Slide 1: Improving Student Outcomes
DRAFT Improving Student Outcomes Investor Presentation Dan Rosensweig, CEO Andy Brown, CFO May 2016 NYSE: CHGG Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Reserved.
Slide 2: Safe Harbor
DRAFT Safe Harbor Forward-Looking Statements This presentation contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies
Slide 3: Student outcomes need to improve
DRAFT Student outcomes need to improve 41% Drop out of college (1) 45% Grads in jobs not requiring $40k 43% In default or behind on 4-year degree (2) Average debt of 2015 grad class (3) Federal student loan repayment(4) $1.3 Trillion+ Student Loan Debt (5) Confidential Confidential Material Material
Slide 4: Incoming freshmen will be different from any generation before
DRAFT Incoming freshmen will be different from any generation before Born the same Only 6% complete year as Google homework by hand (1) 1 in 5 recall ever 70% will have more using a landline . (1) than $40k in debt But they send at graduation (3) ~ 60 texts/day (2) Chegg. Helping students save time,
Slide 5: They are emerging as the “on-demand” generation
DRAFT They are emerging as the “on-demand” generation “I want it now.” SMS or Binge Snap Me watch Not email Uber Stream everywhere anything Chegg. Helping students save time, save money and get smarter. 5 Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Reserved. Confidential Material –
Slide 6: With different expectations on how to learn
DRAFT With different expectations on how to learn 62% 49% Can learn a new subject Use online tutorials for school* effectively online or offline* 81% 70% Use a device in class every day* “Prefer classes & programs at my own pace”* Chegg. Helping students save time, save money and get smarter. Confid
Slide 7: The younger they are, the more likely they will learn online
DRAFT The younger they are, the more likely they will learn online 53% 70% 85% 90% 46% 72% 68% 80% Foreign Language History Science Math College High School Chegg. Helping students save time, save money and get smarter. 7 Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Reserved. Confide
Slide 8: Chegg Services help improve student outcomes
DRAFT Chegg Services help improve student outcomes LEARN BETTER HIGHER MORE ON-DEMAND more comprehension test scores RELEVANT when, what subjects of course content and grades internships and how and jobs Chegg. Helping students save time, save money and get smarter. 8 Confidential Material – Chegg I
Slide 9: On-demand learning is getting bigger and Chegg is just getting started
DRAFT On-demand learning is getting bigger and Chegg is just getting started Pre-college College Career “How do I study “Which materials do “How can I get live “How do I find for the SAT/ACT?” I need for classes?” help now?” an internship?” “How do I connect “How do I improve “How can I find “How do
Slide 10: Chegg offers services to solve the biggest student pain points
DRAFT Chegg offers services to solve the biggest student pain points consumer Direct-to- Study Tutors Test Prep Writing Tools Required Materials Subscription-based Subscription and Online courses Citations, bibliography, eTextbooks and print available textbook solutions and a-la-carte online prepari
Slide 11: Chegg is one of the most popular brands among students
DRAFT Chegg is one of the most popular brands among students Unaided Awareness – College Students Amazon.com 35% 38% Chegg.com 24% 27% 13% increase Barnes and Noble 8% Ebay 7% 7% Khan Academy 6% 7% Tutor.com 2% 4% Quizlet.com 3% 4% 2014 2015 Q: What companies, websites, and resources can you think o
Slide 12: Chegg has transitioned to a high growth, high margin business
DRAFT Chegg has transitioned to a high growth, high margin business Business +41% ~80% +38% Highlights 2015 Chegg Services 2015 Chegg Study Chegg Services Revenues Subscribers Gross Margins % Growth YoY % Growth YoY Chegg. Helping students save time, save money and get smarter. Confidential Material
Slide 13: Students increasingly embrace Chegg Services
DRAFT Students increasingly embrace Chegg Services Leading to great results Chegg Services FY'12-'15 CAGR: 56% Chegg $94m Services +38% Revenue $68m +62% Chegg $42m Services Subscribers +68% $25m 1.0m .5m .7m .3m FY 12 FY 13 FY 14 FY 15 Chegg. Helping students save time, save money and get smarter.
