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'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. 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. As has been reported, U.S. 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 U.S. higher education institutions. In addition, 59% of U.S. students are now majoring in STEM and business, with more than 80% taking STEMB 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 TAM, increase retention, increase 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 at 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 U.S. 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. 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 the U.S. students reporting that mental health is impacting their studies, and nearly a 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 U.S. footprint of Busuu and have just launched an ad-supported freemium model. With over half of U.S. students reporting wanting to learn another language, we see a tremendous opportunity for U.S. 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 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 important, happiest employees, as well as being recognized as a 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. 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% to 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 contribute 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 were 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, or 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%-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. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. We would like to request you limit yourself to one question. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. 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. Did that look any different, as you looked at the U.S. market versus some of your international markets? Yeah, this is Dan. I think we saw what we expected or 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 started 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. 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 things, is a little less consistent. The U.S. market was actually stronger, and we're very happy with that. Stronger in subscriptions and stronger in the percentage uptake rate for the bundle and for renewals. Both international and U.S. are doing really well for both the bundle and for renewals. 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 JP Morgan. Please go ahead. Hey, it's Bryan Smilek on for Doug. Thanks for taking my questions. Just to start, can you dig a bit deeper into your commentary around overall back-to-school trends versus pre-pandemic levels? Just how course load intensity is trending as well? Just sticking with the macro too, how are students at, you know, public two-year colleges responding to the current environment, given they represent a meaningful amount of your sub base? Thanks. Yeah. Here's what we saw. You asked a lot of questions there. What we saw was a stronger incoming freshman 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, 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 subs 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 or the larger state schools, are considering college a twelve-month a year versus two semesters and a summer off. That's good for us because that's part of the reason we believe we're seeing increased renewal intensity. From that perspective, the trends that we're seeing are what we saw and we're benefiting from. Our next question comes from Mike Grondahl of Northland Securities. Please go ahead. Hey, guys. Congrats on the progress. 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 how that went on your June call. It was gonna be rolled out to existing subscribers in October. Just kinda curious how it went, what you saw, and did it truly push more people to the bundle? Yes. Everything that we were hoping to see, we saw. 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 multipoint increase in people taking the bundle. Everything that the test suggested we would see, we've seen it now at scale, and that's really good news. That's, you know, again, reasons why you're seeing, as Andy pointed out in his prepared remarks, just the leverage in our model. You know, I think as our revenue grows, our profitability is growing much more significantly, and we're generating a lot more cash. Those things are what we expected to see from the price increase, and the increased take rate, and improvement in renewals. Those were all really good results of the choices we made. Got it. Thank you. Yep. Our next question comes from Ryan MacDonald of Needham. Please go ahead. Hi, thanks for taking my questions, 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, you know, what sort of the pipeline in terms of localization looks like? You know, 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. Yeah, I think you're not gonna see a noticeable impact on ARPU given just how big the U.S. is and for a while. I think what you'll see if we're successful is what we're seeing in Turkey, which is an increase in downloads, an increase in engagement, an increase in conversions, and an increase in retention, which are literally a home run. That's what we were hoping to see. The next one we just rolled out, which is Spanish language, as we said we would. We're rolling that in Mexico. We have no results, you know, to report on there. We talked a while back about six regions, six countries where we're focused on, and that's where we'll be doing all of our efforts. Just to remind people, what this allows for is for students to use this in English, use this in their local language, ask a question in English, ask a question in a local language, get a response in English, get a response in their local language. All of those things increase conversion and retention, which is an increase in profitability. I think more than a potential impact in the short term on ARPU, you'll see a continued increase in profitability, which is great because every one of these is incremental profit. That's all good news for us. Our next question comes from Jeff Silber 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. You know, part of what we said at the very beginning of this year is what Andy has articulated, is we wanted to get back to when we had 19 straight quarters of, you know, making and then improving our guidance, which is, you know, subscription models are supposed to be consistent and more predictable. That's basically what we've seen and been able to predict since April. We're very, very, very happy about that. You know, where we're seeing changes is just good changes. We're seeing an increase in take rate. We're seeing constant improvement in retention. The funnels have remained strong. You know, no one's asked yet, but I think the bundles are gonna be a massive opportunity for us to increase conversion and retention and ARPU, because the more value we put in the bundle for the same price and the more we're able to create value beyond just the academic year, the better it is for our business. The amounts of content today is pretty significant and the first of what we believe to be more brands that students are familiar with and want to come through Chegg. You know, there's no lack of interest from big -name partners. We're very excited about that. Thanks, Dan. Yep. 