Chegg, Inc Q3 FY2022 Earnings Call

Thank you for standing by. This is the conference operator. Welcome to the Chegg, Inc. Third Quarter 2022 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Tracey Ford, VP of Investor Relations and ESG. Please, go ahead.

Good afternoon. Thank you for joining Chegg's third quarter 2022 conference call. On today's call are Dan Rosensweig, 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/mediacenter. 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 on the investor slide deck found on our IR website, investor.chegg.com. We also recommend you review the investor data sheet, which is also posted in our IR website. Now, I will turn the call over to Dan.

Thank you, Tracey, and welcome everyone to our Q3 2022 earnings call. Chegg had a strong third quarter, exceeding both our top and bottom line expectations, with Chegg Services revenue growing 8% year-over-year, reaching 4.8 million subscribers. Our results reflect excellent execution and show the inherent profitability of our model, while continuing to invest in future growth. We regularly monitor the trends in education. And as has been reported, US undergraduate enrollment has stabilized and returned to pre-pandemic norms. What has changed is that students are increasingly going to schools offering online and hybrid classes, which are now offered by over half of the US higher education institutions. In addition, 59% of US students are now majoring in STEM and Business, with more than 80% taking STEM-B courses. Our data also suggests students are spreading their course load over the full year. We believe these trends are all positive for Chegg. We continue to make investments to increase the value of Chegg's offerings, both to our existing students, as well as expand the opportunity to reach new learners. In addition to providing academic support, we are also adding non-academic services and job skills preparation, which we believe will expand our total addressable market (TAM), increase retention, increase average revenue per user (ARPU) and better serve students. We believe this is a major opportunity, which is why we recently announced the promotion of Nathan Schultz to Chief Operating Officer. Nathan is now responsible for all of our direct-to-student offerings. For those who don't know Nathan, he has been at Chegg for 15 years and has held almost every senior role in the company. Most recently, he and his team built our Learning Services group, launched the Chegg Study Pack and led the integration of Writing and Mathway. This promotion is well-deserved, a long time in coming and organizes the company around future growth. Congratulations, Nathan. This school year, we increased the price of our base product Chegg Study by $1 in the US. As expected, we saw a minimal impact on conversion and retention and a positive impact on the take rate for the Chegg Study Pack. Chegg Study and Chegg Study Pack are now renewing at similar rates, and we see the highest satisfaction scores from students using the Chegg Study Pack. Our strategy continues to be to increase our TAM as well as the percentage of students who subscribe to the Chegg Study Pack. This increases our ARPU and profitability and most importantly, serves the students better. As we add more value, we expect to add more students, which is why we continue to invest in more forms of content, subjects, and personalization. As an example, our investment in Uversity, which was recently made available to students, is performing well, allowing us to better target the exact learning content students want. In addition to Uversity, our plan is to expand value by adding non-academic services and job skills preparation in the future. So today, we are pleased to announce our partnership with Calm, the number one platform for mental fitness and well-being and the most preferred wellness brand for college users. Every Chegg Study Pack subscriber globally will now receive Calm Premium for free, which is a $70 annual value. The mental health challenge facing college students is huge. It's real and it’s affecting their lives today. With over half of US students reporting that mental health is impacting their studies and nearly one-third of students worldwide reporting their mental health has worsened since returning to campus, we hope this partnership provides some of the support they need. Internationally, we are prioritizing market share growth by delivering compelling value propositions for students in their countries, increasing our subscriber base through local pricing, content and user experience. These efforts are focused on expanding our reach in major markets, including Turkey, where we recently launched a fully localized app and have seen a significant increase in downloads, activation, and engagement. We also just launched our Spanish language app in beta, and we believe this will be a major opportunity for us going forward. Students' needs continue to evolve, including the growth in demand for language learning. We are expanding the US footprint of Busuu and have just launched an ad-supported freemium model. With over half of US students reporting wanting to learn another language, we see a tremendous opportunity for US growth. Busuu is also now a key part of our growing partnership with Guild. Thanks to the early success of our partnership and our strong outcomes, we are pleased to announce that we are adding Busuu's language learning into the Guild marketplace in early 2023. Our partnership with Guild continues to yield excellent results. And as they grow their customer base among large employers, we are seeing increased adoption of our courses, as well as a very strong learner completion rate, which is how we are measured for quality and value. We want to thank Guild and look forward to continuing to expand our partnership. The great work we have accomplished would not be possible without our amazing employees. Their tireless work to put students first has once again resulted in recognition for our teams. This quarter, we are proud to win comparably awards for our benefits and perks and compensation, work-life balance, and perhaps most importantly, happiest employees, as well as being recognized as the Fortune Best Workplaces for Women, and for Technology. Also, Chegg employees recently participated in our First Global Day of Impact where we furthered our commitment to put student success and health first. Together, Chegg volunteers supported 13 global organizations supporting education, hunger, mental health and more. Our teams have helped almost 5,000 students and I couldn't be prouder. And with that, I'll turn it over to Andy.

