Chegg, Inc. (NYSE:CHGG) Q2 2023 Earnings Call Transcript

What Scale AI does is allow us to use what Chegg uniquely has, which is our data, our history, our user information, our content and create very specific and unique learning experiences for each student. So this is the differentiator. We were always planning on building this, working with Scale AI will allow us to do all of the categories we have much faster. So instead of launching with just a few, we will be doing a rolling launch and get to all 26 of them in a much more rapid period of time. So it’s a great deal, they’re an extraordinarily great partner, they work with ChatGPT. They work with everybody, but we will continue to work with all the relevant generalists that can supply value inside of our system. But what Scale AI does is allow us to leverage what we uniquely have that no one else has and everybody else wants.

Douglas Anmuth: That’s very helpful. Thank you, Dan.

Dan Rosensweig: Yes, appreciate the question.

Andrew Brown: Let me just fill in here. Dan mentioned earlier in the answer to that question. CS and CSP just so everybody is aware on the call that he’s referring to Chegg Study and Chegg Study Path. That’s our internal lingo that he was using. Thank you.

Operator: Our next question comes from Jeff Silber with BMO Capital Markets. Please proceed with your questions.

Jeffrey Silber: Thanks so much. I’m just wondering if you’re seeing any different trends in your subscribers between the U.S. and some of the larger markets that you serve overseas?

Dan Rosensweig: Well, the summer school is really a U.S. experience more than it is outside the U.S. So most of the data we have over the last few months in terms of actual user behavior is U.S.-based. So I really can’t speak to outside the U.S. What I can say for those that we have outside the U.S. that have been testing our new experiences, the results have been very, very similar, which is significantly increased engagement, length of time using it because they’re getting access to more information and asking more and more questions that we will have in the system already. So — but it’s too early to give international lens versus the U.S. I think we’ll be able to do a lot more of that on the next call because really, the semester picks up in about two weeks. So sort of the last week or two of August through the first two weeks of September is the overwhelming majority of when the good stuff happens.

Jeffrey Silber: Okay. That’s helpful. I know — I’m sorry. In the past you’ve talked about the strong visibility in your business. And I’m just curious, what do you need to see before you think you’ll start talking about annual guidance again?

Dan Rosensweig: Yes, we ask ourselves that same question, and I’m sure Andy is going to have some perspective on this. But I think for the moment, given the volatility of how people are reacting to information, our lens right now is to focus on what’s right ahead of us, which we have really great confidence in, and as we build a few of those, I think it leads us back to where you’re asking. What I will just add to what I said earlier is as the semester evolves, third, fourth week of August, first couple of weeks in September, that gives us a really good lens into obviously, to Q4. And since Q1 is a rollover from Q4, I think we’re getting closer to that. But I think we’re just going to stay with what we’re doing now, because it’s just a more conservative approach to things. And I think we learned the impact of the volatility of people just, in my opinion over reacting to information that we provided. Andy, I don’t know if you have more to add to that.