Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $16.5 million, up 13% year over year, at the top end of guidance range [15] - Annual contract value (ACV) plus royalties reached $69.1 million, a 15% year-over-year increase, marking a record high for the company [16] - Remaining Performance Obligations (RPO) at the end of Q2 were $99.3 million, representing a 28% year-over-year increase, also a new high [16] - Non-GAAP gross profit for the quarter was $15 million, with a gross margin of 91% [16] - GAAP gross profit was $14.8 million, with a gross margin of 89% [16] - Non-GAAP operating loss for the quarter was $3.5 million, flat year over year [18] - GAAP operating loss for Q2 was $8.2 million, compared to a loss of $7.4 million in the prior year [18] - Non-GAAP net loss for the quarter was $4.4 million, or diluted net loss per share of $0.11 [19] - GAAP net loss for the quarter was $9.1 million, or diluted net loss per share of $0.22 [19] - Free cash flow was negative $2.8 million for Q2, approximately at the midpoint of guidance range [19] Business Line Data and Key Metrics Changes - Increased adoption of Arteris' technology in enterprise computing and automotive applications, driven by AI computing [8] - Over two dozen FlexGen installations at multiple customers, expected to contribute to revenue over time [9] - Expansion of multi-die solutions announced, supporting chiplet architectures and collaborations with major industry players [10][11] - Introduction of Magellan Packaging, a new software product aimed at automating IP packaging for silicon chiplets [12] Market Data and Key Metrics Changes - The semiconductor industry is shifting from traditional monolithic chips to multi-die or chiplet architectures, particularly driven by AI workloads [10] - Anticipation of a growing number of heterogeneous chiplet projects, with current estimates at about 30 projects out of 600 to 700 SoCs [44] Company Strategy and Development Direction - Focus on strategic investments in R&D and customer support to drive technology innovations and expand market reach [18] - Ongoing development of new silicon system IP technologies and strong relationships with leading electronics companies [12] - Monitoring global economic uncertainty while capitalizing on opportunities for customers to outsource system IP needs [12] Management's Comments on Operating Environment and Future Outlook - Management remains encouraged by strong deal execution, evidenced by a 28% year-over-year growth in RPO [21] - Despite foreign exchange fluctuations impacting operating expenses, the company sees promising signs of accelerated interest from major customers [21] - Guidance for Q3 2025 includes expected ACV plus royalties of $69.5 million to $72.5 million and revenue of $16.8 million to $17.2 million [20] Other Important Information - The company was recognized with the AI Engineering Innovation Award for FlexGen at the AI Breakthrough Awards [9] Q&A Session Summary Question: Details on AMD announcement and scope of partnership - AMD chose Arteris' FlexGen technology for various products, including AI data center chiplets, after extensive evaluation against competitors [26][27] Question: Impact of AMD's decision on internal teams and performance metrics - AMD will continue using its internal cash coherent fabric while augmenting it with Arteris technology for non-coherent applications [36] Question: Customer adoption of FlexGen and support for decision-making - There are over two dozen FlexGen installations, with expectations for sales to begin in the second half of the year [37] Question: Update on heterogeneous chiplet projects - Currently, about 30 heterogeneous chiplet projects are identified, with expectations for growth in the coming years [44]

Financial Data and Key Metrics Changes - In Q2 2025, worldwide revenue reached $61.1 million, a 16% increase compared to 2024, driven by strong performance across Trauma and Deformity, Scoliosis, and OPSB [26][27] - US revenue was $48.1 million, a 17% increase from 2024, representing 79% of total revenue [26] - International revenue totaled $12.9 million, reflecting a 12% growth compared to 2024, accounting for 21% of total revenue [27] - Gross profit margin decreased to 72% from 77% in 2024, primarily due to higher 7D growth and increased international set sales [28] - Adjusted EBITDA improved to $4.1 million, a 50% increase from $2.6 million in 2024 [32] Business Line Data and Key Metrics Changes - Trauma and Deformity global revenue was $41.7 million, a 10% increase year-over-year, driven by PMP femur, PMP tibia, DF2, and OPSB [27] - Scoliosis global revenue reached $18.5 million, a 35% increase compared to the prior year, driven by increased sales of Response, ApiFix, and 7D Technology [27][28] - The OPSB business grew over 20%, surpassing initial guidance for 2025 territory expansion [14][20] Market Data and Key Metrics Changes - International sales were solid, particularly in Europe and the Middle East, with