Greetings and welcome to the Chegg, Inc. Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. An interactive question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Tracey Ford, VP of Investor Relations. Thank you. You may begin.

Good afternoon. Thank you for joining Chegg's third quarter 2017 conference call. On today's call are Dan Rosensweig, Chairman and CEO; and Andy Brown, Chief Financial Officer. A copy of our earnings press release, along with our investor presentation, is available at 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 these 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 quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 31, 2017, 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. We also recommend you review the information included in the slide deck and investor data sheet posted on our IR website, investor.chegg.com. Now, I will turn the call over to Dan.

Thank you, Tracey, and welcome everyone. Four years ago, Chegg's went public viewed as a textbook rental company as nearly all our revenue came from print textbooks, but even then we had a much bigger vision to serve the modern generation of students by building an all digital education platform. We saw a huge $1 trillion education industry representing 7% of the GDP and that 15% of the U.S. population was participating in on an annual basis. At the same time, it was an industry that was experiencing significant pressure, was cutting investment and was increasingly misaligned with its customers. We understood that even though today’s students were more diverse than ever, they all have been raised on technology and the Internet. We saw more students on their own with little or no learning support who are taking on huge amount of debt, taking longer to graduate, if they graduated at all and failing to find jobs they were worthy of a degree. To address this, we’ve been building a platform of interconnected learning services that focuses on helping students pick their classes, get better grades, master those subjects, pass their classes and then start their career, delivering all of our services in the manner students expect, online, on-demand, adaptive personalize, affordable, and of course, all backed by human help. In just four years the results have been dramatic, which Chegg now serving nearly ten million visitors in a month according to ComScore and we expect to have around four million paying customers in 2017. Further, we expect to have more Chegg Services subscribers than textbook customers for the first time in our history. Our Chegg Services revenue has grown from just $25 million in 2012 to what we expect will be over $180 million in 2017. And given our…

Thanks, Dan, and good afternoon everyone. Chegg had a great third quarter with all key metrics and financials ahead of our expectations. These strong results and the continued momentum give us confidence to raise our guidance again for 2017. In addition, we are providing our initial outlook for 2018 that meets or exceeds our previously discussed long-term financial targets. We are extremely proud of what the Chegg team has accomplished over the past four years since our IPO, as students are increasingly relying on Chegg’s integrated platform of connected educational services to improve their outcomes. For the third quarter, total revenue was 62.6 million, with both Required Materials and Chegg Services revenues exceeding our expectations. All indications suggest we gained share in Required Materials during the fall rush and we continued to see growth rates for our subscription services in line with prior years. This resulted in gross margins coming in higher than we expected reaching 64.3%, because much of the incremental revenue from Chegg Services goes straight to the gross margin line due to its relatively fixed cost structure of the business. This led to an adjusted EBITDA of 5.7 million, well above our expectations, demonstrating the leverage of our all-digital model. During the quarter, we significantly strengthened our balance sheet, adding approximately 148 million in cash from our follow-on offering, bringing our cash and investments balance to 220 million. This, along with the power of our operating model, which generates cash, puts us in a position of strength as we continue to invest in and grow the business. Based on the results of the fall semester rush and continued momentum into Q4, we are increasing our guidance for the remainder of the year. We now expect total revenue for Q4 to be between 70 and 71 million, with…

At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Alex Paris from Barrington Research. Please proceed with your question.

Hi, this is Chris Howe sitting in for Alex. Congrats on the quarter. My first question is, just thinking back to the Kaplan partnership that you had previously announced. Could you provide an update on how that's going? And my follow-up to that would be, would you consider something like this for perhaps some of your other businesses such as Careers?

