Chegg, Inc. · NYSE:CHGG
Chegg — Investor Day (November 2016)
171 slides from Chegg's investor day presentation, Nov 16, 2016
Slide 1: Chegg Analyst Day
Chegg Analyst Day TRACEY FORD // VP Investor Relations
Slide 2: Chegg Analyst Day Safe Harbor
Chegg Analyst Day Safe Harbor 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 an
Slide 3: Agenda
Agenda 8:30 A Smarter Way to Student 9:00 The Student Graph 9:15 A Beloved Brand Chegg 9:30 10:00 Product Approach & Tour Learning Services Analyst 10:30 10:45 Break A Look Ahead Day 11:05 Financial Overview 11:30 Q&A 12:15 Lunch
Slide 4: A Smarter Way to Student
A Smarter Way to Student DAN ROSENSWEIG // CEO
Slide 5: Education is a massive industry
Education is a massive industry 15 1.3 7 ARE STUDENTS 1 % $ TRILLION 2 % OF THE US GDP 3 1National Center for Education Statistics and US Census Bureau, 2015 2https://www.federalreserve.gov/releases/g19/Current/#fn11b 3www.data.worldbank.org/indication/NY.GD.MKTP.CD?location +US
Slide 6: Today's student is different
Today’s.student is different
Slide 7: Today's student population is larger, more diverse, and has more need
Today’s student population is larger, more diverse, and has more need IN THE 90s RIGHT NOW 32% % ENROLLED1 18 – 24 40% 23% NON-WHITE STUDENTS2 45% 55% FEMALE2 57% 45% RECEIVE FINANCIAL AID3 72% 1http://nces.ed.gov/programs/digest/d15/tables/dt15_302.60.asp?current=yes 2http://nces.ed.gov/programs/di
Slide 8: Students face more pressure than ever
Students face more pressure than ever 296% 26 $35K INCREASE IN IN-STATE AVERAGE STUDENT DEBT FOR THE AVERAGE TUITION AT PUBLIC AGE2 STUDENT WHEN THEY COLLEGE SINCE 19951 GRADUATE4 40% WORK AT LEAST 30 HOURS PER WEEK3 1National Center for Education Statistics and US Census Bureau, 2015 2Hall and Part
Slide 9: The system isn't working
The system isn’t working 50 41 44 OF STUDENTS IN REMEDIAL COURSES1 % DON’T GRADUATE22 % IN JOBS THAT DON’T REQUIRE DEGREES33 % 1http://www.ncsl.org/research/education/improving-college-completion-reforming-remedial.aspx 2National Center for Education Statistics, 2015 3Economic Policy Institute, 2016
Slide 10: The class of 2020 is different
The class of 2020 is different These kids were born the same year as Google. They’ve only ever owned a smartphone.
Slide 11: They are online and on-demand
They are online and on-demand
Slide 12: They are online and on-demand
They are online and on-demand
Slide 13: They are online and on-demand
They are online and on-demand
Slide 14: They are online and on-demand
They are online and on-demand
Slide 15: Gane
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Slide 16: Online, On-demand, Personalized, Adaptive, Affordable
Online On-demand Personalized Adaptive Affordable
Slide 17: Chegg awareness continues to grow
Chegg awareness continues to grow 78% 53% 2015 2016 (CHEGG) (CHEGG PLATFORM)
Slide 18: The Student Hub
Chegg BOOKS STUDY TUTORS TESTPREP INTERNSHIPS COLLEGES _ The Student Hub * iva ! Q) 3) Find an online tutor ¢ Anna Unlock better grades =m) i with Chegg Study On 4 bs fone [EE Course Companion for Basic. PODS i: 2 Basic College Mathematics 10th 3 ia ” iN ar, 8 SEE Calculus for Scientists and. Get a
Slide 19: Platforms become category leaders
Platforms become category leaders SOCIAL PROFESSIONAL ENTERTAINMENT MUSIC STUDENT GRAPH GRAPH GRAPH GRAPH GRAPH
Slide 20: Slide 20
Slide 21: Student
Slide 22: College
College — How do | get my textbooks for less?
Slide 23: College
College How do | get my textbooks for less? ~ How do | get unstuck? — What should | major it? ~ How do | master the subject? ~ How do | balance working and learning? ~ How much debt should | take on?
Slide 24: College
College — Should | go to college? ~ Which college should i go to? ~ How do | get in? How can | afford it? How do | get my textbooks for less? ~ How do | get unstuck? — What should | major it? ~ How do | master the subject? ~ How do | balance working and learning? ~ How much debt should | take on?
Slide 25: College
College ~ Should | go to college? ~ Which college should | go to? ~ How do | get in? How can | afford it? ~ How do | get my textbooks for less? ~ How do | get unstuck? _ What should | major it? ~ How do | master the subject? ~ How do | balance working and learning? ~ How much debt should | take on?
