Chegg, Inc. (‘Chegg’) provides individualized learning support to students.
Available on demand 24/7 and powered by over a decade of learning insights, the Chegg platform offers students artificial intelligence (‘AI’)-powered academic support thoughtfully designed for education, coupled with access to a vast network of subject matter experts who help ensure quality and accuracy.
The company’s long-term strategy is centered upon its ability to utilize its Subscription Services to increase stude...
Chegg, Inc. (‘Chegg’) provides individualized learning support to students.
Available on demand 24/7 and powered by over a decade of learning insights, the Chegg platform offers students artificial intelligence (‘AI’)-powered academic support thoughtfully designed for education, coupled with access to a vast network of subject matter experts who help ensure quality and accuracy.
The company’s long-term strategy is centered upon its ability to utilize its Subscription Services to increase student engagement with its learning platform. It continues to invest in the expansion of its offerings and technology platform to provide a more compelling and personalized solution, and deepen engagement with students. The company continues to integrate artificial intelligence into its platform, and it is conversational, more instructional, and interactive. It remains focused on providing a holistic and differentiated product offering that supports the whole student with 360 degrees of individualized academic and functional support, including the delivery of content.
The company’s service and product offerings fall into two categories: Subscription Services, which encompass its Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings that can be accessed internationally through its websites and on mobile devices, and Skills and Other, which encompass its Chegg Skills, advertising services, print textbooks, and eTextbooks offerings. In 2024, 6.6 million students subscribed to its Subscription Services.
Subscription Services
Chegg Study: Chegg Study subscribers have access to personalized, step-by-step learning support powered by AI, computational engines, and subject matter experts. Subscribers engage with its conversational experience that delivers the right support, at the right time. Chegg Study also includes a collection of free perks where available, including services students care about in and out of the classroom, such as Tinder Gold, DashPass Student, and Max.
Chegg Study Pack: Chegg Study Pack is a premium subscription bundle that includes all of the benefits of Chegg Study, as well as Chegg Writing and Chegg Math.
Chegg Writing: The company’s Chegg Writing subscription service consists of a suite of essential tools, including plagiarism detection scans, grammar and writing fluency checking, expert personalized writing feedback, and premium citation generation. Chegg Writing also includes the popular website properties EasyBib, Citation Machine, BibMe, and CiteThisForMe.
Chegg Math: The company’s Chegg Math subscription service provides students with a computational engine to help them understand and solve math problems. They can work through difficult math problems with the help of a step-by-step math problem solver and calculator for instant guided instructional explanations that break things down in a range of math topics.
Busuu: Subscribers to Busuu have access to a premium language learning platform that offers comprehensive support through self-paced lessons, live classes with expert tutors, and a huge community of members to practice alongside. A team of experts has developed an online learning instruction to bring students from novice to advanced speakers in a fast-paced, enjoyable environment. The Busuu offering offers comprehensive courses, taught by qualified teachers in 14 languages.
Skills and Other
Chegg Skills: Chegg Skills seeks to ensure that companies have the right talent, with the right skills, at the right time, by aligning employer needs with learner outcomes. The company offers programs designed to train learners on the latest technical skills, such as AI, coding, data analytics, and cybersecurity. Its programs are available through partners that connect employers with top learning providers, and directly to large employers.
Advertising Services: The company works with brands and programmatic partners to deliver advertising across its platforms.
Other: The company provides other educational offerings to help students with their coursework.
Technology and Platform Integration
Technology is at the core of the company’s learning platform. It leverages the latest in distributed systems, machine learning, data analytics, and generative AI to increase efficiency and scale in its business. The key elements of its technology platform are:
AI
The company’s technology, which includes computational engines, machine learning, decision tools, and proprietary generative AI capabilities, allows it to build a personalized learning assistant without compromising quality and safety. It has built large language models, and is leveraging frontier models, specific to academic subjects and use cases that cater to learner needs. The company is building an AI Arena, whereby it will automatically update to newer models as they are released and tested to improve solution accuracy and speed. Its AI capabilities allow it to leverage its data and expertise to optimize the learning experience effectively and efficiently.
Proprietary Data
The company has over a hundred million pieces of proprietary learning content powering its personalized learning assistant. It is leveraging this data for its large language models and has built proprietary algorithms to optimize the quality and accuracy of its content. Its unique dataset enables personalized learning and powers new capabilities to enhance the learning experience.
Personalization
As learners engage with the company’s platform, the conversational experience generates valuable data. It combines this data with other public information about learners and their schools to tailor its offerings and predict student needs.
Search
Search is a very efficient platform for Chegg, as learners increasingly turn online for academic support. The company’s business model benefits from more students asking more questions, as it indexes those questions into search and other platforms, to drive even more customers.
Shared Infrastructure
The company leverages shared infrastructure to allow it to efficiently build products across its learning platform. This infrastructure resides at major cloud-hosting providers globally. Its architecture consists primarily of front-end applications, backend services, operational databases, and reporting subsystems. It uses industry-standard logging and monitoring tools to ensure uptime. The architecture is also designed to allow for expansion into new international markets.
Information Security
The company’s learning platform includes encryption, antivirus, firewall, intrusion prevention, and patch-management technologies to help protect its systems distributed across cloud-hosting providers and its offices. Its existing products and services undergo periodic security assessments. New features are developed according to its secure software development lifecycle process. The company also monitors for anomalies relating to authentication, data transfers, system, and user behavior, as well as cloud configuration changes.
Programmatic Advertising
The company’s programmatic advertising technology includes a combination of a deep understanding of programmatic purchasing trends with data analytics, engineering, and machine learning. The result is an online advertising platform that continuously maximizes the value of the digital impressions it serves.
