SANTA CLARA, Calif.,
Sept. 4, 2019 /PRNewswire/
-- Chegg, Inc. (NYSE: CHGG), a Smarter Way to Student,
announced today that it has entered into a definitive agreement to
acquire Thinkful, an online learning platform that offers
professional courses directly to students across America. 85% of
Thinkful graduates get jobs in their field of study within six
months of graduating their program.
"With the anticipated addition of Thinkful to our platform,
Chegg will continue to expand our offerings and make it easier for
students to accelerate their path from learning to earning," said
Dan Rosensweig, CEO of Chegg.
"Students are increasingly looking to improve their professional
opportunities by learning the most relevant job skills, either
while in school or soon after. Adding Thinkful courses to our suite
of Chegg Learning Services will enable us to empower students to
obtain in-demand, high-quality job skills, for the fastest-growing
job categories, with affordable prices. Thinkful has achieved
strong revenue growth of greater than 30% year-over-year because it
has focused on going directly to students and helping them gain the
most valuable skills for today's workforce."
Founded in 2012 by Darrell Silver
and Daniel Friedman, Thinkful offers
high-quality, online, outcomes-focused curricula, coupled with live
experts, to give learners highly sought-after technology skills
such as engineering, data science, data analytics and product
design.
"We founded Thinkful because we saw millions of people with no
way to achieve a fulfilling career, especially in high-tech fields,
and we knew we could fix it," said Darrell
Silver, CEO of Thinkful. "Becoming part of the Chegg
platform will allow us to accelerate course development, lower the
cost for students, grow, and increase our reach."
Thinkful, which has been referred to as "the future of higher
learning in America,"1 seeks to make its programs
broadly available by offering high-quality content at low costs and
with a variety of payment options, including income share
agreements. Thinkful's average customer is 30 years-old, two-thirds
of its customers work while in their classes, and half do not have
a college degree.
The International Labor Organization estimates that the impact
of rapid automation on most developed countries, including
the United States, is causing a
mismatch between existing traditional qualifications and the skills
required in many jobs. This creates a growing need to address
workforce shortages in skills in the digital
economy.2
"Being student-focused and going direct to students is at the
heart of Chegg. As a result, we have an in-depth understanding of
what students want in both academic and career services. Students
want us to provide a relevant, outcomes-focused, pathway to help
them get tech-enabled jobs and advance professionally once they are
in those jobs," said Nathan Schultz,
President of Learning Services at Chegg. "We believe that providing
affordable, high-quality, human-supported, skills-based training
represents an incredible opportunity to improve outcomes for
learners, expands our TAM, and continues to realign our education
system towards workforce development both in the United States and around the world,"
Schultz added.
Chegg expects to acquire Thinkful for approximately $80 million in an all-cash transaction. There are
potential additional payments of up to $20
million, which may be paid in cash or restrictive stock
units, at Chegg's sole discretion, subject to performance-based
contingencies. The acquisition, which was approved by the
boards of directors of Chegg and Thinkful, is expected to close
early in the fourth quarter of 2019, subject to customary
closing conditions.
Chegg expects, assuming an early fourth quarter close of the
acquisition, the Q4 2019 revenue contribution of Thinkful, after
the effect of the fair-value adjustment through purchase
accounting to Thinkful's deferred revenue, to be approximately
$2 million. Thinkful's 2018 net
revenue was approximately $14
million, an increase of approximately 30% year-over-year. As
part of Chegg, we expect the impact of the acquisition of Thinkful
to result in a Q4 2019 adjusted EBITDA loss of approximately
$4 million, and as the service
scales, we expect its adjusted EBITDA to be breakeven in 2020 and
to contribute to Chegg's adjusted EBITDA in fiscal years
thereafter.
Updated Chegg 2019 guidance including the Thinkful contribution,
which assumes an early Q4 close:
- Total 2019 revenue: $400 million - $404 million, with Chegg Services revenue
$332 million - $334 million
- 2019 adjusted EBITDA: $117
million - $120 million
- No change to Q3 guidance as transaction is expected to close
in Q4
For more information about the use of forward-looking non-GAAP
measures, see the below section of the press release titled "Use of
Non-GAAP Measures."
