Slide 1: Q2-23 Investor Presentation
Q2-23 Investor Presentation Aug 7, 2023 © 2023 Chegg, Inc. / All Rights Reserved
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements offerings; mobile app stores and mobile operating systems making Chegg’s apps and mobile website This presentation contains forward-looking statements made pursuant to the safe harbor provisions of available to students and to grow Chegg’s user base a
Slide 3: Who Are We?
We put learners first. Our mission is to improve learning and learning outcomes by putting students first, in school and beyond. Who Are We? We strive to improve the overall return on investment in education by helping learners learn more in less time and at a lower cost. The Chegg platform provides
Slide 4: Investment Highlights
Investment Highlights 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
Slide 5: AI at Chegg
AI at Chegg The advances in AI create opportunities for Chegg and we’ve pivoted the company to harness AI to better serve learners Building and Owning our own Large Language Models Enhances our competitive moat, lowers our costs, and allows us to train the models specifically for education 83% Stu
Slide 6: Chegg's Vision, Powered by AI
We’re entering an exciting new chapter, driven by the advances in AI We intend to build the largest connected community of learners around the world with a truly scalable, affordable, adaptive learning assistant I’m still nervous. Can you help? C Great, try this one! Find the absolute minimum: Chegg
Slide 7: Long-Term Strategic Focus
Long-Term Strategic Focus Grow Subscribers Profitable Growth Extend Lifetime Value Embrace AI to deliver a personalized, Invest responsibly in scalable content, Increase lifelong relevance by conversational learning companion technology, and tools to support extending our breadth and depth, and incr
Slide 8: Chegg at a Glance: Financial and KPI Highlights 2022
Chegg at a Glance: Financial and KPI Highlights 2022(1) 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(3) 18 COMPARABLY AWARDS Including Best Company 5% 33% 15% Outlook and
Slide 9: Today's Learners Face More Pressure Than Ever
Today’s Learners Face More Pressure Than Ever It’s Harder to Be a They’re Faced with They Aren’t Prepared for Student Mounting Costs the Workplace 25% 38% 39.5% Over 25 years old(1) Don’t graduate (2) Of recent graduates are ~43% $36K underemployed (4) Average student loan balance Are employed (1) p
Slide 10: 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 11: Chegg's Integrated Platform of Connected Services
Chegg’s Integrated Platform of Connected Services Subscription Services Skills & Other Skills / Thinkful Chegg Study High quality online skills-based courses in areas Learning service with 99 million pieces of such as Data Science, Data Analytics, UX/UI expert-generated content1 Design, Software Eng
Slide 12: Large Global Academic Market Opportunity
Large Global Academic Market Opportunity 18M CA, AU and UK Secondary and Tertiary Students(4) 100M Total students 48M 34M English Language US University(2) and High Instruction as a School Students(3) Medium - Tertiary Students Outside the US, CA, AU, UK(1) 8.1M5 6.1M U.S. 2.1M International Chegg S
Slide 13: Overwhelming value and unique competitive advantages
Online Overwhelming On-demand value and unique Personalized competitive Adaptive Affordable advantages Backed by Expert Human Help © 2023 Chegg, Inc. / All Rights Reserved 13
Slide 14: Chegg Serves Students of Diverse Backgrounds
Chegg Serves Students of Diverse Backgrounds 27% First generation 15% Family income <$20k 56% Minorities 59% Female 25% Over 25 years old 11% work Full-Time / 32% Part-Time Source: Chegg Consumer Insights, April 2023, Quarterly Marketing Tracker. Chegg Services users in the past 3 months
Slide 15: Majority of U.S. College Students are taking STEM-B Courses
Majority of U.S. College Students are taking STEM-B Courses 22% Not STEM-B Major but taking STEM-B Courses 59% STEM-B Major 19% No STEM-B STEM-B = Science, Tech, Engineering, Math, or Business Chegg Consumer Insights, conducted by Peerless Research Group, September 2022. Base: Panel Sample US Colleg
Slide 16: Chegg Delivers Positive Learner Outcomes
Chegg Delivers Positive Learner Outcomes Learn & Better Grades More Efficient Help When You Understand Need It 90% 91% 91% 92% Say that Chegg helps Say they get better Say that they work Say that Chegg helps them better grades when they use more efficiently when them figure it out if understand the
Slide 17: Chegg's Approach to ESG: Our Six Pillars
Chegg’s Approach to ESG: Our Six Pillars Public We foster an environment centered on respect, where We help learners succeed by providing the type of help they Recognition diversity and inclusion are Focus on need, when they need it, in the celebrated, and employees can Help Learners format they wan
