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 ~~June~~September 30, 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 ~~July 31,~~October 23, 2023, the Registrant had ~~115,321,288~~115,814,932 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 - ~~June~~September 30, 2023 and December 31, 2022

Condensed Consolidated Statements of Operations - for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

Condensed Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ - for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

Condensed Consolidated Statements of Stockholder's Equity - for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

Condensed Consolidated Statements of Cash Flows - for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

Notes to Condensed Consolidated Financial Statements

Item 2.

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

2223

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

3132

Item 4.

Controls and Procedures

3132

PART II - OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

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)


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	175,368	$	473,677	Cash and cash equivalents	$	94,419	$	473,677
Short-term investments	Short-term investments	209,686		583,973		Short-term investments	166,841		583,973
Accounts receivable, net of allowance of $224 and $394 at June 30, 2023 and December 31, 2022, respectively		20,670		23,515
Accounts receivable, net of allowance of $245 and $394 at September 30, 2023 and December 31, 2022, respectively						Accounts receivable, net of allowance of $245 and $394 at September 30, 2023 and December 31, 2022, respectively	30,480		23,515
Prepaid expenses	Prepaid expenses	18,620		28,481		Prepaid expenses	30,761		28,481
Other current assets	Other current assets	22,372		34,754		Other current assets	25,195		34,754
Total current assets	Total current assets	446,716		1,144,400		Total current assets	347,696		1,144,400
Long-term investments	Long-term investments	422,758		216,233		Long-term investments	412,541		216,233
Property and equipment, net	Property and equipment, net	198,318		204,383		Property and equipment, net	168,735		204,383
Goodwill	Goodwill	629,564		615,093		Goodwill	617,690		615,093
Intangible assets, net	Intangible assets, net	67,630		78,333		Intangible assets, net	56,638		78,333
Right of use assets	Right of use assets	28,267		18,838		Right of use assets	26,568		18,838
Deferred tax assets	Deferred tax assets	146,790		167,524		Deferred tax assets	145,807		167,524
Other assets	Other assets	28,492		20,612		Other assets	28,964		20,612
Total assets	Total assets	$	1,968,535	$	2,465,416	Total assets	$	1,804,639	$	2,465,416
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	12,954	$	12,367	Accounts payable	$	18,187	$	12,367
Deferred revenue	Deferred revenue	53,200		56,273		Deferred revenue	58,906		56,273
Accrued liabilities	Accrued liabilities	76,657		70,234		Accrued liabilities	73,133		70,234
Total current liabilities	Total current liabilities	142,811		138,874		Total current liabilities	150,226		138,874
Long-term liabilities	Long-term liabilities					Long-term liabilities
Convertible senior notes, net	Convertible senior notes, net	767,043		1,188,593		Convertible senior notes, net	599,291		1,188,593
Long-term operating lease liabilities	Long-term operating lease liabilities	21,253		13,375		Long-term operating lease liabilities	19,537		13,375
Other long-term liabilities	Other long-term liabilities	2,427		7,985		Other long-term liabilities	2,236		7,985
Total long-term liabilities	Total long-term liabilities	790,723		1,209,953		Total long-term liabilities	621,064		1,209,953
Total liabilities	Total liabilities	933,534		1,348,827		Total liabilities	771,290		1,348,827
Commitments and contingencies (Note 6)	Commitments and contingencies (Note 6)					Commitments and contingencies (Note 6)
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding	Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding	—		—		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; 115,177,618 and 126,473,827 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		115		126
