SANTA CLARA, Calif., April 26, 2018 /PRNewswire/ -- Chegg, Inc. (NYSE: CHGG),
the Smarter Way to Student, today reported financial results for the three months ended March 31,
2018.
"Momentum continued into Q1 as we achieved 37% year-over-year Chegg Services revenue growth, driven by 44% subscriber growth,"
said Dan Rosensweig, Chairman and CEO of Chegg, Inc. "We expect this momentum to continue, as
students are increasingly relying on Chegg to help them with their educational needs. This gives us confidence to raise our
guidance for 2018."
Q1 2018 Highlights:
- Total Net Revenues of $76.9 million, an increase of 23% year-over-year
- Chegg Services Revenues grew 37% year-over-year to $56.3 million, or 73% of total net
revenues, compared to 66% in Q1 2017
- Net Loss was $2.6 million
- Non-GAAP Net Income was $12.9 million
- Adjusted EBITDA was $16.7 million
- 1.6 million: number of Chegg Services subscribers, an increase of 44% year-over-year
- 158 million: total Chegg Study content views, an increase of 59% year-over-year
Our net revenues are comprised of two revenue streams: (1) Chegg Services revenues, which includes Chegg Study, Chegg Writing,
Chegg Tutors, Brand Partnership, Test Prep and Internships; and (2) Required Materials revenues, which includes commissions from
Ingram and other partners, on the rental and sale of print textbooks, as well as revenues from eTextbooks.
For more information about non-GAAP net income and adjusted EBITDA, and a reconciliation of non-GAAP net income to net loss,
and adjusted EBITDA to net loss, see the sections of the press release titled "Use of Non-GAAP Measures," "Reconciliation of Net
Loss to EBITDA and Adjusted EBITDA," and "Reconciliation of GAAP to Non-GAAP Financial Measures."
Business Outlook:
Second Quarter 2018
- Total Net Revenues in the range of $69 million to $71
million
- Chegg Services Revenues in the range of $58 million to $60
million
- Gross Margin between 74% and 75%
- Adjusted EBITDA in the range of $17 million to $18.5
million
Full Year 2018
- Total Net Revenues in the range of $300 million to $305
million
- Chegg Services Revenues in the range of $243 million to $246
million
- Gross Margin between 72% and 74%
- Adjusted EBITDA in the range of $77 million to $79
million
- Capital Expenditures in the range of $30 million to $35
million
For more information about the use of forward-looking non-GAAP measures, a reconciliation of forward-looking net loss to
EBITDA and adjusted EBITDA for the second quarter 2018 and full year 2018, see the below sections of the press release titled
"Use of Non-GAAP Measures," and "Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA."
An updated investor presentation and an investor data sheet can be found on Chegg's Investor Relations website http://investor.chegg.com .
Prepared Remarks - Dan Rosensweig, CEO Chegg, Inc.
Thank you Tracey, and welcome everyone. Chegg is off to a strong start in 2018. In Q1 we achieved 37% year-over-year revenue
growth for Chegg Services, driven by 44% growth in subscribers. We are proud of our momentum and our financial performance, which
gives us the confidence to raise our guidance for both revenue and EBITDA for the remainder of the year.
As always, we remain focused on execution and set out three priorities for 2018. First, to meet our financial goals and Andy
will walk you through a more detailed view of our results and improved guidance. Second, as we see the education space being a
trillion-dollar market, we continue to prioritize expanding our TAM; so we are making smart investments and adding new subjects,
new content, new formats and new services. Third, when the opportunity presents itself, we plan to add new capabilities that
leverage our brand, our reach, our student graph, and our balance sheet.
Our team couldn't be more motivated, because we are having a huge impact on millions of students. As a result, they have been
executing across our priorities and I couldn't be more pleased with both our financial results and our user engagement metrics.
Students are increasingly benefiting from, and depending on, Chegg during their educational journey. We think our growth rates
reflect the power of Chegg's brand, which now has more than 80% brand recognition on college campuses. We believe the strength of
our brand reflects the quality of our services, which is positively impacting our engagement and retention. We also believe it
reflects the power of our model, which, as it scales, will become even more profitable.