strong surgical demand [6][23] - The company achieved its first EU MDR approval through LP Canada, which is expected to catalyze future growth [24] Company Strategy and Development Direction - The company is focused on expanding its OPSB strategy through territory expansion, accelerated R&D, and scaling its sales force [14][20] - The 3P pediatric plating platform is expected to enhance market share in trauma and limb deformity, with multiple new systems planned for launch [13][89] - The company is committed to helping more children and significantly growing revenue while improving adjusted EBITDA and reducing cash burn [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong momentum throughout 2025, driven by successful scaling of OPSB and innovative product launches [8][9] - The company raised its revenue guidance for 2025 to a range of $237 million to $242 million, representing year-over-year growth of 16% to 18% [33] Other Important Information - The company hosted 182 unique training experiences for over 3,420 healthcare professionals in Q2 2025 [25] - The company ended Q2 2025 with $72.2 million in cash, short-term investments, and restricted cash [32] Q&A Session Summary Question: Can you discuss the clinic strategy and the performance of existing clinics? - Management noted that existing clinics are seeing growth due to investments made on the sales side, while new Greenfield clinics are contributing to revenue but not yet at maximum volume [39][40] Question: Can you provide insights on the Scoliosis and T&D business growth expectations for the second half of the year? - Management expects Scoliosis growth to remain strong, potentially exceeding overall company growth, while T&D growth may be lighter due to previous quarter comparisons [45] Question: What caused the selective case slowdown in the limb deformity segment? - Management indicated that the volume was lighter in the first part of Q2 but rebounded strongly in June, attributing the fluctuation to normal business ebbs and flows [49][50] Question: How is the international product expansion strategy structured? - Management stated that international growth is expected to outpace US growth, with new product launches planned on a quarterly basis following EU MDR approvals [64][66] Question: What are the expectations for the trauma portfolio and potential product gaps? - Management highlighted the introduction of the 3P system as a significant opportunity to fill gaps in the trauma and deformity market, with plans for multiple system launches over the next few years [88][89]

Financial Data and Key Metrics Changes - Net sales increased by 9% year over year, reaching $309 million for the first time in quarterly revenue [29][30] - Adjusted EBITDA rose by 12% year over year, with an adjusted EBITDA margin of 7.4%, the highest in three years [35] - Free cash flow for the first six months of 2025 was $52 million, nearly three times the full-year free cash flow achieved in 2024 [5][36] - Cash and cash equivalents grew to an all-time high of $311 million, a 27% increase year over year [10][37] Business Line Data and Key Metrics Changes - Revolve segment net sales increased by 9% year over year, while FORWARD segment net sales increased by 10% [30] - Domestic net sales grew by 7%, and international net sales increased by 17% year over year [30] - The return rate decreased by more than 1.5 points year over year, contributing to improved profitability [9] Market Data and Key Metrics Changes - International markets showed strong growth, particularly in China, where sales more than doubled over the past two years [12] - The company reported a 17% increase in international net sales, with nearly all regions experiencing double-digit growth [11][30] - The luxury market overall declined year over year, but the company gained market share [7] Company Strategy and Development Direction - The company is focused on expanding brand awareness, growing the customer base, and enhancing connections with the next generation of consumers [10] - Continued investment in owned brands is a priority, as they generate higher margins compared to third-party brands [24] - The company is exploring physical retail opportunities, with plans to open a new store in Los Angeles by the fourth quarter [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current volatile environment, citing strong cash flow and a solid balance sheet [44] - The company anticipates that tariff mitigation efforts will improve gross margins over the long term [39] - Management noted that while the tariff landscape remains uncertain, recent improvements in tariff mitigation have been promising [39] Other Important Information - The company has successfully implemented AI-driven enhancements to improve the shopping experience and operational efficiency [14][15] - Marketing investments represented 15.2% of net sales, remaining flat year over year [32] - The effective tax rate increased to 33.7% due to certain discrete tax