SANTA CLARA, Calif.–(BUSINESS WIRE)–Chegg, Inc. (NYSE:CHGG) right now reported monetary outcomes for the three months ended September 30, 2021.
“During the last 12 months and a half, we skilled extraordinary development and, in midst of a robust 12 months, had a strong third quarter, rising Chegg Companies income 23% year-over-year. Nonetheless, in late September it turned clear to us that the training {industry} is experiencing a slowdown that we imagine is short-term and is a direct results of the COVID-19 pandemic,” stated Dan Rosensweig, CEO & President of Chegg, Inc., “Regardless of these developments, our staff continues to execute at a excessive stage. Chegg is in a wonderful place to come back out of this stronger than ever and reap the benefits of the alternatives earlier than us.”
In November 2021, our board of administrators authorized a $500.Zero million enhance to our current securities repurchase program authorizing the repurchase of as much as $1.Zero billion of our frequent inventory and/or convertible notes.
Q3 2021 Highlights:
- Complete Web Revenues of $171.9 million, a rise of 12% year-over-year
- Chegg Companies Revenues grew 23% year-over-year to $146.Eight million, or 85% of whole web revenues, in comparison with 77% in Q3 2020
- Web Earnings was $6.7 million
- Non-GAAP Web Earnings was $33.9 million
- Adjusted EBITDA was $46.Four million
- 4.Four million: variety of Chegg Companies subscribers, a rise of 17% year-over-year
- 229 million: whole Chegg Examine content material views
Complete web revenues embody revenues from Chegg Companies and Required Supplies. Chegg Companies primarily contains Chegg Examine, Chegg Writing, Chegg Math Solver, Chegg Examine Pack, Mathway, and Thinkful. Required Supplies contains print textbooks and eTextbooks.
For extra details about non-GAAP web earnings and adjusted EBITDA, and a reconciliation of non-GAAP web earnings to web earnings (loss), and adjusted EBITDA to web earnings (loss), see the sections of this press launch titled “Use of Non-GAAP Measures,” “Reconciliation of Web Earnings (Loss) to EBITDA and Adjusted EBITDA,” and “Reconciliation of GAAP to Non-GAAP Monetary Measures.”
Enterprise Outlook:
Fourth Quarter 2021
- Complete Web Revenues within the vary of $194 million to $196 million
- Chegg Companies Revenues within the vary of $175 million to $177 million
- Gross Margin between 70% and 71%
- Adjusted EBITDA within the vary of $67 million to $69 million
Full Yr 2021
- Complete Web Revenues within the vary of $762 million to $764 million
- Chegg Companies Revenues within the vary of $657 million to $659 million
- Gross Margin between 65% and 66%
- Adjusted EBITDA within the vary of $255 million to $257 million
For extra details about using forward-looking non-GAAP measures, a reconciliation of forward-looking web earnings (loss) to EBITDA and adjusted EBITDA for the fourth quarter 2021 and full 12 months 2021, see the under sections of the press launch titled “Use of Non-GAAP Measures,” and “Reconciliation of Ahead-Trying Web Earnings (Loss) to EBITDA and Adjusted EBITDA.”
An up to date investor presentation and an investor knowledge sheet will be discovered on Chegg’s Investor Relations web site http://investor.chegg.com.
Ready Remarks – Dan Rosensweig, CEO Chegg, Inc.
Thanks Tracey, and welcome everybody to Chegg’s Q3 2021 earnings name. During the last 12 months and a half, we skilled extraordinary development and, within the midst of a robust 12 months, had a strong third quarter. Nonetheless, in late September it turned clear to us that the training {industry} is experiencing a slowdown that we imagine is short-term. This industry-wide dynamic was unanticipated and is a direct results of the COVID-19 pandemic. A mix of variants, elevated employment alternatives and compensation, together with fatigue, have all led to considerably fewer enrollments than anticipated this semester. And people college students who’ve enrolled are taking fewer and fewer rigorous courses and are receiving much less graded assignments. We imagine it is a submit pandemic affect that may have an effect on this faculty 12 months however is just not sustainable for greater training long run. Studying websites and apps, each free and paid, within the U.S. and Canada have skilled considerably diminished visitors for the reason that fall semester started. Regardless of these developments, our staff continues to execute at a really excessive stage. Actually, Chegg has skilled year-over-year will increase in retention and adoption of the Chegg Examine Pack which has positively impacted our ARPU by 5% in Q3.
In the remainder of the world, we proceed to see very sturdy subscription and income development. Whereas nonetheless early, worldwide is clearly turning into a significant a part of our enterprise, and we have now already exceeded our goal of 1 million worldwide subscribers. We imagine that, in time, worldwide will likely be bigger for us than the U.S. That is why we’re investing in key areas comparable to localization of content material and language in addition to our e-commerce and pricing platform. These infrastructure investments will enable us to take native forex and supply each variable and native pricing, and we imagine these capabilities will assist enhance penetration in giant untapped markets the place pricing is a significant variable for fulfillment. We must be able to leverage these investments by the autumn of 2022.
At a world stage, college students are more and more turning to the web and Chegg to enhance their studying and outcomes. Domestically, personalization, increasing past the textbooks to programs, and supporting further non-STEM topics stay our focus to extend our home TAM. Chegg is uniquely positioned to personalize every scholar’s studying journey and produce them further providers as a result of we have now so many subscribers, a lot knowledge, and such related content material. Subsequently, we have now the power to personalize and develop the worth we provide current prospects and create new worth for our new prospects. An excellent instance of that is our funding in Uversity, which is off to a really robust begin. Though early, and never but stay for college kids, we have now already acquired over 20,000 items of content material, in STEM and non-STEM topics, from college at over 700 faculties, together with lots of the most prestigious faculties on the earth, who will assist college students be taught whereas incomes extra for themselves. This providing has been so widespread with college that we have now already paid over Four million {dollars} to educators. We’re excited for the way forward for Uversity, which is constructing stronger relationships with establishments and professors, and we’re grateful for the eagerness these educators from around the globe are exhibiting to furthering training and help for college kids by means of Chegg.