For the past 8 years, we have been on a journey to make education more affordable, relevant, and more accessible. Given the
positive student response and the size of the opportunity, we feel like we are just getting started. As we watch the trends and
changes that are impacting every other industry, we believe that Chegg and the education industry are poised to drive broad
changes in the next few years. Right now, many businesses are going through transitions due to the advancements in technology and
the power of the internet. Whether you are a disruptor or an incumbent in an industry, the ones that leverage technology to
evolve their business and their model are able to increase their relevance by personalizing and simplifying the user experience
and, as a result, they create overwhelming value for their customers. When that happens, the company that drives the change and
focuses on the customer win big.
We think it's clear that platform companies are distancing themselves from others because they are better able to serve their
customers, and their models are more sustainable, predictable, and profitable. Across industries, the key elements that
distinguish these platform leaders are that they own their customer and the data, are not dependent on other channels of
distribution except their own, and they own proprietary content - allowing them to know what their customer wants, when they want
it, how they want it, and efficiently and effectively respond to their customer's needs. As a result, we see that these companies
are able to provide more personalized services, grow faster, acquire customers for less, therefore, creating great value for
their customers, the company, and their shareholders.
Our team has put Chegg in a position to do those same things within our industry. According to ComScore, we have a reach of
over 35 million unique visitors on an annual basis, as many as 10 million in a month, with 85% of that traffic coming organically
and, as we own the vast majority of our content, we are able to have a deeper relationship with our customers, better understand
their needs, create relevant content and services for them - which we can distribute more efficiently and affordably - and do it
all at scale, and as you can see do it all profitably.
And you can see the results in the continued growth of our Chegg Services businesses, were we served a record 1.6M subscribers in Q1. This was led by Chegg Study, which is the center of our flywheel. We measure the
success of Chegg Study not just by financial results, but also by user engagement and retention, all of which has seen, and
continues to see, strong growth.
We continued to add value to Chegg Study by increasing our catalog of textbook solutions, which now covers almost 30,000
textbook ISBNs. We now have a library of nearly 22 million proprietary, expert answers and textbook solutions, which is an
increase of 43% in the past year. Our proprietary content helped drive 158 million Chegg Study content views in Q1, which is up
59% year-over-year; so we are adding more content which increases our engagement. We believe this reflects the tremendous value
students see in having an online, on-demand, learning service that meets them where they are, in the format they want, at the
time they need it most. We believe that the more content and formats we add, the more we increase the quantity and quality
of our services, the more valuable and popular Chegg becomes.
As popular as Chegg Study is, Chegg Writing is also seeing great momentum. 75 percent of 12th graders lack the
proficiency in writing, and we believe subjects, like writing, can be taught at scale, using machine learning and A.I., to meet a
student at their current level and improve their competency. Not only are students turning to us to create citations, having
created almost 130 million in Q1, but with our newest writing subscription, they are now able to learn spelling, grammar,
sentence structure, and more. We continue to see a major opportunity in writing, because we are able to improve the outcomes for
students both academically and, ultimately, professionally, by teaching them how to write more effectively.
One of our core competencies is the ability to not only build businesses, but to acquire and grow businesses that students
value. When we see a service that solves big student problems, where we can grow the business, reduce the costs, and improve the
quality, we add it to our network. We have done that several times, including with both Chegg Writing and Chegg Tutors,
which have both leveraged our brand, our reach, and our network to build experiences that better serve students and accelerate
our growth.
That power is demonstrated, as this quarter we continued to see that over 50% of our Chegg Tutors customers attach from other
Chegg Services. Because we have that direct relationship with our students, we can see new trends early and capitalize on them.
In writing, we saw the need to build a product to teach students to write and, in tutors, there is a real trend towards chat
based tutoring. As technology becomes more prolific in education, we continue to believe in the importance of on-demand, expert
human help. Chegg is in the best position to take advantage of that, because of our interconnected platform where we have
immediate insight in to what students are studying, where they got stuck, and connect them to the right tutor at the right
time.
We are clearly early in the growth of our current products, so we will continue to make investments in them, but we also see
huge opportunity for the future. As we know math is one of student's biggest pain points, as 64% of U.S. students are not
prepared for college-level math. We believe Chegg Math, which will be launching later this year, will be a powerful part of the
Chegg Services offering.
Another area we are making significant investments in is identifying and developing career paths, which will connect a student
from learning to earning. Our data team will help students identify the impact of the choices they make, including the school
they go to, the classes they take, the major they graduate with and the pathway that leads to, including the companies they are
likely get a job with, the salaries they are likely to earn, and how those paths can be altered by taking different classes or
acquiring different skills. We are uncovering incredible insights in to career paths that we think will make a meaningful
difference in the lives of students and employers.