Slide 26: Solving student problems is a great business
Solving student problems is a great business SUBSCRIBER GROWTH OUR CORE SERVICES Learning Services: FY 2012 300K Chegg Study Chegg Tutors FY 2013 500K Chegg Writing Tools Chegg Test Prep FY 2014 700K Outcome Services: FY 2015 1,000K Enrollment Brand Partnership FY 2016 *Projected 1,500K students Car
Slide 27: The next 100 years
The next 100 years
Slide 28: A smarter way to student
A smarter way to student
Slide 29: The Student Graph
The Student Graph MIKE OSIER // CHIEF OUTCOMES OFFICER
Slide 30: The Student Graph
The Student Graph Growth in customers Growth in attach rate Enhance products & services Drive product roadmap Develop strategies
Slide 31: The Chegg data flywheel
The Chegg data flywheel Products improve Services connect Expands our relevance
Slide 32: The Student Graph textbook transformation
The Student Graph textbook transformation Dynamic pricing platform Integrated supply chain Program overhauls Planned warehouse shutdown Ingram partnership
Slide 33: Chegg Study
Chegg Study Subject interaction patterns Time of day engagement Insights from aggregate data
Slide 34: Invaluable analysis from textbook pacing
Invaluable analysis from textbook pacing
Slide 35: Question/answer patterns drive predictions
Question/answer patterns drive predictions
Slide 36: Engagement drives better predictions
Engagement drives better predictions Hour of the day Day of the semester
Slide 37: Engagement means better targeting
• Questions Engagement means better targeting • Answers • Solutions • Textbooks • eTextbooks • Pricing • Tutors • Mobile • Customer Service • Shipping • Citations • Concepts • Subjects • School • Catalog • Academic Calendar • Time of Day
Slide 38: Chegg tutors
Chegg tutors
Slide 39: Matching tutor supply with student demand
Chegg tutors: matching tutor supply with student demand Excess Tutors Hour of Day Tutor Shortage
Slide 40: Matching tutors with subjects by time of day
Chegg tutors: matching tutors with subjects by time of day Tutor Subjects Literature Physics Tutor Demand Time of Day
Slide 41: Student Graph: An anonymous visit
Student Graph: Next Generation An anonymous visit
Slide 42: Student Graph: A personalized recommendation
Student Graph: Next Generation A personalized recommendation
Slide 43: Student Graph: 3rd year ChemE Textbook
Student Graph: Next Generation 3rd year ChemE Textbook
Slide 44: Student Graph: Schools using Textbook
Student Graph: Next Generation Schools using Textbook
Slide 45: Student Graph: eTextbook Pacing
Student Graph: Next Generation eTextbook Pacing
Slide 46: Student Graph: Student IP Address
Student Graph: Next Generation Student IP Address
Slide 47: Student Graph: Student School
Student Graph: Next Generation Student School
Slide 48: Student Graph: Student School
Student Graph: Next Generation Derived from citation Textbook & eTextbook Chapter & Concepts Major & School City & State Personalized Help Opportunities Student School
Slide 49: Personalization from fragments
Student Graph Personalization from fragments
Slide 50: Personalization from fragments
Student Graph Personalization from fragments
Slide 51: Student choices, student outcomes
student choices student outcomes
Slide 52: Students face pivotal choices
Students face pivotal choices
Slide 53: How many years? How much debt? Which jobs?
How many years? How much debt? Which jobs? Where? What will I earn? Which career path is best for me?
Slide 54: What students do after they leave school
students do after they leave school Tools do not factor what A
Slide 55: We have mapped millions of paths
We have mapped millions of paths
Slide 56: We have mapped millions of paths
We have mappeg
Slide 57: Pathways
| Pathways
Slide 58: Choosing a school: an incomplete approach
Choosing a school: an incomplete approach
Slide 59: Choosing a school: an incomplete approach
Choosing a school: an incomplete approach
Slide 60: Choosing a school: an incomplete approach
Choosing a school: an incomplete approach
Slide 61: The Student Graph: simulate choices for life
The Student Graph: simulate choices for life Get a job Pursue a career Location-based salary Earn from skills Pay down debt
Slide 62: Pathways Choices
Student Interactions Additional Data Pathways Choices “INNOVATION oe __-® High school College Career
Slide 63: The Student Graph
The Student Graph
Slide 64: A Beloved Brand
A Beloved Brand ESTHER LEM // Chief Marketing Officer
Slide 65: A 10+ year journey with students
A 10+ year journey with students ACE THE TEST PICK A MAJOR ESSAY HELP FIRST JOB WRITING HELP MORE BOOKS TEST PREP ORDER JOB HOMEWORK BOOKS SEARCH HELP GRADUATE FIND AN PAY INTERNSHIP FIND A SCHOOL TUITION MIDDLE SCHOOL HIGH SCHOOL COLLEGE CAREER
Slide 66: Chegg is building a powerful student-first brand
Chegg is building a powerful student-first brand 1. Scale and reach drive direct traffic 2. Hyper-efficient SEO 3. Targeted paid advertising
Slide 67: A relationship lasting 4 days a year
A relationship lasting 4 days a year
Slide 68: College
College ~ Should | go to college? ~ Which college should | go to? ~ How do | get in? How can | afford it? ~ How do | get my textbooks for less? ~ How do | get unstuck? _ What should | major it? ~ How do | master the subject? ~ How do | balance working and learning? ~ How much debt should | take on?