Thanks Dan and good afternoon, everyone. Q3 was another good quarter for Chegg with revenue and adjusted EBITDA coming in above the high end of our expected ranges as the momentum we saw in Q2 carried into Q3. During the quarter, we also made a significant capital allocation to reduce our outstanding debt at a material discount to par. With that backdrop, let me walk you through the Q3 results. For Q3, total revenue was $165 million. This was driven by Chegg Services revenue growth of 8% year-over-year to $159 million as subscribers grew 9%, reaching 4.8 million for the quarter. Gross margin continued to be strong and came in above the high end of our expectations at 73%, demonstrating continued leverage in our model. We are also seeing increased leverage in our operating expenses all while continuing to make significant investments for future growth opportunities. This, combined with the gross margin improvement, resulted in a large adjusted EBITDA beat for the quarter, increasing our expected profitability for the year. Before moving on to the balance sheet, some of you may have noticed that our Q3 GAAP net income of $252 million exceeded our net revenue of $165 million. Let me explain. There were two discrete items that contributed to this. First, during the quarter, we opportunistically repurchased $500 million of our outstanding 2026 notes for $400 million. These notes were trading at a significant discount to par and thus, provided a risk-free return to our shareholders. This resulted in a net gain after certain costs of $94 million and was recorded in the other income line on the income statement. The second item was the release of the vast majority of our valuation allowance against our deferred tax assets of $175 million, which was recorded in the benefit from income taxes line on the income statement. In simple terms, this release was taken because we have shown a consistent track record of GAAP profitability and we expect to remain profitable for the foreseeable future. As such, we now expect to be able to recognize the full benefits of these deferred tax assets. Now, looking at the balance sheet. We ended the quarter with $1.2 billion of cash and investments. As mentioned earlier, during the quarter, we used $400 million to retire $500 million of our outstanding debt. We also repurchased 1.1 million shares of our common stock at an average price of $20.10. We believe these actions increase shareholder value and where possible, given the strength of our balance sheet and an operating model that generates significant cash flows. Moving on to guidance. With a solid Q3 behind us and the fall semester now in full swing, we have a better understanding of what to expect for the remainder of the year. As a result, we are significantly narrowing the ranges and increasing the midpoints for the year. We are also monitoring global macroeconomic trends around inflation and a possible recession for the potential impact it could have on our business as we enter 2023. For full year 2022, we now expect total revenue to be between $762 million and $765 million, with Chegg Services revenue between $730 million and $733 million, gross margin between 73% and 74% and adjusted EBITDA between $252 million and $255 million or 33% adjusted EBITDA margin and an increase of approximately 280 basis points from our prior guidance. We also expect free cash flow to be at the higher end of our expected range of 50% to 60% of adjusted EBITDA. This results in Q4 guidance of total revenue to be between $200 million and $203 million, with Chegg Services revenue between $197 million and $200 million, gross margin between 74% and 76% and adjusted EBITDA between $71 million and $74 million or 36% margin. In closing, the Chegg team continues to operate at a high level, and we have a balance sheet and an operating model that is second to none. This allows us to invest in the current business as well as new opportunities, such as international expansion and skills to deliver increased profits and cash flows. With that, I'll turn the call over to the operator for your questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from Stephen Sheldon of William Blair. Please go ahead.

