Slide 1: An Investment In Improving Student Outcomes
An Investment In Improving Student Outcomes May 1, 2017 1 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements This presentation contains forward-looking statements made pursuant to the safe harbor parties’ ability to achieve the anticipated benefits of the partnership, including the potential impact provisions of the Private Securities Litigation Reform Act o
Slide 3: The leading student-first connected learning platform
The leading student-first connected learning platform…focused on improving student outcomes 3 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 4: Chegg at-a-Glance
Chegg at-a-Glance Chegg Services Chegg’s connected learning Students subscribe to our learning services: platform for students reaches Chegg Study approximately 40 MM1 unique visitors Chegg Tutors annually and 10 MM monthly 2 Chegg Writing Tools NYSE: CHGG Q1-2017 HIGHLIGHTS Required Materials
Slide 5: An Investment in Improving Student Outcomes
An Investment in Improving Student Outcomes Large Opportunity with Compelling Market Trends Leading Student-First Connected Learning Platform Focused on Student Outcomes Transitioned to an All Digital, High Growth, High Margin Model 5 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Rese
Slide 6: Large Student Market Opportunity
Large Student Market Opportunity 11 million MIDDLE SCHOOL STUDENTS1 78% of college students have heard of a Chegg service. 16 million HIGH SCHOOL STUDENTS 1 80% of people who use Chegg plan to recommend us.4 20 million COLLEGE and GRAD STUDENTS 1 Education comprises ~ 7 % of US GDP 2 or $ 1.3 trilli
Slide 7: Compelling Macro Trends
Compelling Macro Trends Introducing the class of 2020… Today’s Born the same into a world where on- and learning happens on students want year as Google… demand is the norm… their own schedule learning solutions that 62% 1 are customized use online tutorials for school and available 81% 1 on-demand
Slide 8: Existing System Outpaced by Technology & Student Needs
Existing System Outpaced by Technology & Student Needs Chegg’s direct-to-student services are designed to improve student outcomes: writing help, test prep, college matching, required materials for less, online homework help, on-demand live Critical need for tutoring, internship search and more affo
Slide 9: On-Demand Learning Services Drive Rapid Growth
On-Demand Learning Services Drive Rapid Growth Chegg Services Subscribers quintupled over the past 4 years Fast Growing Chegg Services Revenue Chegg Services Subscribers (in millions) Revenue Growth ($ in millions)* FY'12 0.3 $178 Chegg Services FY’12 — FY’17 CAGR: 48% FY'13 0.5 $129 $94 FY'14 0.7 $
Slide 10: Well Positioned to Capture Big Market Opportunity
Well Positioned to Capture Big Market Opportunity Significant upside potential Chegg is an established ~ 47million 2 brand in a students in middle school and above1 nascent market with ~ 1.5 million lots of Chegg Services subscribers in FY’16 greenfield Chegg’s Services subscribers represent ~ 3% of
Slide 11: Supporting Every Step of the Educational Journey
We are increasing our organic guidance Supporting Every Step of the Educational Journey Middle School High School College Post-Graduate Uses “Chegg Writing Tools ” Gets help from “Chegg Tutors” Utilizes “Chegg Test Prep” for college admissions Orders books or ebooks from “Chegg Required Materials” S
Slide 12: Chegg Study: A Powerful Learning Tool
Chegg Study: A Powerful Learning Tool 9 MM proprietary Chegg Study connects students to guided textbook solutions created by Chegg experts, expert Q&As and expanding their learning and improving 6 MM unique outcomes solution sets (as of Q1-17) 26,000+ 99 million textbook ISBNs in content pages consu
Slide 13: Tutors: On-Demand Personalized Instruction
Tutors: On-Demand Personalized Instruction In Q1-17, average lesson Chegg Tutors is a simple, reliable and affordable service hours per which allows students to quickly match with a human tutor to receive one-on-one help. student increased 5% y/y Market Opportunity >85% of all 175 ~ $5-7B 1,2 Total
Slide 14: Writing: Helping Students from Middle School onwards
Writing: Helping Students from Middle School onwards Imagine Easy Solutions (acquired 5/2016) is a leading provider of online writing tools, relied upon by millions of students and teachers 150+ MM With nearly 25% of college freshmen required to take non- citations in credit remedial writing courses
Slide 15: Required Materials Drive Brand Awareness & Loyalty
Required Materials Drive Brand Awareness & Loyalty 1 ~$550 MM 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 opportu
Slide 16: Business Outlook: 2017
We are increasing our organic guidance Business Outlook: 2017 Q1 2017 Q2 2017 Full Year 2017 Results Guidance Guidance Total Revenues $62.6m $52m - $54m $235 - $240m Chegg Services Revenue $41.0m $42m - $44m $175 - $180m Gross Margin %* 66% 68% - 70% >65% Adjusted EBITDA* $9.5m $7m - $9m $38 - $40m
Slide 17: Adjusted EBITDA Guidance Seasonality
We are increasing our organic guidance Adjusted EBITDA Guidance Seasonality 17 17 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 18: Pure Digital, High Growth, High Margin Operating Model
We are increasing our organic guidance Pure Digital, High Growth, High Margin Operating Model >65% We expect ~30% Chegg’s all- digital model ~25% to fuel sustainable high- growth and profitability while 20% 30% better serving student needs Chegg Services y/y (6)% and delivering Revenue Growth Gross
Slide 19: Appendix
Appendix 19 Confidential Material – Chegg Inc. © 2005 - 2016. All Rights Reserved.
Slide 20: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures CHEGG, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages) (unaudited) ` Three Months Ended March 31, 2017 2016 Total net revenues $ 62,602 $ 66,654 Adjustment as if transition to Ingram is complete — (19
Slide 21: Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF GAAP NET LOSS TO EBITDA AND ADJUSTED EBITDA (in thousands, except percentages) (unaudited) 2011 2012 2013 2014 GAAP Net loss: $ (37,602) $ (49,043) $ (55,850) $ (64,758) Interest expense, net 3,764 4,393 3,81
Slide 22: Reconciliation of Forward Looking Net Loss to EBITDA and Adjusted EBITDA
Reconciliation of Forward Looking Net Loss to EBITDA and Adjusted EBITDA CHEGG, INC. RECONCILIATION OF FORWARD LOOKING NET LOSS TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) Three Months Year Ended Ended June 30, December 31, 2017 2017 * * Net loss $ (7,500) $ (24,400) Interest expense, n
Slide 23: Reconciliation of Required Materials Net Revenues to Non-GAAP
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 24: Reconciliation of Forward Looking Operating Cash Flow to Free Cash Flow
Reconciliation of Forward Looking Net Cash Provided by Operating Activities to Free Cash Flow CHEGG, INC. RECONCILIATION OF FORWARD LOOKING NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (in thousands) (unaudited) Year Ended December 31, 2017 * Net Cash Provided by Operating Activities