Slide 69: Chegg has huge audience reach
Chegg has huge audience reach ~ 40UVs (12 MONTHS)1 M ~ 10 UVs (ONE MONTH)2 M 1 Source: comScore U.S. Annual Unique Visitors (Custom Analytics), Oct 2015 - Sep 2016 2 Source: comScore U.S. Media Metrix Multi-Platform, Audience Duplication, Sep 2016
Slide 70: Chegg is the biggest student-focused brand by far
Chegg is the biggest student-focused brand by far PERCENT UNAIDED AWARENESS (COLLEGE) AMAZON 26% Chegg CHEGG 21% GOOGLE 9% QUIZLET 6% KHAN ACADEMY 6% BARNES & NOBLE 6% WIKIPEDIA 3% KAPLAN TEST PREP 3% *Source: Hall & Partners, October 2016 (Base: College (n=1370))
Slide 71: Chegg is nearly universally known
Chegg is nearly universally known 78OF STUDENTS HAVE HEARD OF A CHEGG SERVICE1 % 80 % OF THOSE WHO USE CHEGG, PLAN TO RECOMMEND US1 1Hall and Partners Survey, Oct 2016, (College (n=1370))
Slide 72: Chegg has built an efficient acquisition engine
Chegg has built an efficient acquisition engine PAID 85% 15% of traffic comes through unpaid channels1 DIRECT 23% 62% SEO 1Google Analytics, July 1-Sep 30, 2016 TRAFFIC TO CHEGG SITE
Slide 73: SEO is a major competitive advantage
SEO is a major competitive advantage STUDENTS TYPE IN QUESTIONS, CHEGG RESPONDS WITH ANSWERS
Slide 74: We can be precise and cost efficient with paid ads
We can be precise and cost efficient with paid ads TARGET KEY SEGMENTS
Slide 75: We can be precise and cost efficient with paid ads
We can be precise and cost efficient with paid ads TARGET KEY SEGMENTS 3. FOLLOW UP WHEN 4. CROSS-SELL ANOTHER 1. SEARCH ON CHEGG THEY GET STUCK SERVICE 2:21 Monday, November 20 CHEGG 2m ago Don’t freak out! Need some help 2. TARGET BASED ON SEARCH from a live tutor? Connect now with a Calculus tutor
Slide 76: Our marketing approach is working
Our marketing approach is working $4 1500K +44 % -31 % 0 0 Q3 2015 Q3 2016 2015 2016 (EST) OVERALL CUSTOMER ACQUISITION COST TOTAL CHEGG SERVICES SUBSCRIBERS
Slide 77: 15,000 Cheggheads
Ni 1G "2D = 15,000 Cheggheads
Slide 78: Student pain points are pervasive
Student pain points are pervasive 93% 92% 88% 86% 75% 80% 67% 64% ACADEMIC PERFORMANCE FINANCIAL CONCERNS HEALTH AND WELLNESS RELATIONSHIP ISSUES College High School * Source: Cheggheads, October 2016 (Base: College (n=72), High school (n=204))
Slide 79: Both Achievers and Strugglers seek help
Both “Achievers” and “Strugglers” seek help REASON TO USE SUPPLEMENTAL RESOURCES OUTSIDE OF SCHOOL 58 % 42 % 51 % 49 % COLLEGE HIGH SCHOOL Achievers - Get ahead of my classmates Strugglers - Keep up with my classmates * Source: Hall & Partners, October 2016 (Base: College (n=1370) and High School (n
Slide 80: A smarter way to student
A smarter way to. student
Slide 81: Find a boyfriend who's like Chegg
Find a boyfriend who's like chegg; always there for you, gives you straight answers, and helps you to succeed. 9. 47 Sie reaarTae
Slide 82: Students trust us enough to recommend us
Students trust us enough to recommend us STUDENT RECOMMENDATIONS FOR RESOURCES CHEGG TEXTBOOKS EASYBIB CHEGG TUTORS CHEGG TEST PREP CHEGG STUDY FLASHCARDS+ 20% 40% 60% 80% 100% *Source: Hall & Partners, 2016 October (Base: Used a specific brand-College)
Slide 83: A new crop of freshmen every year
A new crop of freshmen every year
Slide 84: Gen Z is digital
Gen Z is digital
Slide 85: Digital usage is starting earlier
Digital usage is starting earlier PERCENTAGE OF STUDENTS USING EASYBIB BY MIDDLE SCHOOL OR BEFORE 64% 26% College High School *Source: Hall & Partners, October 2016 (Base: EasyBib users: High school (n=417), College (n=373))
Slide 86: High schoolers are more digitally dependent
High schoolers are more digitally dependent PERCENTAGE OF STUDENTS DOING % Schoolwork SCHOOL Online (HS & College) WORK ONLINE 80% 66% 72% 70% 53% 46% 25% 6% Studying science online Studying history online Learning a foreign Completed a written homework language online assignment by hand High school