items [34] Q&A Session Summary Question: Can you elaborate on the tariff mitigation efforts and their long-term benefits? - Management indicated that partnerships with brands have been strengthened due to tariff pressures, which should yield long-term benefits [46][47] Question: How should pricing be adjusted in response to tariffs? - Price increases are expected to be mid-single digits in Q3, with adjustments made in line with market trends [49][50] Question: What are the trends in U.S. versus international sales? - International sales showed strong double-digit growth, particularly in China, while U.S. sales increased by 7% [53][57] Question: What is the impact of tariffs on gross margin? - Tariffs had a negative impact in Q2, but this was offset by improvements in markdown margins and owned brand sales [65][66] Question: What progress has been made in reducing return rates? - Management is optimistic about reducing return rates further, although tougher comparisons are expected in the second half of the year [68][69] Question: What advancements have been made in AI initiatives? - The company has made significant progress in AI enhancements, including improvements in search algorithms and customer service technologies [70][72]

Financial Data and Key Metrics Changes - The company reported product revenue of $52.4 million for Q2 2025, representing a 16% year-over-year increase [22][28] - For the first half of 2025, product revenue increased 15% to $95.7 million compared to the same period in 2024 [22] - Non-GAAP adjusted EBITDA for Q2 2025 was $935,000, marking the fifth consecutive quarter of positive adjusted EBITDA [28] Business Line Data and Key Metrics Changes - IFC revenue for Q2 2025 was $5.6 million, up from $2 million in the prior year period, with strong demand driving growth [24] - The core platelet franchise continues to be a key revenue driver, with increasing adoption of pathogen-reduced platelets in the U.S. and international markets [9][14] - The INT-two 100 illuminator was launched, receiving positive feedback and contributing to product growth [10][15] Market Data and Key Metrics Changes - North American product revenues increased 17% year-over-year in Q2 2025, while EMEA product revenues rose 21% [23] - Canadian Blood Services transitioned to 100% routine use of INTERCEPT platelets, and growth was noted in the Middle East [15] - The company is addressing regulatory requirements in China to strengthen its market position [16][17] Company Strategy and Development Direction - The company aims to transform blood safety and availability through its INTERCEPT product portfolio, with a focus on expanding its market presence [6][31] - The anticipated regulatory approval of the INTERCEPT red blood cell program in Europe is expected to enhance customer relationships [32] - The company is committed to achieving positive non-GAAP adjusted EBITDA for the full year 2025 [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exceeding the full-year 2025 product revenue guidance due to strong customer demand [7][31] - The company remains mindful of macroeconomic and geopolitical factors but believes its value proposition and pipeline position it well for future growth [20] - The strong commercial results and product development progress indicate a sustainable growth trajectory [20][31] Other Important Information - The company received a $7.2 million award from the U.S. Defense Department for a study evaluating the utility of early IFC in trauma patients [12] - The company ended Q2 2025 with $78 million in cash and equivalents, slightly down from $80.5 million in the prior year [29] Q&A Session Summary Question: Revenue guidance for the year and expected cadence - Management expects continued growth in the back half of the year, with a flattening from Q2 to Q3 due to seasonal factors and deferred revenue recognized in Q2 [35][36] Question: EU red blood cell opportunity and TAM - The expanded CE Mark submission allows access to all patient populations, reducing initial limitations and opening up new opportunities [37][38] Question: Key drivers for IFC guidance and quarterly cadence - The strong pipeline of new hospital customers and increased supply position are expected to drive growth, despite some backlog being cleared in the first half [42][44] Question: Operating expenses and investment growth - The increase in operating expenses is primarily due to government contract activity and cost of living adjustments, with no significant one-time expenses [45]

Evolus (EOLS) Q2 2025 Earnings Call August 05, 2025 04:30 PM ET Speaker0Good afternoon, everyone, and thank you for standing by. Welcome to Evolus Second Quarter Earnings Conference Call. As a reminder, today's conference is being recorded and webcast live. All participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session.I would now like to turn the conference over to Narek Segarian, Vice President and Head of Global Investor Relations and Corporate Commun ...