Hey, thank you. I guess just on the subscriber trends. I'm curious what trajectory you saw in subscribers coming out of the summer months and then over in the last few months? And did that look any different as you look at the US market versus some of your international markets?

Yes, this is Dan. I think we saw what we expected, more on the high end of the range of what we expected. As we said in the summer, we saw a surge in summer school, students starting to make things up. And I think we reported then that 85% of them said that they had an expectation to continue into the fall. And we saw that, and we captured a lot of that, and we're really proud of the execution that we've done. I would say that international, because of inflation and other factors, is a little less consistent. The US market was actually stronger. And we're very happy with that, stronger in subscriptions and stronger in the percentage of take rate for the bundle. And for renewals, both international and US are doing really well for both the bundle and renewals. So I would say that what we saw was the stronger end of what we were hoping to see.

Thank you. Nice results.

Thank you.

Our next question comes from Doug Anmuth of JPMorgan. Please go ahead.

It's Bryan Smilek on for Doug. Thanks for taking my question. Just to start, can you dig a bit deeper into your commentary around overall back-to-school trends versus pre-pandemic levels? And then just how course load intensity is trending as well? And then just sticking with the macro, how are students at public 2-year colleges responding to the current environment, given they represent a meaningful amount of your subscriber base? Thanks.

Yes. Here's what we saw. You asked a lot of questions there. What we saw was a stronger incoming freshmen class and a return of the previous freshman class. What we haven't seen yet, but I expect that we will at some point, is the return of the 1.5 million people that left to go into the workforce. In terms of the workload intensity, we are seeing, as I think our commentary says, we are seeing more students in the semester; they are engaged very highly throughout the semester earlier in the semester, which is why I think we picked up so many subscribers early in Q3. They're just taking fewer classes, and we think that is a result of the commentary that we said in Q2, which is we think a large portion of students now, particularly state school students, the larger state schools are considering college 12 months a year versus two semesters and the summer off. That's good for us because that's part of the reason we believe we're seeing increased renewal intensity. So from that perspective, the trends that we're seeing are what we saw and we're benefiting from that.

Our next question comes from Mike Grondahl of Northland Securities. Please go ahead.

Hey guys, congrats on the progress. And I guess I was just looking for a little bit of insight into the dollar price increase for new subscribers, I think you launched in July. And you gave some color on how that went on your June call, and it was going to be rolled out to existing subscribers in October. Just kind of curious how what you saw and did it truly push more people to the bundle?

Yes, everything that we were hoping to see we saw. So we didn't see a reduction in conversion when we rolled out the price increase to new subscribers. We saw literally insignificant amounts of non-renewals when we rolled out the increase to the base, and we saw a multi-point increase in people taking the bundle. So everything that the test suggested we would see, we've seen it now at scale, and that's really good news. And that's, again, reasons why we're seeing, as Andy pointed out in his prepared remarks, just the leverage in our model. I think as our revenue grows, our profitability is growing much more significantly, and we're generating a lot more cash. So those things are what we expected to see from the price increase and the increased take rate and improvement in renewals. So those were all really good results of the choices we make.

Got it. Thank you.

Our next question comes from Ryan MacDonald of Needham. Please go ahead.

Hi, thanks for taking my question and congrats on a nice quarter. Dan, I'm curious, as we think about the continued expansion internationally, you talked about in the prepared remarks your launch of the fully localized app in Turkey. Can you give us a sense of what sort of the pipeline in terms of localization looks like? And potentially what sort of impact we might see on ARPU as these fully localized apps continue to be rolled out and the potential there that this could be offset by in terms of subscriber adoption? Thanks.

Yes, I believe there won't be a significant impact on ARPU, considering the size of the US market and its ongoing potential. If we succeed, we can expect outcomes similar to what we’ve experienced in Turkey, which include increases in downloads, engagement, conversions, and retention – all of which are fantastic results. This is what we've been aiming for. Additionally, we just launched the Spanish language version in Mexico, although we don't have any results to share yet. We previously discussed focusing on six countries where we will concentrate our efforts. This localization allows students to interact in both English and their local language, enabling them to ask questions in either language and receive responses in both. These features enhance conversion rates and retention, which ultimately leads to increased profitability. Therefore, rather than seeing a short-term effect on ARPU, we anticipate continued growth in profitability, which is encouraging because each of these represents additional profit for us.

