Slide 1: Q3-23 Investor Presentation
Q3-23 Investor Presentation Oct 30, 2023 © 2023 Chegg, Inc. / All Rights Reserved
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements personal learning assistant; competition in aspects of Chegg’s business, and Chegg’s expectation that such This presentation contains forward-looking statements made pursuant to the safe harbor provisions of the competition will increase; Chegg’s abil
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 – Personal Learning Assistant
AI at Chegg – Personal Learning Assistant The advances in AI create opportunities for Chegg and we’ve pivoted the company to harness AI to better serve learners. We plan to build the largest connected community of learners around the world with a truly scalable, adaptive learning assistant Chegg’s A
Slide 6: Proprietary Solution Flow Technology
Proprietary Solution Flow Technology Chegg technology automatically routes questions to the best source that optimizes solution relevancy, speed, accuracy, and cost Proprietary question routing Match in Provide existing technology solution to the database question We built Orchestrator to be adaptab
Slide 7: We Are Building An Industry-Leading Proprietary AI Stack That Will Deliver Personalized Learning at Scale
We Are Building An Industry-Leading Proprietary AI Stack That Will Deliver Personalized Learning at Scale Integration into Chegg Study and Chegg Skills Conversational and guided learning experience based on student needs Questions automatically routed to either (1) existing content database, (
Slide 8: Transforming the User Experience: Chegg's Vision, Powered by AI
We’re entering an exciting new chapter, driven by the advances in AI To help illustrate Chegg’s vision for AI, what we’re building over the next several years, and how our user experience is changing, we created the following videos: Is this structure correct? Transforming the Chegg’s Vision, Powere
Slide 9: 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 10: Chegg at a Glance: Financial and KPI Highlights
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 11: 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% Over 25 years old(1) Don’t graduate (2) 39.5% Of recent graduates are ~43% $36K underemployed (4) Average student loan balance Are employed (1) p
Slide 12: 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. Our stu
Slide 13: 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 102 million pieces of such as Data Science, Data Analytics, UX/UI expert-generated content1 Design, and Softwar
Slide 14: 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 15: 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 15
Slide 16: Chegg Serves Students of Diverse Backgrounds
Chegg Serves Students of Diverse Backgrounds 27% First generation 15% Family income <$20k 56% Minorities 59% Female 25% Over 25 years old 11% work Full-Time / 32% Part-Time Source: Chegg Consumer Insights, April 2023, Quarterly Marketing Tracker. Chegg Services users in the past 3 months
Slide 17: Majority of U.S. College Students are taking STEM-B Courses
Majority of U.S. College Students are taking STEM-B Courses 22% Not STEM-B Major but taking STEM-B Courses 59% STEM-B Major 19% No STEM-B STEM-B = Science, Tech, Engineering, Math, or Business Chegg Consumer Insights, conducted by Peerless Research Group, September 2022. Base: Panel Sample US Colleg
Slide 18: Chegg Delivers Positive Learner Outcomes
Chegg Delivers Positive Learner Outcomes Learn & Better Grades More Efficient Help When You Build Confidence Understand Need It 89% 91% 90% 91% 83% Say that Chegg helps Say they get better Say that they work Say that Chegg helps Say that Chegg helps them learn their grades when they use more efficie
Slide 19: Chegg's Approach to ESG: Our Six Pillars
Chegg’s Approach to ESG: Our Six Pillars Public We foster an environment centered on respect, where We help learners succeed by providing the type of help they Recognition diversity and inclusion are Focus on need, when they need it, in the celebrated, and employees can Help Learners format they wan