Financial Data and Key Metrics Changes - Second quarter revenue reached $442 million, exceeding guidance and reflecting a 21% year-over-year growth, marking the third consecutive quarter of growth [5][18][19] - Earnings per share (EPS) was $1.50, up 76% from the previous year, the highest level since 2022 [18][19] - Gross margin improved slightly to 38.1%, with operating margin increasing by 110 basis points sequentially [18][21] Business Line Data and Key Metrics Changes - Semiconductor revenue was $210 million, up 11% year-over-year but down 6% sequentially due to customer delivery schedule shifts [19][20] - Data center computing revenue surged to $142 million, up 47% quarter-over-quarter and nearly doubled year-over-year [20][11] - Industrial and medical revenue was $69 million, a 7% sequential increase but down 13% year-over-year [20][12] Market Data and Key Metrics Changes - The semiconductor market showed solid year-over-year growth despite a sequential decline, influenced by tariff impacts and customer inventory management [19][51] - Data center demand is expected to remain strong, with projections for over 80% growth in 2025 [15][28] - Industrial and medical markets are showing signs of recovery, with increased backlog and improved customer inventory levels [12][20] Company Strategy and Development Direction - The company is focused on a diversification strategy across three distinct markets to mitigate cycle risks and enhance profitability [6][15] - Investments in technology and capacity are being made to support long-term growth, particularly in data center and semiconductor markets [7][16] - The closure of the last China factory is expected to contribute to gross margin improvements, targeting 40% by the end of 2025 [9][28] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining data center revenue growth into 2026, driven by high investment from hyperscalers [36] - The company anticipates modest sequential growth in industrial and medical markets, with a stronger order book driving higher revenue in the second half of the year [15][72] - Tariff impacts are being actively managed through various mitigation strategies, with expectations for continued operational improvements [25][26] Other Important Information - Total cash and cash equivalents at the end of Q2 were $714 million, with net cash of $147 million [22][24] - The company repurchased $23 million of common stock during the quarter [22][24] - Free cash flow grew 21% sequentially, indicating strong cash generation capabilities [24] Q&A Session Summary Question: Sustainability of data center demand - Management believes data center revenues are sustainable into 2026 due to continued high investment from hyperscalers [36] Question: Content per server for AI data centers - AI data centers have significantly higher power consumption, leading to increased revenue potential, though not on a linear basis [42][45] Question: Changes in semiconductor growth projections - The semiconductor growth projection was adjusted to mid-single digits for 2025 due to tariff impacts and market conditions [49][51] Question: Impact of tariffs on gross margin - Tariff costs are expected to remain at current levels, with mitigation strategies in place to offset impacts [53][55] Question: Design wins in industrial and medical - Recent design wins are expected to contribute to revenue growth in the second half, alongside market recovery [71][72]

Financial Data and Key Metrics Changes - Organic revenues were essentially flat, aligning with previous guidance, while OIBDA was $124 million and AFFO was $85 million [11][24][22] - A restructuring charge of $19.8 million was incurred due to the reduction of approximately 120 employees, with expected annualized expense savings of $18 million to $20 million [17][18] Business Line Data and Key Metrics Changes - Billboard revenues decreased by 2.5%, primarily due to the exit of two large marginally profitable contracts in New York and LA [12][16] - Transit revenues grew by 5.6%, driven by a 17% increase in digital revenues, despite a 2.9% decline in organic revenues [13][14] - Digital billboard revenues decreased by 4.5%, while overall digital revenue grew by 1.5%, representing over 34% of total organic revenues [14][15] Market Data and Key Metrics Changes - The strongest revenue categories were legal, financial, service providers, and insurance, while weaker categories included entertainment, health and medical, restaurants, and alcohol [13] - The New York MTA saw mid-single-digit growth despite a strong 20% growth in 2024 [13] Company