Slide 1: Q1-23 Investor Presentation
Chegg #& Q1-23 Investor Presentation May 1, 2023 Chegg
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 strate
Slide 3: We put learners first.
We put learners first. Our mission is to improve learning and learning outcomes by putting students first, in school and beyond. We strive to improve the overall return on investment in education by helping learners learn more in less time and at a lower cost. Chegg ‘© 2023 Chegg, Inc. / All Rights
Slide 4: Leading Direct-To-Student Connected Learning Platform
Leading Direct-To-Student Connected Learning Platform Large Addressable Markets in Early Stages of Growth including International, Skills, Language Learning, and Non-Academic High Margin Model with Strong Free Cash Flow Generation; Increased Focus on Expense Management Competitive Moat Given Brand,
Slide 5: Business Trends Update
Business Trends Update = In the first part of the year we were meeting expectations on new sign-ups and we saw no noticeable impact from ChatGPT on our new account growth. ™ Since March we saw a significant spike in student interest in ChatGPT which we believe is having an impact on our new customer
Slide 6: Long-Term Strategic Focus
Long-Term Strategic Focus Grow Subscribers Embrace Al to deliver a personalized, conversational learning companion and increase local product-market fit for new learners around the world “ok Overwhelming Value Add content and services that students find essential and enhance their experience Chegg G
Slide 7: 2023 Priorities
2023 Priorities Leverage the Power of Al Successfully build and roll out an Al conversational learning companion that will empower students to learn in real-time more effectively, and with greater accuracy than ever before Profitable Growth Increased focus on expense management while responsibly inv
Slide 8: Key metrics: subscribers, revenue growth, EBITDA margin
8.1 Million 10% 2.1 Million CHEGG SUBSCRIPTION CHEGG SERVICES REVENUE INTERNATIONAL CHEGG SERVICES Y/Y GROWTH SERVICES SUBSCRIBERS VOTED FORTUNE’S BEST SUBSCRIBERS Workplaces®) 18*COMPARABLY AWARDS Including Best Company 5% 33% 15% Outlook and Best Global Culture CHEGG SUBSCRIPTION ADJUSTED EBITDA I
Slide 9: It's Harder to Be a Student
It’s Harder to Bea Student T% Over 25 years old ~43% Are employed They’re Faced with They Aren’t Prepared for Mounting Costs the Workplace 38% Don’t graduate ?) 39.5% Of recent graduates are S36K underemployed @) Average student loan balance per borrower ) (1) Source: Chegg Consumer Insights, Oct 20
Slide 10: Chegg helps lighten students' heavy mental load
Chegg helps lighten students’ heavy mental load Over half of US College students say their emotional and mental health has negatively impacted their performance in school more than it has in the pastt Chegg is proud to support students’ mental health in a variety of ways Launched inaugural Student M
Slide 11: Delivering Services That Meet The Learning Needs of Students
Delivering Services That Meet The Learning Needs of Students Our years of experience and student engagement data help us understand how students learn. We then provide evidenced- based support to address students’ specific needs and desired learning outcomes, meeting students where they are. Student
Slide 12: Chegg's Integrated Platform of Connected Services
Chegg’s Integrated Platform of Connected Services Subscription Services Chegg Study Learning service with 95 million pieces of expert-generated content! oe « » Chegg Writing ee A leading provider of online writing tools. » Creates bibliographies and checks for grammar errors, sentence structure, and
Slide 13: Chegg's Overwhelming Value and Unique Competitive Advantages
Chegg’s Overwhelming Value and Unique Competitive Advantages Online x On-demand ( ~ Personalized; _ *
Slide 14: Large Global Academic Market Opportunity
Large Global Academic Market Opportunity CA, AU and UK Secondary oy 100M Students Total students 34M English Language US University?) and High Instruction as a School Students) Medium - Tertiary neces eteeeneeeeeesensererersesererers Students Outside the US, CA, AU, UK") 5 7 61MUS. 8 ° 1 M 2.1M Inte
Slide 15: Introducing the future of learning with Chegg, powered by GPT-4
Introducing the future of learning with Chegg, powered by GPT-4 CheggMate will combine the power of GPT-4’s advanced Al systems with Chegg's extensive content library and subject-matter experts to make learning faster, personalized, adaptive, accurate, effective and helpful Olivia, I’ll create anoth
Slide 16: Structured Q&A
Structured Q&A Our Structured Q&A tools enable our experts to create better, more complete, and clearer learning content and solutions for students Regular Q&A = Step-by-step solution Structured Q&A = Learning goal navigation = Step-by-step solution = Subject-specific drawing tools = More legible an
Slide 17: Student demographics