Common stock, $0.001 par value per share: 400,000,000 shares authorized; 115,671,820 and 126,473,827 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						Common stock, $0.001 par value per share: 400,000,000 shares authorized; 115,671,820 and 126,473,827 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	116		126
Additional paid-in capital	Additional paid-in capital	1,121,820		1,244,504		Additional paid-in capital	1,151,697		1,244,504
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(43,179)		(57,488)		Accumulated other comprehensive loss	(56,426)		(57,488)
Accumulated deficit	Accumulated deficit	(43,755)		(70,553)		Accumulated deficit	(62,038)		(70,553)
Total stockholders' equity	Total stockholders' equity	1,035,001		1,116,589		Total stockholders' equity	1,033,349		1,116,589
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,968,535	$	2,465,416	Total liabilities and stockholders' equity	$	1,804,639	$	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 June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Net revenues	Net revenues	$	182,853	$	194,721	$	370,454	$	396,965	Net revenues	$	157,854	$	164,739	$	528,308	$	561,704
Cost of revenues	Cost of revenues	47,412		45,684		96,562		100,769		Cost of revenues	83,575		45,203		180,137		145,972
Gross profit	Gross profit	135,441		149,037		273,892		296,196		Gross profit	74,279		119,536		348,171		415,732
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	52,872		52,480		99,779		104,895		Research and development	46,202		45,426		145,981		150,321
Sales and marketing	Sales and marketing	30,956		35,279		67,973		77,777		Sales and marketing	28,872		31,803		96,845		109,580
General and administrative	General and administrative	70,309		53,935		129,282		100,805		General and administrative	57,075		53,742		186,357		154,547
Total operating expenses	Total operating expenses	154,137		141,694		297,034		283,477		Total operating expenses	132,149		130,971		429,183		414,448
(Loss) income from operations	(Loss) income from operations	(18,696)		7,343		(23,142)		12,719		(Loss) income from operations	(57,870)		(11,435)		(81,012)		1,284
Interest expense, net and other income, net:	Interest expense, net and other income, net:									Interest expense, net and other income, net:
Interest expense, net	Interest expense, net	(1,114)		(1,616)		(2,382)		(3,213)		Interest expense, net	(733)		(1,525)		(3,115)		(4,738)
Other income, net	Other income, net	64,103		1,809		76,179		7,989		Other income, net	40,492		97,258		116,671		105,247
Total interest expense, net and other income, net	Total interest expense, net and other income, net	62,989		193		73,797		4,776		Total interest expense, net and other income, net	39,759		95,733		113,556		100,509
Income before provision for income taxes		44,293		7,536		50,655		17,495
Provision for income taxes		(19,681)		(60)		(23,857)		(4,277)
Net income		$	24,612	$	7,476	$	26,798	$	13,218
Net income (loss) per share
(Loss) income before (provision for) benefit from income taxes										(Loss) income before (provision for) benefit from income taxes	(18,111)		84,298		32,544		101,793
(Provision for) benefit from income taxes										(Provision for) benefit from income taxes	(172)		167,264		(24,029)		162,987
Net (loss) income										Net (loss) income	$	(18,283)	$	251,562	$	8,515	$	264,780
Net (loss) income per share										Net (loss) income per share
Basic	Basic	$	0.21	$	0.06	$	0.22	$	0.10	Basic	$	(0.16)	$	1.99	$	0.07	$	2.07
Diluted	Diluted	$	(0.11)	$	0.06	$	(0.08)	$	0.10	Diluted	$	(0.16)	$	1.23	$	(0.24)	$	1.31
Weighted average shares used to compute net income (loss) per share
Weighted average shares used to compute net (loss) income per share										Weighted average shares used to compute net (loss) income per share
Basic	Basic	117,977		126,272		120,828		129,201		Basic	115,407		126,132		119,001		128,166
Diluted	Diluted	132,944		149,574		137,416		129,934		Diluted	115,407		148,045		121,876		151,221