So, Chris, this is Dan. On Kaplan, Kaplan has been really allowed until December, so we spent a year working on them, building the co-branded products. And again for those of you, who don't know what it is, is this would be the least expensive that you can get from Kaplan. It’s co-branded and co-created by Kaplan and Chegg. It will utilize Kaplan 75 years of history of creating premier Test Prep produce several at an affordable rate, exclusively online, uniquely through Chegg and then integrating in other Chegg’s products and services. So, we’re very excited about our launch later on this year. So, it’s nothing else to report on that except all the plans are going the way we expected them to go and this should be launching some at the end of this year. And would we consider doing it for other things? So, the answer is, we wouldn’t do it for Careers because there is nobody who does Careers in the way that we’re capable of doing it. The magic of what we are building is the ability to have access to millions of millions of millions of students and their records and their history, all the data about them it's in our proprietary student graph, and then the ability to do matching based on that uniquely done by how we are capable of doing it versus others. So, we met with all the players in the space. Obviously, everybody would like access to this Chegg audience, but we believe what working on is going to be special and unique and has the opportunity to be huge. We are just taking our time as we’ve done with everything. I mean we need people to just understand that when you’re dealing with people’s lives and their brains, and their careers, we got to make sure the things we do are right before we roll them out on this. So, we only take our time with these things. So, we are very excited though and I think you are going to see some examples of that in 2018 about the employer side as well as the student side. So for Careers absolutely not, but for other things, we see ourselves is -- I mean we do essentially for the publishers with textbooks and eTextbooks as an example. So, whatever is the best way is most efficient way to leverage our brand, our reach, our data to bring students better outcome, we will consider.

Our next question is from Brent Thill with Jefferies. Please proceed with your question.

Good afternoon. A question for Dan on just kind of the next leg of the tutor business. So if you could just at a high level walk-through of how you see that business enfolding over the next year? And I’ve just a couple of quick follow-ups for Andy.

Sure. So, the tutor business, we're remained really extraordinarily excited about. We see those things that we are looking for happening. The magic of it becomes the ability to match the exact right tutor at the exact right moment and that is what we have been working out since we’ve started building the Company. We’ve rebuilt the tech platform. We’re rebuilding the matching platform to be able to do it at scale because it’s getting to the point where we have to think about how to make sure that it can scale and then eventually it'd be global. You won’t really see much new except features like the ability to schedule now in advance. So, if you're in high school or if you're in college, you want to schedule the same tutor, you want to schedule a specific time, the ability to do that. Most of what we are working on this year which will bleed into next year are the tools for the tutors themselves. The ability to get access to the student faster, you get access to the question that the student is working on faster to be able to do the match better, to rebuild the whiteboard and the learning space inside of tutors and build tools that allow tutors to work even more effectively with students. So, we are on track to doing the things that we want. We are extraordinarily excited about it. And of course as we had in our prepared remarks that part of ‘18 is to start really rolling it out and integrating it into the Writing product, which we haven’t been able to do yet.

Great, thanks. And for Andy, just on 2018, you mentioned 606 will effectively slow part of the revenue growth. I think it's been midpoint of your close to 17% growth, if you kind of added that back in. What type of impact is that have any for ‘18? And if you could also just talk a little bit about the CapEx, you mentioned you're going to come in a low higher end on ‘17 at $27 million. Is that run rate that we should look at going forward in the ‘18? Or does that -- do those capital when you start to fade as you shift into ‘18?

Yes, so couple of things. I think it’s super important to understand that when you look at 606, it has no impact on Chegg Services. End of story. We mentioned that earlier. It does have a small impact on -- impact both on the revenue and expenses in the Required Materials business, but no impact on the business itself in the sense that we've said for several years that we believe required material will be $50 million to $60 million of -- $60 million on annual basis breakeven in somewhere 5 million and 6 million units. So, we don't see anything changing in that, just accounting changes only. As far as CapEx and some of the other things around 2018, we'll give more details around 2018 when we get into the February call. So, yes, so look forward to that in February.

Our next question is from Douglas Anmuth with JP Morgan. Please proceed with your question.

Thanks for taking the question. I've got a couple of guys. First, I mean, when you've seen the acquisitions over a last couple years in Writing and then more recently in Math. So, just if you could talk a little bit about whether you think there are other subjects, specific opportunities where you can expand? And then, can you give any color on what M&A might be adding into the '18 revenue? Just kind of how you're thinking about your contribution there? And then, can you just clarify on the higher CapEx in ’17? It sounds like from the last question, you’re not ready to give an '18 CapEx number, but if you could just talk about the higher number in ‘17? And is that strictly for more study content basically? Thanks.