Strategy and Development Direction - The company has undergone a significant internal reorganization, rebranding sales teams and centralizing operational functions to enhance efficiency and focus on client relationships [5][6][7] - A redesigned brand solutions group aims to drive demand from enterprise marketers across major industry verticals [6][10] - The company is focusing on digital out-of-home advertising as a growing opportunity, particularly targeting digital media buyers who have not yet engaged with this ecosystem [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, expecting revenue growth to accelerate in the third quarter, driven by double-digit growth in transit and low single-digit decline in billboard revenues [28][29] - The company acknowledges challenges in the entertainment sector but remains bullish about future performance based on committed deals [38] Other Important Information - The company maintained a $0.30 cash dividend payable on September 30 to shareholders [26] - Committed liquidity is over $600 million, with total net leverage at 4.8 times, within the target range [25] Q&A Session Summary Question: Are you through the heaviest period of changes to the business? - Management believes they have made significant progress in transformation but acknowledges that work continues in optimizing sales strategy and modernizing workflows [34][36] Question: Can you unpack the weakness in the entertainment vertical? - The decline was attributed to the absence of key studios supporting their slate, but management is optimistic about future performance in this sector [38] Question: What are the drivers behind the acceleration in transit? - Key performance improvements in New York, management focus, and incentives have contributed to the growth in transit revenues [42][43] Question: Is the decline in static transit revenue structural? - Management indicated that the decline is likely structural, as there is a shift towards digital formats [50] Question: What is the potential for margin expansion in the back half of the year? - Expected annualized savings from restructuring could lead to margin improvements, with half of the benefits anticipated in 2025 [53]

Financial Data and Key Metrics Changes - Net sales for the second quarter reached $1,180 million, reflecting a 4.5% increase year-over-year [5][29] - Adjusted EBITDA was $67.7 million, slightly down from $67.9 million last year, with an adjusted EBITDA margin of 5.7% [33] - Adjusted EPS decreased to $0.23 from $0.25 year-over-year [33] - Gross margin was reported at 30.6%, down 30 basis points from last year but up 20 basis points from the previous quarter [30][33] Business Line Data and Key Metrics Changes - Comparable store sales increased by 1.1%, driven by a 1.5% rise in transactions, partially offset by a 0.4% decrease in average transaction size [29][30] - The company opened 11 new stores and closed 2, maintaining a target of 33 to 35 net new stores for the year [5][30] Market Data and Key Metrics Changes - The company operates 552 stores across 16 states as of the end of the second quarter [30] - The Pacific Northwest region has seen improvements in service levels and variety due to consolidation efforts [44] Company Strategy and Development Direction - The company is focusing on four strategic imperatives: improving new store performance, securing top talent, addressing execution gaps, and enhancing execution at scale [6][7] - A disciplined approach to store expansion is being adopted to ensure higher returns on invested capital [28][29] - The introduction of a new arrivals guide and real-time order guide aims to enhance inventory management and improve sales planning for independent operators (IOs) [12][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving comp growth in the second half of the year, supported by improved inventory management and pricing strategies [41][44] - The company is preparing for potential economic challenges, emphasizing its historical resilience during recessions [61][62] - Management reaffirmed the full-year guidance, increasing adjusted EPS due to favorable interest expenses [36][37] Other Important Information - The company raised over $5 million through its Independence for Hunger campaign, providing over 10 million meals to local organizations [26][27] - The restructuring plan is nearing completion, with charges incurred during the second quarter related to asset impairments and lease terminations [32][33] Q&A Session Summary Question: Can you discuss the comp guidance and confidence level for the second