See Notes to Condensed Consolidated Financial Statements.

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CHEGG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

(in thousands)

(unaudited)

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
Net income $ 24,612 $ 7,476 $ 26,798 $ 13,218
Other comprehensive income (loss)
Change in net unrealized loss on investments, net of tax (4,420) (2,333) (608) (15,250)
Change in foreign currency translation adjustments, net of tax 6,579 (29,613) 14,917 (48,284)
Other comprehensive income (loss) 2,159 (31,946) 14,309 (63,534)
Total comprehensive income (loss) $ 26,771 $ (24,470) $ 41,107 $ (50,316)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net (loss) income	$	(18,283)	$	251,562	$	8,515	$	264,780
Other comprehensive (loss) income
Change in net unrealized loss on investments, net of tax	(322)		(1,946)		(930)		(17,196)
Change in foreign currency translation adjustments, net of tax	(12,925)		(31,056)		1,992		(79,340)
Other comprehensive (loss) income	(13,247)		(33,002)		1,062		(96,536)
Total comprehensive (loss) income	$	(31,530)	$	218,560	$	9,577	$	168,244

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 June 30, 2023
Common Stock
Shares Par
Value Additional Paid-In
Capital Accumulated Other Comprehensive Loss Accumulated
Deficit Total Stockholders’ Equity
Balances at March 31, 2023 119,628 $ 120 $ 1,120,344 $ (45,338) $ (68,367) $ 1,006,759
Repurchases of common stock (5,408) (6) (35,051) — — (35,057)
Issuance of common stock upon exercise of stock options and ESPP 358 — 2,935 — — 2,935
Net share settlement of equity awards 600 1 (3,332) — — (3,331)
Share-based compensation expense — — 36,627 — — 36,627
Proceeds from capped call related to extinguishment of 2025 notes 297 — 297
Other comprehensive income — — — 2,159 — 2,159
Net income — — — — 24,612 24,612
Balances at June 30, 2023 115,178 $ 115 $ 1,121,820 $ (43,179) $ (43,755) $ 1,035,001


	Three Months Ended September 30, 2023
	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balances at June 30, 2023	115,178	$	115	$	1,121,820	$	(43,179)	$	(43,755)	$	1,035,001

Issuance of common stock upon exercise of stock options	3	—		26		—		—		26
Net share settlement of equity awards	491	1		(2,789)		—		—		(2,788)
Share-based compensation expense	—	—		32,640		—		—		32,640

Other comprehensive loss	—	—		—		(13,247)		—		(13,247)
Net loss	—	—		—		—		(18,283)		(18,283)
Balances at September 30, 2023	115,672	$	116	$	1,151,697	$	(56,426)	$	(62,038)	$	1,033,349


		Three Months Ended June 30, 2022												Three Months Ended September 30, 2022
		Common Stock												Common Stock
		Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity			Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balances at March 31, 2022		126,682	$	127	$	1,176,765	$	(36,922)	$	(331,449)	$	808,521
Balances at June 30, 2022													Balances at June 30, 2022	126,344	$	126	$	1,211,506	$	(68,868)	$	(323,973)	$	818,791
Repurchases of common stock	Repurchases of common stock	(837)	(1)		1		—		—		—		Repurchases of common stock	(1,147)	(1)		(23,077)		—		—		(23,078)

Issuance of common stock upon exercise of stock options and ESPP		265	—		4,102		—		—		4,102

Net share settlement of equity awards	Net share settlement of equity awards	234	—		(2,754)		—		—		(2,754)		Net share settlement of equity awards	227	—		(2,555)		—		—		(2,555)
Share-based compensation expense	Share-based compensation expense	—	—		33,392		—		—		33,392		Share-based compensation expense	—	—		34,814		—		—		34,814
Other comprehensive loss	Other comprehensive loss	—	—		—		(31,946)		—		(31,946)		Other comprehensive loss	—	—		—		(33,002)		—		(33,002)
Net income	Net income	—	—		—		—		7,476		7,476		Net income	—	—		—		—		251,562		251,562
Balances at June 30, 2022		126,344	$	126	$	1,211,506	$	(68,868)	$	(323,973)	$	818,791
Balances at September 30, 2022													Balances at September 30, 2022	125,424	$	125	$	1,220,688	$	(101,870)	$	(72,411)	$	1,046,532

See Notes to Condensed Consolidated Financial Statements.

