SANTA CLARA, Calif.,
July 29, 2019 /PRNewswire/ -- Chegg, Inc. (NYSE:
CHGG), a Smarter Way to Student, today reported financial results
for the three months ended June 30, 2019.
"We had a great second quarter. We delivered year over year
revenue growth of 30% for Chegg Services and 26% for total revenue,
and improved operating leverage to achieve a 33% adjusted EBITDA
margin," said Dan Rosensweig, CEO of
Chegg, Inc. "The team remains focused on our mission of putting
students first and our continued momentum and strong results gives
us the confidence to, once again, raise our full year
guidance."
Q2 2019 Highlights:
- Total Net Revenues of $93.9
million, an increase of 26% year-over-year
- Chegg Services Revenues grew 30% year-over-year to
$80.3 million, or 86% of total net
revenues, compared to 83% in Q2 2018
- Net Loss was $2.0
million
- Non-GAAP Net Income was $29.8
million
- Adjusted EBITDA was $31.1
million
- 2.2 million: number of Chegg Services subscribers, an
increase of 30% year-over-year
- 198 million: total Chegg Study content views, an
increase of 25% year-over-year
Total net revenues include revenues from Chegg Services and
Required Materials. Chegg Services primarily includes Chegg Study,
Chegg Writing, Chegg Tutors, and Chegg Math Solver. Required
Materials includes rental and sale of print textbooks and
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 this 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:
Third Quarter 2019
- Total Net Revenues in the range of $88 million to $90
million
- Chegg Services Revenues in the range of $68 million to $69
million
- Gross Margin between 74% and 75%
- Adjusted EBITDA in the range of $19 million to $20
million
Full Year 2019
- Total Net Revenues in the range of $398 million to $402
million
- Chegg Services Revenues in the range of $330 million to $332
million
- Gross Margin between 76% and 77%
- Adjusted EBITDA in the range of $121 million to $124
million
- Capital Expenditures in the range of $40 million to $50
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 third quarter 2019 and full year 2019,
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. It's been an incredible
first half of the year and we are delighted to report another
great quarter. We delivered 26% year over year top-line
growth, yielding a record 2.2 million paying subscribers in the
second quarter alone. Our team continues to execute against our key
priorities; which are to meet our financial goals, to expand our
TAM, and to invest in opportunities that leverage our reach, our
student graph, and the strength of our brand. Our strategy
continues to pay off, which is why we have the confidence to, once
again, raise our 2019 guidance - which Andy will walk you through
in greater detail.
We see a lot of opportunities to continue the expansion of our
TAM across academic products & services, international
opportunities, and through the evolution of new categories, like
skills-based learning. We believe the power of the Chegg platform
puts us in the pole position to support students, in a broad
variety of ways, on the path from learning to earning.
The strength of the Chegg brand remains at an all-time high,
which is exciting as we enter the back-to-school season. Chegg
Study remains our largest service and serves as the center of our
growth funnel. It provides students with the essential support
through their academic journey and does so online, with
high-integrity content, in multiple formats, and meets them at
whatever academic level they are at. Our goal is to up-level
students from where they are to where they need to be, as it helps
students better understand their course material and master their
subjects. We continue to expand the subject matter we cover,
thereby increasing the number of students who can use the platform.
Our library of content now has a record 30 million proprietary,
expert answers and textbook solutions, which has doubled in just
the last two years. It's not only the amount of content but the
quality of content, that drives our value, as is evidenced by the
200 million pieces of content students accessed via Chegg Study
this quarter. And video is becoming a much more important
component of our learning services, along with the addition of
practice test problems. For the second half of this year, we will
continue to expand the amount of video content we offer and
increase the categories of practice and self-assessment
capabilities, so students can better understand where they need
help to be successful in their courses.
In addition to Chegg Study, Chegg Writing has become a mainstay
for both high school and college students and has very quickly
become our second largest service. Because of the popularity and
the value of our writing services, students submitted nearly 2
million original papers for review this quarter alone, generating
nearly 137 million citations. But we are not stopping there. As
we've done with all of our services, we are expanding the content
as well as the capabilities of our writing services to grow with
the students' needs. We enhanced our grammar and plagiarism
checker, as well as expanded how we help students with foundational
writing concepts, like sentence structure and thesis development.
Our goal is to fundamentally improve students' writing
abilities.