Slide 87: High schoolers are more digitally dependent
High schoolers are more digitally dependent PERCENTAGE OF STUDENTS DOING % Schoolwork SCHOOL Online (HS & College) WORK ONLINE 80% 66% 72% 70% 53% 46% 25% 6% Studying science online Studying history online Learning a foreign Completed a written homework language online assignment by hand High school
Slide 88: Student social media posts about Chegg
cF s Follow It's currently 1am and Chegg Tutors is currently helping me write this essay and | couldn't be more thankful © Maya @bakingswifts - 18 Rate my professor: you have to study me: Well this class sounds like it is going to be so difficult idk if | can do it
Slide 89: Ouch!
—_ Werte DYNAMIC PERSPECTIVE
Slide 90: Spotify
Spotify
Slide 91: Bernie is more popular than Hillary
Bernie is more popular than Hillary
Slide 92: Trump is the likely Republican nominee
Trump is the likely Republican nominee
Slide 93: An influential group
An influential group
Slide 94: The value of our brand, reach, and the student graph
The value of our brand, reach, and the student graph… 1. Grow audience faster 2. Reduce acquisition costs 3. Generate love from students
Slide 95: A smarter way to student
A smarter way to student
Slide 96: Product Approach & Tour
Product Approach & Tour CHUCK GEIGER // Chief Product Officer
Slide 97: Student insights power our product strategy
Student insights power our product strategy POWERFUL DATA & ANALYTICS PROPRIETARY STUDENT RESEARCH
Slide 98: Student-first defines our approach to product development
Student-first defines our approach to product development With us beginning, during, and through delivery of our products Our passion and our differentiation Good for students = good for Chegg
Slide 99: Our products must…
Our products must… OVERWHELMING VALUE
Slide 100: Our products must…
Our products must… OVERWHELMING ONLINE, VALUE ON-DEMAND
Slide 101: Our products must…
Our products must… OVERWHELMING ONLINE, MULTI-DEVICE VALUE ON-DEMAND
Slide 102: Our products must…
Our products must… OVERWHELMING ONLINE, MULTI-DEVICE VALUE ON-DEMAND PERSONALIZED
Slide 103: Our products must…
Our products must… OVERWHELMING ONLINE, MULTI-DEVICE VALUE ON-DEMAND PERSONALIZED CONTINUOUS IMPROVEMENT
Slide 104: Our products must…
Our products must… OVERWHELMING ONLINE, MULTI-DEVICE VALUE ON-DEMAND PERSONALIZED CONTINUOUS STUDENT IMPROVEMENT PARTNERSHIP
Slide 105: Textbooks
Textbooks
Slide 106: Textbooks help build our brand, reach, and data
Textbooks help build our brand, reach, and data ~ 6 M BOOKS IN 2016 25 GROWTH IN % CHEGG STUDY ATTACH 9 M+ SAMPLES & INSERTS (3Q 2016 YOY) (LTM)
Slide 107: Chegg Study & Chegg Tutors
Chegg Study & Chegg Tutors
Slide 108: A proprietary student platform
A proprietary student platform PROPRIETARY CONTENT MASSIVE ENGAGEMENT ATTACH TO MORE SERVICES ~23K ISBNs 45M+ CONTENT VIEWS 50% TUTORING CUSTOMERS ~7M Q3 2016 FROM CHEGG STUDY Q3 2016 EXPERT ANSWERS
Slide 109: Citations
Citations
Slide 110: Imagine Easy expands the Chegg platform
Imagine Easy expands the Chegg platform PROPRIETARY CONTENT IMAGINE EASY ~ 30M UVs (12 MONTHS)1 > 1.4B CITATIONS TO DATE CHEGG PLATFORM 1 Source: comScore U.S. Annual Unique Visitors (Custom Analytic, Oct 2015 – Sep 2016)Duplication, Sep 2016
Slide 111: We will continue to serve our students
We will continue to serve our students
Slide 112: Learning Services
Students need ongoing Learning help across so many areas ACADEMIC NEEDS (COLLEGE) Services Q: Here are a number of things students might need to do or use in order to complete assignments or advance academically. Please indicate how frequently each is a need for you. (Percent ongoing & occasional) N
Slide 113: Almost all students need extra help