The degree-based pathway will proceed to be very giant in the USA, and we count on that it’s going to develop once more after the pandemic, however one of many classes we see is simply how a lot expertise influences and empowers the world. Subsequently, we’re growing our funding in digital abilities coaching, which is essential to an growing proportion of the inhabitants around the globe. Inside the area, one of many key developments is extra employers offering skilling, reskilling, and upskilling to their present worker base and utilizing this profit to draw new staff. That’s the reason we’re excited to announce our new partnership with Guild, which can launch subsequent 12 months. Guild is a frontrunner in serving giant firms the place the employer’s providing to pay for the staff’ undergraduate levels in addition to present skilling and upskilling curriculum. Thinkful programs will likely be provided to staff at related corporations by means of the Guild platform creating a brand new alternative for home development.
As we glance forward, we stay robust believers within the development of on-line training help and abilities providers around the globe. As we handle by means of this second in time, we’ll stay centered on constructing long-term worth for each learners and our shareholders. The final two years have created a scenario no one might have anticipated and have clearly quickly affected the upper training {industry}. However what can also be clear is that extra individuals are going to be taught extra issues, particularly on-line, and that may solely create extra alternative for Chegg. We stay the market chief, with a beloved model, a robust moat, and our providers proceed to assist thousands and thousands of learners all around the globe, as college students depend on us to be taught their course materials and higher perceive ideas, which improves their outcomes. We’re in an important place to come back out of this short-term slowdown stronger than ever and reap the benefits of the alternatives earlier than us and, by means of all of it, we stay centered on our long-term mission of placing college students first in all the pieces that we do.
And with that I’ll flip it over to Andy. Andy…
Ready Remarks – Andy Brown, CFO Chegg, Inc.
Thanks Dan and good afternoon everybody.
As Dan talked about earlier, we had a superb Q3. Most of our monetary and enterprise metrics got here in at or above our anticipated ranges, regardless of {industry} headwinds in our North American markets that emerged late within the quarter. Consequently, we’re lowering our steerage for This autumn and full 12 months 2021. As well as, given the timing and nature of those uncertainties and the truth that the varsity 12 months is seasonal, we’ll present our preliminary full 12 months 2022 steerage in February, after we can have further knowledge to raised inform our forecast. We imagine within the long-term alternative, and as such we’ll proceed to put money into our tech and engineering capabilities, the personalization of our platform, and the breadth, depth and supply of our content material. Because the chief within the class that continues to develop, we imagine these investments will put us in a good stronger place.
Trying particularly on the third quarter, whole income got here in at $172 million, pushed by a 23% year-over-year enhance in Chegg Companies, this was offset by a lower in Required Supplies which was impacted by decrease enrollment and the nationwide employee shortages that created longer lead occasions.
Gross margin got here in on the excessive finish of our forecast at 61%, as our greater margin Chegg Companies income contributed extra to whole income than we anticipated, leading to adjusted EBITDA of $46 million, growing 45% year-over-year.
We ended the quarter with roughly $2.6 billion of money and investments, and as such we’re navigating the present surroundings from a place of power. We’ll use our steadiness sheet to create shareholder worth, which incorporates shopping for again securities throughout occasions of worth dislocation and to that finish we introduced right now that we have now elevated our securities buyback program by $500 million. As well as, we imagine the mixture of our steadiness sheet and money flows put us within the pole place to amass property ought to they change into accessible on the proper worth.
Transferring on to steerage. For This autumn we now count on:
- Complete income between $194 and $196 million, with Chegg Companies income between $175 and $177 million;
- Gross margin between 70 and 71 p.c;
- And adjusted EBITDA between $67 and $69 million.
Consequently, for full 12 months 2021, we now count on:
- Complete income between $762 and $764 million, with Chegg Companies income between $657 and $659 million;
- Gross margin between 65 and 66 p.c;
- And adjusted EBITDA between $255 and $257 million.
In closing, we had a strong third quarter and whereas we’re navigating this short-term {industry} slowdown, we’re extra excited than ever in regards to the alternatives forward of us and the way forward for our enterprise. We now have an important model with college students, an unimaginable enterprise mannequin with a robust steadiness sheet, we’re executing nicely, and we’re growing investments to develop our providers and seize development alternatives.
With that, I’ll flip the decision over to the operator to your questions.
Convention Name and Webcast Data
To entry the decision, please dial 1-877-407-4018, or outdoors the U.S. +1-201-689-8471, 5 minutes previous to 1:30 p.m. Pacific Daylight Time (or 4:30 p.m. Japanese Daylight Time). A stay webcast of the decision may even be accessible at http://investor.chegg.com below the Occasions & Shows menu. An audio replay will likely be accessible starting at 4:30 p.m. Pacific Daylight Time (or 7:30 p.m. Japanese Daylight Time) on November 1, 2021, till 8:59 p.m. Pacific Daylight Time (or 11:59 p.m. Japanese Daylight Time) on November 8, 2021, by calling 1-844-512-2921, or outdoors the U.S. +1-412-317-6671, with Convention ID 13724122. An audio archive of the decision may even be accessible at http://investor.chegg.com.
Use of Investor Relations Web site for Regulation FD Functions
Chegg additionally makes use of its media heart web site, http://www.chegg.com/press, as a way of exposing materials personal info and for complying with its disclosure obligations below Regulation FD. Accordingly, traders ought to monitor http://www.chegg.com/press, along with following press releases, Securities and Alternate Fee filings and public convention calls and webcasts.
About Chegg
Thousands and thousands of individuals Be taught with Chegg. We attempt to enhance academic outcomes by placing the scholar first. We help college students on their journey from highschool to varsity and into their profession with instruments designed to assist them be taught their course supplies, succeed of their courses, get monetary savings on required supplies, and be taught essentially the most in-demand abilities. Our providers can be found on-line, anytime and wherever. Chegg is a publicly held firm based mostly in Santa Clara, California and trades on the NYSE below the image CHGG. For extra info, go to www.chegg.com.
