Slide 1: Q3-24 Investor Presentation
Chegg | | Q3-24 Investor Presentation November 12, 2024 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: Improve learning and life outcomes
ae #. improve learning and lee
Slide 4: Q3-24 Highlights
Q3-24 Highlights * While the global education industry continues to experience tremendous change, we have shown early progress against the strategic plan we outlined in June. * We delivered better-than-expected revenue of $137 million and adjusted EBITDA of $22 million. * Technology shifts have crea
Slide 5: Subscriber and revenue KPIs
Q2'24 Q3'24 Q2'24 Q3'24 Chegg Study/Pack Subscribers Subscription Services Revenue Global 3,419 2,913 Global 146,813 119,804 YoY -9% -13% YoY -11% -14% US 2,858 2,498 US 126,104 102,696 YoY -9% -13% YoY -10% -14% INTL 561 416 INTL 20,709 17,108 YoY -6% -16% YoY -20% -17% Subscription Services Subscr
Slide 6: 360° of Student Support - Academic and Functional
360° of Student Support - Academic and Functional Helping students not only pass the class but excel in their learning journey Academic Support Functional Support oe Engagement = Organizational & Time Management = Administrative Academic ry gxress to Stug, e " = Motivational Global Students. Early C
Slide 7: We Know Students and We Know Learning
We Know Students and We Know Learning Meeting students where they are and applying learning science to improve outcomes. 100 million Q&A pairs > we know the B subjects and topics students need to learn ~3 billion monthly data interaction points > we know how students prefer to learn 10+ years of use
Slide 8: Rolling out the New Chegg Experience
Rolling out the New Chegg Experience The process of embedding Al into every facet of Chegg’s platform is ongoing and iterative as we build truly individualized learning support for students 2023 2H24 We are testing Al-enhanced learnings aids such as practice questions, study guides & In September we
Slide 9: AI at Chegg
Al at Chegg The advances in artificial intelligence have created opportunities for Chegg. We pivoted the company to harness Al to better serve learners around the world. We are building an individualized, interactive, on-demand learning companion backed by proprietary data, generative Al large langu
Slide 10: Proprietary Solution Flow Technology Incorporating Automated Solutions
Proprietary Solution Flow Technology Incorporating Automated Solutions Chegg technology automatically routes questions to the best source that optimizes solution relevancy, speed, and accuracy an => Match in ea database r routes rch optimal ase lel or tional No e Student asks match in a question dat
Slide 11: Industry-Leading Proprietary AI Stack That Delivers Individualized Learning
Industry-Leading Proprietary Al Stack That Delivers Individualized Learning User Experience Layer Personalization Layer LLM + Computational Engine Layer Proprietary Expert Layer Data Layer the launch or upgrades to any products, and may not be an exact representation of Chegg products in the future.
Slide 12: Chegg at a Glance: Financials and KPIs - 2023
Chegg at a Glance: Financials and KPls - 2023 $716 Million $222 Million $597 Million TOTAL REVENUE ADJUSTED EBITDA CONVERTIBLE NOTE REPURCHASES AT $92 MILLION DISCOUNT TO PAR 7.7 Million 31% >$300 Million SUBSCRIPTION SERVICES ADJUSTED EBITDA MARGIN STOCK REPURCHASES SUBSCRIBERS $100 Million $173 Mi
Slide 13: Student challenges: harder to be a student, mounting costs, unprepared for work
It’s Harder to Bea They’re Faced with They Aren’t Prepared for Student Mounting Costs the Workplace 26% 38% 0 Over 25 years old Don’t graduate ) 52 % Of graduates are underemployed, and even a ~38% S36K decade after graduation, 45% are underemployed 4) Average student loan balance per borrower ®) Ar
Slide 14: Chegg's Integrated Platform of Connected Services
Chegg’s Integrated Platform of Connected Services Subscription Services Chegg Chegg Study Personalized step-by-step learning support powered by artificial intelligence, computational engines and subject-matter experts. Our databse includes 132 million solutions! Chegg Writing A leading provider of o
Slide 15: Real-time value for students and unique competitive advantages
Real-time Overwhelming a value for students = ("7'V'dualizeo i Conversational and unIgUE Affordable competitive Backed by Expert Human advantages Help Satisfaction Guarantee Chegg
Slide 16: Student demographics
28% First generation 23% Family income <$20k 53% Minorities 61% Female 26% Over 25 years old 5% work Full-Time / 33% Part-Time —a —= ~~ Source: Chegg Consumer Insights, Oct 2023»@uarterly, Marketing irackersChegg Servicestusesifthe beet 3 months (College n-284),including Ghegeleeny Mathway, Easybib,
Slide 17: Majority of U.S. College Students are taking STEM-B Courses
