Chegg 2014 Annual Report Download - page 81

Table of Contents
43
Results of Operations
The following table summarizes our historical consolidated statements of operations (in thousands, except percentage
of revenue):
Year Ended December 31,
2014 2013 2012
Net revenues
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 181,570 60% $ 189,004 74% $ 177,410 83%
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,460 29 51,958 20 28,074 13
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,804 11 14,613 6 7,850 4
Total net revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304,834 100 255,575 100 213,334 100
Cost of revenues
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,760 48 140,033 55 124,013 58
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,158 10 18,522 7 10,836 5
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,067 11 16,505 6 10,820 5
Total cost of revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,985 69 175,060 68 145,669 68
Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,849 31 80,515 32 67,665 32
Operating expenses(1):
Technology and development . . . . . . . . . . . . . . . . . . . . . 49,386 16 41,944 16 39,315 18
Sales and marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,315 24 50,302 20 51,082 24
General and administrative . . . . . . . . . . . . . . . . . . . . . . . 41,837 14 40,486 16 25,117 12
Gain on liquidation of textbooks . . . . . . . . . . . . . . . . . . . (4,555) (2) (1,186) — (2,594) (1)
Total operating expenses. . . . . . . . . . . . . . . . . . . . . . 158,983 52 131,546 52 112,920 53
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65,134) (21) (51,031) (20) (45,255) (21)
Interest and other income (expense), net . . . . . . . . . . . . . . . 562 — (4,177) (2) (3,759) (2)
Loss before provision for income taxes . . . . . . . . . . . . . . . . (64,572) (21) (55,208) (22) (49,014) (23)
Provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . . 186 — 642 — 29 —
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (64,758) (21)% $ (55,850) (22)% $ (49,043) (23)%
(1) Includes share-based compensation expense as follows:
Cost of revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 617 $ 1,185 $ 542
Technology and development . . . . . . . . . . . . . . . . . . . . . . . . . . 10,451 9,414 7,657
Sales and marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,300 7,107 5,164
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,520 19,252 4,682
Total share-based compensation expense. . . . . . . . . . . . . . . $ 36,888 $ 36,958 $ 18,045
Year Ended December 31, 2014, 2013 and 2012
Net Revenues
Net revenues in the year ended December 31, 2014 increased $49.3 million, or 19%, compared to the same period
during 2013. Rental revenue decreased $7.4 million or 4%, while service revenue increased $35.5 million, or 68%, and sale
revenue increased $21.2 million, or 145%. The rental decrease in 2014 as compared to 2013 was due to our partnership with
Ingram, whereby our revenue is comprised of the commission earned from Ingram related to the fulfillment of rental books
owned by Ingram in the current period, and the increase in service and sales revenue in 2014 as compared to 2013 was driven
primarily from growth across our digital offerings for students which included revenue from our acquisitions in 2014.