Almost all students need extra help KEY CATEGORIES WHERE COLLEGE HIGH SCHOOL STUDENTS SEEK HELP Step-by-step solutions Homework Q+A Online homework systems Essay + writing help Flashcards Schedule + time management 96 % 82 % Notes + note sharing Language learning Bibliography tools Math help Study g
Slide 114: Schools are not meeting student needs
Schools are not meeting student needs and students don’t think their schools can help 100% 50% 42 % 40 % 33 % 0% ARE PERSONALIZED FOR MY ALLOW ME TO LEARN ARE EASY TO ACCESS SPECIFIC ACADEMIC NEEDS AT MY OWN PACE Source: Cheggheads, Profiling Survey, October 2016 (Base: college students (n=728)
Slide 115: Students already turn to the Internet to complete their homework
Students already turn to the Internet to complete their homework And they are increasingly turning to Chegg ~10M monthly unique visitors (Sep 2016)1 5M+ monthly unique visitors to citations / EasyBib (Sep 2016)1 22M+ textbook solutions viewed in Q3 2016 ~24M questions and expert answers viewed in Q3
Slide 116: Chegg's business flywheel
Chegg’s business flywheel CURRENT SERVICES SOLUTIONS BOOKS Q&A STUDENT CHEGG PLATFORM TUTORS FLASHCARDS CITATIONS
Slide 117: Chegg's flywheel expands into a $30B global market
Chegg’s flywheel expands into a $30B global market NEW CATEGORIES MATH HELP NOTES + NOTE SHARING ONLINE LECTURES MEMORIZATION TOOLS LANGUAGE LEARNING CAREERS CHEGG PLATFORM NEW MARKETS HIGH SCHOOL INTERNATIONAL
Slide 118: We are adding more subscribers each year
We are adding more subscribers each year 1600 1500K 1400 +461K 1200 +302K 1039K 1000 800 +273K 737K 600 464K 400 200 0 2013 2014 2015 2016F
Slide 119: Chegg Study has a massive addressable market
Chegg Study has a massive addressable market ~ 23 ISBNs K ~ 9 ENROLLED M 15 ~ % PENETRATION2 > 6 X ROOM FOR STUDENTS1 SUBSCRIBER GROWTH 1 Nielsen Addressability Report, Oct 2016 2Calculation based on current Chegg subscribers and enrolled students using Chegg Study ISBNs
Slide 120: Strong fundamentals have driven Chegg Study growth
Strong fundamentals have driven Chegg Study growth Acquisition 40% GROWTH IN CHEGG STUDY SUBSCRIBERS WEEKLY ENGAGEMENT Engagement 20 MINUTES PER SESSION 80+ SOLUTIONS PER TERM Retention 80% MONTHLY 50% ATTACH: TUTOR CUSTOMERS Attach FROM CHEGG STUDY
Slide 121: We're delivering strong outcomes for students
We’re delivering strong outcomes for students CHEGG STUDY HELPS ME… 89 % 88 % 84 % GET HOMEWORK DONE GET A BETTER BETTER UNDERSTAND WITH LESS STRESS GRADE MY SCHOOL WORK Source: Hall & Partners Survey of Chegg Study subscribers, Oct 2016
Slide 122: Millions of students need writing help
Millions of students need writing help 70% LACK WRITING PROFICIENCY1 20M+ STUDENTS CONSIDER WRITING HELP AN ONGOING NEED2 $ 3B+ SPENT ANNUALLY ON REMEDIAL WRITING INSTRUCTION3 1https://www.insidehighered.com/news/2015/01/20/study-finds-big-gaps-between-student-and-employer-perceptions 2Factworks Sur
Slide 123: Imagine Easy is a powerful addition to the Chegg platform
Imagine Easy is a powerful addition to the Chegg platform ~ 30M UNIQUE VISITORS (PAST YEAR)1 Acquisitions 900M IMPRESSIONS Q3 2016 27%+ GROWTH IN SUBSCRIPTIONS IN Q3 2016 ~ WEEKLY ENGAGEMENT Engagement 8 MINUTES PER SESSION 29%+ GROWTH IN CITATIONS IN Q3 2016 1 Source: comScore US Annual Unique Visi
Slide 124: Enormous market for on-demand human help
Enormous market for on-demand human help MILLIONS USE TUTORING DESPITE MARKET INEFFICIENCIES In-person 10 5 STUDENTS USING M $ SPENT ON B+ Expensive Location-dependent Scheduled TUTORING1 TUTORING2 1 Factworks Survey, May 2016 2 http://www.cnbc.com/2014/08/29/high-tech-tutoring-big-media-big-start-u
Slide 125: Our marketplace is working for tutors and students
Our marketplace is working for tutors and students MORE STUDENTS BEST MATCHING MORE TUTORS
Slide 126: Our marketplace is working for tutors and students