As we continue to solve the biggest pain points for students in
the United States, we have seen
that many of these issues are global in nature, which is why we are
focused on expanding our customer base outside of the United
states. We are already seeing the benefits from international
expansion as we move in to other English-speaking countries. We
believe international expansion creates a long runway for Chegg to
be a high-growth, high-margin company.
Each of our products stand on their own but, to better serve
students' needs and to create more value for our shareholders, we
have been testing our Chegg Services bundle - the Chegg Study Pack.
The results over the first half of the year have been positive and
we will update you in the third quarter conference call with our
plans for the remainder of this year and for 2020.
We are in a trillion-dollar industry that continues to grow,
evolve, and realign to serve the needs of the modern student.
With 85% of students reporting they go to school to get a job,
focusing on career-based skills development, to prepare for the
workforce, is increasingly more important for our students,
employers, and institutions so, naturally, it is for Chegg. We see
a large opportunity to expand our TAM, and our product offerings,
by helping students develop the critical skills that employers are
looking for. We will continue to invest when we see opportunities
that will improve student outcomes - both in the classroom and
beyond.
The education industry seems to be at an inflection point and we
believe there are a significant opportunities ahead for us. Like we
have seen in other industries, the companies that are operating at
scale, have brand awareness, own their customer, have proprietary
content, and own the data, will be able to disproportionately take
advantage of those opportunities for the benefit of their customers
and their shareholders. We are excited about the months and years
ahead and I am grateful to our incredible team at Chegg. We remain
unwavering in our mission to always put students first.
And, with that, I will turn it over to Andy.
Prepared Remarks - Andy Brown,
CFO Chegg, Inc.
Thanks Dan and good afternoon everyone.
We ended the first half of the year on a high note with Q2
metrics and financial results ahead of our expectations. These
strong results and continuing momentum, give us the confidence to
raise our guidance again for 2019.
For the second quarter, total revenue was $93.9 million, a 26% increase year over year.
Chegg Services revenue and subscribers grew 30% year over year, as
we continue to achieve robust growth rates on top of a very large
base.
While Q2 is a relatively quiet period for Required Materials,
the team has been diligently working on our next contract for
delivering physical textbooks to students. We entered the
negotiations in a position of strength and with an industry that
has shifted over the past 5 years to more publisher consignment for
physical rentals and more digital course materials like eTextbooks.
Our priorities in our negotiations reflect this ongoing shift and
we believe the outcome will benefit students and shareholders
alike. And we expect to have more clarity on this by our next
earnings call.
Turning back to Q2, we exceeded our gross margin expectations at
78%, as we continue to see leverage in the model, with incremental
margin from our subscription services driving the expansion, due to
the relatively fixed cost nature of the business.
Our strong performance in both revenue and gross margin drove
adjusted EBITDA at $31.1 million, a
61% increase from Q2 2018 and more than double our revenue growth
rate, demonstrating the power of our model and the leverage of our
subscription-based offerings.
Looking at the balance sheet, we ended the quarter with
cash and investments of $1.1 billion,
which includes the $100 million over
allotment option the banks exercised in the convertible debt
offering.
We believe our balance sheet, along with a strong business model
that generates cash, puts us in a position to increase our
relevance with students and as Chegg's influence in the industry
continues to grow, we are seeing more and better opportunities come
our way.
As we move to the second half, we expect to maintain high
revenue growth and gain leverage that will continue to drive
adjusted EBITDA margin expansion, all while investing in our
current subscription services and future opportunities, like
bundles and international.
As such, for the full year 2019 we are raising both our revenue
and adjusted EBITDA guidance, reflecting the strength of our
business. We have also aligned our seasonality to reflect later
school start dates for the fall semester.
For the full year we now expect:
- Total revenue to be between $398
and $402 million, with Chegg Services
revenue between $330 and $332 million
- Gross margin between 76% and 77%
- And adjusted EBITDA between $121
and $124 million
Looking specifically at Q3:
- We expect revenue to be between $88 and $90
million, with Chegg Services revenue between $68 and $69
million
- Gross margin between 74% and 75%
- And adjusted EBITDA between $19
and $20 million
In closing, it's been a great first half, the Chegg team
continues to deliver above the high-end of our expectations, giving
us the confidence to increase guidance, all while continuing to
invest in both the content that powers our existing services and
building out our new services and capabilities, which we expect to
contribute to our future growth.
