always believe that we had, it is true. Second thing is we always test it. So we know that if we just went to the Study Pack that we would lose very few customers. And the reason is because the Internet breaks into 2 major groups, of which we're not in either, which is I'm bored, Facebook, Snapchat, Netflix, Disney+, Spotify. And I'm busy, all the B2B services that you use, including some of the B2C services like I'm planning travel or whatever. We are I'm in desperate need and your insurance. So we know we have the power. I think we will continue to wait as long as we can before we apply it in the U.S. simply out of respect for what's going on in the world right now. But we do have that bullet if we want to shoot it.

Understood. And then I know we're sort of coming close to the end of time, but perhaps we can talk a little bit about M&A and the, I suppose, capital allocation more broadly. I mean edtech and its sort of broadest sense remains very fragmented. I mean there has been more deal activity, I suppose, in the last 1 or 2 years than probably the last 10, but it still remains pretty fragmented. Can you talk about how you see this evolving on a sort of a sector level, I suppose, over the next few years and then, again, perhaps address where you see Chegg fitting into that?

Yes. Look, we have an internal mantra of brilliant by accident, which is we kept raising money. For 3.5 years, we couldn't raise anything because we were a terrible stock, and we were literally living hand to mouth. And even when we did deals, we did deals all cash, and we spread them out over multiple years. And I think our use of capital has proven out to be quite good. When you look at Mathway, you look at Busuu, you look at Chegg Study, which was Cramster, look at Chegg Writing, every one of them, they're businesses that have been around for a long period of time, they're not new. They're businesses that were either undercapitalized or where the founders needed or wanted to cash out, and we're able to grow them faster and more profitably than they are by putting the network together. And so we have a -- I think I believe we have a really stellar record of M&A. But when we raised money -- I mean we sold stock at $102, and people thought we were going to use it for a big acquisition, and we kept saying there's going to be a rainy day, we just can't pick the date on that. And clearly, it came in November 1, which will be a day that will live in infamy, in my mind. But we wanted to have the strongest balance sheet so that we have the flexibility to create value for our shareholders. So we had nearly $2 billion, and that allowed us to do things that we didn't originally expect. We never thought we'd be buying back stock at this stage, but we've now retired probably 20% of our shares. We now -- we bought back $600 million of stock. So we sold the stock at $102, and we bought it back around $28 because we believe without any doubt that we are the most valuable and should create the greatest amount of value in the edtech space. So we'd rather buy us than anything else. The second thing is companies in the private markets, they're still living in a fantasy world. A lot of people don't realize, they don't follow the sector, that after Chegg went public, no other edtech company went public for 7 years. So then a couple of them, Coursera, Duolingo, Udemy, utilized sort of the COVID uptick to go out and go public. And we have been patient, and we will be patient. And I think we're seeing -- for most of them, they're at their 52-week lows now or they're all time lows now because I think the market is taking a more sober look at companies whose growth are slowing and whose costs are rising. And then here's Chegg, which is growing and profitable. So we can continue to be patient, and we will. And -- but when we look, it's what I said earlier, Katherine, that you asked about, which is why Busuu. If we can leverage the brand, the reach, the audience we have to accelerate growth and accelerate profitability and get it at a good price for our shareholders, we will. We will be patient because we want to be the company that is the one that becomes the biggest in the space. And we think those companies are going to need more than they have over time. So we'll be patient. On overall capital allocation, because we had so much cash, we were able to buy back stock and buy Busuu and still have substantial cash left to support our shareholders either through M&A or some sort of retiring debt or other things that we could do. And we're just -- we're focusing on capital allocation in ways that we hadn't really had to in the past. And we think we're using it wisely. Our shareholders have told us that they're very comfortable with the fact that we bought back so much stock and still have so much cash, and we're able to do the Busuu acquisition as an example.

Fantastic. Well, I think that takes us to time. Dan, thank you so much for joining us. And everybody else, thank you also for dialing in today.

Thank you, Katherine. Good luck to George.

He'll need your products soon.

Yes.