So, this is Dan. I’ll probably take most of those because although he can’t tell and he is actually sick, but he has been a trooper and came in for the call. So, he'll chime in hopefully. So, on the M&A side, one of the things that we’ve actually done Doug is we’ve actually slowed it down a lot over the last couple of years. So, we didn’t make a significant -- we did writing a year and a half ago. And we -- Math is the only thing that we’ve done this year. And it’s technology and a small team of geniuses in this subject, and it’s going to be integrated into Chegg Study and other Services. And we’re extraordinarily excited about it because it’s such a big vertical. And in many cases you know we -- the M&A opportunities are always going to be available because given our reach in our brand, in our ability to execute and grow businesses faster at a lower cost, we’re always going to look at things, but we don’t have a need to do anything other than execute on what we’re doing in order to achieve the numbers next year. So, you’ll ask what the impact to M&A would be on the numbers next year. The answer is zero because it's an expense that a moderate expense and we've assumed that into our guidance going forward. So when we give guidance, it’s all about the organic businesses that we have. And if anytime we've [ratted], we thing we've broken out and said this is what it adds onto. And on the CapEx, it’s -- we said all along that it doesn’t take that much capital around the Company that what we do is when we see opportunities to invest to grow faster than we take them, so the slight increase and it's a couple million bucks. In the fourth quarter, I had to do with the acquisition of Math and the fact that in the Q&A side, you're seeing students are actually using us more and more often for more things, and the volume of questions that they're asking on a daily basis and all the different ways like 800,000 questions a day. Now, the majority of them are ones that we already have indexing catalog and that's been great. But what we don't want to do is miss the opportunity to grow into new verticals and new subjects that they're interested in using Chegg Study for because we believe that expands the TAM. So as we think about next year's CapEx, it won't be significantly differently than what you would expect it be. It's not like there is suddenly a brand new CapEx charge that changes what we've been doing. But whenever we see an opportunity to grow in investment content, we do it.

Yes, I mean I think just to reiterate what Dan said. When you look at M&A of the 2018, bottom line is Math. Math isn't contributing to revenue, but it will contribute to expense, but it is included in our 2018 guidance. And then with respect to CapEx, you would anticipate that our overall Chegg Services revenue growth would, the group would be much higher than any type of CapEx growth.

And that's just overall, what you're seeing is just great organic growth of the Company. The fact is that the business is hitting on all cylinders. And as we said in the prepared remarks, it's actually doing better than even we anticipated. They're growing faster. They're more profitable. And we just couldn't be more excited about having essentially completed the transition and going into next year already. So, it's exciting time for us, big difference.

Can you follow up on one thing on Chegg Study, if we look at pricing? Now, I was just curious to get any of your thoughts on, what you think pricing trends or pricing power could be overtime? How you balance that with growth?

Yes, and that's the magic question, which is we use sophisticated A/B testing and price testing all the time every day as much as 15% of the audience will get a different price on different day with different messages. So, we are abundantly aware of what price we could be charging. And we're choosing to stay with the current price because we've not actually seen a decrease in the growth rate. So even though Chegg Study has been around a long time, even though it's getting a lot bigger even though it's the base is a lot bigger. We haven't really seen any significant reduction in growth rate. In fact, we've seen it's really come in to its own. So, we don't see a reason with such high gross profit margins to change the price. But we do know we have significant pricing power, given the fact of not only the test results which you can just look at the usage. We have record usage in terms of how often they use it, how many pages they consume, what they use for the number of questions that they're asking, the number of the subjects that they're asking it in. I mean Chegg Study has become a beast, and we just -- what we want to do is be able to grow as big as we can and invest in as much as we can and continue to increase the TAM. So we don't have to think about pricing at this point, but we do know we have pricing power.

Our next question is from Corey Greendale with First Analysis. Please proceed with your question.

Thank you. This is Ken Wang on for Corey. Dan and Andy congrats on a very strong quarter.

Thank you.

Thank you.

So, just wondering, thinking about the Cogeon acquisition. Any additional color you can offer us just on somehow it was valued?