Our next question comes from Jeff Gilbert of BMO Capital Markets. Please, go ahead.

Hi, this is Ryan on for Jeff. I was just wondering how did traffic trend throughout the quarter? Was the lift in September and now October in line with expectations as kids went back to school?

Yes. At the beginning of this year, we expressed our desire to return to a period when we had 19 consecutive quarters of meeting and then exceeding our guidance. Subscription models should be consistent and predictable, and that’s what we've been able to foresee since April. We're very happy about that. The changes we are seeing are positive. There's an increase in our take rate, continuous improvement in retention, and our funnels remain robust. Although no one has mentioned it yet, we believe the bundles will present a significant opportunity for us to boost conversion, retention, and ARPU. By providing more value in the bundle at the same price and extending value beyond just the academic year, it benefits our business greatly. The competitive environment today is quite strong, and we’re starting to attract more brands that students recognize and want to engage with Chegg. There is significant interest from major partners, and we're excited about it.

Thanks, Dan.

Yes.

Our next question comes from Brent Thill of Jefferies. Please, go ahead.

Good afternoon, Dan. On the career onboarding piece, I think you're alluding to more things to come here. Can you just walk through strategically what you're going to be doing here and maybe a transition to Andy on that? I know you get tired of me asking this question, but when you think about a 36% operating margin guide, versus skills and the clear onboarding international, all these things you want to do. Have you given yourself enough runway to put these in and make sure you're full throttle into these new endeavors? Thanks.

I'll have Andy address that great question, but my answer is definitely yes. We have a solid model that generates strong profitability and cash flow, allowing us to continue to invest, which is evident in our success. Andy can provide more details on this exciting strategy. We began with textbooks to reduce the cost of college and alleviate some challenges, and we accomplished that. We also established a prominent brand that we believe has created the best homework help and tutoring available for everyone, especially those historically underserved by other institutions. This has enabled students to overcome obstacles and pursue their studies. Chegg Study evolved from this foundation, and the Chegg Study Pack emerged to meet the needs of students whose majors require additional resources, offering substantial value. Students require non-academic support, which is often lacking on college campuses. As we noted in our remarks, there's a distinct trend in where students are enrolling. They are increasingly choosing large schools now that Ivy League options are out of reach. We're seeing a rise in enrollment at major state schools with athletics, as well as in HBCUs for underserved communities, due to increased governmental investment, which is encouraging. Online non-profit schools are also gaining popularity. These trends create opportunities for Chegg, as students are seeking support in areas like mental health and financial literacy, which they want bundled with Chegg services. We believe this approach will help us engage the 10 million students we currently do not reach in the U.S., retain our existing students longer, and help us appropriately price our services. The skills aspect can be divided into three areas. First is the direct marketplace, which began with the original take pool and is now complemented by corporate marketplace contributions. Companies are providing these opportunities as benefits, and our relationship with Guild has been excellent; they are the largest provider of education opportunities for frontline workers. Companies like Walmart and Chipotle are leveraging our skills offerings, which positions us for significant growth and profitability, unlike others that struggle because they maintain large sales forces. This makes Guild a valuable partner for us. The third area ties in with bundled offerings and the strategic organization under Nathan. We aim to provide not just academic support but also lifelong support for skills, such as using software like Adobe, Office 360, and Salesforce. These skills are easier to learn, affordable to create, and have high margins. We can sell these directly to students at low prices or bundle them, which we believe will enhance conversion rates and retention. Overall, we see this as a significant growth strategy and are very excited about it. As for whether we are investing enough, I'll hand it back to Andy.

Yes. Dan addressed it well initially, Brent. We definitely have the right resources to seize the opportunities in front of us now and in the future. For many years, even when we were struggling to reach break-even on EBITDA, we consistently emphasized the importance of having sufficient resources for our initiatives. Now, we are at a stage where we can pursue multiple endeavors. You’ve observed many of our investments that amount to tens of millions of dollars. One example for this year is our investment in Uversity, as Dan mentioned earlier, which is substantial. We find ourselves in a unique position; as we scale, our profitability increases, we generate more cash, and we can invest more, which we are actively doing. We're investing in various initiatives that I can't disclose right now, but they will become clear over the next six, 12, or 18 months and represent future growth opportunities for us. Therefore, we are not underinvested; in fact, we are strategically invested and continue to allocate resources for future growth.