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		Six Months Ended June 30, 2023												Nine Months Ended September 30, 2023
		Common Stock												Common Stock
		Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity			Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balances at December 31, 2022	Balances at December 31, 2022	126,474	$	126	$	1,244,504	$	(57,488)	$	(70,553)	$	1,116,589	Balances at December 31, 2022	126,474	$	126	$	1,244,504	$	(57,488)	$	(70,553)	$	1,116,589
Repurchases of common stock	Repurchases of common stock	(13,008)	(13)		(186,355)		—		—		(186,368)		Repurchases of common stock	(13,008)	(13)		(186,355)		—		—		(186,368)
Issuance of common stock upon exercise of stock options and ESPP	Issuance of common stock upon exercise of stock options and ESPP	376	—		3,079		—		—		3,079		Issuance of common stock upon exercise of stock options and ESPP	379	—		3,105		—		—		3,105
Net share settlement of equity awards	Net share settlement of equity awards	1,336	2		(11,068)		—		—		(11,066)		Net share settlement of equity awards	1,827	3		(13,857)		—		—		(13,854)
Share-based compensation expense	Share-based compensation expense	—	—		71,363		—		—		71,363		Share-based compensation expense	—	—		104,003		—		—		104,003
Proceeds from capped call related to extinguishment of 2025 notes	Proceeds from capped call related to extinguishment of 2025 notes				297						297		Proceeds from capped call related to extinguishment of 2025 notes	—	—		297		—		—		297
Other comprehensive loss		—	—		—		14,309		—		14,309
Other comprehensive income													Other comprehensive income	—	—		—		1,062		—		1,062
Net income	Net income	—	—		—		—		26,798		26,798		Net income	—	—		—		—		8,515		8,515
Balances at June 30, 2023		115,178	$	115	$	1,121,820	$	(43,179)	$	(43,755)	$	1,035,001
Balances at September 30, 2023													Balances at September 30, 2023	115,672	$	116	$	1,151,697	$	(56,426)	$	(62,038)	$	1,033,349


		Six Months Ended June 30, 2022												Nine Months Ended September 30, 2022
		Common Stock												Common Stock
		Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity			Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balances at December 31, 2021	Balances at December 31, 2021	136,952	$	137	$	1,449,305	$	(5,334)	$	(337,191)	$	1,106,917	Balances at December 31, 2021	136,952	$	137	$	1,449,305	$	(5,334)	$	(337,191)	$	1,106,917

Repurchases of common stock	Repurchases of common stock	(11,562)	(12)		(300,438)		—		—		(300,450)		Repurchases of common stock	(12,709)	(13)		(323,515)		—		—		(323,528)

Issuance of common stock upon exercise of stock options and ESPP	Issuance of common stock upon exercise of stock options and ESPP	319	—		4,557		—		—		4,557		Issuance of common stock upon exercise of stock options and ESPP	319	—		4,557		—		—		4,557
Net share settlement of equity awards	Net share settlement of equity awards	635	1		(10,221)		—		—		(10,220)		Net share settlement of equity awards	862	1		(12,776)		—		—		(12,775)
Share-based compensation expense	Share-based compensation expense	—	—		68,303		—		—		68,303		Share-based compensation expense	—	—		103,117		—		—		103,117
Other comprehensive loss	Other comprehensive loss	—	—		—		(63,534)		—		(63,534)		Other comprehensive loss	—	—		—		(96,536)		—		(96,536)
Net income	Net income	—	—		—		—		13,218		13,218		Net income	—	—		—		—		264,780		264,780
Balances at June 30, 2022		126,344	$	126	$	1,211,506	$	(68,868)	$	(323,973)	$	818,791
Balances at September 30, 2022													Balances at September 30, 2022	125,424	$	125	$	1,220,688	$	(101,870)	$	(72,411)	$	1,046,532

See Notes to Condensed Consolidated Financial Statements.