Yes, I'll start and if Andy feels well enough, we'll have him chime in, which is it really was valued on the quality of the technology which we look at. I cannot tell you how many NAF companies we've looked at over the last two years? How many we’ve engaged in? How many we've evaluated? And we’ve done it on a global basis. We love the team. It’s a family. They’re chess champions. They are math geniuses. They built a technology that’s newer than everybody else can scale and can be global. And for us cannot only be Math as a vertical, but Math, the technology, they don’t actually allows Math to be and underpinning in all the others STEM categories when Math has become essential. So for us, it was the right company at the right time in the price. In sometimes, when you buy start-up like, the prices what the clearance types will be. So, it was not particularly expensive, but we have to make sure that we are able to secure it. So others didn’t and when we look at all the choices, we felt like this was by far the best technology and capability we’ve seen in the best team. They’re located in Berlin. We already have an office in Berlin. So, we’re combining those offices together and we’re really excited about it.

And then, it's also wondering if you can kind of give any additional color whether it’s quantitative or qualitative. Just anything on the number of products your average user is utilizing?

We don’t give that number out, but what we have given out is the increase in the attach rate. So, we’re seeing increase attach rate everywhere. So, initially, it was textbook to our digital services particularly Chegg Study. Now, it’s actually Chegg Study and our digital service is back to textbook. Because we believe for the first time, it’s very likely by the end of this year we’ll have more digital subscribers than we do textbook customers, that’s a big change in such a short period of time. We continue to see huge attach between Chegg Study digital services and tutors. And so, we don’t release the numbers, but it continues to grow all the time. We had a team is only job it is do increase attach rate. We haven’t fully integrated writing in yet, so we think it’s just going to increase. But the collective network of 78% of people knowing Chegg by least one of our brand name, the NPS being over 80 and the fact that over 85% of our traffic comes in organically, I can tell the better story.

Our next question from is from Mike Grondahl with Northland Securities. Please proceed with your question.

Two things. One, any update on Chegg video and kind of the services there that you talked about last quarter? And then maybe secondly, how does the opportunity go with Sallie Mae kind of t hat they were going to make alone in that student could get a couple of months of Chegg Services for free. Any update there?

Yes, on both. Well, limited update in terms of what we can give. On the video, I think we articulated last time, but if we didn’t, let me just be clear. We’re rolling it out very slowly. We only have about 500 videos currently rolled out. Where they’re seeing, they get excellent usage. But what we said, it was by the end of ’18, we expect to have, it’s fully deployed. We think it’s about 14,000 or 15,000 videos that will do that. But where we tested and where they’re deployed, the feedback has been extraordinarily positive. And what we’re learning is, what should their length be, what should the format be to get them right because we can both license them, which is what the original 500 to 400. And then we can do them ourselves through our subject matter experts and which we have 35,000 as you may recall and through our tutor network, which we have tens of thousands available to us. So, we’re really just testing length of video, format of video, those kinds of things. But where it's being seeing, it's being picked up as it just as you'd expect which is they love particularly on mobile devices. As our Sallie Mae, Sallie Mae has been really great. That deal goes all the way through the middle of next year. And so, they were two -- where we want to get through two full semesters to see how it works. But I think we’ve all been extraordinarily happy with the fact that, it’s something that students really wanted, it’s something that it's taken us upon. And we really know the impact of it on one after the first quarter is complete with sort of first half of next year is complete. And when the people who've taken it for four months or whatever, whether or not they renew, and we haven't reached that point yet because the school year, their quarter just started, the school year. So, we don't know, but I would say that we -- both sides are really, really happy with the take up rate andwith the communication and with students feedback about it.

Our next question is from Alex Fuhrman with Craig-Hallum Capital Group. Please proceed with your question.

Great. Thanks guys for taking my question and congratulations on a great quarter. I did want to ask a little bit about the guidance for next year and particularly as it relates to Required Materials. I know you've kind of spoken in the past about that eventually settling into about $50 million, $60 million business. And obviously based on your guidance for this year, it looks like it's going to be quite a bit higher than that. Can give us a little bit of sense on why that business was strong this year? And why you expect it to settle to a lower rate? And then just from a larger picture perspective, obviously the Required Materials as sounds like has becoming a much smaller part of your user base, but historically I would imagine that was a very important channel in terms of lead generation for Chegg Study. how important is that still today for you?