Use of Non-GAAP Measures
To complement Chegg’s monetary outcomes offered in accordance with typically accepted accounting ideas in the USA (GAAP), this press launch and the accompanying tables and the associated earnings convention name include non-GAAP monetary measures, together with adjusted EBITDA, non-GAAP working bills, non-GAAP earnings from operations, non-GAAP web earnings, non-GAAP weighted common shares, non-GAAP web earnings per share, and free money circulate. For reconciliations of those non-GAAP monetary measures to essentially the most straight comparable GAAP monetary measures, please see the part of the accompanying tables titled, “Reconciliation of Web Earnings (Loss) to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Monetary Measures,” “Reconciliation of Web Money Offered by Working Actions to Free Money Movement,” and “Reconciliation of Ahead-Trying Web Earnings (Loss) to EBITDA and Adjusted EBITDA.”
The presentation of those non-GAAP monetary measures is just not supposed to be thought-about in isolation from, as an alternative choice to, or superior to, the monetary info ready and offered in accordance with GAAP, and could also be totally different from non-GAAP monetary measures utilized by different corporations. Chegg defines (1) adjusted EBITDA as earnings earlier than curiosity, taxes, depreciation and amortization, or EBITDA, adjusted for print textbook depreciation expense and to exclude share-based compensation expense, different earnings (expense), web, acquisition-related compensation prices, transitional logistic costs and restructuring costs; (2) non-GAAP working bills as working bills excluding share-based compensation expense, amortization of intangible property, acquisition-related compensation prices and restructuring costs; (3) non-GAAP earnings from operations as (loss) earnings from operations excluding share-based compensation expense, amortization of intangible property, acquisition-related compensation prices, transitional logistic costs and restructuring costs; (4) non-GAAP web earnings as web earnings (loss) excluding share-based compensation expense, amortization of intangible property, acquisition-related compensation prices, amortization of debt low cost and issuance prices, the loss on early extinguishment of debt, the online loss on change in truthful worth of by-product devices, the achieve on sale of strategic fairness investments, transitional logistic costs and restructuring costs; (5) non-GAAP weighted common shares excellent as weighted common shares excellent adjusted for the impact of excellent inventory choices, RSUs, PSUs, and shares associated to our convertible senior notes, to the extent such shares should not already included in our weighted common shares excellent; (6) non-GAAP web earnings per share is outlined as non-GAAP web earnings divided by non-GAAP weighted common shares excellent; and (7) free money circulate as web money supplied by working actions adjusted for purchases of property and gear, purchases of textbooks and proceeds from disposition of textbooks. To the extent further vital non-recurring gadgets come up sooner or later, Chegg might think about whether or not to exclude such gadgets in calculating the non-GAAP monetary measures it makes use of.
Chegg believes that these non-GAAP monetary measures, when taken along with the corresponding GAAP monetary measures, present significant supplemental info relating to Chegg’s efficiency by excluding gadgets that is probably not indicative of Chegg’s core enterprise, working outcomes or future outlook. Chegg administration makes use of these non-GAAP monetary measures in assessing Chegg’s working outcomes, in addition to when planning, forecasting and analyzing future intervals and believes that such measures improve traders’ general understanding of our present monetary efficiency. These non-GAAP monetary measures additionally facilitate comparisons of Chegg’s efficiency to prior intervals.
As offered within the “Reconciliation of Web Earnings (Loss) to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Monetary Measures,” “Reconciliation of Ahead-Trying Web Earnings (Loss) to EBITDA and Adjusted EBITDA,” and “Reconciliation of Web Money Offered by Working Actions to Free Money Movement” tables under, every of the non-GAAP monetary measures excludes a number of of the next gadgets:
Share-based compensation expense.
Share-based compensation expense is a non-cash expense that varies in quantity from interval to interval and relies on market forces which might be usually past Chegg’s management. Consequently, administration excludes this merchandise from Chegg’s inside working forecasts and fashions. Administration believes that non-GAAP measures adjusted for share-based compensation expense present traders with a foundation to measure Chegg’s core efficiency in opposition to the efficiency of different corporations with out the variability created by share-based compensation because of the number of fairness awards utilized by different corporations and the various methodologies and assumptions used.
Amortization of intangible property.
Chegg amortizes intangible property that it acquires at the side of acquisitions, which ends up in non‑money bills that will not in any other case have been incurred. Chegg believes excluding the expense related to intangible property from non-GAAP measures permits for a extra correct evaluation of its ongoing operations and offers traders with a greater comparability of period-over-period working outcomes.
Acquisition-related compensation prices.
Acquisition-related compensation prices embody compensation expense ensuing from the employment retention of sure key staff established in accordance with the phrases of the acquisitions. Usually, these acquisition-related compensation prices should not factored into administration’s analysis of potential acquisitions or Chegg’s efficiency after completion of acquisitions, as a result of they aren’t associated to Chegg’s core working efficiency. As well as, the frequency and quantity of such costs can range considerably based mostly on the dimensions and timing of acquisitions and the maturities of the companies being acquired. Excluding acquisition-related compensation prices from non-GAAP measures offers traders with a foundation to check Chegg’s outcomes in opposition to these of different corporations with out the variability attributable to buy accounting.
Amortization of debt low cost and issuance prices.
Starting January 1, 2021, because of our adoption of Accounting Requirements Replace (ASU) 2020-06 (ASU 2020-06), we account for our convertible senior notes totally as a legal responsibility and not document curiosity expense associated to the amortization of the debt low cost. We proceed to acknowledge the efficient curiosity expense on our convertible senior notes and amortize the debt issuance prices over the time period of the convertible senior notes. We adopted ASU 2020-06 below the modified retrospective technique utilized to convertible senior notes excellent as of January 1, 2021 and haven’t modified beforehand disclosed quantities or supplied further disclosures for comparative intervals. Previous to our adoption of ASU 2020-06, we had been required to individually account for the legal responsibility (debt) and fairness (conversion possibility) elements of our convertible senior notes and acknowledge the efficient curiosity expense on our convertible senior notes and amortize the debt low cost and issuance prices over the time period of the notes.
The distinction between the efficient curiosity expense and the contractual curiosity expense are excluded from administration’s evaluation of our working efficiency as a result of administration believes that these non-cash bills should not indicative of ongoing working efficiency. Chegg believes that the exclusion of the non-cash curiosity expense offers traders with a greater comparability of period-over-period working outcomes.