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 July 29,
2019, until 8:59 p.m. Pacific Daylight Time on
August 5, 2019, by calling 1-844-512-2921, or outside the U.S.
+1-412-317-6671, with Conference ID 13691855. 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,
other income, net, restructuring charges, and acquisition-related
compensation costs; (2) non-GAAP income from operations as income
(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, acquisition-related compensation
costs, and amortization of debt discount and issuance costs; (5)
non-GAAP weighted average shares outstanding as weighted average
shares outstanding adjusted for the effect of dilutive options,
restricted stock units, and shares related to our convertible
senior notes; 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 expense 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 assets 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, Cogeon GmbH, WriteLab and StudyBlue 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.
Amortization of debt discount and issuance costs.
Under GAAP, we are required to separately account for the
liability (debt) and equity (conversion option) components of our
convertible senior notes that were issued in private placements in
March 2019/April 2019 and
April 2018. Accordingly, for GAAP
purposes we are required to recognize the effective interest
expense on our convertible senior notes and amortize the debt
discount and issuance costs over the term of the notes. The
difference between the effective interest expense and the
contractual interest expense are excluded from management's
assessment of our operating performance because management believes
that these non-cash expenses are not indicative of ongoing
operating performance. Chegg believes that the exclusion of the
non-cash interest expense provides investors an enhanced view of
our performance and enables the comparison of period-over-period
results.
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 continued momentum and 2019 guidance;
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; Chegg's ability to attract new students from
high schools and colleges, which are populations with inherently
high turnover; the ease of accessing Chegg's offerings through
search engines; the rate of adoption of Chegg's offerings; the
effect and integration of Chegg's acquisition of Imagine Easy
Solutions, Cogeon, WriteLab, and StudyBlue; Chegg's ability to
strategically take advantage of new opportunities to leverage the
Student Graph; competitive developments, including pricing
pressures and other services targeting students; 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 reputation with students and tutors; the outcome
of any current litigation; 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; regulatory
changes, in particular concerning privacy and marketing; 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 Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on April 29, 2019 and
Chegg's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2019 to be filed with
the Securities and Exchange Commission, and could cause actual
results to vary from expectations.
Contact:
Investor contact
Tracey Ford
ir@chegg.com
Media contact:
Heather Hatlo Porter
press@chegg.com
CHEGG,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except for number of shares and par value)
|
(unaudited)
|
|
June 30,
2019
|
|
December 31,
2018
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
555,792
|
|
$
374,664
|
Short-term
investments
