Chegg, Inc.

greetings and welcome to Chegg Inc first quarter 2022 earnings conference call at this time all participants are in listen-only mode a question-and-answer session will follow the formal presentation if anyone should require operator assistance during a conference please press star 0 on your telephone keypad as a reminder this conference is being recorded I'd now like to turn the conference over to your host, Tracy Ford, Vice President of Investor Relations at NESG. Please go ahead.

Good afternoon. Thank you for joining Chegg's first quarter 2022 conference call. On today's call are Dan Rosenzweig, Co-Chairperson and CEO, and Andy Brown, Chief Financial Officer. A copy of our earnings press release, along with our investor presentation, is available on our investor relations website, investor.chegg.com. A replay of this call will also be available on our website. We routinely post information on our website and intend to make important announcements on our Media Center website at chegg.com slash Media Center. We encourage you to make use of these resources. Before we begin, I would like to point out that during the course of this call, we will make forward-looking statements regarding future events, including the future financial and operating performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements. In particular, we refer you to the cautionary language included in today's earnings release and the risk factors described in Chegg's annual report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2022, as well as our other filings with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release in the investor slide deck on our IR website, investor.cheg.com. We also recommend you review the investor data sheet, which is also posted on our IR website. Now I will turn the call over to Dan.

Thank you, Tracy, and welcome everyone to our Q1 2022 earnings call. We started the year with a solid quarter. Chegg services grew 14% year over year, with 5.4 million subscribers. In addition, we are announcing a new partnership with an independent book reseller, enabling us to continue to offer print and e-textbooks to students while our partner handles inventory and fulfillment. We expect this deal to improve our margins and growth rates over time. As noted in our fourth quarter call, we entered the year with momentum. However, this trend has not continued at the level we expected. The issues of enrollment, the economy, and now inflation have all impacted our industry. Students continue to take fewer classes, and those they do take are often less rigorous with fewer or more limited assignments. With higher wages and increased cost of living, more people are shifting their priorities towards earning over learning, resulting in lower course loads or delaying enrollment in schools at this time. In the U.S. alone, we have seen approximately 1 million students forego or postpone higher education over the last two years. The impact of these factors is evident in the reduced traffic to higher education support services. This has made forecasting at this time challenging, and while we expect many of these trends to be temporary, we are reducing our guidance to better reflect the current market conditions, which Andy will walk you through. That being said, we are executing well against these current conditions, and indications are that we are outperforming our sector. With approximately 50% of the world's population under the age of 30, and technology impacting what we learn, how we learn, where we learn, and when we learn, the global need for affordable, high-quality, dependable academic support and skills-based learning will only grow. Our goal during this time is to gain greater market share and invest in future growth. Students who are using paid support services this semester are overwhelmingly choosing Chegg. We are experiencing strong engagement, our highest take rate for the Chegg Study Pack, and outstanding retention rates. Along with the increased take rate for the Chegg Study Pack, our continued efforts in the expansion, quality, discoverability, and personalization of our content drove strong retention, which increased the ARPU of our business. These are powerful endorsements of the critical role Chegg plays in the lives of students. We remain bullish on the post-pandemic era, so we are staying focused on investments in our future, specifically international expansion, language learning, skills training, and supplemental support services like soft skills and financial literacy. Our reach is expanding globally. And we are improving both our content library and technology platform to increase students' ability to discover our more than 100 million pieces of learning material, thereby improving student outcomes. Domestically, we continue to be focused on our key priorities, including the student-facing launch of Uversity this fall, which will increase the breadth and quality of our content, deepen our relationships with academic institutions, and expand the number of students who can learn from Chegg. To date, professors have uploaded over 140,000 approved pieces of instructional content, and Uversity will soon be rolling out to faculty in the UK and Canada. Our international expansion continues to perform well, led by the adoption of Chegg Study and Chegg Study Pack, and accelerated by the addition of Busuu. We continue to grow our subscribers and take market share, and we are now offering local content and user experiences in key markets. We are currently accepting local currencies in five countries and expect to expand to at least three new markets by the end of the year. In addition, we are price testing in eight countries to determine the optimal price to value equation. And we are excited to have recently launched our first fully localized app in Turkey. Our next localized app will be in Spanish and that will increase our TAM in both the U.S. and other key countries like Mexico, as well as emerging Latin America markets. We are also building new B2B channels for both our skills and language services and are pleased with their early success. Busuu has direct relationships with over 500 companies, and our Skills Distribution Partner Guild now reaches over 4 million frontline workers, which is an important channel for checks. We are proud to have graduated our first Guild cohorts from our new programs in technology fundamentals and advanced programs like cybersecurity. With recent research showing that 82% of global workers polled plan to train in new digital skills in the next five years, we believe these kinds of programs represent a major opportunity for CHEG. Beyond the academic and professional needs of students, There is an enormous opportunity to improve student lives beyond the classroom. 83% of US students feel they need to learn more about money and finances, and half are struggling with their mental health. CHEG is investing in serving these vital student needs and will continually work to support them beyond academics and skills. Given the current environment, we are very proud of how the CHEG team continues to execute. We will manage through the volatility and expect a return to higher and more predictable growth over time. Through all this, we will never lose sight of our mission to put students first around the world. And with that, I will turn it over to Andy.