Loss on early extinguishment of debt.
Starting January 1, 2021, because of our adoption of ASU 2020-06 and accounting for our convertible senior notes totally as a legal responsibility, we’re required to check the full consideration of extinguished convertible senior notes to the respective carrying quantities to document a loss. Previous to our adoption of ASU 2020-06, we had been required to individually account for the legal responsibility (debt) and fairness (conversion possibility) elements of our convertible senior notes which required us to estimate the truthful worth of extinguished or transformed convertible senior notes and evaluate to the respective carrying quantity to document a loss.
The loss on early extinguishment of debt is just not thought-about a core-operating exercise and we imagine its exclusion offers traders with a greater comparability of period-over-period working outcomes.
Loss on change in truthful worth of by-product devices, web.
Our convertible senior notes embedded conversion choices and associated capped name devices meet sure situations for exclusion as by-product devices and as a substitute meet situations to be categorized in fairness. The embedded conversion options and capped name transactions should not remeasured so long as they proceed to fulfill the situations for fairness classification, in any other case they’re categorized as by-product devices and recorded at truthful worth with modifications in truthful worth recorded in different (expense) earnings, web. The loss on change in truthful worth of by-product devices is just not thought-about a core-operating exercise and we imagine its exclusion offers traders with a greater comparability of period-over-period working outcomes.
Acquire on sale of strategic fairness funding.
The achieve on sale of strategic fairness funding represents a one-time occasion to document a achieve on our strategic fairness funding in a overseas entity that was acquired. The achieve on sale of strategic fairness funding is a one-time occasion and we imagine its exclusion offers traders with a greater comparability of period-over-period working outcomes.
Transitional logistics costs.
The transitional logistics costs characterize incremental bills incurred as we transition our print textbooks to a brand new third get together logistics supplier. Chegg believes that it’s acceptable to exclude them from non-GAAP monetary measures as a result of it’s the results of an occasion that isn’t thought-about a core-operating exercise and we imagine its exclusion offers traders with a greater comparability of period-over-period working outcomes.
Restructuring costs.
Restructuring costs characterize bills incurred at the side of the change in our go-to-market technique for our Thinkful product providing which we imagine can have essentially the most development potential to serve learners. Chegg believes that it’s acceptable to exclude them from non-GAAP monetary measures as a result of it’s the results of an occasion that isn’t thought-about a core-operating exercise and we imagine its exclusion offers traders with a greater comparability of period-over-period working outcomes.
Loss from impairment of strategic fairness funding.
The loss from impairment of strategic fairness funding represents a one-time occasion to document an impairment cost on our strategic fairness funding in WayUp, Inc. The loss from impairment of strategic fairness funding is a non-cash expense and we imagine the exclusion of the impairment cost from non-GAAP monetary measures offers traders with a greater comparability of period-over-period outcomes.
Impact of shares for inventory plan exercise.
The impact of shares for inventory plan exercise represents the dilutive affect of excellent inventory choices, RSUs, and PSUs calculated below the treasury inventory technique.
Impact of shares associated to convertible senior notes.
Starting January 1, 2021, because of our adoption of ASU 2020-06, the impact of shares associated to convertible senior notes represents the dilutive affect of excellent convertible senior notes calculated below the if-converted technique which assumes all excellent convertible senior notes are transformed initially of the interval leading to the next share depend when calculating the dilutive affect. Previous to our adoption of ASU 2020-06, the impact of shares associated to convertible senior notes represents the dilutive affect of excellent convertible senior notes calculated below the treasury inventory technique.
The impact of shares associated to convertible senior notes represents the dilutive affect of our convertible senior notes, to the extent such shares should not already included in our weighted common shares excellent as they had been antidilutive on a GAAP foundation.
Free money circulate.
Free money circulate represents web money supplied by working actions adjusted for purchases of property and gear and purchases of textbooks and together with proceeds from the disposition of textbooks. Chegg considers free money circulate to be a liquidity measure that gives helpful info to administration and traders about the amount of money generated by the enterprise after the purchases of property and gear and textbooks, which might then be used to, amongst different issues, put money into Chegg’s enterprise and make strategic acquisitions. A limitation of the utility of free money circulate as a measure of monetary efficiency is that it doesn’t characterize the full enhance or lower in Chegg’s money steadiness for the interval.
Ahead-Trying Statements
This press launch accommodates forward-looking statements made pursuant to the secure harbor provisions of the Non-public Securities Litigation Reform Act of 1995, which embody, with out limitation statements relating to the affect of the continuing coronavirus (COVID-19) pandemic on Chegg’s monetary situation and outcomes of operations, Chegg’s continued momentum and 2021 steerage; and people included within the investor presentation referenced above, these included within the “Ready Remarks” sections above, and all statements about Chegg’s outlook below “Enterprise Outlook.” The phrases “anticipate,” “imagine,” “estimate,” “count on,” “intend,” “undertaking,” “endeavor,” “will,” “ought to,” “future,” “transition,” “outlook” and related expressions, as they relate to Chegg, are supposed to establish forward-looking statements. These statements should not ensures of future efficiency, and are based mostly on administration’s expectations as of the date of this press launch and assumptions which might be inherently topic to uncertainties, dangers and modifications in circumstances which might be tough to foretell. Ahead-looking statements contain recognized and unknown dangers, uncertainties and different elements which will trigger precise outcomes, efficiency or achievements to vary materially from any future outcomes, efficiency or achievements. Necessary elements that would trigger precise outcomes to vary materially from these expressed or implied by these forward-looking statements embody the next: the consequences of the COVID-19 pandemic on Chegg’s enterprise and the financial system typically; Chegg’s potential to draw new college students, which have an inherently excessive charge of turnover primarily as a result of commencement; modifications in search engine methodologies that modify Chegg’s search outcome web page rankings, leading to decreased scholar engagement on Chegg’s web site; competitors in points of Chegg’s enterprise, and Chegg expects such competitors to extend; Chegg’s potential to keep up its providers and programs with out interruption, together with because of technical points or cybersecurity threats; third-party cost processing dangers; adoption of presidency regulation of training unfavorable to Chegg; the speed of adoption of Chegg’s choices; cellular app shops and cellular working programs making Chegg’s apps and cellular web site accessible to college students and to develop Chegg’s consumer base and enhance their engagement; Chegg’s potential to develop internationally; schools and governments proscribing on-line entry or entry to Chegg’s web site; Chegg’s potential to strategically reap the benefits of new alternatives; aggressive developments, together with pricing pressures and different providers focusing on college students; Chegg’s potential to construct and develop its providers choices; Chegg’s potential to develop new services on an economical foundation and to combine acquired companies and property; the affect of seasonality on the enterprise; Chegg’s model and repute; the end result of any present litigation and investigations; the power of our logistics accomplice to handle the success processes; Chegg’s potential to successfully management working prices; modifications in Chegg’s addressable market; regulatory modifications, specifically regarding privateness and advertising; any vital disruptions associated to cybersecurity or cyber-attacks; modifications within the training market, together with because of COVID-19; and normal financial, political and {industry} situations. All info supplied on this launch and within the convention name is as of the date hereof and Chegg undertakes no obligation to replace this info besides as required by regulation. These and different essential threat elements are described extra totally in paperwork filed with the Securities and Alternate Fee, together with Chegg’s Annual Report on Kind 10-Ok for the 12 months ended December 31, 2020 filed with the Securities and Alternate Fee on February 22, 2021, and will trigger precise outcomes to range from expectations.
