Slide 1: Q3-18 Investor Presentation
Q3-18 Investor Presentation October 29, 2018 1 Chegg Inc. © 2005 - 2018. All Rights Reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements ability to build and expand its services offerings; Chegg’s ability to develop new products and This presentation contains forward-looking statements made pursuant to the safe harbor services on a cost-effective basis and to integrate acquired busines
Slide 3: Leading student-first connected learning platform to improve student outcomes
Leading student-first connected learning platform to improve student outcomes 3 Chegg Inc.Inc. Chegg © 2005 - 2018. © 2005 All All - 2018. Rights Reserved. Rights Reserved.
Slide 4: Investment Highlights
Investment Highlights Leading Student-First Connected Learning Platform Large Addressable Market with Compelling Market Trends All Digital, High Growth, High Margin Model Competitive Moat Given Brand, Reach, Data and Proprietary Content 4 Chegg Inc. © 2005 - 2018. All Rights Reserved.
Slide 5: Chegg at a Glance
Chegg at a Glance 1 2.2 Million 45% 2+ Million CHEGG SERVICES CHEGG SERVICES SUBSCRIBER REQUIRED MATERIAL ANNUAL SUBSCRIBERS Y/Y GROWTH CUSTOMERS 44% 18.2% 440 Million CHEGG SERVICES ADJUSTED EBITDA CHEGG STUDY Y/Y REVENUE GROWTH MARGIN(2) CONTENT VIEWS 1. All amounts shown for FY17 and based on Com
Slide 6: Q3-18 Highlights
Q3 – 18 Highlights • Chegg Services subscribers increased 45% y/y • Chegg Services revenue of $54.2 million, up 37% y/y • 110 million Chegg Study content views, up 51% y/y • Increased FY2018 guidance and provided initial outlook for 2019 6 Chegg Inc. © 2005 - 2018. All Rights Reserved.
Slide 7: Today's Students Face More Pressure Than Ever
Today’s Students Face More Pressure Than Ever It’s Harder to Be a Student They’re Faced with Mounting Costs They Don’t Get Support Up to 25 237% INCREASE IN IN-STATE TUITION AT PUBLIC 40% AVERAGE STUDENT AGE(1) COLLEGE SINCE 1997(3) OF STUDENTS IN REMEDIAL COURSES(5) ~40% $37K DEBT OWED BY 2016 GRAD
Slide 8: Large Student Domestic Market Opportunity
Large Student Domestic Market Opportunity 16M 36 Million Total Planned 20M High School Expansion in University Students Can Benefit from Students(2) Students(1) International Markets 2.2 Million Chegg Services Subscribers in 2017 YoY growth of 45% 1. Source: National Center for Education Statistics
Slide 9: Chegg Aims to Provide Overwhelming Value to Solve Students' Problems
Chegg Aims to Provide Overwhelming Value to Solve Students’ Problems Online On-demand Personalized Adaptive Affordable …and Backed by Human Help Chegg Inc. © 2005 - 2018. All Rights Reserved.