|
259,399
|
|
93,345
|
Accounts receivable,
net of allowance for doubtful accounts of $23 and $229 at June 30,
2019 and December 31, 2018, respectively
|
5,948
|
|
12,733
|
Prepaid
expenses
|
12,152
|
|
4,673
|
Other current
assets
|
14,608
|
|
9,510
|
Total current
assets
|
847,899
|
|
494,925
|
Long-term
investments
|
288,682
|
|
16,052
|
Property and
equipment, net
|
76,962
|
|
59,904
|
Goodwill
|
149,466
|
|
149,524
|
Intangible assets,
net
|
22,374
|
|
25,915
|
Right of use
assets
|
14,756
|
|
—
|
Other
assets
|
15,544
|
|
14,618
|
Total
assets
|
$
1,415,683
|
|
$
760,938
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
3,131
|
|
$
8,177
|
Deferred
revenue
|
18,821
|
|
17,418
|
Current operating
lease liabilities
|
4,774
|
|
—
|
Accrued
liabilities
|
37,425
|
|
34,077
|
Total current
liabilities
|
64,151
|
|
59,672
|
Long-term
liabilities
|
|
|
|
Convertible senior
notes, net
|
874,126
|
|
283,668
|
Long-term operating
lease liabilities
|
14,243
|
|
—
|
Other long-term
liabilities
|
3,592
|
|
6,964
|
Total long-term
liabilities
|
891,961
|
|
290,632
|
Total
liabilities
|
956,112
|
|
350,304
|
Commitments and
contingencies
|
|
|
|
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; 119,335,960 and
115,500,418 shares issued and outstanding at June 30, 2019 and
December 31, 2018, respectively
|
119
|
|
116
|
Additional paid-in
capital
|
873,104
|
|
818,113
|
Accumulated other
comprehensive loss
|
(618)
|
|
(1,019)
|
Accumulated
deficit
|
(413,034)
|
|
(406,576)
|
Total stockholders'
equity
|
459,571
|
|
410,634
|
Total liabilities and
stockholders' equity
|
$
1,415,683
|
|
$
760,938
|
CHEGG,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
revenues
|
$
93,862
|
|
$
74,222
|
|
$
191,271
|
|
$
151,171
|
Cost of
revenues(1)
|
20,518
|
|
17,784
|
|
43,853
|
|
38,008
|
Gross
profit
|
73,344
|
|
56,438
|
|
147,418
|
|
113,163
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development(1)
|
32,065
|
|
26,218
|
|
64,757
|
|
51,751
|
Sales and
marketing(1)
|
11,795
|
|
11,437
|
|
30,512
|
|
26,773
|
General and
administrative(1)
|
22,622
|
|
19,479
|
|
46,292
|
|
37,735
|
Restructuring
charges
|
47
|
|
15
|
|
69
|
|
235
|
Total operating
expenses
|
66,529
|
|
57,149
|
|
141,630
|
|
116,494
|
Income (loss) from
operations
|
6,815
|
|
(711)
|
|
5,788
|
|
(3,331)
|
Interest expense and
other income, net:
|
|
|
|
|
|
|
|
Interest expense,
net
|
(13,514)
|
|
(3,664)
|
|
(17,746)
|
|
(3,684)
|
Other income,
net
|
5,253
|
|
894
|
|
6,820
|
|
1,458
|
Total interest
expense and other income, net
|
(8,261)
|
|
(2,770)
|
|
(10,926)
|
|
(2,226)
|
Loss before provision
for income taxes
|
(1,446)
|
|
(3,481)
|
|
(5,138)
|
|
(5,557)
|
Provision for income
taxes
|
583
|
|
428
|
|
1,209
|
|
969
|
Net loss
|
$
(2,029)
|
|
$
(3,909)
|
|
$
(6,347)
|
|
$
(6,526)
|
Net loss per share,
basic and diluted
|
$
(0.02)
|
|
$
(0.03)
|
|
$
(0.05)
|
|
$
(0.06)
|
Weighted average
shares used to compute net loss per share, basic and
diluted
|
118,790
|
|
112,738
|
|
117,766
|
|
111,826
|
|
|
|
|
|
|
|
|
(1)Includes share-based compensation
expense as follows:
|
|
|
|
|
|
|
|
Cost of
revenues
|
$
74
|
|
$
103
|
|
$
199
|
|
$
197
|
Research and
development
|
5,218
|
|
3,529
|
|
10,135
|
|
7,662
|
Sales and
marketing
|
1,754
|
|
1,730
|
|
3,562
|
|
3,319
|
General and
administrative
|
8,406
|
|
6,681
|
|
16,594
|
|
12,507
|
Total share-based
compensation expense
|
$
15,452
|
|
$
12,043
|
|
$
30,490
|
|
$
23,685
|
CHEGG,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
(unaudited)
|
|
Six Months
Ended June 30,
|
|
2019