Our industry is evolving. We see that the companies that own their customer, own the data, own the channel of distribution,
own the content, and who can be responsive to their customers' needs are in the best position to succeed particularly those that
are doing it under a subscription-based model like Chegg. Increasingly it's not about offering one product or service to your
customer, but offering them as a bundle, which we believe can create overwhelming value for our customers and help drive
continued subscriber growth, expand the TAM, and increase overall profitability.
It's been a great start to the year, and with all the opportunities in front of us, our team is excited, energized, and
looking forward to the year ahead. And, with that, I will turn it over to Andy. Andy
Prepared Remarks - Andy Brown, CFO Chegg, Inc.
Thanks Dan and good afternoon everyone.
It has been a great start to 2018, with all key metrics and financials ahead of our expectations. In addition, early in the
second quarter, we were able to strengthen our balance sheet raising $345 million via a convertible
debt offering on very favorable terms, which puts us in a position of increased strength for future growth and extends our
position as a leader in the direct to student market. The strong results we achieved in Q1 and continued momentum into Q2, give
us the confidence to raise our full year guidance again for 2018.
For the first quarter, total revenue was $76.9 million, a 23% increase year over year, with both
Chegg Services and Required Materials exceeding our expectations. Chegg Services revenue grew 37% year over year as we continued
to see growth rates for our subscription services in line with prior years and all indications suggest we gained share in
Required Materials during the spring semester. As a reminder we continue to offer Required Materials because we solve a
significant pain point for students, it also increases our reach, provides data, and builds our brand on campus.
This resulted in gross margins coming in higher than we expected reaching 73.7%, as much of the incremental revenue from Chegg
Services goes straight to the gross margin line due to its relatively fixed cost structure.
Our strong performance in both revenue and gross margin drove adjusted EBITDA of $16.7 million,
which was above our expectations and more than a 75% increase from Q1 of 2017, demonstrating the power of the model and the
leverage of our subscription based offerings. Adjusted EBITDA margin was 22% for the quarter, putting us well on our way to reach
our goal of over 25% for the full year.
We ended the quarter with cash and investments of $200 million, not including the recent capital
raise that closed in early April. This along with free cash flow generated from the business, puts us in a strong financial
position with approximately half a billion dollars on the balance sheet, allowing us to invest in and grow the business.
Based on the results of the spring semester rush and continued momentum into Q2, we are increasing our guidance for the
remainder of the year. We expect:
- Total revenue for Q2 to be between $69 and $71 million,
with
- Chegg Services revenue between $58 and $60 million
- Gross margin between 74% and 75%
- And adjusted EBITDA between $17 and $18.5 million
For the full year 2018, we now expect:
- Total revenue to be between $300 and $305 million, with Chegg
Services revenue between $243 and $246 million
- Gross margin between 72% and 74%
- Adjusted EBITDA between $77 and $79 million
- And finally, we expect CapEx to remain in the $30 to $35
million range, with approximately 80% being used to fuel expansion of content and add new modalities such as video for
our subscription services. We believe these investments increase engagement on our platform and expand our TAM.
In closing, it's been a strong start to the year, we delivered above the high-end of our expectations, giving us confidence to
increase guidance, all while continuing to invest in both the content that powers our existing services and building out new
services like Careers and Math, which we expect will contribute to our growth in 2019 and beyond.
With that, I'll turn the call over to the operator for your questions.
Conference Call and Webcast Information
To access the call, please dial 1-877-407-4018, or outside the U.S. +1-201-689-8471, five minutes prior to 1:30 p.m. Pacific
Daylight Time (or 4:30 p.m. Eastern Daylight Time). A live webcast of the call will also be available
at http://investor.chegg.com under the Events
& Presentations menu. An audio replay will be available beginning at 4:30 p.m. Pacific Daylight Time on
April 26, 2018, until 8:59 p.m. Pacific Standard Time on May 3, 2018, by calling 1-844-512-2921, or outside
the U.S. +1-412-317-6671, with Conference ID 13677690. An audio archive of the call will also be available at http://investor.chegg.com .
Use of Investor Relations Website for Regulation FD Purposes
Chegg also uses its media center website, http://www.chegg.com/mediacenter , as a means of disclosing material non-public information and for
complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor http://www.chegg.com/mediacenter , in
addition to following press releases, Securities and Exchange Commission filings and public conference calls and
webcasts.