Slide 14: Chegg Digital Model: Higher Growth, Margins & Profits
DRAFT Chegg Digital Model: Higher Growth, Margins & Profits On track to become a 100% digital business Pure Digital Model Textbook Rental Model 2009 2010 2011 2012 2013 2014 2015 2016 2018 2011 – 2014 (average) Target Operating Model (full year 2018) REVENUE GROWTH 20% CHEGG SERVICES REVENUE GROWTH
Slide 15: Pro Forma Revenue Growth
DRAFT Pro Forma Revenue Growth ($ in millions) $200 Pro Forma Revenue: consists of Chegg Services Revenue and Required Materials Pro Forma Revenue Chegg Services Revenue $160 consists of: 1. Learning Services a. Chegg Study $120 $94 b. Chegg Tutors c. Test Prep+ $68 d. Writing Tools+ $80 2. Marketin
Slide 16: Non-GAAP Gross Margin %
DRAFT Non-GAAP Gross Margin %* 100% 80% 60% 40% 20% 0% FY'12 FY'13 FY'14 FY'15 Chegg Services Total Chegg Chegg Services Platform is Highly Profitable on a Non-GAAP Basis Chegg. Helping students save time, save money and get smarter. 16 Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Re
Slide 17: Chegg’s 2016 Results and Outlook
DRAFT We are increasing our organic guidance and adding $7M revenue and $2m adjusted EBITDA from Imagine Easy Q1 2016 Results Q2 2016 Guidance Fiscal 2016 Guidance Total GAAP Revenue $66.7m $48m to $52m $239m to $257m Pro Forma Revenue* $46.8m $36m to $40m $179m to $192m Chegg Services Revenue $25.6
Slide 18: Additive to Chegg’s learning services portfolio
Imagine Easy addresses writing deficiency among students DRAFT Additive to Chegg’s learning services portfolio • Extends reach to middle school and high school users • Strong brands and user engagement • More than 7m users in March* • Logged 240m+ sessions in last 12 months • Average session length
Slide 19: Summary
DRAFT Summary • Higher education is ripe for disruption • Chegg is one of the most popular student brands • Transitioning to a high growth, high margin, pure digital business • The leading student-first connected learning platform • Improving student outcomes Chegg. Helping students save time, save
Slide 20: Appendix
DRAFT Appendix Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Reserved.
Slide 21: Payment Terms for Imagine Easy Solutions Acquisition
DRAFT Payment Terms for Imagine Easy Solutions Acquisition Q2'2016 Q3'2016 Q4'2016 2017 2018 2019 Total Purchase Price $25.00m $17.00m $42.00m Contingent Consideration * $3.00m $7.35m $5.40m $2.25m $18.00m $25.00m $0.00m $3.00m $24.35m $5.40m $2.25m $60.00m * Subject to contingencies which may be se
Slide 22: Reconciliation of GAAP to Non-GAAP Financial Measures
DRAFT Reconciliation of GAAP to Non-GAAP Financial Measures Chegg. Helping students save time, save money and get smarter. 22 Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Reserved. Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 23: Reconciliation of GAAP to Non-GAAP Gross Margin
DRAFT Reconciliation of GAAP to Non-GAAP Gross Margin 2012 2013 2014 2015 Chegg Services GAAP net revenue $ 24,644 $ 41,829 $ 68,117 $ 94,285 GAAP gross profit $ 18,334 $ 33,051 $ 51,734 $ 75,167 Share-based compensation expense 9 - - - Non-GAAP gross profit $ 18,343 $ 33,051 $ 51,734 $ 75,167 GAAP
Slide 24: Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA DRAFT Chegg. Helping students save time, save money and get smarter. 24 Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Reserved. Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 25: DRAFT
DRAFT Confidential Material – Chegg Inc. © 2005 - 2015. All Rights Reserved. 25