Our marketplace is working for tutors and students MORE STUDENTS BEST MATCHING MORE TUTORS 60% 60% 60% > $ 650 TOTAL TUTORS TOTAL LESSONS TOTAL DOLLARS Q3 2016 Q3 2016 TUTORING MINUTES PER TUTOR Q3 2016 YTD 2016
Slide 127: Proven efficacy in Chegg Tutors
Proven efficacy in Chegg Tutors CHEGG TUTORS HELP ME… 84 % 79 % 78 % BETTER UNDERSTAND GET A BETTER GET HOMEWORK DONE MY SCHOOL WORK GRADE WITH LESS STRESS Source: Hall & Partners Survey of Chegg Tutors customers, Oct 2016
Slide 128: Students need help across Chegg's core categories
Students need help across Chegg’s core categories PERCENTAGE OF STUDENTS SEEKING ONLINE HELP TUTORING TUTORING (32%) (24%) STUDY AND 78 % USE 2+ STUDY AND 54 USE 2+ % HOMEWORK HOMEWORK AIDS (88%) AIDS (76%) WRITING AIDS WRITING AIDS (81%) (51%) COLLEGE HIGH SCHOOL (STUDENTS & PARENTS) Source: Factwo
Slide 129: A Look Ahead
A Look Ahead Chuck Geiger & Vikram Subramaniam
Slide 130: A sneak peek
A sneak peek CHEGGMATE CAREER EXPLORER AND JOB FINDER
Slide 131: CheggMate
* wt et CheggMate = A
Slide 132: A sneak peek
A sneak peek LEVERAGING CHEGG’S KEY ASSETS & PATENTS: Instant access to key concepts within a book (physical or digital) Simple and comprehensive organizer of study material 1+1=3 connection between phone and desktop
Slide 133: Careers
Careers VIKRAM SUBRAMANIAM // VP of Product, Outcomes
Slide 134: Finding a job is a big market opportunity
Finding a job is a big market 3.4M opportunity CURRENTLY IN HIGH SCHOOL 39 14–29 YEAR-OLDS1 IN LABOR FORCE M 10M QUIT COLLEGE 9M GRADUATED COLLEGE $ 10 SPENT BY COMPANIES RECRUITING THIS GROUP2 B 10.8M WORK AFTER HIGH SCHOOL 5.8M CURRENTLY IN COLLEGE 1Bureau of Labor Statistics, Current Population S
Slide 135: The market is broken
The market is broken ONE YEAR AFTER GRADUATION 18% OF NEW GRADS ARE NOT WORKING1 44% ARE IN JOBS THAT DON’T REQUIRE A DEGREE2 30% ARE LOOKING FOR A NEW JOB3 1Baccalaureates and Beyond Longitudinal Study, 2008-2014, NCES 2Economic Policy Institute, 2015 3Baccalaureates and Beyond Longitudinal Study,
Slide 136: The market is broken
The market is broken ONE YEAR AFTER GRADUATION EMPLOYERS ARE FRUSTRATED TOO 18% OF NEW GRADS ARE NOT WORKING1 53% OF EMPLOYERS STRUGGLE TO FIND QUALIFIED RECENT GRADS4 44% ARE IN JOBS THAT DON’T REQUIRE A DEGREE2 1.7YRS TENURE FOR NEW GRADS5 30% ARE LOOKING FOR A NEW JOB3 1Baccalaureates and Beyond
Slide 137: Current options are not student first
Current options are not student first Keyword search presumes you know what you want and what to look for
Slide 138: Current options are not student first
Current options are not student first Keyword search presumes Limited experience leads you know what you want to profiles that are never and what to look for discovered
Slide 139: Current options are not student first
Current options are not student first Keyword search presumes Limited experience leads Students don’t have a you know what you want to profiles that are never professional network and what to look for discovered they can leverage
Slide 140: Chegg is uniquely positioned to solve this problem
Chegg is uniquely positioned to solve this problem MASSIVE ENGAGEMENT STUDENT GRAPH STUDENT FIRST ~40M UNIQUE VISITORS JOBS Translate every experience to skills IN PAST 12 MONTHS1 See the skills you have Understand the skills >60M you need Bridge your skills gap JOB & INTERNSHIP VIEWS STUDENTS EMPLO
Slide 141: Chegg Job Finder
Chegg' Job Finder Get matched to jobs that are a great fit! lam studying MAJOR = at SCHOOL NAME FIND RELEVANT JOBS © 2016 Chegg Inc. All rights reserved
Slide 142: Chegg Job Finder
Chegg' Job Finder Get matched to jobs that are a great fit! lam studying Political Sslence. at University of Texas at Dallas FIND RELEVANT JOBS © 2016 Chegg Inc. All rights reserved
Slide 143: Chegg Job Finder