half? - Management is optimistic about comp growth, citing improvements in inventory and pricing strategies, as well as positive feedback from IOs regarding new tools [41][44] Question: What are the drivers behind the performance of newer store cohorts? - The company is focusing on infill markets and enhancing site selection criteria, which has led to better performance in new stores [51][53] Question: How is the health of the consumer and potential impacts from SNAP changes? - Currently, there are no significant changes in consumer behavior, and the company is well-positioned to attract value-seeking customers [60][62] Question: What are the expectations for gross margin evolution? - Management is confident in maintaining gross margins within the 30% to 30.5% range, with ongoing improvements in shrink and operational efficiencies [55][56] Question: Can you elaborate on the new arrivals guide and its impact? - The new arrivals guide allows IOs to reserve products outside their ordering windows, enhancing their merchandising capabilities and expected to drive sales [70][71] Question: What is the current health of the IO base? - The voluntary attrition rate among IOs remains below 10%, indicating a healthy balance between supply and demand [64][66]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $58.9 million, representing a 36% growth year over year, with 85% from the MRD business and 15% from immune medicine [20][21] - MRD revenue grew 42% year over year to $49.9 million, with clinical and pharma contributions of 65% and 35% respectively [20][21] - Sequencing gross margin improved by 14 percentage points year over year to 64%, driven by lower labor and overhead costs alongside increasing volumes and higher pricing [22][23] - Cash burn for the quarter was approximately $11 million, a 36% improvement over the same period last year, ending with a solid cash position of $222 million [7][20] Business Line Data and Key Metrics Changes - ClonoSEQ revenue grew 57% year over year, with over 25,300 tests delivered, up 37% versus the prior year and up 10% sequentially [7][20] - The MRD business achieved positive adjusted EBITDA of $1.9 million, a significant improvement from a deficit of $11.3 million a year ago [23] - Immune medicine revenue was $8.9 million, up 13% from a year ago, with adjusted EBITDA loss improving by 14% year over year [23] Market Data and Key Metrics Changes - Blood-based testing represented 44% of MRD tests, up 40% from a year ago, with multiple myeloma accounting for 41% of U.S. ClonoSEQ volume [8][9] - The average selling price (ASP) for ClonoSEQ tests in the U.S. reached $12.90, a 17% increase year over year [10][21] - The backlog for MRD Pharma business grew to $218 million, up 21% from the prior year, with 175 active global clinical trials [12][13] Company Strategy and Development Direction - The company is focused on expanding EMR integrations to drive volume growth, with significant progress in integrating ClonoSEQ into Flatiron's Onco EMR [11][12] - The MRD Pharma business is expected to continue growing, with a strong pipeline and increasing global support for MRD testing as a key endpoint in clinical trials [13][106] - The company aims to achieve a cash burn target of $25 million to $30 million by scaling revenue generation from pharma partnerships while managing R&D investments [19][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving raised full-year guidance, driven by stronger-than-expected clinical volume performance and higher MRD milestone revenue anticipated for the year [20][26] - The company remains optimistic about the growing global support for MRD testing to accelerate new treatments across various malignancies [13][106] - Management highlighted the importance of the recent NCCN guidelines update for multiple myeloma, which is expected to support increased adoption of ID testing [96] Other Important Information - The company has begun processing ClonoSEQ tests on the NovaSeq X, which is expected to scale operations and improve margins [6] - The integration of ClonoSEQ into EMR systems is seen as a key driver of volume growth, with positive feedback from healthcare providers [11][34] Q&A Session Summary Question: Can you provide insights on the Flatiron integration and its impact on volume growth? - Management noted that the integration with Flatiron is in early stages, but initial results are promising, with expectations for consistent ordering at clinically appropriate time points [34][35] Question: What are the expectations for ClonoSEQ pricing and payer traction? - The company