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 gonna be doing here? Maybe, you know, 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, you know, skills and the career onboarding, international, all these things you wanna do, have you given yourself enough runway to put these in and make sure you're kinda full throttle into these new endeavors? Thanks. I'll let Andy answer that very good question. My answer is yes, of course. I mean, if you look, it's just we have a great model, Brent. What can I say? It really does generate this level of profitability and cash flow, and it gives us the freedom to continue to invest, which is why you're seeing the success that we're seeing. Andy can go a little bit more into detail on that. The strategy is pretty exciting, which is, we started off with textbooks to lower the price of college and reduce the pain and we did that. We built a very big brand, which it allowed us to build, we believe, the premier homework help tutoring for the masses to allow anybody, particularly the people who have been underserved by their institutions or their families or economically or structurally, to be able to get unstuck and continue on with their studies. That is what Chegg Study became. Chegg Study Pack was a recognition that there's a set of students that their majors require them to have even more things, and we could provide overwhelming value for them. We recognize that is just part of what students need while they're on campus. First, they absolutely need non-academic support because there's almost none on college campuses. As we said in our prepared remarks, you're seeing a real bifurcation of where students go. They're going to very large schools now if they can't get into the Ivy League. You're gonna see a surge in the four-year giant state schools that have football teams, frankly. You're seeing a surge in HBCUs for underserved communities because finally the government has chosen to invest in them, which we think is a good thing. You're seeing a surge in online, not-for-profit schools. Those are areas where Chegg should thrive. But you're also seeing them go to places where they have no support in mental health, no support in financial literacy, and other areas of services that they want bundled into Chegg. We think by doing that, we'll attract the 10 million students that we don't currently have in the U.S. On top of that, we'll keep the students that we have longer, and they'll see the value, and we'll continue to be able to price accordingly. The skill side breaks into three areas. It breaks into the direct marketplace, which was the original Thinkful, which at the moment has been usurped by a corporate marketplace. Corporations are paying for it as a benefit, which is why our relationship with Guild is really excellent. They're the largest provider of education opportunities as well, now through us, for skills in the frontline workers. Walmart, Chipotle, big companies like that, where they're really taking advantage of our skills. That very well has a chance to be a really large business and very profitable, where others are not profitable because they have giant sales forces. We don't have to. Guild does that for us. We think this is a big differentiator and a big opportunity for us. Although it just started this year, we're seeing the benefits of it already. Then the third area, which goes with the bundles, and part of the reason that we've organized around this through Nathan, is we believe that providing academic support for the rest of your life, like things like Calm, as well as employable skills support. Can I learn to use Adobe? Can I learn to use Office 365? Can I learn to use Salesforce? Things that are easier to learn, that are lower price, that we can build one time, and they're like software. Their margins will be extraordinarily high, that we can either sell directly to the student at a very low price and/or bundle it in, which we believe will get a higher conversion or a higher retention rate. We believe it's a really big growth strategy, and we're super excited about it. As for are we investing enough, I will turn that back over to Andy. Yeah. I mean, Dan nailed it up front, Brent. We absolutely have the right amount of resources to go against the opportunities ahead of now and ahead of us. I think one of the things that we have done for many years, even you've been with us for quite some time, even back when we were struggling to break even on an EBITDA line, we always said to ourselves, "We're gonna make sure we have enough resources to put enough wood behind the arrow, whatever we're going to do." We're now at a point where we can focus on multiple things. You've seen many of the investments that we've made that are literally tens of millions of dollars. I'll just point out one for this year. Dan talked earlier about Uversity. That literally is an investment of tens of millions of dollars, period. You know, we feel like we're in a very unique position. You know, as we continue to scale, we get more profitable. As we continue to scale, we drive more cash. As we continue to scale, we can invest more, and we are. We're investing in many things that, you know, I can't talk about today, but they will reveal themselves over the next, you know, 6, 12, 18 months that we believe are future growth opportunities for us. No, we're not underinvested. We're very well invested, and we continue to invest for future growth. 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. You know, 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 KeyBank. Please go ahead. Hey, guys. Thanks for taking my question. This is kind of feeding off of, the last question. Over the last couple of years, Chegg's R&D teams have been very busy. We saw the completion of the piracy enforcement measures. We saw Uversity, Honor Shield, integration of Busuu, upgrading the UI to more personal experiences, big improvements to international localization. When we think about the pace of R&D priorities over the next 12-24 months. You know, would you say that these R&D innovation will continue at the same pace? Yeah, interested to hear, you know, your answer to that. Thanks. Well, first of all, I want you to speak at my eulogy 'cause that was wonderful. Exactly. Thank you. Yeah, look, you know, my old boss, Terry Semel, used to say, "Don't tell anybody what you're gonna do until after you've done it." Right. We are constantly investing with a North Star, which is how do we create more value for the students? How do we ease their burden? How do we solve their biggest problems? How do we create leverage for them and therefore create leverage for us? The things that you articulated, all of them reduce friction in the system. For us, we always. For example, we're investing in Q&A, which is now structured Q&A, where every question, no matter what format it comes in, gets structured so that it's easier to discover. By the way, that reduces our CapEx because we end up doing fewer duplicate questions because it's all in a structured format. We do a lot of things on the infrastructure standpoint to reduce friction in the process and make us more profitable. In terms