And by the way, we're not unhappy that we're profitable on every line, including GAAP. I mean, you don't often see software companies do that. And I think they could, and I think they should, because we've shown that you can do it and grow and make the proper amount of investments.

Our next question comes from Jason Celino of KeyBanc. Please go ahead.

Hey, guys. Thanks for taking my question. This is kind of feeding off of the last question. But over the last couple of years, Chegg's R&D teams have been very busy. You saw the completion of the piracy enforcement measures. We saw Uversity, Honor Shield, integration of Busuu, upgrading the UI, the more personalized experiences, and big improvements to international localization. So when we think about the pace of R&D priorities over the next 12 to 24 months, would you say that these R&D innovations will continue at the same pace? Interested to hear your answer to that. Thanks.

First of all, I want to thank you for speaking at Uversity; it was wonderful. My former boss, Terrys, used to say not to share plans until after they've been executed. We are always focused on our main goal: creating more value for students, easing their burdens, solving their biggest problems, and providing leverage for them, which in turn benefits us. The initiatives you've mentioned all reduce friction within the system. For instance, we're investing in structured Q&A that organizes every question in a way that makes it easier to find, which also lowers our capital expenses by decreasing duplicate inquiries. We are implementing many infrastructure improvements to streamline processes and enhance profitability. Regarding our investments in Skills, we are committed to building relationships with companies directly and through Guild. We recently expanded our partnership with Busuu within Guild, which we believe presents growth opportunities. We haven't discussed Busuu 3.0, a freemium model in the U.S., much yet, mainly because our customer base here is still small. However, we have the broadest reach to college students who trust our brand, and we know that one in every two wants or needs to learn a language. Thus, we see potential in language investments. We're selective in our commitments but have a multi-year roadmap with opportunities that we believe will expand our total addressable market and improve our average revenue per user, while also increasing the relevance and value of what we provide to a wider audience, both domestically and internationally. We’ve made significant progress in Turkey and Mexico. Our skilled product engineering and design team is adhering to a multi-year roadmap that appears to be effective, and I appreciate you acknowledging that.

Our next question comes from Josh Baer of Morgan Stanley. Please go ahead.

Hi. It's Matt Wilson on for Josh Baer. Thank you for taking our question and congrats on a nice quarter. Maybe building on the last two questions. Annual guidance is calling for a 200 basis point increase in margin expansions in EBITDA margin, which is kind of in line with what you've done over the last few years. Can you talk about how much more room there is on the margin front and what leverage you have to pull beyond 2022 going into like 2023 and beyond?

If you look at our history over the last few years, as we've scaled, the business has naturally become more profitable. This is particularly true in the short term because our cost structure allows for much of the content to be reused. We don't need to constantly add a lot of new content. While we have a capital expenditure budget, that budget remains effective whether we have 10 subscribers or 10,000. Therefore, we believe our margins will continue to grow. I don't focus on what's considered a steady state since we're not there yet; we're still in a growth phase and expect to continue growing and expanding our margins in the foreseeable future.

Awesome. Thank you.

Our next question comes from Alex Fuhrman of Craig-Hallum Capital Group. Please go ahead.

Hey guys. Thanks for taking my question and congratulations on a strong start to the school year here. I wanted to ask about your sales and marketing expense. If we go back over the last 5 or 10 years, it seems like the third quarter when you're gearing up for the beginning of the school semester is often one of your highest marketing expense quarters of the year. And so far in '22, it looks like actually a pretty significant reduction in your marketing expense relative to what we saw in the first half of the year. Is that perhaps the beginning of a trend here? I'm wondering if maybe as you add more products to the bundle, if you start to maybe get some leverage off of your marketing, and we maybe should see some more improvement there? Just curious how you're thinking about marketing expense as you continue to grow the business and add more to your product offering?