26% First generation 20% Family income <$20k 50% Minorities 65% Female 25% Over 25 years old 7% Work full-time / 31% work part-time Source: Chegg Consumer Insights, Jan 2023, Quarterly Marketing Tracker: *Chegg Services users in the past 3 months (College n=399), Chegg services includes: Chegg.com,
Slide 18: Majority of U.S. College Students are taking STEM-B Courses
Majority of U.S. College Students are taking STEM-B Courses 22% Not STEM-B Major but taking STEM-B Courses 59% STEM-B Major 19% No STEM-B Che STEM-B = Science, Tech, Engineering, Math, or Business QQ Chegg Consumer Insights, conducted by Peerless Research Group, September 2022. Base: Panel Sample US
Slide 19: Chegg Delivers Positive Learner Outcomes
Chegg Delivers Positive Learner Outcomes Learn & Better Grades More Efficient Help When You Understand Need It Say that Chegg helps. Say they get better Say that they work Say that Chegg helps them better understand the concepts they are studying in school. And 90% also say Chegg helps them learn th
Slide 20: Chegg's Approach to ESG: Our Six Pillars
Chegg’s Approach to ESG: Our Six Pillars We help learners succeed by providing the type of help they We foster an environment centered on respect, where diversity and inclusion are celebrated, and employees can develop and advance their careers. ~~ Focus on need, when they need it, in the People Hel
Slide 21: Chegg's ESG Journey
Chegg's ESG Journey Chegg conducted a materiality assessment to identify important ESG categories and to align our strategy with what is most material to our stakeholders and society. Please see below for some recent examples of our work to enhance programs, policies, and disclosures within these ma
Slide 22: New Revenue Disaggregation
New Revenue Disaggregation In 2023, we changed the way we disaggregate revenue to better represent Chegg’s current business. We believe this new revenue breakout allows our investors to better monitor and evaluate our business trends. Subscription Services Skills & Other Chegg Revenue Chegg Subscrip
Slide 23: Growth of Chegg Subscription Services
Growth of Chegg Subscription Services Chegg Subscription Services Subscribers Annual Subscription Services Subscribers (in millions) FY'18 Chegg Subscribers FY18 - FY22 CAGR FY'20 FY'21 Chegg Chegg Subscription Services Revenue (S$ in millions) 33% Chegg Subscription Services $672 FY18 — FY22 CAGR $
Slide 24: Industry-leading Margin and Profit
Industry-leading Margin and Profit Chegg’s business model supports operating Adjusted EBITDA leverage Chegg Adj. EBITDA ($million) and Margin (%) $266 " History of expanding adjusted EBITDA margin 52% while investing in profitable future growth Adj. EBITDA $207 . . . FY16 - FY22 " Majority of subscr
Slide 25: Strong FCF Generation
Strong FCF Generation Chegg continues to deliver strong free cash flow and margins = Strong free cash flow conversion from adjusted EBITDA (has been ~50%-70%) " Free cash flow CAGR strong, >30%") * Content remains the largest driver of CapEx and we are driving significant leverage on that investment
Slide 26: Business Outlook
Business Outlook While we continue to have confidence in our ability to forecast the current quarter, given the impact to our new subscriber growth from ChatGPT, our visibility beyond that is less certain for now. As such, we will be guiding to the current quarter only. Q1 2023 Results Q2 2023 Guida
Slide 27: Required Materials Transition
Required Materials Transition In April 2022, we entered into a partnership with an independent book reseller. This partnership allowed us to transition out of our textbook library and fulfillment logistics responsibilities while still offering print and eTextbooks to students. " GT! purchased our pr
Slide 28: Appendix
Slide 29: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) Three Months Ended March 31, 2023 2022 Net income $ 2,186 $ 5,742 Interest expense, net 1,268 1,597 Provision for income taxes 4,176 4,217 Prin
Slide 30: Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA Chegg CHEGG, INC. RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA Net income (loss) Interest expense, net (Benefit from) provision for income taxes Print textbook depreciation expense Other depreciation and amortizat
Slide 31: Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF FORWARD-LOOKING NET LOSS TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) Three Months Ending June 30, 2023 Net loss $ (3.900) Interest expense, net 1,100 Provision for income taxes 2,600 D
Slide 32: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow CHEGG, INC. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (in thousands) (unaudited) Three Months Ended March 31, 2023 2022 Net cash provided by operating activities $ 73.160 $ 80,035 Purcha
Slide 33: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow CHEGG, INC. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW Net cash provided by operating activities Purchases of property and equipment Purchases of textbooks Proceeds from disposition of te