Chegg, Inc.

Greetings. Welcome to Chegg, Inc. Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Tracy Ford, Vice President of Investment Relations for Chegg. You may begin.

Good afternoon. Good afternoon. Thank you for joining Chegg's fourth quarter 2020 conference call. On today's call are Dan Rosenzweig, co-chairperson and CEO, and Andy Brown, chief financial officer. A copy of our earnings press release, along with our investor presentation, is available at our investor relations website, investor.chegg.com. A replay of this call will also be available on our website. We routinely post information on our website and intend to make important announcements on our media center website at chegg.com slash media center. We encourage you to make use of these resources. Before we begin, I would like to point out that during the course of this call, we will make forward-looking statements regarding future events, including the future financial and operating performance of the company. These forward-looking statements are subject to material risks and uncertainties. that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important factors that could cause an actual result to differ materially from those in the forward-looking statements. In particular, we refer you to the cautionary language included in today's earnings release and the risk factors described in Chegg's quarterly report on Form 10-Q filed with the Securities and Exchange Commission on October 26, 2020. as well as our other filings with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release on investor slide deck found in our IR website, investor.cheg.com. We also recommend you review the investor data sheet, which is also posted in our IR website. Now I will turn the call over to Dan.

Thank you, Tracy, and welcome everyone to our 2020 Q4 earnings call. Last year was a complicated time for the world, for our country, and particularly for students who are navigating the pandemic rising social issues, and school closings. It was also an unprecedented time for CHEC as we transitioned 1,900 employees out of our offices and into a remote working environment overnight. It was a year in which we increased our community support, committing over $1 million to local organizations, including food banks, who are rising to meet the increased need from students across the country. Like many, we had to meet these challenges head on. but we never lost sight of putting students first, and we are proud of our results and that we outperformed even our most enthusiastic expectations. It has always been our operating assumption that the transition to online learning was inevitable, but we certainly didn't know the catalyst would be COVID-19. We believe this massive shift to learning online, accelerated by the pandemic, is an irreversible trend and is actually more student-centric. 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 student success. Our results reflect the growing importance of Chegg's learning support services to millions of students around the world. In 2020, we saw year-over-year annual subscriber growth of 67%, representing over 6.6 million subscribers, and total revenue growth of 57%. The trends towards online learning are continuing, and as a result, it gives us the competence to raise our guidance in 2021. which Andy will walk you through in more detail shortly. At the start of last year, we laid out our key objectives with no idea that a global pandemic was about to hit and the dramatic impact it would have on our employees, students, our business, and the entire world. We entered 2020 with three core priorities. To deliver on our financial goals and to continue to provide services that create overwhelming value for academic and professional learners. Second, to continue investing in opportunities that leverage the strength of our brand, reach, customer base, and provide opportunities for meaningful growth in future years. And third, to continue to invest in content and our technical infrastructure to allow us to take advantage of those opportunities, not only faster, but also at greater global scale. But within the first quarter, the world changed. Thankfully, as a software company that was built to scale online, we were able to meet the increased demand without missing a beat. However, the massive shift to online learning around the world did prompt us to reprioritize and accelerate efforts that weren't on our roadmap at the start of the year, including our global e-commerce infrastructure, new and expanded international content, and our account sharing initiatives. We believe that our decision to expand our areas of focus in 2020 has set us up for continued strong growth in 2021 and beyond. As we think about the future of higher education, it is clear that the trends have accelerated what we have been talking about for years and will have a permanent impact on the future of education. This last year has reaffirmed that platform companies that serve the needs of their primary constituents that own their customer, the data, the channel of distribution, and the content will outperform their peer groups and disproportionately benefit their customers and shareholders. The pandemic has also revealed that there are two economies, the service economy, which was dramatically impacted by COVID-19 as 25 million people lost their jobs, and the technology economy, which saw dramatic gains. It is clear that the need to reskill for the modern workforce is here, and this represents a tremendous opportunity for CHECK. 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 upskilled and reskilled for the current job market. The reality is that the majority of college-age students don't get a college degree, and there's 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 investments. While we are still early in building out this part of our business, we expect to be a prominent player in skills-based learning and expect to expand our footprint in the space going forward. This is a highly disruptive moment in higher education's history, and it has been anything but smooth. As institutions had to make the transition to virtual learning overnight, it became clear that schools were under-invested 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. We also believe that higher education must acknowledge that the Internet is here and is a permanent part of learning. As a result, educators must reimagine how they teach, what the curriculum needs to be, how students are assessed and how best to support them. And if that doesn't happen, ultimately, it is the students that will suffer. 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 technology systems to support learning at scale. As part of our responsibility, we are also working with institutions as they make this transition, including introducing new technology and tools that limit students' ability to use Chegg during designated exam periods. We accelerated our efforts in this area due to the pandemic and recently launched Honor Shield, a free tool available to institutions and professors. And we will continue to find ways to support the millions of hardworking students and educators who use online resources to enhance their learning experience. In fact, in a blind study of students who use Chegg for more than two months, they found that 90% reported that Chegg study helps them better understand their schoolwork. As we enter 2021, we have expanded our priorities to include an increased investment in international growth, as for the first time, we anticipate over more than a million subscribers outside the U.S. Because of its popularity, we will continue to invest in the Chegg Study Pack by expanding our offerings to create even more overwhelming value for students. And we are significantly increasing investments in our skills offering, as we believe there will be a lot of activity in this industry and see a huge opportunity to be a significant player and a leader in this space. We have important and ambitious priorities this year. And despite the ongoing pandemic, I have never been more confident about the opportunities ahead of us. And with that, I will turn it over to Andy. Andy?