|
|
2018
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(6,347)
|
|
$
(6,526)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
13,934
|
|
10,665
|
Share-based
compensation expense
|
30,490
|
|
23,685
|
Amortization of debt
discount and issuance costs
|
17,025
|
|
3,421
|
Deferred income
taxes
|
39
|
|
(315)
|
Operating lease
expense, net of accretion
|
2,168
|
|
—
|
Other non-cash
items
|
(115)
|
|
115
|
Change in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
6,944
|
|
2,609
|
Prepaid expenses and
other current assets
|
(12,942)
|
|
(6,773)
|
Other
assets
|
2,334
|
|
(500)
|
Accounts
payable
|
(5,417)
|
|
(1,712)
|
Deferred
revenue
|
1,403
|
|
270
|
Accrued
liabilities
|
2,397
|
|
(2,678)
|
Other
liabilities
|
(4,067)
|
|
1,254
|
Net cash provided by
operating activities
|
47,846
|
|
23,515
|
Cash flows from
investing activities
|
|
|
|
Purchases of
investments
|
(527,363)
|
|
(66,634)
|
Maturities of
investments
|
86,105
|
|
71,980
|
Purchases of property
and equipment
|
(23,491)
|
|
(10,087)
|
Acquisition of
business, net of cash acquired
|
—
|
|
(14,438)
|
Net cash used in
investing activities
|
(464,749)
|
|
(19,179)
|
Cash flows from
financing activities
|
|
|
|
Common stock issued
under stock plans, net
|
17,208
|
|
18,050
|
Payment of taxes
related to the net share settlement of equity awards
|
(82,251)
|
|
(40,314)
|
Proceeds from
issuance of convertible senior notes, net of issuance
costs
|
780,180
|
|
335,601
|
Purchase of
convertible senior notes capped call
|
(97,200)
|
|
(39,227)
|
Repurchase of common
stock
|
(20,000)
|
|
(20,000)
|
Net cash provided by
financing activities
|
597,937
|
|
254,110
|
Net increase in cash,
cash equivalents and restricted cash
|
181,034
|
|
258,446
|
Cash, cash
equivalents and restricted cash, beginning of period
|
375,945
|
|
126,963
|
Cash, cash
equivalents and restricted cash, end of period
|
$
556,979
|
|
$
385,409
|
|
|
|
|
Supplemental cash
flow data:
|
|
|
|
Cash paid during the
period for:
|
|
|
|
Interest
|
$
431
|
|
$
37
|
Income
taxes
|
$
912
|
|
$
944
|
Cash paid for amounts
included in the measurement of lease liabilities:
|
|
|
|
Operating cash flows
from operating leases
|
$
2,325
|
|
$
-
|
Non-cash investing
activities:
|
|
|
|
Accrued purchases of
long-lived assets
|
$
5,170
|
|
$
5,337
|
|
|
|
|
|
June
30,
|
|
2019
|
|
2018
|
Reconciliation of
cash, cash equivalents and restricted cash:
|
|
|
|
Cash and cash
equivalents
|
$
555,792
|
|
$
384,926
|
Restricted cash
included in other current assets
|
121
|
|
-
|
Restricted cash
included in other assets
|
1,066
|
|
483
|
Total cash, cash
equivalents and restricted cash
|
$
556,979
|
|
$
385,409
|
CHEGG,
INC.
|
RECONCILIATION OF
NET LOSS TO EBITDA AND ADJUSTED EBITDA
|
(in
thousands)
|
(unaudited)
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net loss
|
$
(2,029)
|
|
$
(3,909)
|
|
$
(6,347)
|
|
$
(6,526)
|
Interest expense,
net
|
13,514
|
|
3,664
|
|
17,746
|
|
3,684
|
Provision for income
taxes
|
583
|
|
428
|
|
1,209
|
|
969
|
Depreciation and
amortization expense
|
7,149
|
|
5,448
|
|
13,934
|
|
10,665
|
EBITDA
|
19,217
|
|
5,631
|
|
26,542
|
|
8,792
|
Share-based
compensation expense
|
15,452
|
|
12,043
|
|
30,490
|
|
23,685
|
Other income,
net
|
(5,253)
|
|
(894)
|
|
(6,820)
|
|
(1,458)
|
Restructuring
charges
|
47
|
|
15
|
|
69
|
|
235
|
Acquisition-related
compensation costs
|
1,601
|
|
2,456
|
|
4,679
|
|
4,704
|
Adjusted
EBITDA
|
$
31,064
|
|
$
19,251
|
|
$
54,960
|
|
$
35,958
|
CHEGG,
INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(in thousands,
