2020 Annual Report (PDF)

2020 ANNUAL REPORT Dear Chegg Stockholder, As we begin 2021, we’d like to thank you for continuing to believe in us and our student-first mission. In closing the chapter of 2020, we must recognize how incredibly unprecedented last year was. It was a complicated time for the world, for our country, and particularly for students who were navigating the pandemic, rising social issues, and school closings. And, although it was an unprecedented time for Chegg as well, we continued to live and breathe our mission by giving over one million dollars to local organizations, including food banks, who were rising to meet the increased need from students across the country. And, while we faced the same challenges that many others faced, we had to meet these challenges head on, never losing sight of putting students first because they need high-quality, educational support and in-demand skills now more than ever. For years, we’ve said that the transition to online education was the future and we’ve operated under this assumption, but we certainly didn’t know the catalyst would be the COVID-19 pandemic. We believe that this massive shift to learning online, accelerated by the pandemic, is an irreversible trend and is a better way to serve students. With increased access to digital learning and support, more learners can learn more subjects, on any device, anywhere and anytime, with incredibly high-quality content and tools. Whenever there is a major platform disruption, there are new leaders that redefine the category and, as the largest direct-to-student online learning platform, Chegg’s products and services are increasingly critical to students’ success. Our results reflect the growing importance of Chegg’s learning support services to millions of students around the world. This past year, we achieved annual subscriber growth of 67% year-over-year, representing over 6.6 million subscribers, and total revenue growth of 57% year-over-year, resulting in total revenue of $644 million. We enriched our content offering, investing in more international, local content and reaching more students across the globe, resulting in an incredible 1.3 billion content views. The trends towards online learning are progressing and students continue to show us, time and time again, just how much they value our products. We are proud of our results and we outperformed even our most enthusiastic expectations. 2020 also saw Chegg broadening its reach to more students by strengthening our mathematics offerings in acquiring Mathway. By offering more relevant content to more students, we are continuing to position ourselves as forward-thinking and student-focused and we can support student academic success in more ways. Additionally, we strengthened our Board of Directors by appointing Sarah Bond, Corporate Vice President of Gaming Ecosystem at Microsoft. Sarah’s knowledge of subscription-based services and passion for using technologies to build online communities makes her an excellent addition to our board. So, we’re very excited to have her experience and appreciation for our student-first mission on our board. The pandemic has also revealed the need of many to reskill for the modern workforce and this represents a tremendous opportunity for Chegg. Skills-based training and support is emerging as a very large category especially when you consider the number of people globally that need to be up-skilled and re- skilled for the current and future job market. The reality is, that the majority of college age students don’t get a college degree, and there is a real demand right now for students to find programs that are far less expensive, are more skills-based, and deliver a greater return on their investment. While we are still early in building out this part of our business, as we always look to serve the needs of young people, we expect to be a prominent player in skills-based learning and expect to expand our footprint in the space going forward. While we started last year with three main objectives – to deliver on financial goals, to continue investing in opportunities to support more students, and to invest in our infrastructure to take advantage of these opportunities – 2020 made us shift focus. Thankfully, as a software company, that was built from day one to scale online, we were able to meet the increased demand without missing a beat. However, as we continue thinking about the future of higher education, it is clear that the trends have truly accelerated what we have been talking about for years and will have a permanent impact. Like us, institutions all across the globe had to suddenly transition their workforce, and students, fully online. During this nearly immediate transition, it became clear that schools were underinvested in technology, online assessment, and digital support for students and we believe it’s only going to get more challenging in the years ahead, as the shift to hybrid and online learning will be permanent. As a leader in education, we take our role in this transition very seriously. That is why we invest millions of dollars every year building content, personalized learning experiences, and utilize technology systems to provide learning at scale. We will continue to find ways to support the millions of hardworking students and educators who use online resources to enhance their learning experience. That is our mission and it always has been. On behalf of the management team, and everyone at Chegg, I would like to thank you for your continued support, and for putting students first. Sincerely, Dan Rosensweig, President, Chief Executive Officer and Co-Chairperson of the Board of Directors Chegg, Inc. Forward-Looking Statements This letter 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 belief that the shift to online learnings is an irreversible trend and a better way to serve students; digital learnings allows more learners to learn more subjects; that Chegg’s products are increasingly critical to students’ success; that education trends will have a permanent impact; that there will be more challenges in the years ahead with the shift to hybrid and online learning becoming permanent; that Chegg will continue to find ways to support students and educations; Chegg’s expectation that it will continue to focus Chegg Study Pack; and Chegg’s opportunity to be a leader in the skills space. The words "anticipate," "believe," "expect," "will," and similar expressions, as they relate to Chegg, are intended to identify forward-looking statements. These statements are not guarantee of future performance and are based on management's expectations as of the date of this letter and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to differ materially from any future results, performance, or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: Chegg’s ability to attract new students, increase engagement and increase monetization; the ongoing uncertainty regarding the return of students to in-person classes and remote learning, and the effects of COVID-19 on college enrollment, 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, StudyBlue, Thinkful and Mathway; Chegg’s ability to strategically take advantage of new opportunities; 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 and investigations; the ability of our logistics partner to manage the fulfillment processes; Chegg’s ability to effectively control operating costs; changes in Chegg’s addressable market; regulatory changes, in particular concerning education, privacy and marketing; changes in the education market; and general economic, political and industry conditions, including the ongoing COVID-19 pandemic. All information provided in this release is as of the date hereof and Chegg undertakes no duty to update this information except as required by law. These and other important risk factors are described more fully in documents filed with the Securities and Exchange Commission, including Chegg's Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on February 22, 2021. [THIS PAGE INTENTIONALLY LEFT BLANK] Chegg, Inc. 2021 Proxy Statement [THIS PAGE INTENTIONALLY LEFT BLANK] FH?B 0E+KH/JE9A>EB:;HI 5EK7H;9EH:?7BBO?DL?J;:JE7JJ;D:J>;DDK7B);;J?D=E</JE9A>EB:;HIJ>;WDDK7B);;J?D=X E<>;== %D9 K;JEJ>;FK8B?9>;7BJ>?CF79JE<J>;+2% F7D:;C?97D:JEIKFFEHJJ>;>;7BJ>7D:M;BB 8;?D=E<EKH;CFBEO;;I

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