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CHEGG, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(in hundreds, apart from variety of shares and par worth) |
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(unaudited) |
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|
|
September 30, |
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December 31, |
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|
Belongings |
|
|
|
|||||
|
Present property |
|
|
|
|||||
|
Money and money equivalents |
$ |
713,837 |
|
|
$ |
479,853 |
|
|
|
Quick-term investments |
1,038,345 |
|
|
665,567 |
|
|||
|
Accounts receivable, web of allowance of $111 and $153 at September 30, 2021 and December 31, 2020, respectively |
9,302 |
|
|
12,913 |
|
|||
|
Pay as you go bills |
35,164 |
|
|
12,776 |
|
|||
|
Different present property |
29,316 |
|
|
11,846 |
|
|||
|
Complete present property |
1,825,964 |
|
|
1,182,955 |
|
|||
|
Lengthy-term investments |
813,500 |
|
|
523,628 |
|
|||
|
Textbook library, web |
15,834 |
|
|
34,149 |
|
|||
|
Property and gear, web |
156,121 |
|
|
125,807 |
|
|||
|
Goodwill |
290,499 |
|
|
285,214 |
|
|||
|
Intangible property, web |
43,573 |
|
|
51,249 |
|
|||
|
Proper of use property |
19,520 |
|
|
24,226 |
|
|||
|
Different property |
22,484 |
|
|
24,030 |
|
|||
|
Complete property |
$ |
3,187,495 |
|
|
$ |
2,251,258 |
|
|
|
Liabilities and stockholders’ fairness |
|
|
|
|||||
|
Present liabilities |
|
|
|
|||||
|
Accounts payable |
$ |
10,518 |
|
|
$ |
8,547 |
|
|
|
Deferred income |
49,983 |
|
|
32,620 |
|
|||
|
Accrued liabilities |
73,320 |
|
|
68,565 |
|
|||
|
Complete present liabilities |
133,821 |
|
|
109,732 |
|
|||
|
Lengthy-term liabilities |
|
|
|
|||||
|
Convertible senior notes, web |
1,676,749 |
|
|
1,506,922 |
|
|||
|
Lengthy-term working lease liabilities |
14,137 |
|
|
19,264 |
|
|||
|
Different long-term liabilities |
8,271 |
|
|
5,705 |
|
|||
|
Complete long-term liabilities |
1,699,157 |
|
|
1,531,891 |
|
|||
|
Complete liabilities |
1,832,978 |
|
|
1,641,623 |
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|
Commitments and contingencies |
|
|
|
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Stockholders’ fairness: |
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|
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Most well-liked inventory, $0.001 par worth per share, 10,000,000 shares licensed, no shares issued and excellent |
— |
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|
— |
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Frequent inventory, $0.001 par worth per share: 400,000,000 shares licensed; 144,901,435 and 129,343,524 shares issued and excellent at September 30, 2021 and December 31, 2020, respectively |
145 |
|
|
129 |
|
|||
|
Extra paid-in capital |
1,717,421 |
|
|
1,030,577 |
|
|||
|
Accrued different complete (loss) earnings |
(1,552 |
) |
|
1,530 |
|
|||
|
Accrued deficit |
(361,497 |
) |
|
(422,601 |
) |
|||
|
Complete stockholders’ fairness |
1,354,517 |
|
|
609,635 |
|
|||
|
Complete liabilities and stockholders’ fairness |
$ |
3,187,495 |
|
|
$ |
2,251,258 |
|
|
|
CHEGG, INC. |
||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
|
(in hundreds, besides per share quantities) |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
|
Three Months Ended September 30, |
|
9 Months Ended September 30, |
|||||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|||||
|
Web revenues |
$ |
171,942 |
|
$ |
154,018 |
|
$ |
568,798 |
|
$ |
438,617 |
|
||||
|
Value of revenues(1) |
67,102 |
|
62,370 |
|
199,194 |
|
148,284 |
|
||||||||
|
Gross revenue |
104,840 |
|
91,648 |
|
369,604 |
|
290,333 |
|
||||||||
|
Working bills: |
|
|
|
|
||||||||||||
|
Analysis and improvement(1) |
43,269 |
|
44,041 |
|
130,995 |
|
123,956 |
|
||||||||
|
Gross sales and advertising(1) |
27,239 |
|
24,625 |
|
75,139 |
|
60,621 |
|
||||||||
|
Basic and administrative(1) |
33,971 |
|
40,784 |
|
111,560 |
|
98,221 |
|
||||||||
|
Complete working bills |
104,479 |
|
109,450 |
|
317,694 |
|
282,798 |
|
||||||||
|
Earnings (loss) from operations |
361 |
|
(17,802 |
) |
51,910 |
|
7,535 |
|
||||||||
|
Curiosity expense, web and different earnings (expense), web: |
|
|
|
|
||||||||||||
|
Curiosity expense, web |
(1,633 |
) |
(17,468 |
) |
(5,263 |
) |
(44,320 |
) |
||||||||
|
Different earnings (expense), web |
8,670 |
|
(804 |
) |
(66,618 |
) |
7,396 |
|
||||||||
|
Complete curiosity expense, web and different earnings (expense), web |