Slide 18: Chegg helps lighten students' heavy mental load
Chegg helps lighten students’ heavy mental load Over half of US College students say their emotional and mental health has negatively impacted their performance in school more than it has in the past.1 Chegg is proud to support students’ mental health in a variety of ways 92% “ Academic Chegg Study
Slide 19: Financial Highlights: Q2 2023 Revenue and Subscribers
Financial Highlights: Q2 2023 Revenue and Subscribers Total Revenue Subscription Services Skills & Other Revenue Subscription Services ($millions) Revenue ($millions) ($millions) Subscribers (millions) 200 200 200 6.0 5.0 150 150 150 4.0 100 $195 100 100 3.0 $183 $175 $166 5.3 4.8 2.0 50 50 50 1.0 0
Slide 20: Financial Highlights: Q2 2023 Expenses ex-SBC
Financial Highlights: Q2 2023 Expenses ex-Stock Based Comp (SBC) Cost of Research and Sales and General and OpEx ex-SBC Revenue ex-SBC Development ex-SBC Marketing ex-SBC Administrative ex-SBC 120 120 100% 120 100% 120 100% 100% 140 $119 100% 120 $111 100 100 80% 100 80% 100 80% 80% 80% 80 80 80 80
Slide 21: Financial Highlights: Q2 2023 Adj. EBITDA Margin, Free Cash Flow, and CapEx
Financial Highlights: Q2 2023 Adj. EBITDA Margin, Free Cash Flow, and CapEx Adjusted EBITDA Free Cash Flow CapEx $68 70 $60 7070% 7070% 70% 60 6060% $56 6060% 60% 50 5050% 5050% 50% 40 4040% $36 4040% 40% $28 30 3030% 3030% 30% 35% 33% 20 2020% 31% 2020% 20% $7 10 1010% 18% 1010% 10% 14% 4% 0 00% 00
Slide 22: Financial Highlights: Net (loss) income per share, diluted
Financial Highlights: Net (loss) income per share, diluted GAAP and Non-GAAP Net (loss) income per share, diluted $1.23 $1.50 $1.30 $1.10 $0.90 $0.70 $0.43 $0.38 $0.37 $0.40 $0.50 $0.28 $0.32 $0.27 $0.28 $0.20 $0.20 $0.15 $0.21 $0.05 $0.04 $0.06 $0.30 $0.10 $0.01 $0.02 ($0.10) ($0.30) ($0.11) ($0.50
Slide 23: Healthy Balance Sheet with History of Returning Capital to Shareholders
Healthy Balance Sheet with History of Returning Capital to Shareholders Cash and Debt (6/30/23) In Q2-2023, Chegg repurchased $427M of our outstanding convertible debt for $369M, and used some of the net savings to retire 3.4 million $385 $423 shares of stock for approximately $35 million $35 Ap
Slide 24: New Revenue Disaggregation
New Revenue Disaggregation In 2023, we changed the way we disaggregate revenue to better represent Chegg’s current business. We believe this new revenue breakout allows our investors to better monitor and evaluate our business trends. Subscription Services Skills & Other Chegg Revenue Chegg Subscrip
Slide 25: Growth of Chegg Subscription Services
Growth of Chegg Subscription Services Chegg Subscript ion Services Subscribers Chegg Subscript ion Services Revenue Annual Subscription Services Subscribers (in millions) ($ in millions) 33% Chegg Subscription FY'18 3.1 Services $672 FY18 – FY22 CAGR $617 FY'19 3.9 28% Chegg Subscribers $461 FY18 –
Slide 26: Industry-leading Margin and Profit
Industry-leading Margin and Profit Chegg’s business model support s operat ing Adjust ed EBITDA leverage Chegg Adj. EBITDA ($million) and Margin (%) $266 $255 Majority of subscribers are acquired through 52% unpaid channels Adj. EBITDA $207 FY16 – FY22 Create content once, used by learners many
Slide 27: Strong FCF Generation
Strong FCF Generation Chegg cont inues t o deliver st rong free cash flow Free Cash Flow and margins Chegg FCF ($million) & Conversion (from Adjusted EBITDA) $177 Strong free cash flow conversion from $155 adjusted EBITDA (has been ~50%-70%) 36% FCF CAGR Free cash flow CAGR strong, >30%(1) FY16
Slide 28: Business Outlook
Business Outlook Q2 2023 Results Q3 2023 Guidance Context for Q3-2023 Guidance Total Net Revenue $183m $151m - $153m We typically experience seasonally lower revenue and Subscription margins in Q3. $166m $135m - $137m Services Revenue We also have an elevated level of content depreciation from G
Slide 29: 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. GT1 purchased our pr
Slide 30: Appendix
Appendix © 2023 Chegg, Inc. / All Rights Reserved
Slide 31: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA © 2023 Chegg, Inc. / All Rights Reserved 31
Slide 32: Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA © 2023 Chegg, Inc. / All Rights Reserved 32
Slide 33: Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA © 2023 Chegg, Inc. / All Rights Reserved 33
Slide 34: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow © 2023 Chegg, Inc. / All Rights Reserved 34
Slide 35: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow © 2023 Chegg, Inc. / All Rights Reserved 35
Slide 36: Reconciliation of Net (Loss) Income per Share, Diluted to Non-GAAP
Reconciliation of Net (Loss) Income per Share, Diluted to Non-GAAP Net Income per Share, Diluted © 2023 Chegg, Inc. / All Rights Reserved 36