Slide 1: Q3-17 Investor Presentation
Q3-17 Investor Presentation October 30, 2017 1 Chegg Inc. © 2005 - 2017. 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 - 2017. © 2005 All All - 2017. Rights Reserved. Rights Reserved.
Slide 4: Q3 Highlights
Q3 Highlights Increased FY 2017 guidance. Provided initial 2018 outlook of >30% Chegg Services revenue growth, greater than 70% gross margin and 25% adjusted EBITDA margin, which meets or exceeds the financial objectives set three years ago Chegg Services revenue of $39 million, up 33% y/y Adj
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 Chegg Inc. © 2005 - 2017. All Rights Reserved.
Slide 6: Large Student Market Opportunity
Large Student Market Opportunity 11 million MIDDLE SCHOOL STUDENTS1 78% of college 16 million HIGH SCHOOL STUDENTS 2 students have heard of a Chegg service 20 million UNIVERSITY STUDENTS 6 Education comprises ~ 7 % of US GDP 3 or $ 1.3 trillion annually 4 1 Source: National Center for Education Stat
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% are customized 1 use online tutorials for school and available 81% on-demand 1
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: online homework help, on-demand live tutoring writing Critical need for help, test prep, required materials for less, internships and more affordable, high-quality, lea
Slide 9: Chegg Solves Today's Students' Problems
Chegg Solves Today’s Students’ Problems Online On-demand Personalized Adaptive Affordable …and Backed by Human Help 9 Chegg Inc.Inc. Chegg © 2005 - 2017. © 2005 All Rights - 2017. Reserved. All Rights Reserved.
Slide 10: Integrated Platform of Connected Educational Services
Integrated Platform of Connected Educational Services Chegg Services Students subscribe to our learning services: Chegg’s connected Chegg Study learning platform for Chegg Writing Tools students reaches Chegg Tutors ~10MM1 unique visitors monthly Required Materials Purchase or rent required cl
Slide 11: 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 $184 Chegg Services FY’12 — FY’17 CAGR: 49% FY'13 0.5 $129 $94 FY'14 0.7 $
Slide 12: 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 13: 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” St
Slide 14: Chegg Study: A Powerful Learning Tool
Chegg Study: A Powerful Learning Tool 11 MM proprietary Chegg Study connects students to guided expert Q&As and textbook solutions created by Chegg experts, 6 MM unique expanding their learning and improving solution sets (Q3-17) outcomes ~27,000 ~74 million content textbook ISBNs in Chegg views*, u
Slide 15: Writing: Helping Students from Middle School Onwards
Writing: Helping Students from Middle School Onwards Imagine Easy Solutions (acquired May 2016) is a leading provider of online writing tools, relied upon by millions of students and teachers 63 MM new With nearly 25% of college freshmen required to take non- citations in credit remedial writing cou
Slide 16: Tutors: On-Demand Personalized Instruction
Tutors: On-Demand Personalized Instruction Key subjects: Chegg Tutors is a simple, reliable and affordable service Computer which allows students to quickly match Science, with a human tutor to receive one-on-one help. Calculus, Statistics, Finance and Accounting Market Opportunity 188 ~ $5-7B 1,2 T
Slide 17: Required Materials Drives Brand Awareness & Loyalty
Required Materials Drives 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 opport
Slide 18: Math: Self-guided and Individualized Solutions
Math: Self-guided and Individualized Solutions Chegg acquired math technology company Cogeon Learn More: Expect acquisition to increase value to subscribers and expand Chegg’s addressable market Chegg Math Video Chegg will leverage Cogeon's unique A.I.-driven math technology to enhance current capab
Slide 19: Business Outlook: Q4 and Full Year 2017 Guidance
We are increasing our organic guidance Business Outlook: 2017 Q3 2017 Q4 2017 Full Year 2017 Results Guidance Guidance Total Revenues $62.6m $70m - $71m $251 - $252m Chegg Services Revenue $39.5m $58m - $59m $183 - $184m Gross Margin %* 64% 69% - 71% >65% Adjusted EBITDA* $5.7m $19m - $20m $44 - $45
Slide 20: Business Outlook: Full Year 2018
We are increasing our organic guidance Business Outlook: Full Year 2018 Total Revenue ~$295m Chegg Services Revenue ~$240m Year over Year Growth >30% Adjusted EBITDA* ~$74m Adjusted EBITDA Margin 25% * Non-GAAP financial measure. Reconciliation of 1) forward looking net loss to EBITDA and adjusted E
Slide 21: Business Outlook: 2018 Adjusted EBITDA Seasonality
Business Outlook: 2018 Adjusted EBITDA Seasonality Q1'18 Q2'18 Q3'18 Q4'18 Adjusted EBITDA* ~19% ~24% ~14% ~43% Quarterly Contribution * Non-GAAP financial measure Note: 2018 quarterly contribution percentages are based on FY’18 Adjusted EBITDA business outlook of approximately $74M We have not reco
Slide 22: ASC 606 Revenue Recognition Standard Implementation Update
ASC 606 Revenue Recognition Standard Implementation Update Context Expected Impact Effective for Chegg beginning in We will continue to operate as an agent in our strategic partnership with FY2018 (starting January 1, 2018) Ingram and therefore continue to recognize a commission on total revenue
Slide 23: Appendix
Appendix 23 Chegg Inc. © 2005 - 2017. All Rights Reserved.
Slide 24: 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 and per share amounts) (unaudited) ` Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Total net revenues $ 62,
Slide 25: 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 Ended Year Ended Ended December December 31, December 31, 31, 2017 2017 2018 *
Slide 26: 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 27: 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 $