Slide 1: Q3-19 Investor Presentation
Q3-19 Investor Presentation November 4, 2019 1 Chegg Inc. © 2005 - 2019. All Rights Reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements engines; the rate of adoption of Chegg’s offerings; the effect and integration of Chegg’s acquisition of This presentation contains forward-looking statements made pursuant to the safe harbor provisions of Imagine Easy Solutions, Cogeon, WriteLab, Stu
Slide 3: Leading direct-to-student learning platform to improve educational outcomes
Leading direct-to-student learning platform to improve educational outcomes 3 Chegg Inc.Inc. Chegg © 2005 - 2019. © 2005 All All - 2019. Rights Reserved. Rights Reserved.
Slide 4: Investment Highlights
Investment Highlights Leading Direct-To-Student 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 - 2019. All Rights Reserved.
Slide 5: Chegg at a Glance
Chegg at a Glance (1) 3.1 Million 38% 2+ Million CHEGG SERVICES CHEGG SERVICES SUBSCRIBER REQUIRED MATERIAL SUBSCRIBERS Y/Y GROWTH CUSTOMERS 37% 26% 650 Million CHEGG SERVICES ADJUSTED EBITDA CHEGG STUDY Y/Y REVENUE GROWTH MARGIN(2) CONTENT VIEWS 1. All amounts shown for FY18 and based on Company in
Slide 6: Q3-19 Highlights
Q3 – 19 Highlights • 2.2 million Chegg Services subscribers, up 29% y/y(1) • Chegg Services revenue of $69.3 million, up 28% y/y • 138 million Chegg Study content views(1) • Increased FY2019 guidance 1. Based on Company internal data 6 Chegg Inc. © 2005 - 2019. 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 25 243% 39% OF STUDENTS IN INCREASE IN IN-STATE TUITION AT PUBLIC AVERAGE STUDENT AGE(1) COLLEGE SINCE 1997(3) REMEDIAL COURSES(5) ~40% $30K DEBT OWED BY 2018 GRADUATES(
Slide 8: Large Student Domestic Market Opportunity
Large Student Domestic Market Opportunity 16M 36 Million Total Planned 20M High School Expansion in University Students Can Benefit from Students(2) Students(1) International Markets 3.1 Million(3) Chegg Services Subscribers in 2018 Y/Y growth of 38% 1. Source: National Center for Education Statisti
Slide 9: Chegg Aims to Provide Overwhelming Value to Solve Students' Problems
Chegg Aims to Provide Overwhelming Value to Solve Students’ Problems Online On-demand Personalized Adaptive Affordable …and Backed by Human Help Chegg Inc. © 2005 - 2019. All Rights Reserved.
Slide 10: Chegg is Well-Known Among Students
Chegg is Well-Known Among Students Percent Unaided Awareness (College)(1) 33% Amazon 28% 87% Quizlet 14% Google 10% Khan Academy 10% OF COLLEGE STUDENTS HAVE HEARD OF A CHEGG SERVICE(1) Purdue OWL 9% EasyBib 6% Barnes & Noble 5% 10 1. Hall and Partners Survey, Jan 2019, (College (n=1784)) Chegg Inc.
Slide 11: Integrated Platform of Connected Educational Services
Integrated Platform of Connected Educational Services Chegg Chegg Services Services Students subscribe to our learning services: represents 79% of total revenue(2) Chegg Study Chegg’s connected Chegg Writing learning platform Chegg Tutors 1 Chegg Math Solver reaches ~15M unique visitors on R
Slide 12: Rapid Growth of Chegg Services
Rapid Growth of Chegg Services Chegg Services Subscribers Chegg Services Revenue Annual Chegg Services Subscribers (in Revenue Growth ($ in millions)* millions) FY'12 0.3 Chegg Services FY'13 0.5 FY’12 — FY’19 CAGR: 45% 38% FY'14 0.7 y/y growth for ‘18 FY'15 1.0 FY'16 1.5 FY'17 2.2 FY'18 3.1 * Prior
Slide 13: Chegg Study: A Powerful Learning Tool
Chegg Study: A Powerful Learning Tool Chegg Study is the largest non-required homework Library of 32M help service for students, which contains ~27 million solution sets and expert answered Q&As and 5 million step-by-step expert answers (1) textbook solution sets(1) 35K textbook ISBNs 138 million co
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 created courses(1), Chegg has the opportunity to impact this outcome in 2018(3) before students enroll and sav
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 ~ $5-7B (1
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 annual savings for students from 6 MM A comprehensive selection of textbooks and eBooks tobooks rent delivered in 2015 or buy at an affordable price Builds brand awareness, maintains the direct-to-student relationship and creates opportu
Slide 18: Required Materials - FedEx Agreement Beginning 1/1/20
Required Materials - FedEx Agreement Beginning 1/1/20 Revenue Recognition ~$550 MM 1 2019 2020 2021 annual savings for Print Rental Commission Commission/Gross (ratable) Grossstudents (ratable) from 6 MM books delivered in 2015 Print Sales Commission Commission Gross Consignment Commission Commissio
Slide 19: Business Outlook: 2019
We are increasing our organic guidance Business Outlook: 2019 Q3 2019 Q4 2019 Full Year 2019 Results Guidance Guidance Total Net Revenues $94.2m $122m - $124m $407m - $409m Chegg Services Revenue $69.3m $107m - $108m $332m - $333m Gross Margin % 76% 77% - 78% 76% - 77% Adjusted EBITDA* $23.1m $43m -
Slide 20: Business Outlook: Full Year 2020
We are increasing our organic guidance Business Outlook: Full Year 2020 Total Revenue ~$520m Chegg Services Revenue ~$437m Year over Year Growth ~31% Gross Margin ~72% Adjusted EBITDA* ~$163m Adjusted EBITDA Margin ~31% * Non-GAAP financial measure. Reconciliation of 1) forward looking net income (l
Slide 21: Business Outlook: 2020 Revenue and Adjusted EBITDA Seasonality
Business Outlook: 2020 Revenue and Adjusted EBITDA Seasonality Q1’20 Q2’ 20 Q3’ 20 Q4’20 Total Revenue ~23% ~25% ~22% ~30% Chegg Services Revenue ~23% ~25% ~21% ~31% Adjusted EBITDA * ~17% ~28% ~11% ~44% • Non-GAAP financial measure Note: 2020 quarterly contribution percentages are based on FY’20 Ad
Slide 22: Appendix
Appendix 22 Chegg Inc. © 2005 - 2019. All Rights Reserved.
Slide 23: 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, 2019 2018 2019 2018 Net loss $ (11,477) $ (13,709) $ (17,824) $ (20,235) Interest
Slide 24: 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 (in thousands) (unaudited) Three Months Year Ending Year Ending Ending December December 31, 2019 December 31, 2020 31, 2019 Net in
Slide 25: 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
Slide 26: Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) Three Months Ended December 31, Years Ended December 31, 2018 2017 2018 2017 Net income (loss) $ 5,347 $ 3,659 $ (14,888) $ (20,2