Chegg, a start-up focused on textbook rental and academic services, said on Thursday that it hoped to raise up to $172.5 million in its initial public offering.
In an updated prospectus, the company said that it planned to price its stock sale at $9.50 to $11.50 a share. At the midpoint of the range, that would value Chegg at $906.2 million.
Should investor demand prove stronger than expected, the company’s underwriters can sell additional shares in what’s known as a greenshoe, pushing the offering’s potential proceeds up to $198.4 million.
With the disclosure of its price range, Chegg executives will begin a roadshow to pitch their offering, meeting with investors across the country.
While smaller than Twitter’s eagerly awaited stock sale, Chegg’s I.P.O. is expected to be one of the more closely watched among the technology community. Its chief executive, Dan Rosensweig, is a highly regarded former executive at Yahoo, and its backers include Kleiner Perkins Caufield & Byers, Insight Venture Partners and Pinnacle Ventures.
Formally founded in 2005, Chegg focuses primarily on renting textbooks for a semester at a time, with 180,000 titles in its catalog. But the company is building out its electronic services, which it sees as its future: It offers more than 100,000 electronic textbooks and has rolled out offerings like helping high school students find colleges and scholarships.
In the prospectus, the company said that it now reaches about 30 percent of all college students in the country and 40 percent of college-bound high school seniors.
Chegg said that it earned $22.7 million in adjusted earnings before interest, taxes, depreciation and amortization for the nine months ended Sept. 30, a metric that excludes certain costs like stock-based compensation. That’s up nearly fourfold from results in the period a year earlier.
Using generally accepted accounting principles, the company’s loss narrowed 12 percent, to $50.4 million.
During the first nine months of this year, Chegg’s net revenue rose 23 percent, to $178.5 million.
The offering is being led by JPMorgan Chase and Bank of America Merrill Lynch.