Chegg Job Finder Find jobs by keyword, company, skills, or major My Job Finder @) Political Science Careers View More @ Campaign Worker @ Lobbyist / Organizer @ Urban Policy Planner @ Policy Analyst © Manadement Analyst @ High School Teacher
Slide 144: Chegg Job Finder
Chegg Job Finder Find jobs by keyword, company, skills, or major oe My Job Finder @) Political Science Careers View More @ Campaign Worker @ Lobbyist / Organizer @ Urban Policy Eig @ Policy Analyst @ Management Analyst High School Teacher Urban Policy Planner Figure out the best way to use land in c
Slide 145: Chegg Job Finder
Chegg Job Finder Find jobs by keyword, company, skills, or major Boe My Job Finder © Political Science @ Campaign Worker @ Lobbyist / Organizer ® Urban Policy Planner ‘@ Policy Analyst ‘@ Management Analyst @ High School Teacher View More Urban Policy Planner Figure out the best way to use land in c
Slide 146: Chegg Job Finder
Chegg Job Finder Find jobs by keyword, company, skills, or major |° My Job Finder @) Political Science @ Campaign Worker @ Lobbyist / Organizer ® Urban Policy Planner 6 Careers ‘@ Policy Analyst @ Management Analyst @ High School Teacher View More Urban Policy Planner Figure out the best way to use
Slide 147: Chegg Job Finder
Chegg Job Finder y keyword, company, skills, or major Boe My Job Finder @ Political Science @ Campaign Worker @ Lobbyist / Organizer ® Urban Policy Planner 6 Careers @ Policy Analyst @ Management Analyst @ High School Teacher View More Urban Policy Planner Figure out the best way to use land in citi
Slide 148: Chegg Job Finder
Chegg Job Finder Find jobs by keyword, company, skills, or major Roe My Job Finder @) Political Science @ Campaign Worker @ Lobbyist / Organizer ® Urban Policy Planner 6 Careers @ Policy Analyst @ Management Analyst High School Teacher yourJosmatcHes 100 soss @ Dallas, TX 7 Associate Transit Managem
Slide 149: Associate Transit Management Analyst
Associate Transit Management Analyst Te) City of Dallas Posted: 08/15/16 SKILL ANALYSIS Other Requirements EXPERIENCE LEVEL: INTERNSHIP LOCATION: DALLAS, TX MAJOR: POLITICAL SCIENCE DESCRIPTION Ort Deadline: Available Year-round Skills you have © caricaL THIvKINs © communicarion skits © research ves
Slide 150: Associate Transit Management Analyst
Associate Transit Management Analyst ciyetoas Dallas Transportation Authority | 1500 Marilla St, Dallas, TX 75201 (v) We have customized your resume for this job, and highlighted key changes ANNA SUMMER 3990 Freedom Cir + Santa Clara, CA 95050 « (224) 226-0622 + violet009200@gmall.com SS Objectives
Slide 151: Community Organizer
oe Community Organizer Texas Campaign for the Environment | 3303 Lee Pkwy # 402, Dallas, TX 75219 (v) We have customized your resume for this job, and highlighted key changes ANNA SUMMER 3990 Freedom Cir + Santa Clara, CA 95050 « (224) 226-0622 « violet009200@gmail.com PS Objectives My Skills Curren
Slide 152: Financial Overview
Financial Overview ANDY BROWN // Chief Financial Officer
Slide 153: Transition to services platform
Transition to services platform > 60 % ~ 30 % ~ 30 % ~ 25 % 20 % (6) % CHEGG SERVICES YOY GROSS MARGIN ADJUSTED EBITDA REVENUE GROWTH MARGIN1 PRE-TRANSITION MODEL TARGET OPERATING MODEL Non-GAAP metric. See Appendix for details.
Slide 154: Transition to services platform
Transition to services platform $250 $237 $214 $207 $200 $189 $172 $150 $128 $121 $100 $94 $68 $58 $50 $42 $25 $0 2012 2013 2014 2015 2016 1 2017 2 CHEGG SERVICES 1 Represents the midpoint of guidance for FY16 2 Represents FY17 business outlook for approximately $230M Total Revenue REQUIRED MATERIAL
Slide 155: Transformation: High-growth, profitable, cash provider
Transformation: High-growth, profitable, cash provider 2012 2017 ESTIMATE CHEGG SERVICES REVENUE $ 25M 172M ~$ GROSS MARGIN % 32% >60% ADJUSTED EBITDA1 $(16)M ~$35M CAPEX (INCLUDES TEXTBOOKS) $120M ~$25M FREE CASH FLOW $( 31)M ~$ 20M 1 Non-GAAP metric. See Appendix for details.
