But you see the largest countries that Chegg has historically had like Canada, Australia, and the U.K., those are still our largest countries, and they are also growing again.
Bryan Smilek: Great, thank you.
Dan Rosensweig: Yes.
Operator: Our next question comes from the line of Kunal Madhukar with UBS. Please proceed with your question.
Kunal Madhukar: Hi, thank you for taking my questions. One, on the new product rollout, I thought the new user experience had rolled out in like 3Q of last year. So when you’re talking about this new rollout in 1Q of this year, what exactly has changed? That’s one. And second is in terms of the promotional pricing, how long is the promotional pricing? So the 25% to 35% discount, is it just for the initial month or is it for a few months.
Dan Rosensweig: Yes, good questions. I’ll answer the first one. Let me answer the second one first, which is we — outside the U.S. The promotional pricing, we expect to continue for the rest of this year and determine whether or not we want to raise the promotional pricing to the normal pricing and when we want to do that. That’s all things that we are testing now. So right now, the promotional pricing is only for new accounts and it will go on as long as we determine that it makes sense for it to go on. So we don’t really have a final answer on that yet. However, outside the U.S., the combination of the number of new accounts that we’re getting versus what we were getting before, the higher take rate or the more expensive package and the length of time means that we expect revenue to grow despite the fact that we’re giving new accounts at this promotional discount.
Inside the U.S., we are really just at the beginning of testing it. We’ve got about five weeks of testing, as I said, in five different variants of three different price points. And all of them are performing as we would have hoped. And so we’ll be able to determine if we want to roll it out to the full audience, and if so, how long we want to promotional pricing. Those are all testable things where the goal obviously is to grow as fast as we can from a revenue perspective and new account perspective. So we’ll look for that balance. But we have time to figure that out, because it’s really early. On the question over product, no, the answer is we did not roll anything out of Q2 last year. We rolled out in the second-half of last year was a very, very small beta test where we tested the new interface, and we tested search and the search results and the quality of those search results.
And then we made the determination to expand that from 1% to 10%, 10% to 25%, 25% to 50%. And then at the very beginning of this year, rolled it out to 100% of our audience, the new user interface, but it was not rolled out in Q2. We’ve tested a bunch of things since incept you got to remember, we only really made this decision last February. It’s only been a year since we did all of this. So we announced things like our relationship with scale that allows us to build our own language models and we’ve moved off to open AI so that we can build our own and it’s a lot cheaper and all those things. So a lot has happened between now and then. The big move started really in the testing of automated answers started towards the end of Q4 and then really rolled out in the first quarter of this year, really just in January now.
And it’s just been a spectacular success in terms of utilization of it, the quality of it, and we have a lot more to go. And the hope is that by the end of 2024, the overwhelming majority of questions will go through automated answering rather than humans, and that will continue to substantially lower our cost per question and reduce our overall CapEx over time on an annual basis.
Kunal Madhukar: Thank you.
Operator: Our next question comes from the line of Josh Baer with Morgan Stanley. Please proceed with your question.
Josh Baer: Great. Thanks for the question and Andy, congrats again on your retirement. Wanted to ask about the trajectory of revenue per subscriber. I was just hoping could kind of unpack some of the different factors. I mean, we’ve talked about some of them, but basically how are you thinking about the trajectory of revenue between the growing mix of international, the promotional pricing broadly? Is there still runway for the Study Pack bundle attach? And then also just thinking about the amount of time that a student has their subscription turned on in a given year.
Dan Rosensweig: Yes. All terrific questions exactly why we test so that when we’re ready to give an actual answer, we can. What I can tell you is outside the U.S., where the test has been and while it’s not a test now, it’s been running now for about seven months. What we look for is — first thing we look for is conversion increase, and that happens or it doesn’t happen right away. In this case, it happened depending on the rate of discount in the country and where we were priced before saw different conversion rates. All of them up nicely. It’s very hard to make up the promotional pricing discount just on conversion. So that the next variable you look at is take rate, which is also measurable right away. And yes, there’s room to grow on the take rate, particularly as we start to differentiate the capabilities inside of Chegg & Chegg Study Pack more based on AI capabilities and other kinds of things that we can offer in the more expensive one that is — that has not started yet and probably will not start the rest of this year.
But yes, there’s room to move because we still have more than one out of two that don’t take it. That’s the second variable. The third one that has the greatest amount of impact, because it starts from your net paying customers, your net subscribers, which have to do with your renewal base. We are seeing a very nice uptick in the length of time that students are seeing. So in a perfect world, we would make up the revenue per customer to get as neutral as we could to revenue per customer. And over a multiyear period, we believe that’s exactly what’s going to happen. But in the short-term, particularly outside the U.S., the volume of new customers and those other variables together will generate revenue growth outside the U.S. even though on a per customer basis, it’s still not equal yet.
But it’s very early. We have multiple retention periods to go through and a number of years to go through and so that’s what’s been going on outside of the U.S. has been really positive. Inside the U.S., the plan, what we are doing is we are testing and the first measurement, so it’s not to 100% of the new accounts, it’s only to a percentage of them. But it’s only to new accounts, so it doesn’t affect any of the existing revenue. Then, as I said, there’s five variants with three different price points, and that has to do with presentation of it is why there’s five. And then what we do is we narrow down to the ones where we see the desired conversion, the desired take rate and in a couple of weeks, we’ll actually see how it improves retention.
Depending on how month 1 retention improves, then the month two, month three and month four, all of those hopefully get us closer and closer and closer to a breakeven on revenue per customer with a lot more customers. That’s the objective. So we have lots of room to grow, lots of optimization to do. And again, the test is now three weeks old. But the first two hurdles are really good, which is driving increased number of overall customers versus what we would have done had we not done because we believe that in a competitive market, we want to go fight for the market share because, frankly, nobody else is anywhere near as good as we are. And once students realize that, they stay on and they use us more. And then when you launch the new product stuff, which we have, with automated answers as an example, this is the highest engagement on a per customer level we’ve ever had.
And if it works as we hope, which is to regenerate the flywheel, more customers, more new questions, more new questions going to search, more students that haven’t used us go to search, find it or TikTok or wherever we put it, driving customers. All of those things so far have been positively impacted. But the overall objective is as close as you can to revenue breakeven on a per customer basis because you’ve got those variables. Then in year two or whenever we choose to get rid of promotional pricing, we raised the rates on those existing customers. So the revenue on those customers goes way up, and that we’ll be testing that to determine cancellation rates and all those things. But the business model is very, very sound. And — but we have to do it one brick at a time.
