Chegg, Inc.

Ladies and gentlemen thank you for your patience the teleconference will begin momentarily. Greetings and welcome to the Chegg first quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tracy Ford. Please go ahead.

Good afternoon. Thank you for joining Chegg's first quarter 2023 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 certainties 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 21st, 2023, as well as 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 measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found on our earnings press release and the investor slide deck on our IR website. investor.chegg.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 2023 Q1 earnings call. Chegg had a solid quarter, ending Q1 above our guidance on total revenue and adjusted EBITDA. As we shared with you during our last call, We believe that generative AI and large language models are going to affect society and business both positively and negatively at a faster pace than people are used to. Education is already being impacted, and over time, we believe that this will advantage Chegg. In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth, and we were meeting expectations on new signups. However, Since March, we saw a significant spike in student interest in CHAT GPT. We now believe it's having an impact on our new customer growth rate. Fortunately, we continue to see very strong retention rates, suggesting that those students who already understand the value of CHAT continue to choose us and retain us at high rates. We are also expecting a positive recovery in enrollment trends, which historically would be good news for CHAT. because it's too early to tell how this will play out. We believe that it's prudent to be more cautious with our forward outlook. Therefore, we intend to provide only the next quarter's guidance at this time, and Andy will walk you through those details shortly. We can all see that AI technology is evolving at a very rapid pace, and at Chegg, we are embracing it aggressively and immediately. Throughout my career, I've witnessed the most significant technology platform shifts, from the creation of the internet to the explosion of mobile, and the movement of software to the cloud. And we believe that AI is the next big shift. Several months ago, I met with Sam Altman to discuss the future of AI in education. And coming out of those discussions, we quickly reoriented our company to focus and prioritize on the utilization and incorporation of AI into Chegg services. The first big step is the introduction of Cheggmate, which we recently announced in cooperation with OpenAI. Cheggmate will harness the power of ChatGPT paired with our proprietary data and subject matter experts to make learning more personalized, adaptive, accurate, fast, and effective, all in an easy-to-use and conversational manner. The combination of Chegg's experience over the last 13 years of improving student outcomes and our proprietary learning taxonomy, the 150,000 subject matter experts in our network, and the billions of pieces of unique learning content that Chegg owns, when coupled with the real-time conversational nature of ChatGPT, will establish Cheggmate as a powerful and distinctive learning tool offered exclusively from Chegg. Based on our research, 85% of students would prefer to have human experts involved in their study support, which is why we believe that the future of learning is a blend of AI technology with human-based support to build trust and ensure accuracy and relevancy. Ultimately, we believe the introduction of Chegnate will lead to an increase in the size of the market we serve and strengthen our relationship with our users while reducing content costs. Large language models are currently used horizontally, similar to search, but history suggests that over time, focused and category-leading verticals are where enduring value is created. Cheggmate is being designed for learning and tailored to an individual student's learning style and needs. It will offer personalized assessments, practice tests, and instant feedback along with Chegg's proprietary step-by-step solutions. We are moving very fast with a beta launch of Cheggmate later this month. And as we test and iterate, we will expand access throughout the year. As with all Chegg services, Our goal is to deliver improved outcomes and overwhelming value. With our recently introduced partner offerings from DoorDash and Calm, we are seeing the benefits of adding non-academic content to our subscription with improved retention. These value-added partnerships are creating more value for our subscribers and strengthening the Chegg brand, and we expect to add more offers in the future. Our partnership with Guild also continues to perform extremely well. and we see an even bigger opportunity ahead for us in our skilled business. We are introducing new offerings, including Busuu, our award-winning language learning product, as we expand the catalog of course offerings through Guild. Other new additions include UX design and frontline leadership programs, while future courses will focus on the latest advancements in artificial intelligence to meet both student and employer demand. To improve learning outcomes even more, We expect to add real-time conversational support to all of our skills-based courses, which we believe will improve completion rates. While we are talking about skills, I want to take a moment to acknowledge the recent news that John Fillmore, president of our skills business, will be leaving Chegg after 10 years. John is ready to take another big step in his own career, one which we wholeheartedly support. John served in a variety of key roles at Chegg during his tenure, and I cannot thank him enough for his friendship, counsel, wisdom, and leadership over the last decade. I also want to take the opportunity to welcome Colin Coggins, who joins us today as our Senior Vice President of Chegg Skills. Our priorities outside of North America are to make our services more personalized and accessible to everyone and to localize content and pricing so we can expand it to new geographic markets. To that end, in Q3, we plan to roll out a new payment system for India to capture customers during the peak back-to-school season. And in countries like Turkey, Mexico, India, and South Africa, we continue to see our rollout of local subscription pricing or localized content user experiences as a growth lever. In fact, Q1 2023 was an all-time high for app acquisitions in Mexico, where we recently rolled out our localized app. We are excited and optimistic about the future and are moving fast to leverage the best of AI to advantage the students. Our unique position in the industry, coupled with our deep expertise in learning, enables us to make this future a reality and will enable us to grow our business for the benefit of our customers and our shareholders. These transitions don't happen overnight and are rarely smooth at the start. Our position as a category leader and our focus exclusively on the needs of students has led to great brand recognition and incredible customer loyalty for Chegg. With 13 years of experience educating students, our proprietary improving learning taxonomy, our billions of pieces of unique learning content created by more than 150,000 subject matter experts, combined with exciting benefits of AI, will propel Chegg into the future. We are embarking on a new chapter for our industry and certainly for Chegg. and we are making the adjustments we need to meet this opportunity head on. We are confident we have the brand, platform, balance sheet, operating model, and experience to make the appropriate investments needed for the future and enhance our position as a leader in the industry. And with that, I will turn it over to Andy. Andy?