Slide 20: Financial Highlights: Q3 2023 Revenue and Subscribers
Financial Highlights: Q3 2023 Revenue and Subscribers Total Revenue Subscription Services Skills & Other Revenue Subscription Services ($millions) Revenue ($millions) ($millions) Subscribers (millions) 200 160 200 6.0 140 5.0 150 120 150 4.0 100 100 80 100 3.0 $165 $146 $140 $158 60 4.8 4.4 2.0 50 4
Slide 21: Financial Highlights: Q3 2023 Expenses ex-SBC and One-Time Charges
Financial Highlights: Q3 2023 Expenses ex-Stock Based Comp (SBC) and One-Time Content and Related Assets Charges* 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% 120 100% 100% $97 $97 10
Slide 22: Financial Highlights: Q3 2023 Adj. EBITDA Margin, Free Cash Flow, and CapEx
Financial Highlights: Q3 2023 Adj. EBITDA Margin, Free Cash Flow, and CapEx Adjusted EBITDA Free Cash Flow CapEx 70 7070% 7070% 70% 60 $50 6060% 6060% 60% 50 5050% 5050% 50% $39 40 4040% 4040% 40% 30 3030% 3030% $22 $23 30% 20 30% 2020% $16 2020% 20% 25% $9 10 1010% 10% 1010% 10% 6% 13% 15% 0 00% 00
Slide 23: 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 $1.50 $1.30 $1.23 $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 $0.18 $0.05 $0.06 $0.30 $0.04 $0.01 $0.02 $0.10 ($0.10) ($0.30) ($0.11)
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 (9/30/23) We have opportunistically retired both convertible debt and equity, returning approximately $1.2 billion and $800 million, respectively, to investors through $674 repurchases over the last three years $
Slide 25: Growth of Chegg Subscription Services
Growth of Chegg Subscription Services Chegg Subscription Services Subscribers Chegg Subscription 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 $461 FY18 – FY
Slide 26: Industry-leading Margin and Profit
Industry-leading Margin and Profit Chegg’s business model supports operating Adjusted EBITDA leverage Chegg Adj. EBITDA ($million) and Margin (%) $266 $255 Majority of subscribers are acquired through 52% unpaid channels Adj. EBITDA $207 FY16 – FY22 Create content once, used by learners many CAG
Slide 27: Strong FCF Generation
Strong FCF Generation Chegg continues to deliver strong free cash flow Free Cash Flow and margins Chegg FCF ($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 – F
Slide 28: Business Outlook
Business Outlook Q3 2023 Results Q4 2023 Guidance Total Net Revenue $158m $185m - $187m Subscription Services Revenue $140m $164m - $166m Gross Margin % 47%2 73%-74% Non-GAAP Gross Margin % 74% Adjusted EBTIDA1 $39m $62m - $64m CapEx $23m Free Cash Flow1 $9m $49m (1) Non-GAAP financial measure. (2)
Slide 29: 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 30: 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 31: Appendix
Appendix © 2023 Chegg, Inc. / All Rights Reserved
Slide 32: Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA
Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA © 2023 Chegg, Inc. / All Rights Reserved 32
Slide 33: 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 33
Slide 34: Reconciliation of Forward-Looking Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Forward-Looking Net Income to EBITDA and Adjusted EBITDA © 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 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 36
Slide 37: Reconciliation of Forward-Looking Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Forward-Looking Net Cash Provided by Operating Activities to Free Cash Flow © 2023 Chegg, Inc. / All Rights Reserved 37
Slide 38: Reconciliation of GAAP Expenses to Expenses ex-SBC and One-Time Content and Related Assets Charge
Reconciliation of GAAP Expenses to Expenses ex-SBC and One-Time Content and Related Assets Charge CHEGG, INC. RECONCILIATION OF GAAP EXPENSES TO EXPENSES EXCLUDING SHARE BASED COMPENSATION AND THE CONTENT AND RELATED ASSETS CHARGE (in thousands) (unaudited) Three Months Ended September 30, 2023 2022
Slide 39: Reconciliation of Net (Loss) Income per Share, Diluted to Non-GAAP Net Income per Share, Diluted
Reconciliation of Net (Loss) Income per Share, Diluted to Non-GAAP Net Income per Share, Diluted © 2023 Chegg, Inc. / All Rights Reserved 39