CHEGG, INC (CHGG) SPO
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|Company Name||CHEGG, INC|
|Company Address||3990 FREEDOM CIRCLE
SANTA CLARA, CA 95054
|Employees (as of 12/31/2016)||766|
|State of Inc||DE|
|Fiscal Year End||--|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||9/13/2017|
We estimate that our net proceeds from the common stock that we are selling in this offering will be approximately $128.3 million, or approximately $147.7 million if the underwriters exercise in full their option to purchase additional shares, based on the public offering price of $13.50 per share and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The principal purpose of this offering is to obtain additional capital. We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes, which may include acquisitions of businesses, technologies, or other assets. Pending other uses, we intend to invest the proceeds to us in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. We cannot predict whether the proceeds invested will yield a favorable return. Our management will have broad discretion in the application of the net proceeds we receive from this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds.
While we do not have any competitors that compete with us across our business in its entirety, we face significant competition in each aspect of our business, and we expect such competition to increase. The actual and potential competition in each of our primary areas of operations is described below. Products and Services for Students. Our Chegg Services face competition from different businesses depending on the offering. For Chegg Study, our competitors primarily include publishers that provide study materials and online instructional systems. Additionally, we face competition from free services such as Yahoo! Answers and Brain.ly for our Expert Answers service. For our Chegg Tutors services, we face competition from other online tutoring services such as Tutors.com and Varsity Tutors. For our writing tools, we primarily face competition from other citation generating services such as Noodle Tools. The market for textbooks and supplemental materials is intensely competitive and subject to rapid change. We face competition from college bookstores, some of which are operated by Follett and Barnes & Noble Education, online marketplaces such as Amazon.com and providers of eTextbooks such as Apple iTunes, and Blackboard, as well as various private textbook rental websites. Many students purchase from multiple textbook providers, are highly price sensitive and can easily shift spending from one provider or format to another. As a consequence, our Required Materials product line, which includes eTextbooks, competes primarily on price and further on selection and functionality and compatibility of our eTextbook Reader across a wide variety of desktop and mobile devices. Enrollment Marketing Services. With respect to our enrollment marketing services, we compete against traditional methods of student recruitment, including student data providers such as standardized test providers, radio, television and Internet advertising and print mail marketing programs. In this area, we compete primarily on the basis of the number of high-quality connections between prospective students and colleges we are able to provide as well as on price. We are able to create these connections by providing prospective students with an easy-to-use platform to input their academic information and aspirations, learn about colleges, locate scholarships and financial aid and facilitate and streamline the application process. Brands. With respect to brands, we compete with online and offline outlets that generate revenues from advertisers and marketers, especially those that target high school and college students. In this area, we seek to partner with brands that have offerings that will interest or delight students and have received very positive comments and feedback from students on these offerings. We provide these brands with preferential access to our audience, which we believe represents a highly engaged portion of the target demographic of our brand partners. We believe that we have competitive strengths, some of which are discussed above, that position us favorably in each aspect of our business. However, the education industry is evolving rapidly and is increasingly competitive. A variety of business models are being pursued or may be considered for the provision of print textbooks and eTextbooks, some of which may be more profitable or successful than our business model.
Chegg is the leading student-first connected learning platform. Our goal is to help students transition from high school to a career. As such, we are committed to improving student outcomes throughout this decade long journey. We help students study more effectively for college admissions exams,
find the right college to accomplish their goals, get better grades and test scores while in school, and find internships that allow them to gain valuable skills to help them enter the workforce after college. Our student platform offers products and services that help students transition from high school to college to career. We strive to improve the overall return on investment in education by helping students maximize their outcomes through more efficient and cost-effective solutions that bridge the gap between what formal institutions offer and students actually need. During 2016, nearly 6.5 million students turned to Chegg to help them save money and improve their outcomes. In 2016, over 1.5 million students subscribed to our Chegg Services, an increase of 47% year over year from 1.0 million students in 2015. These subscribers represent approximately 4% of the 36 million students enrolled in high school through college education, according to the National Center for Education and Statistics and the U.S. Census Bureau. Students subscribe to our digital products and services, which we collectively refer to as Chegg Services. These include Chegg Study, Chegg Tutors, Writing Tools (acquired in May 2016), Enrollment Marketing, Brand Partnership, Internships, and Test Prep, which, according to comScore, collectively bring 40 million annual unique visitors to our platform. Chegg Study service provides 6 million step-by-step Textbook Solutions and over 10 million answers, powered by our expert network, helping students with their course work. When students need additional help on a subject, they can reach a live tutor online, anytime, anywhere through Chegg Tutors. According to comScore, our Writing Tools, including EasyBib, Citation Machine, BibMe, CiteThisForMe, and NormasAPA, provide 30 million unique annual visitors with online citation, bibliography, and anti-plagiarism services. In 2016, we matched approximately 5.3 million domestic and international students with colleges in the United States to help them find the best fit school for them. As of December 31, 2016, we provided access to approximately 340,000 internships to help students gain skills and experiences that are critical to securing their first job. We provide high school students with an online adaptive test preparation service currently covering the ACT and SAT exams. Through our strategic partnership with Ingram Content Group, or Ingram, we offer Required Materials, which includes an extensive print textbook and eTextbook library for rent and sale, helping students save money compared to the cost of buying new. In 2016, students rented or bought over 5.7 million textbooks and eTextbooks from Chegg. To deliver services to students, we partner with a variety of third parties. We work with colleges to help shape their incoming classes. We source print textbooks, eTextbooks, and supplemental materials directly or indirectly from thousands of publishers in the United States, including Pearson, Cengage Learning, McGraw Hill, Wiley, and MacMillan. We have a large network of students and professionals who leverage our platform to tutor in their spare time and employers who leverage our platform to post their internships and jobs. In addition, because we have a large student user base, local and national brands partner with us to reach the college and high school demographics. --- We were incorporated in Delaware in July 2005. We launched our online print textbook rental business in 2007. We hired our current Chief Executive Officer in 2010, who implemented our current business strategy to create the leading student-first connected learning platform for students to help them improve their outcomes. Beginning in 2010, we made a series of strategic acquisitions to expand our Chegg Services, including Cramster in 2010 to add our Chegg Study service, InstaEDU in 2014 to add our Tutoring service, internships.com in 2014 to add to our Internship service, and Imagine Easy Solutions in 2016 to add a portfolio of online writing tools. Our principal executive offices are located at 3990 Freedom Circle, Santa Clara, California 95054 and our telephone number is (408) 855-5700. Our Internet address is www.chegg.com.
|Auditor||Ernst & Young LLP|
|Company Counsel||Fenwick & West LLP|
|Lead Underwriter||Allen & Company LLC|
|Lead Underwriter||BofA Merrill Lynch|
|Lead Underwriter||Morgan Stanley & Co. LLC|
|Underwriter||Barrington Research Associates, Inc|
|Underwriter||Northland Securities, Inc|
|Underwriter Counsel||Davis Polk & Wardwell LLP|
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