except percentages and per share amounts)
|
(unaudited)
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
revenues
|
$
93,862
|
|
$
74,222
|
|
$
191,271
|
|
$
151,171
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
66,529
|
|
$
57,149
|
|
$
141,630
|
|
$
116,494
|
Share-based
compensation expense
|
(15,378)
|
|
(11,940)
|
|
(30,291)
|
|
(23,488)
|
Amortization of
intangible assets
|
(1,713)
|
|
(1,446)
|
|
(3,503)
|
|
(2,863)
|
Restructuring
charges
|
(47)
|
|
(15)
|
|
(69)
|
|
(235)
|
Acquisition-related
compensation costs
|
(1,601)
|
|
(2,456)
|
|
(4,679)
|
|
(4,704)
|
Non-GAAP operating
expenses
|
$
47,790
|
|
$
41,292
|
|
$
103,088
|
|
$
85,204
|
|
|
|
|
|
|
|
|
Operating expenses as
a percent of net revenues
|
70.9%
|
|
77.0%
|
|
74.0%
|
|
77.1%
|
Non-GAAP operating
expenses as a percent of net revenues
|
50.9%
|
|
55.6%
|
|
53.9%
|
|
56.4%
|
|
|
|
|
|
|
|
|
Loss from
operations
|
$
6,815
|
|
$
(711)
|
|
$
5,788
|
|
$
(3,331)
|
Share-based
compensation expense
|
15,452
|
|
12,043
|
|
30,490
|
|
23,685
|
Amortization of
intangible assets
|
1,713
|
|
1,446
|
|
3,503
|
|
2,863
|
Restructuring
charges
|
47
|
|
15
|
|
69
|
|
235
|
Acquisition-related
compensation costs
|
1,601
|
|
2,456
|
|
4,679
|
|
4,704
|
Non-GAAP income from
operations
|
$
25,628
|
|
$
15,249
|
|
$
44,529
|
|
$
28,156
|
|
|
|
|
|
|
|
|
Net loss
|
$
(2,029)
|
|
$
(3,909)
|
|
$
(6,347)
|
|
$
(6,526)
|
Share-based
compensation expense
|
15,452
|
|
12,043
|
|
30,490
|
|
23,685
|
Amortization of
intangible assets
|
1,713
|
|
1,446
|
|
3,503
|
|
2,863
|
Restructuring
charges
|
47
|
|
15
|
|
69
|
|
235
|
Acquisition-related
compensation costs
|
1,601
|
|
2,456
|
|
4,679
|
|
4,704
|
Amortization of debt
discount and issuance costs
|
13,020
|
|
3,421
|
|
17,025
|
|
3,421
|
Non-GAAP net
income
|
$
29,804
|
|
$
15,472
|
|
$
49,419
|
|
$
28,382
|
|
|
|
|
|
|
|
|
Weighted average
shares used to compute net loss per share
|
118,790
|
|
112,738
|
|
117,766
|
|
111,826
|
Effect of shares for
stock plan activity
|
6,540
|
|
11,449
|
|
8,400
|
|
12,450
|
Effect of shares
related to convertible senior notes
|
3,646
|
|
—
|
|
3,494
|
|
—
|
Non-GAAP weighted
average shares used to compute non-GAAP net income per
share
|
128,976
|
|
124,187
|
|
129,660
|
|
124,276
|
|
|
|
|
|
|
|
|
Net loss per
share
|
$
(0.02)
|
|
$
(0.03)
|
|
$
(0.05)
|
|
$
(0.06)
|
Adjustments
|
0.25
|
|
0.15
|
|
0.43
|
|
0.29
|
Non-GAAP net income
per share
|
$
0.23
|
|
$
0.12
|
|
$
0.38
|
|
$
0.23
|
CHEGG,
INC.
|
RECONCILIATION OF
FORWARD-LOOKING NET LOSS TO EBITDA AND ADJUSTED
EBITDA
|
(in
thousands)
|
(unaudited)
|
|
Three Months
Ending
September 30, 2019
|
|
Year Ending
December 31, 2019
|
Net loss
|
$
(18,600)
|
|
$
(12,500)
|
Interest expense,
net
|
13,600
|
|
44,900
|
Provision for income
taxes
|
800
|
|
2,800
|
Depreciation and
amortization expense
|
7,800
|
|
30,000
|
EBITDA
|
3,600
|
|
65,200
|
Share-based
compensation expense
|
17,000
|
|
65,000
|
Other income,
net
|
(5,000)
|
|
(16,800)
|
Restructuring
charges
|
—
|
|
100
|
Acquisition-related
compensation costs
|
2,400
|
|
7,500
|
Donation from Chegg
Foundation
|
1,500
|
|
1,500
|
Adjusted
EBITDA*
|
$
19,500
|
|
$
122,500
|
|
|
|
|
* Adjusted EBITDA
guidance for the three months ending September 30, 2019 and the
year ending December 31, 2019 represents the midpoint of the ranges
of $19 million to $20 million and $121 million to $124
million, respectively.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/chegg-reports-q2-2019-financial-results-and-raises-full-year-2019-guidance-300892506.html
SOURCE Chegg, Inc.