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
contains the non-GAAP financial measure adjusted EBITDA. The
presentation of this non-GAAP financial measure 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 adjusted EBITDA as earnings
before interest, taxes, depreciation and amortization, or EBITDA,
adjusted to exclude share-based compensation expense, other income,
net, restructuring charges, and acquisition-related compensation
costs. 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 adjusted EBITDA, when taken together with
the corresponding GAAP net loss, 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 adjusted EBITDA in
assessing Chegg's operating results, as well as when planning,
forecasting and analyzing future periods and believes that such
measure enhances investors' overall understanding of our current
financial performance. Adjusted EBITDA also facilitates comparisons
of Chegg's performance to prior periods.
A reconciliation of forward-looking fiscal year 2019 adjusted
EBITDA to net loss is not available without unreasonable effort due
to the unavailability of certain information needed to calculate
reconciling items, largely driven by the unknown effect of purchase
accounting adjustments on such reconciling line items.
However, Chegg believes that the change between the adjusted EBITDA
guidance contained within this press release, from our most
recently issued adjusted EBITDA guidance for the third quarter and
fiscal year 2019 furnished in our Current Report on Form 8-K and
filed with the Securities and Exchange Commission ("SEC") on
July 29, 2019, will mostly impact the
net loss reconciling line item.
Forward-Looking Statements
This press release may be deemed to contain forward-looking
statements, which are subject to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, including Chegg's
belief that Thinkful, as part of Chegg's platform, will accelerate
students' path from learning to earning; Chegg's belief that adding
Thinkful courses to its suite of Chegg Learning Services will
enable it to empower students to obtain in-demand, high-quality job
skills, for the fastest-growing job categories, with affordable
prices and will develop the next generation workforce; Chegg's
expectation that Thinkful will accelerate students' path from
learning to earning; that Chegg's acquisition of Thinkful will
enable Thinkful to accelerate course development, lower the cost
for students, grow and increase its reach; that Thinkful as the
future of higher learning in America; Chegg's belief that providing
that providing affordable, high-quality, human-supported,
skills-based training represents an incredible opportunity to
improve outcomes for learners, expands our TAM and continues to
realign our education system towards workforce development both in
the United States and around the
world; statements regarding the expected closing of the Thinkful
acquisition; statements regarding Chegg's expectation for the full
year 2019 revenue contribution of Thinkful and related effects of
accounting write down of Thinkful's deferred revenue; statements
regarding Chegg's expectations regarding Thinkful's adjusted EBITDA
for the remainder of 2019; statements regarding Thinkful's
expectation to be breakeven adjusted EBITDA in 2020 and contribute
to Chegg's adjusted EBITDA in fiscal years thereafter.
Statements regarding future events are based on management's
current expectations and are necessarily subject to associated
risks related to, among other things, the timing and closing of the
Thinkful acquisition; the potential impact on the business of
Thinkful due to the acquisition, general economic conditions,
competition, and integration risks, among others. Therefore, actual
results, performance or achievements may differ materially and
adversely from those expressed in any forward-looking statements.
For information regarding other related risks, see the "Risk
Factors" section of Chegg's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2019
filed with the SEC on July 29, 2019
and Chegg's other SEC filings. You can obtain copies of Chegg's SEC
filings on the SEC's website at www.sec.gov or at Chegg Investor
Relations website at investor.chegg.com. The forward-looking
statements included herein are made only as of the date hereof, and
Chegg undertakes an obligation to revise or update any
forward-looking statements for any reason except as required by
law.
Media Contact:
Heather Hatlo Porter
Press@Chegg.com
Investor Relations:
Tracey Ford
IR@chegg.com
1 https://www.forbes.com/sites/richardvedder/2019/08/01/coding-academies-and-the-future-of-higher-education/#71665421e013
2 https://www.ilo.org/wcmsp5/groups/public/---dgreports/---inst/documents/publication/wcms_646038.pdf
View original content to download
multimedia:http://www.prnewswire.com/news-releases/chegg-to-acquire-online-skills-based-learning-platform-thinkful-to-help-students-accelerate-their-path-from-learning-to-earning-300911279.html
SOURCE Chegg, Inc.