Yeah. Really great question. It gives me a chance to clarify something. A lot of that is the fact that we no longer own textbooks. So this was the quarter in which we spent a lot of money marketing textbooks. But now that we don't own them and they're an insignificant part of our business, although we still do millions of them. But the deals that the team cut are really great for our shareholders for exactly the reason you pointed out. So the majority of the marketing expense in this quarter always went to textbooks, not to Chegg Study or to Chegg Study Pack or those other things. So yes, this is more of a steady state of what you can expect to see. And we are seeing improvements in the top of the funnel. We are a great SEO company. Those 100-plus million questions that we have all get SEO. That's part of the great flywheel that we've built that content is owned by us. And therefore, it is unique and it gets indexed by Google and it gets indexed globally. And as we make it more local language, we'll see improvements in countries around the world. So that is our best form of marketing. And again, without the textbooks, you'll see this looking more like the steady state. And our efforts will be on improving the funnel, I mean, improving inside the funnel, which we think the bundles will hopefully have a significant impact because every point improvement in conversion is quite substantial in our revenue and our profit. And we think the bundles will go a long way to doing that. So we're pretty excited about it. So I'm really glad you pointed that out.

Okay. That’s really helpful. Thanks.

Yeah, Alex, let me just add to that, please. So when Dan said steady state, I just want to make sure that the seasonality that you've seen in the past is going to be smoother is really what we're talking about here. So we don't have where we have tons of marketing expense for textbooks that clearly goes away in Q3 and then to a great extent in Q1. And the beauty of that is it also makes the seasonality of our profitability, I'll call it, less seasonal. Because what ended up happening with textbooks, we spend all of that money on marketing, but we only recognize a small amount of the revenue and the rest of the revenue will get recognized over the next three to four months. So I think what it does is it reduces the seasonal impact, both on the marketing line and the profitability line.

Thank you for the question.

Our next question comes from Brian Peterson of Raymond James. Please go ahead.

Hi, this is Jessica on for Brian. I just want to touch in with Busuu. How has progress been on realizing synergies with Busuu as it integrates into your overall business? I also appreciate any color on progress of your initiative to begin raising brand awareness among your existing US customers, as well as potential new customers? Thanks.

It's a great question, and I want to emphasize that it's still very early. Anything I share may not yet be indicative of future performance. We are close to completing the integration, although there are still some backend tasks left to address. Our priority has been to focus on investments we deem essential. We're expecting to finish the integration by the end of this year, with only a few items remaining. As for recognition, it’s simply too soon to draw conclusions. While current recognition is low, we see a strong demand for language services. We refer to this phase as Busuu 3.0, indicating that prior to our acquisition, they were at Busuu 2.0. We’re witnessing early positive signs, but I don’t want to elaborate further because there’s still much uncertainty. The freemium model we are implementing is highly attractive to college students, which was not previously offered by Busuu in the U.S. We expect to provide a clearer outlook by mid-next year after we've had time to assess the first half of the year, make necessary adjustments, and identify areas of strength versus those needing improvement. While it’s early in the process, the initial indicators are promising, which is why we are pursuing this opportunity, as we believe it holds great potential for success.

This concludes the question-and-answer session. I would like to turn the conference back over to Dan Rosensweig for any closing remarks.

Thank you, everybody, for joining us. Really appreciate the time and attention to the company. As you can see, the last year has been a very difficult one. Last year, this call was a very difficult one. This is much more positive, as its business is returning to a greater level of predictability. We see bigger opportunities ahead. One of the things that I've learned about the internet since my days at Computing Magazine to Yahoo! is that there's always the next level of growth, and we think that Busuu 3.0, Skills, the investment in bundles and more value to more customers in the US and around the world is a really big opportunity for us, and the company is excited about it, and executing well on it. And we just happen to have one of those models that as it grows, it gets a lot more profitable, and we're proud of that. But it also gives us the resources to be able to invest in even bigger opportunities. So thank you, everybody, for joining. I want to thank all of our employees for all the awards that they have earned because the mission matters and they come here for the mission, and we're proud of the work that they do to serve the students. So thanks, everybody. Bye.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.