Chegg Files to Raise as Much as $150 Million in IPOAri Levy
Chegg Inc., a provider of textbooks for rent and digital services for college students, filed to raise as much as $150 million in an initial public offering.
JPMorgan Chase & Co. is leading the sale, along with Bank of America Corp.’s Merrill Lynch unit, the Santa Clara, California-based company said today in a regulatory filing. Chegg intends to list on the New York Stock Exchange under the symbol CHGG.
Founded in 2005, Chegg gained popularity as a Netflix Inc.- style service for textbooks, a model that attracted scores of students yet has struggled to make a profit. Former Yahoo! Inc. executive Dan Rosensweig, 52, joined Chegg as chief executive officer in 2010 and shifted the company to digital products, acquiring startups focused on e-textbooks, online homework help and question-and-answer forums.
While revenue climbed 24 percent last year to $213.3 million, the company’s net loss widened to $49 million, as Chegg bolstered spending on sales and marketing as well as research and development. Chegg said in its prospectus that it does “not expect to be profitable in the near term” as it continues to invest in products to help students.
Chegg has raised almost $200 million in debt and equity from investors including Kleiner Perkins Caufield & Byers, Foundation Capital and Insight Venture Partners. In recent months, the company has added several new directors to the board, including Jeffrey Housenbold, CEO of Shutterfly Inc.; Marne Levine, a vice president at Facebook Inc.; and Jed York, CEO of the San Francisco 49ers football team.
Consumer-Web IPOs have been sparse since Facebook’s troubled offering in May 2012. RetailMeNot Inc., an online coupon provider, was the third U.S. consumer-focused technology company to go public since Facebook when it debuted last month, while more than a dozen business-software providers have sold shares.
Chegg originally filed its IPO under the Jumpstart Our Business Startups, or JOBS, Act, which lets emerging companies maintain confidentiality until three weeks before their roadshow.
Competition is picking up in Chegg’s market. Amazon.com Inc., Google Inc. and Apple Inc. all provide digital textbooks, and Barnes & Noble Inc. offers book rentals. Even with Chegg moving toward other forms of content, print textbooks accounted for 87 percent of its revenue in 2012.