Slide 1: An Investment In Improving Student Outcomes
An Investment In Improving Student Outcomes November 7, 2016 1 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements impact of the economic risk-sharing arrangements between Chegg and Ingram on Chegg’s This presentation contains forward-looking statements made pursuant to the safe harbor results of operations; Chegg’s ability to attract students through its required
Slide 3: Chegg at-a-Glance
Chegg at-a-Glance Chegg’s direct-to-student learning Chegg Services Students subscribe to our learning services: services reach approximately 40 MM1 Chegg Study unique visitors annually and 10 MM2 Chegg Tutors monthly, delivering services that are both Chegg Writing Tools popular and useful fo
Slide 4: An Investment in Improving Student Outcomes
An Investment in Improving Student Outcomes Higher Education is at an Inflection Point Compelling Market Trends Support Our Belief that Chegg Offers a High Value Proposition A Market Leading Direct-to-Student Connected Learning Platform in Higher Education Expected to Complete Transition to an All D
Slide 5: Sizable Student Market Opportunity
Sizable Student Market Opportunity In the fall of 2016, there are projected to be approximately:1 Approximately 15%1 of 11 million MIDDLE SCHOOL STUDENTS the entire U.S. population is a student in middle school and 16 million HIGH SCHOOL STUDENTS above and there are expected to be 5.2 million more 2
Slide 6: Compelling Macro Trends
Compelling Macro Trends Introducing the class of 2020… Born the same into a world where on- and learning happens on Today’s year as Google… demand is the norm… their own schedule students want learning 62% use online tutorials for school 1 solutions that are customized 81% use a device in class ever
Slide 7: Existing System Outpaced by Technology & Students
Existing System Outpaced by Technology & Students Chegg’s existing services and vision fills in the gaps for students, starting in middle school and staying with them into their early careers. Poor outcomes drive critical Direct-to-student services include writing help, test prep, college matching,
Slide 8: On-Demand Learning Services Drive Rapid Growth
On-Demand Learning Services Drive Rapid Growth Chegg Services Subscribers expected Fast Growing Chegg Services expected to quintuple over the past 4 years to comprise two-thirds of revenue 1 Chegg Services Subscriber (in millions) Non-GAAP Revenue Growth ($ in millions) Chegg Services $127.5 FY'12 0
Slide 9: Well Positioned to Capture Big Market Opportunity
Well Positioned to Capture Big Market Opportunity Significant upside potential Chegg is an established ~ 47million 2 brand in a students in middle school and above1 nascent market with ~ 1.5 million lots of Chegg Services subscribers in FY’16 greenfield Chegg’s Services subscribers represent ~ 3% of
Slide 10: Supporting Every Step of the Educational Journey
We are increasing our organic guidance Supporting Every Step of the Educational Journey High School Student College Student Post-Graduate Uses “Chegg Writing Tools ” Gets help from “Chegg Tutors” Utilizes “Chegg Test Prep” for college admissions Orders books or ebooks from “Chegg Required Materials”
Slide 11: Writing: Helping Students from Middle School onwards
Writing: Helping Students from Middle School onwards Online writing instruction from a human tutor, on-demand or as a subscription service Writing Tools Imagine Easy Solutions (acquired in 2016) is a leading that students provider of online writing tools, relied upon by millions of engage: Average s
Slide 12: Tutors: On-Demand Personalized Instruction
Tutors: On-Demand Personalized Instruction Chegg Tutors allows students to instantly match with a human tutor and receive one-on-one help. Nearly 3x as many computer It’s simple, reliable and affordable; as low as $0.40/minute science students on Chegg Tutors In Q3 2016, Chegg tutoring minutes grew
Slide 13: Test Prep: Personalized, Adaptive and On-Demand
Test Prep: Personalized, Adaptive and On-Demand Chegg Test Prep gives students immediate access to Chegg’s high value online sample tests, adaptive courses and live human proposition: tutors, providing them the resources they need to personalized improve test scores courses & live human help as low
Slide 14: Required Materials Drive Brand Awareness & Loyalty
Required Materials Drive Brand Awareness & Loyalty Chegg provides students with a comprehensive selection of 1 textbooks and eBooks to rent or buy in a stress-free way, at ~$550 MM an affordable price annual savings for students from 6 MM Steady business anticipated to generate $50-60M books deliver
Slide 15: Chegg Study: A Powerful Learning Tool for STEM
Chegg Study: A Powerful Learning Tool for STEM Chegg Study connects students to guided In H1 2016, textbook solutions created by Chegg experts, expanding their learning and improving students asked outcomes, particularly in science, technology, and accessed engineering and math (STEM) more Qs & As t
Slide 16: Market Opportunities for Outcome Services
Market Opportunities for Outcome Services Brand Partnerships 8MM free samples/deals sent to students in 2015 Enrollment Services ~$4B1 Market Opportunity Careers ~$5B2 Market Opportunity 1 Source: http://www.alixpartners.com/en/LinkClick.aspx?fileticket=um2rId4ibDE%3D&tabid=2390, http://nces.ed.gov/
Slide 17: Business Outlook: 2016
We are increasing our organic guidance Business Outlook: 2016 Q3 2016 Q4 2016 Full Year 2016 Results Guidance Guidance Total Revenue $71.3m $55m to $60m $246m to $251m Non-GAAP Revenue* $55.5m $48m to $52m $191m to $195m Chegg Services Revenue $29.7m $41m to $44m $126m to $129m Gross Margin %* 45.8%
Slide 18: Business Outlook: Full Year 2017
We are increasing our organic guidance Business Outlook: Full Year 2017 Total Revenue ~$230m Chegg Services Revenue ~$172m Adjusted EBITDA* ~$35m *Non-GAAP financial measure 18 18 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 19: Seasonality
Seasonality Q1'17 Q2'17 Q3'17 Q4'17 Total Revenue ~25% ~22% ~25% ~28% Quarterly Contribution % Contribution to Total Revenue: Chegg Services Required Materials Adjusted EBITDA* ~15% ~22% ~15% ~48% Quarterly Contribution Note: 2017 quarterly contribution percentages are based on FY’17 Total Revenue b
Slide 20: Evolving to Pure Digital, High Margin Operating Model
We are increasing our organic guidance Evolving to Pure Digital, High Margin Operating Model >60% We expect ~30% Chegg’s all- ~25% digital model to fuel sustainable high- growth and 20% 30% profitability while better serving student needs Chegg Services y/y (6)% and delivering Revenue Growth Gross M
Slide 21: An Investment in Improving Student Outcomes
An Investment in Improving Student Outcomes Higher Education Is at an Inflection Point Compelling Market Trends Support Our Belief that Chegg Offers a High Value Proposition A Market Leading Direct-to-Student Connected Learning Platform in Higher Education Expected to Complete Transition to All Digi
Slide 22: Appendix
Appendix 22 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 23: A Driven, Experienced Executive Team
A Driven, Experienced Executive Team Dan Andy Brown Esther Lem Rosensweig Chief Financial Officer Chief Marketing Officer Chairman, President and Chief Executive Officer Nathan Schultz Chuck Geiger Chief Learning Officer Chief Product Officer Mike Osier Dave Borders Jr. Chief Outcomes Officer Genera
Slide 24: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures 24 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 25: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures 25 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.