So, I’ll take most of it, but I'll let Andy talk about '18. So, why did we have a really great quarter? First of all, we have a great team and they work very hard to understand the industry. If you just watch the trends, it's our belief that we picked up 3 points a share based on independent research is being done. Predominately, it’s coming from what you would think, which is the traditional channels that students used to get these books. And I think we've just done extraordinarily great execution. On top of that, other things have worked very much in our favor of things that we made happened. So for example, consignment, consignment makes a big deal in this business because it allowed us to expand our catalog without utilizing any cash, which means what we do with Ingram that allows us to buy more books at lower price because we get the newer books at no price, which gives us the brand new books which historically we haven't necessarily have because we didn't want to pay the $90 or $120 together. Now, we get them on consignment. So expands the catalog and what we have and not everybody starting those deals. One of the things that we did was, we worked with the publishers over the last many years to be a partnership and whether that was on the frog-step which were the first to sign and work through, which we had very little at all, but we were able to help make the rules with them or on consignment the same thing. So, because we were out of the shoots first, we as the publisher see it as a partner. You saw the distribution deals last time, there’ll be more of those coming in the…

Yes, Alex, it’s just a couple of things I think that’s important to understand is we’re anticipating that our overall bulk of textbooks will be about what they were this year. And when you consider that I think most people consider and almost coming down in college and that would also indicate the right of keeping or gaining share again. To Dan’s point and what I’d mentioned earlier in the prepared remarks, the biggest impact the next year really is the 606 impact which has no impact on profitability. And then obviously you've got the -- as we’re seeing over the last few years, we continue to see slight declines in pricing of textbooks. But other than that, it’s really pretty much business as usual for textbooks.

Our next question is from Eric Martinuzzi with Lake Street Capital Markets. Please proceed with your question.

Yes, I wanted to ask about subscriber retention. As I look here Q3, we’re at 1.2 million, roughly flat. I know it’s a little bit dangerous as to compare sequentially on the subscribers given the seasonality of your business. But I was wondering if you could take us layer deeper there on the subscriber retention versus past trend?

Yes, I will start and let Andy go with the first one. It’s not only a little dangerous. It’s apples-to-frogs. The quarters have no connection to each other as it relates to the time of year because remember we are coming off the summer. Now, it’s differing if you made that connection between the fourth quarter and the first quarter. So really although we do the financial year accounting, the real year is August through middle of May, it’s really the college year. So our retention has been phenomenal, best we’ve ever seen. The fast of the matter is Chegg Study the more we invest, the more content, the more format, the more subject, the more questions that we let them ask and that we answer, the bigger the TAM gets, the earlier they come and the longer that they stay. And that formula is working and you see it working in other business models whether it's Spotify or Netflix. This generation really wants easy, low price, high quality, overwhelming value subscription services and Chegg Study is clearly becoming one of them when you calculate what the likely growth is over the rest of the year, it's pretty big. Andy? And we got to cover it.

I think we got to cover it, yes.

When you say it’s been phenomenal. What metric is phenomenal measured on?

Well, first of all just look the results. So, if you look at our year-over-year growth rate, if you look at the revenues, if you look at the margins, if you look at the profit, if you look the organic traffic, if you look at the ability to drive in the tutors. But also the reason the numbers get that good is because students are starting earlier than they had because they’re familiar with a product, they know they wanted and they start signing up when they first get these textbooks. That gives us a longer period of time with them. If you look at the monthly renewal rates, if you look at the -- that's a pause, the number of people that pause and then they came back on, all of those things are key drives to accelerated growth, which is what we’ve seen. So, if I’m struggling to find a metric, it doesn’t look good as it relates to Chegg Study because honestly it’s become for millions of students, it’s really become a necessary product. And if you just look at Twitter and see how they respond to it, they love it. But if you just look at the volume of 74 million content views as an example, it just shows you, and that 63% growth year-over-year, I don't know if we can find a better metric.