Sales and Marketing
Students
The company’s direct-to-consumer marketing strategy focuses on brand and performance marketing. It uses brand marketing and performance marketing to increase awareness of the Chegg brand and its services, and drive traffic to its site. The company utilizes several major direct marketing channels to reach students, including social media. The strength of its content flywheel drives significant organic traffic to Chegg, and it has a full funnel approach to building brand awareness and consideration. Its lifecycle marketing focuses on increasing activation, engagement, and retention. The company utilizes three types of customer relationship management campaigns: onboarding programs to drive activation and retention, personalized cross-sell campaigns to deepen engagement, and promotional campaigns to drive sales and interests.
Student Advocacy
The company is committed to providing a high level of customer service to its students and to fulfilling its brand promise of putting students first. It trusts its students, understands the critical role its products and services have in their learning journey, and strives to resolve all problems quickly and thoroughly. The company also proactively monitors social media to identify and solve problems before it is otherwise informed of their existence. It endeavours to respond to students’ concerns within five minutes.
Competition
For Chegg Study, the company’s competitors primarily include platforms that provide study materials and online instructional systems, such as Course Hero, Quizlet, Khan Academy, and Brainly. For Chegg Writing, it primarily faces competition from other citation generating and grammar and plagiarism services, such as Grammarly. For Chegg Math, it faces competition from other equation solver services, such as Photomath, Gauthmath, and Symbolab. For Busuu, its competitors primarily include language learning platforms, such as Duolingo and Babbel. For Skills, it faces competition from other online learning platforms and online ‘skills accelerator’ courses both in the direct-to-consumer category, including General Assembly, Galvanize, Inc., Flatiron School, Codecademy, DataCamp, and Lambda, Inc., as well as white-label and co-branded providers who compete for adult learners through third-party institutions, including 2U, Inc., Simplilearn, and Kenzie Academy.
Intellectual Property
The company owns the registered U.S. trademarks Chegg, Chegg.com, Chegg Study, EasyBib, the Chegg ‘C’ logo, and Busuu, among others, as well as a variety of service marks.
Government Regulation
Numerous laws and regulatory schemes have been adopted at the national and state level in the United States, and internationally, that have a direct impact on the company’s business and operations. For example:
The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM) establishes requirements for sending commercial email and requires commercial email senders to honor consumers’ requests to not receive email. Violators of CAN-SPAM are subject to both civil and potentially criminal penalties. The U.S. Federal Trade Commission (FTC) has guidelines that impose responsibilities on the company with respect to communications with consumers, and impose fines and liability for failure to comply with rules with respect to advertising or marketing practices.
The Telephone Consumer Protection Act of 1991 (TCPA) restricts telemarketing and the use of automated telephone dialing systems. The TCPA regulates the use of artificial or prerecorded voice messages, fax messages, and the use of automatic dialing systems for both voice calls and sending text messages. Additionally, a number of states have enacted statutes that address telemarketing. For example, some states, such as Colorado, Florida, Indiana, Louisiana, Massachusetts, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee, Texas, and Wyoming, still have do-not-call lists.
The Credit Card Accountability Responsibility and Disclosure Act of 2009, or CARD Act, and similar laws and regulations adopted by a number of states regulate credit card and gift certificate use fairness, including expiration dates and fees. The company’s business also requires that it comply with payment card industry data security and other standards.
The Family Educational Rights and Privacy Act (FERPA) protects the privacy of student records and gives students (and their parents in the case of minors) certain rights (such as data correction and data production) with respect to their student records. FERPA restricts the circumstances in which the company can disclose student records. In addition, many states have passed student privacy laws, some of which are more restrictive than FERPA, and therefore do not preempt FERPA.
California’s Privacy Rights for California Minors in the Digital World Act (Eraser Bill) permits minors to remove or request and obtain removal of content or information posted on the company’s services. The Eraser Bill also has special requirements for marketing and advertising certain products based on personal information specific to a minor, or knowingly using, disclosing, or compiling or allowing a third party to do so.
The Nevada Online Privacy Law, which went into effect on October 1, 2021, provides Nevada residents with the right to know the company’s data practices and the right to opt-out of the sale of certain ‘covered information.’
The General Data Protection Regulation (GDPR), which went into effect in May 2018, gives European Union (EU) residents, among other things, the right to know what personal data the company collects from them, how it is used, and the right to access, correct, delete, and opt out of the sale of their personal information to third parties. The company is also required to obtain consent from consumers in certain circumstances and adhere to certain data transfer mechanisms to transfer EU personal data to certain other jurisdictions.
The United Kingdom’s Data Protection Act 2018 (Data Protection Act) and UK General Data Protection Regulation (‘UK GDPR’) apply to the company’s activities in the United Kingdom.
Human Dignity and Liberty, 5752 1992 (IBL HDL), the Protection of Privacy Law, 5741-1981, and the regulations promulgated thereunder (collectively, the PPL), and the guidelines of the Israel Privacy Authority (IPA Guidelines) apply to the company’s activities in Israel. The PPL gives Israeli residents, among other things, the right to know what personal data the company collects from them, how it is used, and the right to access, correct, and erase their personal information to third parties.
Seasonality
Revenues from Subscription Services are primarily recognized ratably over the subscription term, which has generally resulted in the company’s highest revenues and profitability in the fourth quarter (year ended December 31, 2024), as it reflects more days of the academic year.
History
Chegg, Inc. was founded in 2005. The company was incorporated as a Delaware corporation in 2005.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