7,037 |
|
(18,272 |
) |
(71,881 |
) |
(36,924 |
) |
||||||||
|
Earnings (loss) earlier than provision for earnings taxes |
7,398 |
|
(36,074 |
) |
(19,971 |
) |
(29,389 |
) |
||||||||
|
Provision for earnings taxes |
747 |
|
1,066 |
|
5,793 |
|
2,875 |
|
||||||||
|
Web earnings (loss) |
$ |
6,651 |
|
$ |
(37,140 |
) |
$ |
(25,764 |
) |
$ |
(32,264 |
) |
||||
|
Web earnings (loss) per share |
|
|
|
|
||||||||||||
|
Fundamental |
$ |
0.05 |
|
$ |
(0.29 |
) |
$ |
(0.18 |
) |
$ |
(0.26 |
) |
||||
|
Diluted |
$ |
0.05 |
|
$ |
(0.29 |
) |
$ |
(0.18 |
) |
$ |
(0.26 |
) |
||||
|
Weighted common shares used to compute web earnings (loss) per share |
|
|
|
|
||||||||||||
|
Fundamental |
144,746 |
|
126,194 |
|
140,775 |
|
124,162 |
|
||||||||
|
Diluted |
146,699 |
|
126,194 |
|
140,775 |
|
124,162 |
|
||||||||
|
|
|
|
|
|
||||||||||||
|
(1) Contains share-based compensation expense as follows: |
|
|
|
|
||||||||||||
|
Value of revenues |
$ |
393 |
|
$ |
262 |
|
$ |
1,174 |
|
$ |
644 |
|
||||
|
Analysis and improvement |
8,917 |
|
8,433 |
|
25,976 |
|
23,044 |
|
||||||||
|
Gross sales and advertising |
3,051 |
|
2,431 |
|
9,625 |
|
7,053 |
|
||||||||
|
Basic and administrative |
12,151 |
|
10,403 |
|
39,382 |
|
28,668 |
|
||||||||
|
Complete share-based compensation expense |
$ |
24,512 |
|
$ |
21,529 |
|
$ |
76,157 |
|
$ |
59,409 |
|
||||
|
CHEGG, INC. |
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
(in hundreds) |
||||||||
|
(unaudited) |
||||||||
|
|
|
9 Months Ended September 30, |
||||||
|
|
|
2021 |
|
|
2020 |
|
||
|
Working actions |
|
|
||||||
|
Web loss |
$ |
(25,764 |
) |
$ |
(32,264 |
) |
||
|
Changes to reconcile web loss to web money supplied by working actions: |
|
|
||||||
|
Print textbook depreciation expense |
9,024 |
|
10,699 |
|
||||
|
Different depreciation and amortization expense |
46,273 |
|
33,088 |
|
||||
|
Share-based compensation expense |
76,157 |
|
59,409 |
|
||||
|
Amortization of debt low cost and issuance prices |
4,509 |
|
42,910 |
|
||||
|
Compensation of convertible senior notes attributable to debt low cost |
— |
|
(14,912 |
) |
||||
|
Loss on early extinguishment of debt |
78,152 |
|
3,315 |
|
||||
|
Loss on change in truthful worth of by-product devices, web |
7,148 |
|
— |
|
||||
|
Loss from write-off of property and gear |
1,857 |
|
1,057 |
|
||||
|
Loss from impairment of strategic fairness funding |
— |
|
10,000 |
|
||||
|
Acquire on sale of strategic fairness investments |
(12,496 |
) |
— |
|
||||
|
Loss (achieve) on textbook library, web |
8,765 |
|
(2,028 |
) |
||||
|
Working lease expense, web of accretion |
4,527 |
|
3,400 |
|
||||
|
Restructuring costs |
1,851 |
|
— |
|
||||
|
Different non-cash gadgets |
498 |
|
(102 |
) |
||||
|
Change in property and liabilities, web of impact of acquisition of companies: |
|
|
||||||
|
Accounts receivable |
3,593 |
|
106 |
|
||||
|
Pay as you go bills and different present property |
(31,070 |
) |
(6,178 |
) |
||||
|
Different property |
9,472 |
|
(2,638 |
) |
||||
|
Accounts payable |
1,820 |
|
(1,634 |
) |
||||
|
Deferred income |
17,363 |
|
32,239 |
|
||||
|
Accrued liabilities |
10,552 |
|
34,276 |
|
||||
|
Different liabilities |
(4,108 |
) |
(2,088 |
) |
||||
|
Web money supplied by working actions |
208,123 |
|
168,655 |
|
||||
|
Investing actions |
|
|
||||||
|
Purchases of property and gear |
(67,126 |
) |
(57,457 |
) |
||||
|
Purchases of textbooks |
(10,666 |
) |
(49,641 |
) |
||||
|
Proceeds from disposition of textbooks |
7,815 |
|
7,012 |
|
||||
|
Purchases of investments |
(1,574,060 |
) |
(968,106 |
) |
||||
|
Maturities of investments |
893,315 |
|
412,046 |
|
||||
|
Buy of strategic fairness funding |
— |
|
(2,000 |
) |
||||
|
Proceeds from sale of strategic fairness investments |
16,076 |
|
— |
|
||||
|
Acquisition of companies, web of money acquired |
(7,891 |
) |
(92,796 |
) |
||||
|
Web money utilized in investing actions |
(742,537 |
) |
(750,942 |
) |
||||
|
Financing actions |
|
|
||||||
|
Proceeds from frequent inventory issued below inventory plans, web |
5,373 |
|
9,236 |
|
||||
|
Fee of taxes associated to the online share settlement of fairness awards |
(89,339 |
) |
(65,224 |
) |
||||
|
Proceeds from issuance of convertible senior notes, web of issuance prices |
— |
|
984,096 |
|
||||
|
Buy of convertible senior notes capped name |
— |
|
(103,400 |
) |
||||
|
Proceeds from fairness providing, web of providing prices |
1,091,466 |
|
— |
|
||||
|
Compensation of convertible senior notes |