Slide 156: Essentials of the Ingram agreement
Essentials of the Ingram agreement 5-year agreement started May 2015 Ingram owns textbook purchases: $100M reduction in textbooks spend Chegg receives ~20% commission on physical textbook transactions Chegg maintains the customer relationship Simplifies financial and operating model Transition subst
Slide 157: Capital fuels current and future services
Capital fuels current and future services Chegg Tutors CheggMate Build & acquire new products & services Writing Tools Student Graph Careers Systems Chegg Study Q&A Student Graph Investing in existing services Chegg Study ISBNs Systems
Slide 158: Investments drive growth
Investments drive growth… 25 10 ~23,000 ~7M 15 5 2012 2013 2014 2015 2016 (Est) 2012 2013 2014 2015 2016 (Est) CUMULATIVE NUMBER CUMULATIVE QUESTIONS OF CHEGG STUDY ISBNs AND EXPERT ANSWERS ARCHIVED
Slide 159: Chegg Services subscriber and revenue growth
…which drives Chegg Services subscriber and revenue growth 2013-2016 2013-2016 CAGR: 44% 1.5 CAGR: 45% $128 1.0 $94 0.7 $68 0.5 $42 2013 2014 2015 2016 (Est) 2013 2014 2015 20162 NET PAYING SUBSCRIBERS (M)1 CHEGG SERVICES REVENUE ($M) 1Net paying customers represent Chegg Study, Chegg Tutor and Cheg
Slide 160: Engagement drives Chegg Services ARPU
Engagement drives Chegg Services ARPU ~ 80 % 70 % $ 77 $ 85 2012 2016 (Est) 2012 2016 (Est) CHEGG STUDY MONTHLY SUBSCRIPTION CHEGG SERVICES ARPU RENEWAL RATE
Slide 161: Scale drives profitability
Scale drives profitability $4 -31 % 85 % 64 % 0 2014 YTD 2016 Q3 2015 Q3 2016 OVERALL CUSTOMER ACQUISITION COST OPEX AS A % OF NET REVENUE
Slide 162: Interconnected platform drives profit growth
Interconnected platform drives profit growth ADJUSTED EBITDA ($M) $ 35 $ 19 $ 5 2012 2013 2014 2015 20161 20172 $ (4) $ (16) $ (13) 1Represents the midpoint of guidance for FY16 2Represents FY17 business outlook for approximately $35M for Adjusted EBITDA Non-GAAP metric. See Appendix for details.
Slide 163: FY17 guidance
FY17 guidance GUIDANCE CHEGG SERVICES REVENUE ~$ 172 M TOTAL REVENUE ~ $ 230 M ADJUSTED EBITDA1 ~ $ 35 M 1 Non-GAAP metric. See Appendix for details.
Slide 164: A smarter way to student
A smarter way to student
Slide 165: We hope you conclude…
We hope you conclude… Education is an enormous industry that is being disrupted Student-first will be the winning formula The Student Graph will help Chegg best serve students and become the leader in edtech Chegg is building a 100-year company and pursuing even bigger opportunities globally Our tur
Slide 166: Chegg: A smarter way to student
Chegg A smarter way to student.
Slide 167: Appendix
Appendix
Slide 168: Non-GAAP revenue reconciliation
Non-GAAP revenue reconciliation $000s FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 E* FY 2017E** Total net revenues $213,334 $255,575 $304,834 $301,373 $248,500 $230,000 Adjustment as if transition $(142,765) $(156,554) $(170,606) $(135,270) $(55,500) - to Ingram is complete Non-GAAP total net revenues $
Slide 169: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation RECONCILIATION OF NET LOSS TO EBITDA FY 2012 FY 2013 FY 2014 FY 2015 AND ADJUSTED EBITDA Net loss: $(49,043) $(55,850) $(64,758) $(59,210) Interest expense, net 4,393 3,818 317 247 Provision for (benefit from) income taxes 29 642 186 1,479 Textbook library depreciation
Slide 170: Non-GAAP OPEX reconciliation
Non-GAAP OPEX reconciliation FY 2014 FY 2016 Non-GAAP total net revenues $134,228 $143,023 Operating expenses $158,983 $131,000 Share-based compensation expense (36,271) (32,586) Amortization of intangible assets (4,970) (3,216) Restructuring credits (charges) - 298 Acquisition related compensation
Slide 171: Adjusted EBITDA guidance for fiscal year 2016
Adjusted EBITDA guidance for fiscal year 2016 includes approximately $9.3 million for textbook depreciation and excludes approximately $43.0 million for stock-based compensation expense; $14.1 million for other depreciation and amortization expense; $(0.3) million for restructuring charges; and $5.0