About Chegg
Chegg puts students first. As the leading student-first connected learning platform, Chegg strives to improve the overall
return on investment in education by helping students learn more in less time and at a lower cost. Chegg is a
publicly-held company based in Santa Clara, California and trades on the NYSE under the symbol CHGG. For more
information, visit www.chegg.com .
Use of Non-GAAP Measures
To supplement Chegg's financial results presented in accordance with generally accepted accounting principles in the United States (GAAP), this press release and the accompanying tables and the related earnings conference
call contain non-GAAP financial measures, including adjusted EBITDA, non-GAAP operating expenses and margin, non-GAAP income from
operations, non-GAAP net income, non-GAAP weighted average shares, and non-GAAP net income per share. For reconciliations of
these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the
accompanying tables titled, "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA," "Reconciliation of GAAP to Non-GAAP
Financial Measures," and "Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA."
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for,
or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP
financial measures used by other companies. Chegg defines (1) adjusted EBITDA as earnings before interest, taxes, depreciation
and amortization, or EBITDA, adjusted to exclude share-based compensation expense, acquisition-related compensation costs,
restructuring charges, and other income (expense), net; (2) non-GAAP income from operations as loss from operations excluding
share-based compensation expense, amortization of intangible assets, restructuring charges, and acquisition-related compensation
costs; (3) non-GAAP income from operations margin as non-GAAP income from operations divided by total net revenues; (4) non-GAAP
net income as net loss excluding share-based compensation expense, amortization of intangible assets, restructuring charges, and
acquisition-related compensation costs; (5) non-GAAP weighted average shares outstanding as weighted average shares outstanding
adjusted for the effect of dilutive options, restricted stock units and warrants; and (6) non-GAAP net income per share is
defined as non-GAAP net income divided by non-GAAP weighted average shares outstanding. To the extent additional significant
non-recurring items arise in the future, Chegg may consider whether to exclude such items in calculating the non-GAAP financial
measures it uses.
Chegg believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures,
provide meaningful supplemental information regarding Chegg's performance by excluding items that may not be indicative of
Chegg's core business, operating results or future outlook. Chegg management uses these non-GAAP financial measures in assessing
Chegg's operating results, as well as when planning, forecasting and analyzing future periods and believes that such measures
enhance investors' overall understanding of our current financial performance. These non-GAAP financial measures also facilitate
comparisons of Chegg's performance to prior periods.
As presented in the "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA," "Reconciliation of GAAP to Non-GAAP Financial
Measures," and "Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA" tables below, each of the non-GAAP
financial measures excludes one or more of the following items:
Share-based compensation expense.
Share-based compensation expense is a non-cash expense that varies in amount from period to period and is dependent on market
forces that are often beyond Chegg's control. As a result, management excludes this item from Chegg's internal operating
forecasts and models. Management believes that non-GAAP measures adjusted for share-based compensation provide investors with a
basis to measure Chegg's core performance against the performance of other companies without the variability created by
share-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and
assumptions used.
Amortization of intangible assets.
Chegg amortizes intangible assets that it acquires in conjunction with business combinations, which results in non‑cash
operating expenses that would not otherwise have been incurred had Chegg internally developed such intangible assets. Chegg
believes excluding the accounting expense associated with acquired intangible asset from non-GAAP measures allows for a more
accurate assessment of its ongoing operations.
Restructuring charges.
Restructuring charges primarily relate to expenses related to the exit of Chegg's print coupon business, and Chegg's strategic
partnership with the National Research Center for College & University Admissions. These restructuring charges are excluded
from non-GAAP financial measures because they are the result of discrete events that are not considered core-operating
activities. Chegg believes that it is appropriate to exclude restructuring charges from non-GAAP financial measures because it
enables the comparison of period-over-period operating results from continuing operations.
Acquisition-related compensation costs.
Acquisition-related compensation costs include compensation expense resulting from the employment retention of certain key
employees established in accordance with the terms of the Imagine Easy and Cogeon GmbH acquisitions. In most cases, these
acquisition-related compensation costs are not factored into management's evaluation of potential acquisitions or Chegg's
performance after completion of acquisitions, because they are not related to Chegg's core operating performance. In addition,
the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities
of the businesses being acquired. Excluding acquisition-related compensation costs from non-GAAP measures provides investors with
a basis to compare Chegg's results against those of other companies without the variability caused by purchase accounting.
