Slide 1: An Investment In Improving Student Outcomes
An Investment In Improving Student Outcomes February 13, 2016 1 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements cost-effective basis and to integrate acquired businesses and assets; the impact of This presentation contains forward-looking statements made pursuant to the safe harbor seasonality on the business; Chegg’s partnership with Ingram and the parties’ ab
Slide 3: The leading student-first connected learning platform
The leading student-first connected learning platform…focused on improving student outcomes 3 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 4: Chegg at-a-Glance
Chegg at-a-Glance Chegg Services Chegg’s connected learning Students subscribe to our learning services: platform for students reaches Chegg Study approximately 40 MM1 unique visitors Chegg Tutors annually and 10 MM2 monthly Chegg Writing Tools Chegg Test Prep Get help navigating college thr
Slide 5: An Investment in Improving Student Outcomes
An Investment in Improving Student Outcomes Large Opportunity with Compelling Market Trends Leading Student-First Connected Learning Platform Focused on Student Outcomes Transitioned to an All Digital, High Growth, High Margin Model 5 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Rese
Slide 6: Large Student Market Opportunity
Large Student Market Opportunity 11 million MIDDLE SCHOOL STUDENTS1 78% of college students have heard of a Chegg service. 16 million HIGH SCHOOL STUDENTS 1 80% of people who use Chegg, plan to recommend us.4 20 million COLLEGE and GRAD STUDENTS 1 Education comprises ~ 7 % of US GDP 2 or $ 1.3 trill
Slide 7: Compelling Macro Trends
Compelling Macro Trends Introducing the class of 2020… Today’s Born the same into a world where on- and learning happens on students want year as Google… demand is the norm… their own schedule learning solutions that 62% 1 are customized use online tutorials for school and available 81% 1 on-demand
Slide 8: Existing System Outpaced by Technology & Student Needs
Existing System Outpaced by Technology & Student Needs Chegg’s direct-to-student services are designed to improve student outcomes: writing help, test prep, college matching, required materials for less, online homework help, on-demand live Critical need for tutoring, internship search and more affo
Slide 9: On-Demand Learning Services Drive Rapid Growth
On-Demand Learning Services Drive Rapid Growth Chegg Services Subscribers quintupled over the past 4 years Fast Growing Chegg Services Revenue Chegg Services Subscribers (in millions) 1 Non-GAAP Revenue Growth ($ in millions) FY'12 0.3 $172 Chegg Services FY’12 — FY’17 CAGR: 47% $129 FY'13 0.5 $94 F
Slide 10: 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 11: Supporting Every Step of the Educational Journey
We are increasing our organic guidance Supporting Every Step of the Educational Journey Middle School High School College 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” S
Slide 12: Writing: Helping Students from Middle School onwards
Writing: Helping Students from Middle School onwards Imagine Easy Solutions (acquired 5/2016) is a leading provider of online writing tools, relied upon by millions of students and teachers 430+ MM citation With nearly 25% of college freshman required to take non- sessions logged credit remedial wri
Slide 13: Tutors: On-Demand Personalized Instruction
Tutors: On-Demand Personalized Instruction In Q4 2016, Chegg Tutors is a simple, reliable and affordable service Chegg tutoring which allows students to quickly match minutes grew with a human tutor to receive one-on-one help. 70% y/y Market Opportunity >85% of all >180 ~ $5-7B 1,2 Total tutoring ma
Slide 14: Test Prep: Personalized, Adaptive and On-Demand
Test Prep: Personalized, Adaptive and On-Demand Chegg’s high value proposition: Chegg Test Prep gives students immediate access to personalized online sample tests, adaptive courses and live human courses & live human tutors, providing them the resources they need to help as low as $29.95 improve te
Slide 15: Required Materials Drive Brand Awareness & Loyalty
Required Materials Drive Brand Awareness & Loyalty 1 ~$550 MM A comprehensive selection of textbooks and eBooks to rent or buy at savings for annual an affordable price students from 6 MM books delivered in 2015 Builds brand awareness, maintains the direct-to-student relationship and creates opportu
Slide 16: Chegg Study: A Powerful Learning Tool
Chegg Study: A Powerful Learning Tool 8 MM questions Chegg Study connects students to guided textbook solutions created by Chegg experts, and expert expanding their learning and improving answers outcomes archived ~24,000 A quarter of a textbook ISBNs in Chegg Study database billion content pages co
Slide 17: Market Opportunities for Outcome Services
Market Opportunities for Outcome Services Brand Partnerships 9.5MM free samples/deals sent to students in 2016 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.go
Slide 18: Business Outlook: 2017
We are increasing our organic guidance Business Outlook: 2017 Q4 2016 Q1 2017 Full Year 2017 Results Guidance Guidance Total Revenues $63.1m $57m to $59m ~$230m Non-GAAP Revenues* $56.4m -- -- Chegg Services Revenue $44.3m $38m to $40m ~$172m Gross Margin %* 67.5% 62% to 64% >60% Adjusted EBITDA* $1
Slide 19: Pure Digital, High Growth, High Margin Operating Model
We are increasing our organic guidance Pure Digital, High Growth, High Margin Operating Model >60% We expect ~30% Chegg’s all- digital model ~25% to fuel sustainable high- growth and 20% profitability while 30% better serving student needs Chegg Services y/y (6)% and delivering Revenue Growth Gross
Slide 20: Appendix
Appendix 20 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 21: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures CHEGG, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages) (unaudited) ` Three Months Ended December 31, Year Ended December 31, 2016 2015 2016 2015 Total net revenues $ 63,057 $ 68,154 $ 254,090 $ 301,37
Slide 22: Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF GAAP NET LOSS TO EBITDA AND ADJUSTED EBITDA (in thousands, except percentages) (unaudited) 2011 2012 2013 2014 GAAP Net loss: $ (37,602) $ (49,043) $ (55,850) $ (64,758) Interest expense, net 3,764 4,393 3,81
Slide 23: 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 Year Ended Ended March 31, December 31, 2017 2017 * Net loss $ (10,300) $ (29,900) Interest expense, n