And then just one housekeeping item. Given the equity raised in August, I was wondering, Andy. Do you have and maybe I missed it in some of the materials, but do you have a basic shares outstanding for quarter end and then kind of a diluted shares outstanding to go along with that?

Yes. So, I can get that for you. Yes. So, we’re -- the basic shares outstanding at the quarter end were -- excuse me, the average weighted shares outstanding were 103. The actual shares outstanding I think I don't have that right up the top of my head, but, I think, it's right around 108.

Our next question is from Alex Fuhrman with Barrington Research. Please proceed with your question.

You imagine you have acquired it. And…

You’re going to have to start again. You’ve broke out. We did not hear the beginning of the question.

Okay. No, I was just thinking back to imagine easy when you had first acquired it. You do have mention that it had not reached its full potential in monetizing its customer base through subscriptions. And I just kind of wanted to get an update on how the monetization process is going, and as much as you can share perhaps plans for further monetization?

Yes, so great question. And we do still believe today even though it’s well outperformed our own expectations. Clearly, we’re having a year that even we did not anticipate. And Imagine Easy has going to big part of that and because that has another team that is executed quite brilliantly. And here’s what they’ve executed on. So more people using it, sessions are about the same time, but the pages that they consume are more in the frequency in which they consume it. And that allows for creation of additional ad inventory because part of the revenue comes from ad inventory. In addition to that the application of our data, first party data to their programmatic advertising has absolutely not only increased the amount of inventory, but the revenue per inventory. So that has been a real positive because that's real profit and makes the ads more relevant and contextually better for the students which is always good. And then on the subscription side, what's been really interesting is as we continue to perform at or above our expectations in the subscription business. And this is even prior towards launching the beta product which is out there being tested on BibMe, which is a small percentage of the BibMe audiences getting the new product, and the new product is the ability to help them with plagiarism, help them with spelling, help them with grammar, help them with style. And we're rolling it out just a little bit more each day. There is a clear path to doing that. And even we see improved conversion on Math as we expected to see. So, we just feel like people need to understand that when you're talking about our education it's 15% of the U.S. population at anytime. But the demographics of U.S. education environment is by 2021 put out 75% of people will be English is their second language. That there isn't financial support or tutoring support in most of our seniorities to be able to help people learn and write and do those things. And so we just see all of these markets getting bigger for these capabilities. And one of the things we learned from writing which helps us driving buying our math products and the specific when we brought is that technology backed by human help can actually teach people at scale on a really low cost. And that is the Chegg mantra and so, we don't see any of our products at a point where we're thinking about them slowing down, but quite the opposite. Does that help?

That helps a lot. Thanks so much Dan.

Our next question is from Aaron Kessler with Raymond James. Please proceed with your question.

Yes, hi guys a couple of questions. Maybe, it's a lot of time we have the question just on the sizing the Chegg Study potentially. I think you've talked the 10 million roughly students. And what's the reasonable number do you think longer term to get to you kind of in the Chegg Study product? I mean something you probably have 1-5 range plus today. Thank you.

Yes. So that number 10 million we put out a year ago November for our first Analyst Day. And really what we were really trying to do is make the Math really easy for people to understand because most people don't participate in the education space whether you're an investor or an analyst. And so, it was really sort of difficult to size for people. And what we said was the smallest possible number it could be as if we only stayed in TAM. And we only stayed at that point of 24,000 ISDNs, which were now an excess of 27,000 ISDN. And if Q&A didn't expand to different subject that they were 10 million students that were obligated to subscribe or to buy those textbooks that we had covered, so we said that has to be the smallest of the possible TAM just to size it for people because we'd only reached -- we'd already or only depending on who we are 50% of that market. As you can see, we continue to grow at the same rates that we've been growing on top of a much higher base. We actually believe and we try to say this on the last couple of calls which is the more we invest in the product, the more content, the more formats that we deliver that content, the more subjects, the greater the Q&A that we add. That the TAM is probably two to three times the size just in the U.S. alone about original number we gave out. And that’s because, it will cover the other 50% of subjects that we don’t cover. And it will go deeper in the subjects that we do cover. So we want wide at first now we're going deeper. So we're freshmen all the way through the seniors on key majors and that was not a year ago, the plan. And we believe through concept AI, which is the ability to build for students high school math freshman year, high school math sophomore year, these were all things that the technology and the content we have is allowing us to build. So, we actually see a scenario where every student will want Chegg Study as their companion, as we continue to add more capability to it. So, we’ve been pleasantly surprised and that the more we invest to bigger the market opportunity gets. And that’s why we don’t think, we’ve seen any slowdown.