Forward-Looking Statements
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, which include, without limitation statements regarding Chegg's ability to meet or exceed its long
term financial targets in 2018; Chegg's momentum, and those included in the investor presentation referenced above, those
included in the "Prepared Remarks" sections above, and all statements about Chegg's outlook under "Business Outlook." The words
"anticipate," "believe," "estimate," "expect," "intend," "project," "endeavor," "will," "should," "future," "transition,"
"outlook" and similar expressions, as they relate to Chegg, are intended to identify forward-looking statements. These statements
are not guarantees of future performance, and are based on management's expectations as of the date of this press release and
assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results,
performance or achievements to differ materially from any future results, performance or achievements. Important factors that
could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the
following: Chegg's ability to attract new students, increase engagement and increase monetization; the rate of adoption of
Chegg's offerings; the effect of Chegg's acquisition of Imagine Easy Solutions and Cogeon; Chegg's ability to strategically take
advantage of new opportunities to leverage the Student Graph; competitive developments, including pricing pressures; Chegg's
anticipated growth of Chegg Services; Chegg's ability to build and expand its services offerings; Chegg's ability to develop new
products and services on a cost-effective basis and to integrate acquired businesses and assets; the impact of seasonality on the
business; Chegg's partnership with Ingram and the parties' ability to achieve the anticipated benefits of the partnership,
including the potential impact of the economic risk-sharing arrangements between Chegg and Ingram on Chegg's results of
operations; Chegg's ability to effectively control operating costs; changes in Chegg's addressable market; changes in the
education market; and general economic, political and industry conditions. All information provided in this release and in the
conference call is as of the date hereof and Chegg undertakes no duty to update this information except as required by law. These
and other important risk factors are described more fully in documents filed with the Securities and Exchange Commission,
including Chegg's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February
26, 2018, and could cause actual results to vary from expectations.
CHEGG, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands, except for number of shares and par value)
|
(unaudited)
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
Assets
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
$
106,827
|
|
$
126,457
|
Short-term investments
|
82,264
|
|
81,742
|
Accounts receivable, net of allowance for doubtful accounts of $176 and
$259 at March 31, 2018
and December 31, 2017, respectively
|
8,055
|
|
10,855
|
Prepaid expenses
|
10,799
|
|
2,043
|
Other current assets
|
6,898
|
|
7,845
|
Total current assets
|
214,843
|
|
228,942
|
Long-term investments
|
10,628
|
|
20,305
|
Property and equipment, net
|
48,197
|
|
47,493
|
Goodwill
|
125,525
|
|
125,272
|
Intangible assets, net
|
19,902
|
|
21,153
|
Other assets
|
4,383
|
|
3,765
|
Total
assets
|
$
423,478
|
|
$
446,930
|
Liabilities and stockholders' equity
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable
|
$
3,981
|
|
$
7,049
|
Deferred revenue
|
18,625
|
|
13,440
|
Accrued liabilities
|
26,418
|
|
31,074
|
Total current
liabilities
|
49,024
|
|
51,563
|
Long-term liabilities
|
|
|
|
Total other long-term liabilities
|
4,443
|
|
4,305
|
Total
liabilities
|
53,467
|
|
55,868
|
Stockholders' equity:
|
|
|
|
Preferred stock, $0.001 par value – 10,000,000 shares authorized, no
shares issued and outstanding
|
—
|
|
—
|
Common stock, $0.001 par value 400,000,000 shares authorized; 112,748,665
and 109,667,640
shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
|
113
|
|
110
|
Additional paid-in capital
|
764,065
|
|
782,845
|
Accumulated other comprehensive income (loss)
|
138
|
|
(282)
|
Accumulated deficit
|
(394,305)
|
|
(391,611)
|
Total stockholders'
equity
|
370,011
|
|
391,062
|
Total liabilities and stockholders' equity
|
$
423,478
|
|
$
