- Chegg Inc (NYSE: CHGG) recently announced it has acquired math solver Mathway. These are the details about the deal.
Chegg Inc (NYSE: CHGG) recently announced it has acquired math solver Mathway. Currently, Mathway has subscribers in approximately 100 countries and it has been localized in 13 languages.
Math deficiency is known to be a large-scale issue that is pervasive in education and workforce preparedness. And in the latest OECD rankings, the US ranked 37th of developed countries in terms of math proficiency.
“Math proficiency is a foundational and critical pillar of learning around the world,” said Nathan Schultz, President of Learning Services at Chegg. “The modern student understands that the mastery of math is more important than ever, and Mathway has built an incredible product that students love. Bringing Mathway into the Chegg family will bring additional subject coverage, languages, and international reach, significantly expanding our TAM.”
Mathway — which was founded in 2002 by middle school friends Frank Balcavage and Jake Kuehner — has become one of the most popular education mobile apps. Mathway teaches students with an easy-to-use solver which can be accessed through optical character recognition and offers step‑by‑step instruction to teach both simple and complex mathematics.
“In Mathway we set out to build a math solver that could work directly with a range of students to help them master all forms of math, and meet them at their level,” added Balcavage.
Mathway offers access to a vast range of subject areas with more than 400 different topics, including pre-algebra, algebra, trigonometry, pre-calculus, calculus, and linear algebra, and related disciplines. And in 2019, Mathway solved more than 1.3 billion problems for learners.
Mathway is currently used across the academic spectrum for both learning and instruction — which is approximately half of its users are in high school while 1 in 10 are teachers, professors, or parents. And Mathway’s ‘Ask an Expert – Live’ feature allows those still struggling with a concept to get immediate help.
“Chegg shares our direct‑to‑the‑student, always available, step‑by‑step instruction model. By joining them we believe we will quickly be able to scale to help millions of students at a time when math is increasingly important,” explained Kuehner.
Chegg had acquired Mathway for approximately $100 million in an all-cash transaction. And there are potential additional payments of up to $15 million payable in cash over the next three years that remain subject to performance and other contingencies.
Mathway’s 2019 unaudited net revenue was approximately $13 million. And Chegg expects the Q2 2020 revenue contribution of Mathway — after the effect of the fair-value adjustment through purchase accounting to deferred revenue — to be approximately $0.5 million and an adjusted EBITDA loss of approximately $0.5 million.