(300,755 |
) |
(159,677 |
) |
||||
|
Proceeds from train of convertible senior notes capped name |
69,005 |
|
57,414 |
|
||||
|
Fee of escrow associated to acquisition |
(7,451 |
) |
— |
|
||||
|
Web money supplied by financing actions |
768,299 |
|
722,445 |
|
||||
|
Web enhance in money, money equivalents and restricted money |
233,885 |
|
140,158 |
|
||||
|
Money, money equivalents and restricted money, starting of interval |
481,715 |
|
389,432 |
|
||||
|
Money, money equivalents and restricted money, finish of interval |
$ |
715,600 |
|
$ |
529,590 |
|
||
|
|
9 Months Ended September 30, |
||||||
|
|
2021 |
|
2020 |
||||
|
Supplemental money circulate knowledge: |
|
|
|
||||
|
Money paid in the course of the interval for: |
|
|
|
||||
|
Curiosity |
$ |
1,053 |
|
|
$ |
1,546 |
|
|
Earnings taxes, web of refunds |
$ |
5,610 |
|
|
$ |
2,450 |
|
|
Money paid for quantities included within the measurement of lease liabilities: |
|
|
|
||||
|
Working money flows from working leases |
$ |
5,934 |
|
|
$ |
5,174 |
|
|
Proper of use property obtained in trade for lease obligations: |
|
|
|
||||
|
Working leases |
$ |
— |
|
|
$ |
1,713 |
|
|
Non-cash investing and financing actions: |
|
|
|
||||
|
Accrued purchases of long-lived property |
$ |
1,837 |
|
|
$ |
6,102 |
|
|
Accrued escrow associated to acquisition |
$ |
— |
|
|
$ |
7,451 |
|
|
Issuance of frequent inventory associated to compensation of convertible senior notes |
$ |
235,521 |
|
|
$ |
327,141 |
|
|
|
September 30, |
||||||
|
|
2021 |
|
2020 |
||||
|
Reconciliation of money, money equivalents and restricted money: |
|
|
|
||||
|
Money and money equivalents |
$ |
713,837 |
|
|
$ |
527,541 |
|
|
Restricted money included in different present property |
— |
|
|
313 |
|
||
|
Restricted money included in different property |
1,763 |
|
|
1,736 |
|
||
|
Complete money, money equivalents and restricted money |
$ |
715,600 |
|
|
$ |
529,590 |
|
|
CHEGG, INC. |
||||||||||||||||
|
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA |
||||||||||||||||
|
(in hundreds) |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
Three Months Ended |
|
9 Months Ended |
||||||||||||
|
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
Web earnings (loss) |
$ |
6,651 |
|
$ |
(37,140 |
) |
$ |
(25,764 |
) |
$ |
(32,264 |
) |
||||
|
Curiosity expense, web |
1,633 |
|
17,468 |
|
5,263 |
|
44,320 |
|
||||||||
|
Provision for earnings taxes |
747 |
|
1,066 |
|
5,793 |
|
2,875 |
|
||||||||
|
Print textbook depreciation expense |
2,443 |
|
3,637 |
|
9,024 |
|
10,699 |
|
||||||||
|
Different depreciation and amortization expense |
16,086 |
|
13,254 |
|
46,273 |
|
33,088 |
|
||||||||
|
EBITDA |
27,560 |
|
(1,715 |
) |
40,589 |
|
58,718 |
|
||||||||
|
Print textbook depreciation expense |
(2,443 |
) |
(3,637 |
) |
(9,024 |
) |
(10,699 |
) |
||||||||
|
Share-based compensation expense |
24,512 |
|
21,529 |
|
76,157 |
|
59,409 |
|
||||||||
|
Different earnings (expense), web |
(8,670 |
) |
804 |
|
66,618 |
|
(7,396 |
) |
||||||||
|
Acquisition-related compensation prices |
1,249 |
|
4,945 |
|
5,127 |
|
9,161 |
|
||||||||
|
Transitional logistics costs |
2,301 |
|
— |
|
6,547 |
|
— |
|
||||||||
|
Restructuring costs |
1,851 |
|
— |
|
1,851 |
|
— |
|
||||||||
|
Loss from impairment of strategic fairness funding |
— |
|
10,000 |
|
— |
|
10,000 |
|
||||||||
|
Adjusted EBITDA |
$ |
46,360 |
|
$ |
31,926 |
|
$ |
187,865 |
|
$ |
119,193 |
|
||||
|
CHEGG, INC. |
||||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
||||||||||||||||
|
(in hundreds, besides percentages and per share quantities) |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Three Months Ended September 30, |
|
9 Months Ended September 30, |
||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Working bills |
$ |
104,479 |
|
$ |
109,450 |
|
$ |
317,694 |
|
$ |
282,798 |
|
||||
|
Share-based compensation expense |
(24,119 |
) |
(21,267 |
) |
(74,983 |
) |
(58,765 |
) |
||||||||
|
Amortization of intangible property |
(877 |
) |
(4,408 |
) |
(4,217 |
) |
(9,875 |
) |
||||||||
|
Acquisition-related compensation prices |
(1,249 |
) |
(4,945 |
) |
(5,127 |
) |
(9,161 |
) |
||||||||
|
Restructuring costs |
(818 |
) |
— |
|
(818 |
) |
— |
|
||||||||
|
Loss from impairment of strategic fairness funding |
— |
|
(10,000 |
) |
— |
|
(10,000 |
) |
||||||||
|
Non-GAAP working bills |
$ |
77,416 |
|
$ |
68,830 |
|
$ |
232,549 |
|
$ |
194,997 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Earnings (loss) from operations |