446,930
|
CHEGG, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2018
|
|
2017
|
|
Net revenues
|
$
76,949
|
|
$
62,602
|
|
Cost of revenues(1)
|
20,224
|
|
21,396
|
|
Gross profit
|
56,725
|
|
41,206
|
|
Operating expenses(1):
|
|
|
|
|
Research and development
|
25,533
|
|
19,302
|
|
Sales and marketing
|
15,336
|
|
15,964
|
|
General and administrative
|
18,256
|
|
15,342
|
|
Restructuring charges
|
220
|
|
900
|
|
Gain on liquidation of textbooks
|
—
|
|
(4,766)
|
|
Total operating expenses
|
59,345
|
|
46,742
|
|
Loss from operations
|
(2,620)
|
|
(5,536)
|
|
Interest expense and other income (expense), net:
|
|
|
|
|
Interest expense, net
|
(20)
|
|
(19)
|
|
Other income (expense), net
|
564
|
|
(199)
|
|
Total interest expense and other income (expense), net
|
544
|
|
(218)
|
|
Loss before provision for income taxes
|
(2,076)
|
|
(5,754)
|
|
Provision for income taxes
|
541
|
|
647
|
|
Net loss
|
$
(2,617)
|
|
$
(6,401)
|
|
Net loss per share, basic and diluted
|
$
(0.02)
|
|
$
(0.07)
|
|
Weighted average shares used to compute net loss per share, basic and
diluted
|
110,904
|
|
92,830
|
|
|
|
|
|
|
(1)Includes share-based compensation expense as
follows:
|
|
|
|
|
Cost of revenues
|
$
94
|
|
$
67
|
|
Research and development
|
4,133
|
|
3,241
|
|
Sales and marketing
|
1,589
|
|
1,126
|
|
General and administrative
|
5,826
|
|
3,844
|
|
Total share-based compensation expense
|
$
11,642
|
|
$
8,278
|
|
|
|
|
|
|
CHEGG, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2018
|
|
2017
|
Cash flows from operating activities
|
|
|
*
|
Net loss
|
$
(2,617)
|
|
$
(6,401)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and amortization expense
|
5,217
|
|
4,389
|
Share-based compensation expense
|
11,642
|
|
8,278
|
Gain on liquidation of textbooks
|
—
|
|
(4,766)
|
Loss from write-offs of textbooks
|
—
|
|
314
|
Other non-cash items
|
(41)
|
|
(46)
|
Change in assets and liabilities:
|
|
|
|
Accounts receivable
|
2,783
|
|
1,947
|
Prepaid expenses and other current assets
|
(7,894)
|
|
(1,241)
|
Other assets
|
(506)
|
|
72
|
Accounts payable
|
(3,068)
|
|
(1,139)
|
Deferred revenue
|
5,185
|
|
3,270
|
Accrued liabilities
|
(4,286)
|
|
(3,743)
|
Other liabilities
|
138
|
|
260
|
Net cash provided by operating activities
|
6,553
|
|
1,194
|
Cash flows from investing activities
|
|
|
|
Proceeds from liquidations of textbooks
|
—
|
|
6,943
|
Purchases of marketable securities
|
(12,511)
|
|
—
|
Maturities of marketable securities
|
21,630
|
|
—
|
Purchases of property and equipment
|
(4,883)
|
|
(4,770)
|
Acquisition of business
|
—
|
|
(188)
|
Net cash provided by investing activities
|
4,236
|
|
1,985
|
Cash flows from financing activities
|
|
|
|
Common stock issued under stock plans, net
|
5,222
|
|
2,763
|
Payment of taxes related to the net share settlement of equity
awards
|
(35,640)
|
|
(12,618)
|
Net cash used in financing activities
|
(30,418)
|
|
(9,855)
|
Net decrease in cash, cash equivalents and restricted cash
|
(19,629)
|
|
(6,676)
|
Cash, cash equivalents and restricted cash, beginning of period
|
126,963
|
|
77,433
|
Cash, cash equivalents and restricted cash, end of period
|
$
107,334
|
|
$
70,757
|
|
|
|
|
Supplemental cash flow data:
|
|
|
|
Cash paid during the period for:
|
|
|
|
Interest
|
$
19
|
|
$
30
|
Income taxes
|
$
503
|
|
$
388
|
Non-cash investing and financing activities:
|
|
|
|
Accrued purchases of long-lived assets
|
$
3,204
|
|
$
2,022
|
|
|
|
|
Reconciliation of cash, cash equivalents and restricted cash:
|
|
|
|
Cash and cash equivalents
|
$
106,827
|
|
$
70,294
|
Restricted cash included in other current assets
|
84
|
|
—
|
Restricted cash included in other assets
|
423
|
|
463
|
Total cash, cash equivalents and restricted cash
|
$
107,334
|
|
$
70,757
|
|
|
|
|
* Adjusted to reflect the adoption of ASU 2016-18.
|
CHEGG, INC.
|
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2018
|
|
2017
|
Net loss
|
$
(2,617)
|
|
$
(6,401)
|
Interest expense, net
|
20
|
|
19
|
Provision for income taxes
|
541
|
|
647
|
Depreciation and amortization expense
|
5,217
|
|
4,389
|
EBITDA
|
3,161
|
|
(1,346)
|
Share-based compensation expense
|
11,642
|
|
8,278
|
Other (income) expense, net
|
(564)
|
|
199
|
Restructuring charges
|
220
|
|
900
|
Acquisition-related compensation costs
|
2,248
|
|
1,500
|
Adjusted EBITDA
|
$
16,707
|
|
$
9,531
|
|
|
|
|
CHEGG, INC.
