Edtech company Chegg acquired online coding school Thinkful this week, its first startup purchase of 2019. The price of the acquisition is $80 million, with potential additional payments of up to $20 million, making it the company’s largest deal to date, per Chegg.
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The Thinkful deal is intended to augment Chegg’s Learning Services, a division that offers courses to help students “accelerate their path from learning to earning,” according to Dan Rosensweig, the company’s CEO.
New York-based Thinkful branded itself as helping the “world’s next workforce.” It aims to help individuals learn to code online at their own pace, with the help of mentors, career coaches, and peer guides.
The company also has a somewhat quirky method of generating revenue. According to its website, “if you don’t find your new career within six months of graduating, you don’t pay a cent.” If you do get a job, you owe Thinkful about 15% of your income for 3 years, according to its website. Another option is the offer of a “job guarantee” at the end of the program for $16,000.
It appears to be a revenue model similar to what Lambda School is pursuing; The YC-backed company has raised $48.1 million in venture capital funding to date, and it is working to teach non-technical folks how to code. Contrasting slightly from Thinkful, Lambda School requires any coder that gets a job through the program to pay 17% of their income for 2 years, but only if they are making at least $50,000 a year, according to its website.
Thinkful was founded in 2012 by Darrell Silver and Daniel Friedman, and secured $16 million in venture-capital funding over its lifetime from investors like Owl Ventures, Floodgate, and RRE Ventures. It raised a $9.6 million Series A in January 2018.
Along with this deal, Santa Clara-based Chegg disclosed some growth numbers (which we always love) to give a forecast of what’s to come.
Chegg expects its calendar 2019 revenue, inclusive of Thinkful, to be around $400 million and $404 million. The edtech company expects its adjusted profit (adjusted EBITDA) to reach $121 million to $124 million over the same timeframe. Following this Thinkful deal, Chegg expects is revenue to rise by $2 million from prior guidance. Profit expectations are static.
One other note: Chegg Services (which encompasses many parts of the business) has 2.2 million subscribers, up 30 percent year-over-year. The unadjusted revenue of Chegg Learning ranges between $332 million to $334 million dollars for 2019.
Here’s what all these numbers tell us: while Thinkful won’t dramatically change Chegg’s revenue right off the bat, it’s joining a growing part of the company. And one that Chegg is obviously willing to bet at least $80 million on.
Illustration: Li-Anne Dias