Chegg 2015 Annual Report Download - page 85

Table of Contents
46
Year Ended December 31, 2015, 2014 and 2013
Net Revenues
Net revenues in the year ended December 31, 2015 decreased $3.5 million, or 1%, compared to the same period in 2014.
Rental revenues decreased $61.2 million or 34%, while services revenues increased $44.5 million, or 51%, and sales revenues
increased $13.2 million, or 37%.
Net revenues in the year ended December 31, 2014 increased $49.3 million, or 19%, compared to the same period
in 2013. Rental revenues decreased $7.4 million or 4%, while services revenues increased $35.5 million, or 68%, and sales
revenues increased $21.2 million, or 145%.
The decrease in rental revenues during the years ended December 31, 2015 and 2014 was due to our strategic
partnership with Ingram, which commenced in July 2014. As a result of our strategic partnership, our rental revenues are
increasingly classified as services revenues to represent the commission on the total revenues that we earn from Ingram upon
their fulfillment of a rental transaction using books for which Ingram has title and risk of loss rather than recognizing rental
revenues from transactions using our print textbooks. The increase in services and sales revenues during the years ended
December 31, 2015 and 2014 was driven primarily from growth across our other offerings for students which included
increased revenues from Chegg Study, eTextbooks, and our various acquisitions in 2014 as well as an increase in the
commissions earned from Ingram.
The following table sets forth our net revenues for the periods shown for our Required Materials and Chegg Services
product lines (dollars in thousands):
Year Ended
December 31, Change in 2015 Change in 2014
2015 2014 2013 $ % $ %
Required Materials . . . . . . . . . . . . . . . $ 207,088 $ 236,717 $ 213,746 $ (29,629) (13)% 22,971 11%
Chegg Services . . . . . . . . . . . . . . . . . . 94,285 68,117 41,829 26,168 38 26,288 63
Total net revenues. . . . . . . . . . . . . . . . $ 301,373 $ 304,834 $ 255,575 $ (3,461) (1)% $ 49,259 19%
Required Materials revenues decreased $29.6 million, or 13%, in the year ended December 31, 2015 compared to the
same period in 2014 primarily due to our partnership with Ingram. Because our Required Materials revenues are increasingly
comprised of a commission earned from Ingram rather than the full revenues from a print textbook rental transaction, we
expect this to continue to decrease throughout 2016 as we transition investments in the print textbook library and logistics and
fulfillment for print textbook rental orders to Ingram. Required Materials revenues represented 69% and 78% of net revenues
during the years ended December 31, 2015 and 2014, respectively. Chegg Services revenues increased $26.2 million, or 38%,
in the year ended December 31, 2015, compared to the same period in 2014 due to growth in new memberships for our Chegg
Study service. Chegg Services represented 31% and 22% of net revenues during the years ended December 31, 2015 and 2014,
respectively.
Net revenues in the year ended December 31, 2014 increased $49.3 million, or 19%, compared to the same period
during 2013. Of this increase, Required Materials revenues increased $23.0 million or 11%, while, Chegg Services revenues
increased $26.3 million, or 63%, compared to the same period in 2013. The increase in Required Materials revenues is
primarily due to an increase in just in time sales during our peak rush period and an increase in eTextbook volumes with an
offsetting decrease in rental revenues in the period as compared to 2013. The increase in Chegg Services revenues were due
primarily from growth in new memberships of our Chegg Study service, growth in our enrollment marketing services and
revenues from acquisitions completed in 2014.