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
(in thousands, except percentages and per share amounts)
|
(unaudited)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2018
|
|
2017
|
Net revenues
|
$
76,949
|
|
$
62,602
|
|
|
|
|
Operating expenses
|
$
59,345
|
|
$
46,742
|
Share-based compensation expense
|
(11,548)
|
|
(8,211)
|
Amortization of intangible assets
|
(1,417)
|
|
(1,403)
|
Restructuring charges
|
(220)
|
|
(900)
|
Acquisition-related compensation costs
|
(2,248)
|
|
(1,500)
|
Non-GAAP operating expenses
|
$
43,912
|
|
$
34,728
|
|
|
|
|
Operating expenses as a percent of net revenues
|
77.1%
|
|
74.7%
|
Non-GAAP operating expenses as a percent of net revenues
|
57.1%
|
|
55.5%
|
|
|
|
|
Loss from operations
|
$
(2,620)
|
|
$
(5,536)
|
Share-based compensation expense
|
11,642
|
|
8,278
|
Amortization of intangible assets
|
1,417
|
|
1,403
|
Restructuring charges
|
220
|
|
900
|
Acquisition-related compensation costs
|
2,248
|
|
1,500
|
Non-GAAP income from operations
|
$
12,907
|
|
$
6,545
|
|
|
|
|
Net loss
|
$
(2,617)
|
|
$
(6,401)
|
Share-based compensation expense
|
11,642
|
|
8,278
|
Amortization of intangible assets
|
1,417
|
|
1,403
|
Restructuring charges
|
220
|
|
900
|
Acquisition-related compensation costs
|
2,248
|
|
1,500
|
Non-GAAP net income
|
$
12,910
|
|
$
5,680
|
|
|
|
|
Weighted average shares used to compute net loss per share
|
110,904
|
|
92,830
|
Effect of dilutive options and restricted stock units
|
12,912
|
|
6,944
|
Non-GAAP weighted average shares used to compute non-GAAP net income per
share
|
123,816
|
|
99,774
|
|
|
|
|
Net loss per share
|
$
(0.02)
|
|
$
(0.07)
|
Adjustments
|
0.12
|
|
0.13
|
Non-GAAP net income per share
|
$
0.10
|
|
$
0.06
|
CHEGG, INC.
|
RECONCILIATION OF FORWARD LOOKING NET LOSS TO EBITDA AND ADJUSTED
EBITDA
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended June 30,
2018
|
|
Year Ended
December 31, 2018
|
|
|
*
|
|
*
|
|
Net loss
|
$
|
(6,250)
|
|
$
|
(14,800)
|
|
Interest expense, net(1)
|
5,000
|
|
15,400
|
|
Provision for income taxes
|
600
|
|
2,400
|
|
Depreciation and amortization expense
|
5,600
|
|
22,900
|
|
EBITDA
|
4,950
|
|
25,900
|
|
Share-based compensation expense
|
11,100
|
|
45,000
|
|
Other income, net
|
(500)
|
|
(2,100)
|
|
Restructuring charges
|
—
|
|
200
|
|
Acquisition-related compensation costs
|
2,200
|
|
9,000
|
|
Adjusted EBITDA*
|
$
|
17,750
|
|
$
|
78,000
|
|
|
|
|
|
|
(1) We estimate incurring approximately $5 million and $15
million of interest expense during the three months ended June 30, 2018 and year ended December 31, 2018, respectively,
related to amortization of the debt discount for our convertible debt offering that closed in April 2018.
|
|
|
|
|
|
* Adjusted EBITDA guidance for the three months ended June 30, 2018 and the
year ended December 31, 2018 represents the midpoint of the ranges of $17 million to $18.5 million and $77 million
to $79 million, respectively.
|
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SOURCE Chegg, Inc.