of the things that we're investing in, skills, we are absolutely investing in. We're investing in building relationships directly with companies as well as through Guild. For example, we also just extended the relationship that we said with Busuu inside of Guild, and we think that's an opportunity for extended growth. We haven't really talked on this call about Busuu 3.0, which is the freemium model in the United States. Because you don't have very many customers in the United States, but you know what we have? We have the largest reach to college students of anybody who believe and trust our brand, and we know that one out of every two wants or needs to learn a language. We think we have opportunities to invest in language. We talked about the investment in skills. We don't do more than we can handle, but we do the things. We have a roadmap, a multi-year roadmap of opportunities that we think will expand our TAM and continue to increase our ARPU, and then continue to increase the relevance and the value of what we offer to a larger group of people, both domestically and internationally. I mean, you didn't mention what we've already done in Turkey and what we've done in Mexico. We have an extraordinarily talented product engineering design team, and they have a multi-year roadmap, and we're sticking to it because, at least at the moment, it seems to be working. But thank you for recognizing that. Okay. Thank you. Yep. 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 the nice quarter. Thank you. Maybe building on the last two questions. Annual guidance is calling for 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? I mean, I think if you take a look at our history over the last, I don't know, 2, 3, 4, 5 years, as we continue to scale, the business just inherently gets more profitable, period. Right? And particularly in the short term, short timeframe, right? Because if you think about it from a cost structure standpoint, much of the content is reusable. It's not like we have to keep adding, you know, gobs and gobs of new content. We do have a CapEx budget, but it's reusable, whether or not we have, you know, 10 subscribers or 10,000 subscribers, they can use the same content. We do believe that our margins will continue to expand. I don't even think about it personally, at what a steady state is. We're not at steady state. We're still growing, and we expect to grow, and we expect to expand margins for 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. Wanted to ask about your sales and marketing expense. You know, 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 fall semester, is often one of your highest marketing expense quarters of the year. You know, so far in 2022 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. 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. The deals that the team cut are really great for our shareholders, for exactly the reason you pointed out. 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. Yes, this is more of a steady state of what you can expect to see. You know, we are seeing improvements in the top of the funnel. We are a great SEO company. You know, those 100+ million questions that we have all get SEO'd. It's part of the great flywheel that we built. That content is owned by us, and therefore, it is unique, and it gets indexed by Google, and it gets indexed globally. As we make it more local language, we'll see improvements in countries around the world. That is our best form of marketing. Again, without the textbooks, you'll see this looking more like the steady-state. 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. We think the bundles will go a long way to doing that. We're pretty excited about it. I'm really glad you pointed that out. Yeah. Okay. That's really helpful. Thank you. Thank you. Yeah, Alex, let me just add to that, please. When Dan says steady state, I just wanna make sure that the seasonality that you've seen in the past is gonna be smoother, is really what we're talking about here. 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. The beauty of that is it also makes the seasonality of our profitability, you know, I call it less seasonal, right? Because what ended up happening with textbooks, we would spend all of that money on marketing, but we'd only recognize a small amount of the revenue, and the rest of the revenue would get recognized over the next three to four months. I think what it does is it reduces the seasonal impact, both on the marketing line and the profitability lines. Okay, that's really helpful. Thank you both. 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 wanna touch base with Busuu. How has progress been on realizing synergies with Busuu as you're integrating it into your overall business? I also appreciate any color on progress of your initiative to begin raising brand awareness among your existing U.S. customers as well as potential new customers. Thanks. Yeah, great question. It is super early, so anything I say, you know, I can't tell you that it's projectable at this level yet. The integration is almost done. There's a lot of back-end things. There's a lot of, you know, things that when you put two companies together, you don't need anymore. We focus first on putting the investment into things that we do wanna invest in. The integration should be done before the end of this year, whatever's left. In terms of recognition, it is just too early. I mean, what we know is the recognition is low, but what we know is the need and desire for language is high. We call it Busuu 3.0. I mean, it sounds to me like they had 2.0 before we bought them. They're early. You know, we're seeing green shoots early. But I really I don't wanna say more than that because I don't know more than that at this point. What we know is the freemium model is very compelling to college kids for all the reasons that you would imagine, and that's not what Busuu had in the United States, and that's what we have now. I would say that, check in with us more in the middle of next year after we've had, you know, the first half of the year to really go through it and make the tweaks and see where it's working strong and see where we need to continue to adjust it. It's early, but the early signs are positive, which is obviously why we've embarked on this, because we believe it's gonna be successful. 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, you know, the last year has been a very difficult one. A year ago, 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. You know, one of the things that I've learned about the Internet since my days in computer magazines and Yahoo is that there's always a next level of growth, and we think that Busuu 3.0, Skills, the investment in bundles, and more value to more customers in the U.S. and around the world is a really big opportunity for us, and the company is excited about it and executing well on it. We just happen to have one of those models that as it grows, gets a lot more profitable, and we're proud of that. It also gives us the resources to be able to invest in even bigger opportunities. Thank you, everybody, for joining. I wanna 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. Thanks, everybody. Bye. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.