Slide 10: Chegg is Well-Known Among Students
Chegg is Well-Known Among Students Percent Unaided Awareness (College)(1) 34% Amazon 33% 80%+ Quizlet 12% Google 11% Khan Academy 11% OF COLLEGE STUDENTS HAVE HEARD OF A CHEGG SERVICE(1) Barnes & Noble 8% Purdue OWL 8% EasyBib 8% 1. Hall and Partners Survey, Oct 2017, (College (n=1788)) 10 Chegg Inc
Slide 11: Integrated Platform of Connected Educational Services
Integrated Platform of Connected Educational Services Chegg Chegg Services Services Students subscribe to our learning services: represents 73% of total revenue(2) Chegg Study Chegg’s connected Chegg Writing learning platform Chegg Tutors 1 Chegg Math Solver reaches ~11M unique visitors in a
Slide 12: Rapid Growth of Chegg Services
Rapid Growth of Chegg Services Chegg Services Subscribers Chegg Services Revenue Annual Chegg Services Subscribers (in Revenue Growth ($ in millions)* millions) FY'12 0.3 Chegg Services FY’12 — FY’18 CAGR: 47% FY'13 0.5 45% y/y growth for ‘17 FY'14 0.7 FY'15 1.0 FY'16 1.5 FY'17 2.2 * Prior to FY 201
Slide 13: Chegg Study: A Powerful Learning Tool
Chegg Study: A Powerful Learning Tool Chegg Study is the largest non-required homework Library of 25M help service for students, which contains 18 million solution sets expert answered Q&As and 7 million step-by-step and expert textbook solution sets(1) answers (1) >34K textbook 440 million content
Slide 14: Writing: Helping Students from Middle School Onwards
Writing: Helping Students from Middle School Onwards Chegg Writing is a leading provider of online writing tools 500M With nearly 25% of college freshmen required to take remedial citations in courses(1), Chegg has the opportunity to impact this outcome 2017(3) before students enroll and save time a
Slide 15: Tutors: Online On-demand Personalized Instruction
Tutors: Online On-demand Personalized Instruction Key subjects: Computer Chegg Tutors is a simple, reliable and affordable service Science, which allows students to quickly match with a human tutor to receive one-on-one help. Calculus, Statistics, Finance and Accounting Market Opportunity ~60% of Ch
Slide 16: Math Solver: Step-by-step Problem Solver and Calculator
Math Solver: Step-by-step Problem Solver and Calculator Step-by-step math problem solver and calculator makes learning math easier. A.I.-driven math technology which provides guided explanations for each step in solving a problem. 64% of high school students are not prepared for college-level math.
Slide 17: Required Materials Drives Brand Awareness & Loyalty
Required Materials Drives Brand Awareness & Loyalty ~$550 MM 1 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 opport
Slide 18: Business Outlook: 2018
We are increasing our organic guidance Business Outlook: 2018 Q3 2018 Q4 2018 Full Year 2018 Results Guidance Guidance Total Net Revenues $74.2m $90m - $92.5m $315m - $318m Chegg Services Revenue $54.2m $78m - $79.5m $250m - $252m Gross Margin % 73% 75% - 76% 74% - 75% Adjusted EBITDA* $12.5m $33m -
Slide 19: Business Outlook: Full Year 2019
We are increasing our organic guidance Business Outlook: Full Year 2019 Total Revenue ~$388m Chegg Services Revenue ~$326m Year over Year Growth ~30% Gross Margin ~75% Adjusted EBITDA* ~$112m Adjusted EBITDA Margin ~29% * Non-GAAP financial measure. Reconciliation of 1) forward looking net income (l
Slide 20: Business Outlook: 2019 Revenue and Adjusted EBITDA Seasonality
Business Outlook: 2019 Revenue and Adjusted EBITDA Seasonality Q1’19 Q2’19 Q3’19 Q4’19 Adjusted EBITDA* ~17% ~23% ~18% ~42% Quarterly Contribution We expect Chegg Services and Required Materials revenue to be seasonally similar to 2018 • Non-GAAP financial measure Note: 2019 quarterly contribution p
Slide 21: Appendix
Appendix 21 Chegg Inc. © 2005 - 2018. All Rights Reserved.
Slide 22: Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net loss $ (13,709) $ (11,516) $ (20,235) $ (23,942) Interest
Slide 23: Reconciliation of Forward Looking Net Income (Loss) to EBITDA and Adjusted EBITDA
Reconciliation of Forward Looking Net Income (Loss) to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF FORWARD-LOOKING NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) Three Months Year Ending Year Ending Ending December December 31, 2018 December 31, 2019 31, 2018
Slide 24: Reconciliation of Required Materials Net Revenues to Non-GAAP Required Materials Net Revenues
Reconciliation of Required Materials Net Revenues to Non-GAAP Required Materials Net Revenues CHEGG, INC. RECONCILIATION OF REQUIRED MATERIALS NET REVENUES TO NON-GAAP REQUIRED MATERIALS NET REVENUES (in thousands, except percentages) (unaudited) ` Year Ended December 31, 2016 2015 2014 2013 2012 Re