is seeing improvements in pricing due to contracting efforts, particularly with larger national payers, and anticipates continued pricing momentum in the second half of the year [37][38] Question: How does the company plan to balance investments in the business with EBITDA margin potential? - Management indicated that the business is set up to continuously produce positive adjusted EBITDA, with ongoing investments in MRD and international markets to support growth [42][44] Question: What are the implications of the NCCN guidelines update for multiple myeloma? - The update is viewed as a tailwind for the company, reinforcing the importance of ID testing at diagnosis, which is expected to contribute to ongoing volume growth [96][97] Question: Can you elaborate on the NEO collaboration and its expected impact? - The NEO collaboration is in its pilot phase, with expectations for material impact on volumes in 2026 and 2027, while the current focus is on operational processes [86][88]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported total revenue of $105 million, a decrease of 36% year over year [20] - Adjusted EBITDA for the quarter was $23 million, representing a margin of 22% [21] - The company had 2.6 million subscribers during the quarter, reflecting a year over year decline of 40% [20] - Non-GAAP operating expenses were $64 million, a reduction of approximately $31 million or 33% year over year [20] - Free cash flow for the second quarter was negative $12 million, impacted by severance payments and annual prepayment for hosting expenses [21] - The company concluded the quarter with cash and investments of $114.1 million and a net cash balance of $52 million [22] Business Line Data and Key Metrics Changes - The skills and other revenue segment generated $15 million in Q2, including approximately $7 million from content licensing [20] - Busuu, the language learning business, achieved a 15% year over year revenue increase in Q2, with B2C revenue increasing by 6% year over year and B2B revenue growing by 39% year over year [10][11] - The skills business saw a 16% increase in enrollments quarter over quarter and an 11% increase in monthly active users [12] Market Data and Key Metrics Changes - The language learning market has a significant opportunity, with 78 million success-seeking learners and a $3.2 billion market potential [10] - The skills market is valued at $40 billion, focusing on workplace readiness and upskilling for professional adults [12] Company Strategy and Development Direction - The company is undergoing a strategic review process, exploring options including acquisition, going private, or remaining public [6][7] - The focus is shifting towards skills and Busuu as primary growth engines, with investments in language learning and workplace readiness [8][12] - Chegg Study will continue to serve as a valuable service while generating cash to support investments in Busuu and Skills [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for the skills business and its path to profitability and double-digit growth in 2026 [14] - The company is adapting to evolving consumer expectations and market turbulence, particularly in the Busuu and Skills segments [22] - Management highlighted the importance of proving value in the institutional market to drive significant revenue growth in 2026 and beyond [30] Other Important Information - The company is on track to achieve non-GAAP expense savings of $165 million to $175 million in 2025 and $100 million to $110 million in 2026 [19] - The company has successfully cured its stock price deficiency and regained compliance with NYSE's price listing requirements [22] Q&A Session Summary Question: Regarding Busuu's growth in the B2B segment - Management indicated that growth is driven by both direct sales efforts and strong relationships with partners like Guild, emphasizing their ability to control their growth trajectory [24][26] Question: On Chegg Study's institutional pilots - Management noted the importance of proving value to schools and plans to continue adding partners while focusing on performance metrics to drive predictable growth [28][30] Question: About the B2C performance of Busuu - Management attributed steady performance to targeting the right consumer persona and enhancing product features with AI to improve engagement [35][36] Question: Positioning of the skills business in the AI education market - Management expressed optimism about the skills business, highlighting a transition to micro-learning formats that align with current market demands [39][41]