You won’t see the impact of that in revenue, but you’ll see it in the expense base.
Kenneth Wong: Got it. Okay. That’s all super, super helpful color. Really appreciate it guys.
Rich Walker: Thanks, Ken.
Operator: Our next question comes from Tom Singlehurst with Citi. Please state your question.
Thomas Singlehurst: Yeah. Good evening. I’m Tom here from Citi. Thanks so much for taking the question. In fact a couple of questions. I’m going to start with the clarification. I just really we’re very clear about the last 12 months that is the quarterly dollar retention rates why we should focus on the former. But just to clarify, 2Q being under 100%, even if it’s been approved, is that just a big narrative saying the second quarter is a high period of higher typically is that how you should think about.
Jeff Tarr: Tom, it’s a little mumbled, but I think the question that I got was quarterly retention rate compared to LTM retention rate. I’ll let Rich share some thoughts. But the important point to keep in mind is Q1, Q2, Q3 are very small and so individual wins and losses or anomalies and how the timing of renewals and such can move that data around. That’s why we point dollar retention rate and we’ve been doing that for quite some time. Rich, what can you say about that?
Rich Walker: I just clarify the metrics. The LTM, while below 100%. The LTM was 101% excuse me up 300 basis points, but quarterly at 99% was still up year-over-year. And that trend is noticeable in both the quarter and the LTM, Tom, but I’d reiterate Jeff’s comments. The LTM is the more accurate way to evaluate it.
Jeff Tarr: I think I would just note you’ve seen us focus on LTM whether the quarter was good or the quarter was bad. We’ve focused everyone on LTM for the last couple of years and we encourage you to continue to use that in the models.
Thomas Singlehurst: Sorry. Hopefully you can hear me better. The second question was about Codecademy. Some others have talked about dwindling demand for coding bootcamps given soft round markets in terms of employment. I was wondering whether that’s something you’ve seen or whether it’s just lost in the mix given the robust demand for AI content?
Jeff Tarr: Yeah. So I got the question again. It’s mumbled. So if I don’t answer this exactly right, we’ll get it afterwards. But I think the question is about Codecademy and how Codecademy is performing. I’ll start and I know Rich has some things to share on it. First of all, Codecademy is strategic and critical to our business. We’ve integrated Codecademy’s B2B business into our platform and content business within our B2B tech and dev offering. So it’s now deeply integrated the hands on learning as part of what we saw customers alongside the videos and the coaching and mentoring and the other types of learning labs and hands-on learning. And it’s all in one package. That was the fastest growing content category within our platform and content business.
We’ve also rebranded out the entirety of our tech and dev offering as Codecademy. That’s something we did last quarter and we did that because, well, frankly, Codecademy has taught more people to learn to code than any other organization on the planet. It’s a very strong brand and leveraging that brand across the entirety of our tech and dev portfolio made a great deal of sense. Rich, anything you would like to share?
Rich Walker: I double click Tom. I heard a portion of the question relating to Generative AI and initially I think that segment will benefit. Importantly, if you look at the total content platform bookings that grew 7% in the quarter, the tech and dev segment actually grew double-digit. And that segment is clearly and that segment includes both the code enterprise and the code B2C business. And that segment benefited certainly from the code attributes.
Thomas Singlehurst: Very clear. Final question. I’ll speak loudly. The cost of AI based tools, is that all embedded in guidance? There’s no incremental AI sort of cost coming through.
Jeff Tarr: It’s all embedded.
Rich Walker: Yeah.
Thomas Singlehurst: Perfect. Thank you.
Operator: Thank you. There are no further questions at this time. I’ll hand the floor back over to management for closing remarks.
Jeff Tarr: Thank you, everyone, for joining us. I’d be remiss and not taking note of the fact that today is an anniversary of 9/11 and I do want to express our continuing sense of loss and our gratitude to the nation’s first responders. I also want to thank our team members around the world for your hard work and profitably growing our business, seizing the AI opportunity and working together to build on our strong foundation as the global leader in enterprise learning. I also want to thank our customers and I’m looking forward to being together with many of you at Perspectives 2023 this week in Washington DC and of course many thanks to our stockholders. We’re very grateful to you as well. Have a good rest of your day.
Operator: Thank you. This concludes today’s conference. All parties may disconnect. Have a good day.