Majority of U.S. College Students are taking STEM-B Courses 21% Not STEM-B Major but taking STEM-B Courses 61% STEM-B Major 18% No STEM-B Source: Consumer Insights Oct 2023. Dynata Sample US College students n= 895. Chegg stem-s = Science, Tech, Engineering, Math, or Business d 17
Slide 18: Chegg Delivers Positive Learner Outcomes
Chegg Delivers Positive Learner Outcomes Learn & Understand 90% Say that Chegg helps them learn their coursework. And 90% say Chegg helps them better understand the concepts they are studying in school. Better Grades 91% Say they get better grades when they use Chegg to understand coursework. More E
Slide 19: Chegg's Approach to ESG: Our Six Pillars
Chegg’s Approach to ESG: Our Six Pillars We help learners succeed by providing the type of help they need, when they need it, in the We foster an environment centered on respect, where diversity and inclusion are Focus on celebrated, and employees can People Help Learners format they want to receive
Slide 20: Financial Highlights: Q3 2024 Revenue and Subscribers
Financial Highlights: @3 2024 Revenue and Subscribers Total Revenue (Smillions) Subscription Services Skills & Other Revenue Subscription Services Revenue ($millions) (Smillions) Subscribers (millions) $158 $137 | S18 | $17 3-23 @3-24 Q3-23 @3-24 Q3-23 @3-24 @3-23 @3-24 = The year-over-year decrease
Slide 21: Financial Highlights: Q3 2024 Expenses ex-Stock Based Comp
Financial Highlights: @3 2024 Expenses ex-Stock Based Comp (SBC)* Cost of Revenue ex-SBC $45 $43 Q3-23 Q3-24 =S millions © % of Revenue Research and Development ex-SBC Sales and Marketing ex-SBC $35 $34 $26 $24 Q3-23 Q3-24 Q3-23 Q3-24 mSmillions @% of Revenue =Smillions @% of Revenue = We continue t
Slide 22: Financial Highlights: Q3 2024 Adj. EBITDA Margin, Free Cash Flow, and CapEx
Financial Highlights: @3 2024 Adj. EBITDA Margin, Free Cash Flow, and CapEx Adjusted EBITDA Free Cash Flow $24 CapEx $39 on $23 $9 3 = $16 25% 6% 16% 12% Q3-23 Q3-24 Q3-23 Q3-24 Q3-23 Q3-24 Srrillions © % of Revenue uSmillions © % of Revenue aS millions © % of Revenue Adjusted EBITDA and Free Cash F
Slide 23: Capital Expenditures
Capital Expenditures Capital Expenditures $30.0 $0.1 $0.4 $25.0 cn (0 $95 $20.0 $9.3 $0.2 $0.2 $02 $02 $15.0 $3.3 $46 $56 $10.0 ae $18.4 $13.6 $14.0 GEO $5.0 $10.0 $0.0 millions Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Content mSoftwareDevandAl PP&E Textbooks Total CapEX = As we harness the power o
Slide 24: Healthy Balance Sheet with History of Returning Capital to Shareholders
Healthy Balance Sheet with History of Returning Capital to Shareholders Cash and Debt (9/30/24) = We have opportunistically retired both convertible debt and equity, returning over $1.2 billion and $950 million, respectively, to investors through repurchases over the last three-plus years, $30 inclu
Slide 25: Business Outlook
Business Outlook Q3 2024 Results Q4 2024 Guidance Total Net Revenue $137m $141m - $143m Subscription Services Revenue $120m $126m - $128m Gross Margin % 68% 67%-68% Adjusted EBTIDA? $22m $32m - $34m CapEx $16m Free Cash Flow? $24m (1) Non-GAAP financial measure. Chegg See appendix for reconciliation
Slide 26: Appendix
Slide 27: Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA
Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDA (in thousands) Net (loss) income Interest expense Provision for income taxes Depreciation and amortization expense EBITDA Share-based compensation expense O
Slide 28: Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA Chegg Net income (loss) Interest expense, net Provision for (benefit from) income taxes Print textbook depreciation expense Other depreciation and amortization expense EBITDA Print textbook depreciation expense Share-based compensatio
Slide 29: Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA Chegg CHEGG, INC. RECONCILIATION OF FORWARD-LOOKING NET LOSS TO EBITDA AND ADJUSTED EBITDA Net loss Interest expense. net Provision for income taxes Depreciation and amortization expense EBITDA Share-based compensation expense
Slide 30: 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 ‘Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Net cash provided b
Slide 31: 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 CHEGG, INC. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (in thousands) (unaudited) Years Ended December 31, 2023 2022 2021 2020 2019 2018 2017 2016 Net cash provided by operating act
Slide 32: Reconciliation of GAAP Expenses to Non-GAAP Expenses
Reconciliation of GAAP Expenses to Non-GAAP Expenses Excluding Share-Based Compensation and Other One-Time Expenses Chegg CHEGG, INC. RECONCILIATION OF GAAP EXPENSES TO NON-GAAP EXPENSES EXCLUDING CERTAIN SHARE-BASED COMPENSATION AND OTHER ONE-TIME EXPENSES (unaudited) Cost of revenues S 43.420 $83,