$ |
361 |
|
$ |
(17,802 |
) |
$ |
51,910 |
|
$ |
7,535 |
|
||||
|
Share-based compensation expense |
24,512 |
|
21,529 |
|
76,157 |
|
59,409 |
|
||||||||
|
Amortization of intangible property |
3,047 |
|
4,408 |
|
10,674 |
|
9,875 |
|
||||||||
|
Acquisition-related compensation prices |
1,249 |
|
4,945 |
|
5,127 |
|
9,161 |
|
||||||||
|
Transitional logistics costs |
2,301 |
|
— |
|
6,547 |
|
— |
|
||||||||
|
Restructuring costs |
1,851 |
|
— |
|
1,851 |
|
— |
|
||||||||
|
Loss from impairment of strategic fairness funding |
— |
|
10,000 |
|
— |
|
10,000 |
|
||||||||
|
Non-GAAP earnings from operations |
$ |
33,321 |
|
$ |
23,080 |
|
$ |
152,266 |
|
$ |
95,980 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Web earnings (loss) |
$ |
6,651 |
|
$ |
(37,140 |
) |
$ |
(25,764 |
) |
$ |
(32,264 |
) |
||||
|
Share-based compensation expense |
24,512 |
|
21,529 |
|
76,157 |
|
59,409 |
|
||||||||
|
Amortization of intangible property |
3,047 |
|
4,408 |
|
10,674 |
|
9,875 |
|
||||||||
|
Acquisition-related compensation prices |
1,249 |
|
4,945 |
|
5,127 |
|
9,161 |
|
||||||||
|
Amortization of debt low cost and issuance prices |
1,412 |
|
17,018 |
|
4,509 |
|
42,910 |
|
||||||||
|
Loss on early extinguishment of debt |
— |
|
3,315 |
|
78,152 |
|
3,315 |
|
||||||||
|
Loss on change in truthful worth of by-product devices, web |
— |
|
— |
|
7,148 |
|
— |
|
||||||||
|
Acquire on sale of strategic fairness investments |
(7,158 |
) |
— |
|
(12,496 |
) |
— |
|
||||||||
|
Transitional logistics costs |
2,301 |
|
— |
|
6,547 |
|
— |
|
||||||||
|
Restructuring costs |
1,851 |
|
— |
|
1,851 |
|
— |
|
||||||||
|
Loss from impairment of strategic fairness funding |
— |
|
10,000 |
|
— |
|
10,000 |
|
||||||||
|
Non-GAAP web earnings |
$ |
33,865 |
|
$ |
24,075 |
|
$ |
151,905 |
|
$ |
102,406 |
|
||||
|
|
|
|
|
|
||||||||||||
|
Weighted common shares used to compute web earnings (loss) per share, diluted |
146,699 |
|
126,194 |
|
140,775 |
|
124,162 |
|
||||||||
|
Impact of shares for inventory plan exercise |
— |
|
4,268 |
|
2,727 |
|
4,406 |
|
||||||||
|
Impact of shares associated to convertible senior notes |
22,875 |
|
8,721 |
|
23,876 |
|
4,422 |
|
||||||||
|
Non-GAAP weighted common shares used to compute non-GAAP web earnings per share, diluted |
169,574 |
|
139,183 |
|
167,378 |
|
132,990 |
|
||||||||
|
|
|
|
|
|
||||||||||||
|
Web earnings (loss) per share, diluted |
$ |
0.05 |
|
$ |
(0.29 |
) |
$ |
(0.18 |
) |
$ |
(0.26 |
) |
||||
|
Changes |
0.15 |
|
0.46 |
|
1.09 |
|
1.03 |
|
||||||||
|
Non-GAAP web earnings per share, diluted |
$ |
0.20 |
|
$ |
0.17 |
|
$ |
0.91 |
|
$ |
0.77 |
|||||
|
CHEGG, INC. |
||||||||
|
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW |
||||||||
|
(in hundreds) |
||||||||
|
(unaudited) |
||||||||
|
|
|
|
||||||
|
|
|
9 Months Ended September 30, |
||||||
|
|
|
2021 |
|
2020 |
|
|||
|
Web money supplied by working actions |
$ |
208,123 |
|
$ |
168,655 |
|
||
|
Purchases of property and gear |
(67,126 |
) |
(57,457 |
) |
||||
|
Purchases of textbooks |
(10,666 |
) |
(49,641 |
) |
||||
|
Proceeds from disposition of textbooks |
7,815 |
|
7,012 |
|
||||
|
Free money circulate |
$ |
138,146 |
|
$ |
68,569 |
|
||
|
CHEGG, INC. |
||||||||
|
RECONCILIATION OF FORWARD-LOOKING NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA |
||||||||
|
(in hundreds) |
||||||||
|
(unaudited) |
||||||||
|
|
|
|
||||||
|
|
Three Months Ending |
Yr Ending |
||||||
|
Web earnings (loss) |
$ |
3,100 |
|
$ |
(22,700 |
) |
||
|
Curiosity expense, web |
1,600 |
|
6,900 |
|
||||
|
Provision for earnings taxes |
1,800 |
|
7,600 |
|
||||
|
Textbook library depreciation expense |
2,500 |
|
11,500 |
|
||||
|
Different depreciation and amortization expense |
17,300 |
|
63,600 |
|
||||
|
EBITDA |
26,300 |
|
66,900 |
|
||||
|
Textbook library depreciation expense |
(2,500 |
) |
(11,500 |
) |
||||
|
Share-based compensation expense |
35,100 |
|
111,200 |
|
||||
|
Different earnings (expense), web |
(600 |
) |
66,000 |
|
||||
|
Acquisition-related compensation prices |
8,300 |
|
13,500 |
|
||||
|
Transitional logistic costs |
1,100 |
|
7,700 |
|
||||
|
Restructuring costs |
300 |
|
2,200 |
|
||||
|
Adjusted EBITDA* |
$ |
68,000 |
|
$ |
256,000 |
|
||
* Adjusted EBITDA steerage for the three months ending December 31, 2021 and 12 months ending December 31, 2021 characterize the midpoint of the ranges of $67 million to $69 million and $255 million to $257 million, respectively.