Thanks Dan. Andy, real quick. Can you just make the stock comp outlook for Q4? And maybe how we should think about that go into 2018?

Yes. So, when you look at the stock comp for Q4, it’s a little bit higher than we had originally expected. And just as a reminder to folks, when you look at the stock grants to be execs that's 50% of those are based on performance based, and as we perform much better this year, we've had to slightly increase our stock comp expense. As far as looking forward into 2018, once again, we’ll get more into 2018, when we get to the February call, so stay tuned.

Our next question is from Jeff Silber from BMO Capital Markets. Please proceed with your question.

It’s Henry Chien calling for Jeff. Just had a question on the subscription growth and the revenue growth. Just curious how should we think about the difference between those two growth rates? And more broadly for the quarter, I was wondering if you could add a little bit more color on what products drove revenue growth or any way that you look at it? Thanks.

So, I’ll take the second one first and let Andy answer the first one. The second one is they’ve all grown, right. We believe that we’re very early in all of these, particularly early in tutors. Because we’re building a market that has never been built before, which is an online expert market of human health at an affordable price, so obviously, we see growth there. Writing, we talked about earlier the fact that it’s just performing better than we have originally expected and that all credit goes to that team and what they’re building and how they’re executing. And Chegg Study also outperformed and those are the three big services that we see. And we don’t see a reason for them to slow anytime in the near future that we can see. So, I think as it relates to the question over sub-growth versus revenue, it used to be other way around and it’s reversed. And I’ll let sort of Andy to give you that detail.

Yes, I think when you look at the sub-growth versus the revenue growth, If you take a look over the last few years, we’ve seen variances between sub-growth and revenue growth, primarily because not all -- remind everybody, not all of the revenue that we have in Chegg Services actually subscription based. So, see there will be variances between quarters and even between years and we’ve seen that. But we’re very confident that we’ve talked about our longer term model of the plus 30% revenue growth for Chegg services, and we would anticipate that we would see subscription growth -- subscriber growth at least that.

Got it. Okay. That makes sense. And in terms of your expectations for 2018, are you assuming contribution from any of the new products? Or any -- or just curious, how much impact or how much you're expecting that the new products to contribute to growth rate in 2018?

Yes, we’re not anticipating -- we're anticipating little to no contribution from the new products. So, when you think about 2018 and really much of 2019, think about Chegg Study, Writing, Tutors is the key drivers for our growth. When we look at the investments, I think I’ve mentioned this earlier. When you look at the newer products, the math, the Chegg Careers, those are growth drivers that we think will contribute in 2019 and beyond.

Got it. Okay. Thank you so much.

But one of the great benefits to having in a majority of our revenue now coming from subscription businesses or businesses that act that way is it's much more predictable, and it’s just an exciting time, it’s been a lot of hard work. So -- but we appreciate all the feedback.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the call back over to Dan Rosensweig for closing remarks.

So thanks, everybody for joining our call. As you can see, the financial results are mirroring what we hope that they will do, if not better, based on the vision we laid out several years ago, which is to be an all-digital education platform, serving the modern student in the way that they feel comfortable learning in the subjects that they need to learn, available on-demand and inexpensively, but incredibly high quality, and the Internet and technology and A.I. and computer learning, all of those things should be in need to be apply to education. In the last four years, Chegg has gone from a smallest company to a company that we believe is driving need to change in the industry and that is because we have an incredible committed team. Our people all over the world who are working day and night to improve the outcome of students, I just want to congratulate and thank them. And it's been a great year-to-date and sets us up for a phenomenal 2018, and we look forward to catching up with all of you after our next quarter’s earnings. Thank you all very much for joining the call.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.