chgg-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 001-36180

CHEGG, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-3237489
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3990 Freedom Circle

Santa Clara, CA, 95054

(Address of principal executive offices)

(408) 855-5700

(Registrant’s telephone number, including area code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	CHGG	The New York Stock Exchange

•Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

•Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

•Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

•If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

•Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

•As of April 24, 2023, the Registrant had 119,716,256 outstanding shares of Common Stock.

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TABLE OF CONTENTS

Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited):

Condensed Consolidated Balance Sheets - March 31, 2023 and December 31, 2022

Condensed Consolidated Statements of Operations - for the Three Months Ended March 31, 2023 and 2022

Condensed Consolidated Statements of Comprehensive Income (Loss) - for the Three Months Ended March 31, 2023 and 2022

Condensed Consolidated Statements of Stockholder's Equity - for the Three Months Ended March 31, 2023 and 2022

Condensed Consolidated Statements of Cash Flows - for the Three Months Ended March 31, 2023 and 2022

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

Unless the context requires otherwise, the words “we,” “us,” “our,” “Company” and “Chegg” refer to Chegg, Inc. and its subsidiaries taken as a whole.

Chegg, Chegg.com, Chegg Study, EasyBib, the Chegg “C” logo, Busuu and Thinkful are some of our trademarks used in this Quarterly Report on Form 10-Q. Solely for convenience, our trademarks, trade names and service marks referred to in this Quarterly Report on Form 10-Q appear without the ®, ™ and SM symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and trade names. Other trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

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NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations and results of operations are forward-looking statements. The words “believe,” “may,” “will,” “would,” “could,” “estimate,” “continue,” “anticipate,” “intend,” “project,” “endeavor,” “expect,” “plan to,” “if,” “future,” “likely,” “potentially,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect.

Our forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CHEGG, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for number of shares and par value)

(unaudited)


	March 31, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	281,302	$	473,677
Short-term investments	277,864		583,973
Accounts receivable, net of allowance of $344 and $394 at March 31, 2023 and December 31, 2022, respectively	22,000		23,515
Prepaid expenses	25,486		28,481
Other current assets	30,832		34,754
Total current assets	637,484		1,144,400
Long-term investments	613,863		216,233
Property and equipment, net	201,305		204,383
Goodwill	622,679		615,093
Intangible assets, net	73,086		78,333
Right of use assets	29,770		18,838
Deferred tax assets	163,776		167,524
Other assets	19,824		20,612
Total assets	$	2,361,787	$	2,465,416
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	13,058	$	12,367
Deferred revenue	58,568		56,273
Accrued liabilities	68,026		70,234
Total current liabilities	139,652		138,874
Long-term liabilities
Convertible senior notes, net	1,189,650		1,188,593
Long-term operating lease liabilities	23,064		13,375
Other long-term liabilities	2,662		7,985
Total long-term liabilities	1,215,376		1,209,953
Total liabilities	1,355,028		1,348,827
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $0.001 par value per share: 400,000,000 shares authorized; 119,628,297 and 126,473,827 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	120		126
Additional paid-in capital	1,120,344		1,244,504
Accumulated other comprehensive loss	(45,338)		(57,488)
Accumulated deficit	(68,367)		(70,553)
Total stockholders' equity	1,006,759		1,116,589
Total liabilities and stockholders' equity	$	2,361,787	$	2,465,416

See Notes to Condensed Consolidated Financial Statements.

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CHEGG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Net revenues	$	187,601	$	202,244
Cost of revenues	49,150		55,085
Gross profit	138,451		147,159
Operating expenses:
Research and development	46,907		52,415
Sales and marketing	37,017		42,498
General and administrative	58,973		46,870
Total operating expenses	142,897		141,783
(Loss) income from operations	(4,446)		5,376
Interest expense, net and other income, net:
Interest expense, net	(1,268)		(1,597)
Other income, net	12,076		6,180
Total interest expense, net and other income, net	10,808		4,583
Income before provision for income taxes	6,362		9,959
Provision for income taxes	(4,176)		(4,217)
Net income	$	2,186	$	5,742
Net income per share
Basic	$	0.02	$	0.04
Diluted	$	0.02	$	0.04
Weighted average shares used to compute net income per share
Basic	123,710		132,162
Diluted	124,304		133,270

See Notes to Condensed Consolidated Financial Statements.

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CHEGG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Net income	$	2,186	$	5,742
Other comprehensive income (loss)
Change in net unrealized gain (loss) on investments, net of tax	3,812		(12,917)
Change in foreign currency translation adjustments, net of tax	8,338		(18,671)
Other comprehensive income (loss)	12,150		(31,588)
Total comprehensive income (loss)	$	14,336	$	(25,846)

See Notes to Condensed Consolidated Financial Statements.

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CHEGG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)


	Three Months Ended March 31, 2023
	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balances at December 31, 2022	126,474	$	126	$	1,244,504	$	(57,488)	$	(70,553)	$	1,116,589
Repurchases of common stock	(7,600)	(7)		(151,304)		—		—		(151,311)
Issuance of common stock upon exercise of stock options	18	—		144		—		—		144
Net share settlement of equity awards	736	1		(7,736)		—		—		(7,735)
Share-based compensation expense	—	—		34,736		—		—		34,736
Other comprehensive income	—	—		—		12,150		—		12,150
Net income	—	—		—		—		2,186		2,186
Balances at March 31, 2023	119,628	$	120	$	1,120,344	$	(45,338)	$	(68,367)	$	1,006,759


	Three Months Ended March 31, 2022
	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balances at December 31, 2021	136,952	$	137	$	1,449,305	$	(5,334)	$	(337,191)	$	1,106,917
Repurchases of common stock	(10,725)	(11)		(300,439)		—		—		(300,450)


Issuance of common stock upon exercise of stock options	54	—		455		—		—		455
Net share settlement of equity awards	401	1		(7,467)		—		—		(7,466)
Share-based compensation expense	—	—		34,911		—		—		34,911
Other comprehensive loss	—	—		—		(31,588)		—		(31,588)
Net income	—	—		—		—		5,742		5,742
Balances at March 31, 2022	126,682	$	127	$	1,176,765	$	(36,922)	$	(331,449)	$	808,521

See Notes to Condensed Consolidated Financial Statements.

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CHEGG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities
Net income	$	2,186	$	5,742
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	33,746		33,084
Other depreciation and amortization expense	25,543		20,285
Deferred income taxes	3,441		(746)
Operating lease expense, net of accretion	1,496		1,640
Amortization of debt issuance costs

SEC Form 10-Q filed by Chegg Inc.