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CHEGG, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Net income	$	8,515	$	264,780
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	101,596		98,341
Other depreciation and amortization expense	108,945		64,295
Deferred income taxes	20,929		6,376
Gain on early extinguishment of debt	(85,926)		(93,519)
Loss contingency	7,000		—
Operating lease expense, net	4,535		4,746
Impairment of intangible asset	3,600		—
Loss from write-off of property and equipment	3,578		3,117
Amortization of debt issuance costs	2,610		4,084
Gain on foreign currency remeasurement of purchase consideration	—		(4,628)
Tax benefit related to release of valuation allowance	—		(174,601)
Print textbook depreciation expense	—		1,610
Impairment on lease related assets	—		3,411
Gain on textbook library, net	—		(4,976)
Other non-cash items	(389)		619
Change in assets and liabilities, net of effect of acquisition of business:
Accounts receivable	(6,908)		(2,259)
Prepaid expenses and other current assets	558		13,251
Other assets	8,671		15,926
Accounts payable	4,820		(1,728)
Deferred revenue	2,539		11,434
Accrued liabilities	(6,149)		(23,323)
Other liabilities	(9,810)		(5,240)
Net cash provided by operating activities	168,714		181,716
Cash flows from investing activities
Purchases of property and equipment	(57,298)		(79,242)
Purchases of textbooks	—		(3,815)
Proceeds from disposition of textbooks	9,787		2,503
Purchases of investments	(585,275)		(534,008)
Maturities of investments	561,197		783,912
Proceeds from sale of investments	238,681		—
Purchase of strategic equity investment	(11,853)		(6,000)
Acquisition of business, net of cash acquired	—		(401,125)
Net cash provided by (used in) investing activities	155,239		(237,775)
Cash flows from financing activities
Proceeds from common stock issued under stock plans, net	3,108		4,558
Payment of taxes related to the net share settlement of equity awards	(13,857)		(12,776)
Repurchases of common stock	(186,368)		(323,528)
Repayment of convertible senior notes	(505,986)		(401,203)
Proceeds from exercise of convertible senior notes capped call	297		—
Net cash used in financing activities	(702,806)		(732,949)
Effect of exchange rate changes	(379)		4,628
Net decrease in cash, cash equivalents and restricted cash	(379,232)		(784,380)
Cash, cash equivalents and restricted cash, beginning of period	475,854		855,893
Cash, cash equivalents and restricted cash, end of period	$	96,622	$	71,513

Six Months Ended
June 30,
2023 2022
Cash flows from operating activities
Net income $ 26,798 $ 13,218
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense 69,666 64,171
Other depreciation and amortization expense 52,027 41,921
Deferred income taxes 20,142 (303)
Gain on early extinguishment of debt (53,777) —
Restructuring charges 5,704 —
Loss contingency 7,000 —
Operating lease expense, net 3,009 3,242
Amortization of debt issuance costs 1,988 2,779
Loss from write-off of property and equipment 450 2,767
Gain on foreign currency remeasurement of purchase consideration — (4,628)
Print textbook depreciation expense — 1,610
Impairment on lease related assets — 3,411
Gain on textbook library, net — (4,967)
Other non-cash items (1,083) 470
Change in assets and liabilities, net of effect of acquisition of business:
Accounts receivable 3,081 3,227
Prepaid expenses and other current assets 15,082 28,768
Other assets 5,470 13,058
Accounts payable (671) (5,246)
Deferred revenue (3,634) 4,256
Accrued liabilities (7,140) (21,034)
Other liabilities (8,205) (2,965)
Net cash provided by operating activities 135,907 143,755
Cash flows from investing activities
Purchases of property and equipment (33,864) (57,286)
Purchases of textbooks — (3,815)
Proceeds from disposition of textbooks 9,787 2,494
Purchases of investments (552,409) (356,553)
Maturities of investments 476,862 522,466
Proceeds from sale of investments 238,681 —
Purchase of strategic equity investment (9,604) —
Acquisition of business, net of cash acquired — (401,125)
Net cash provided by (used in) investing activities 129,453 (293,819)
Cash flows from financing activities
Proceeds from common stock issued under stock plans, net 3,081 4,558
Payment of taxes related to the net share settlement of equity awards (11,068) (10,221)
Repurchases of common stock (186,368) (300,450)
Repayment of convertible senior notes (369,761) —
Proceeds from exercise of convertible senior notes capped call 297 —
Net cash used in financing activities (563,819) (306,113)
Effect of exchange rate changes 197 4,628
Net decrease in cash, cash equivalents and restricted cash (298,262) (451,549)
Cash, cash equivalents and restricted cash, beginning of period 475,854 855,893
Cash, cash equivalents and restricted cash, end of period $ 177,592 $ 404,344


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Supplemental cash flow data:	Supplemental cash flow data:					Supplemental cash flow data:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	517	$	437	Interest	$	741	$	875
Income taxes, net of refunds	Income taxes, net of refunds	$	6,171	$	3,915	Income taxes, net of refunds	$	8,368	$	5,530
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	4,909	$	3,869	Operating cash flows from operating leases	$	7,037	$	6,908
Right of use assets obtained in exchange for lease obligations:	Right of use assets obtained in exchange for lease obligations:					Right of use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	12,407	$	3,244	Operating leases	$	12,407	$	7,603
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Accrued purchases of long-lived assets	Accrued purchases of long-lived assets	$	4,518	$	4,057	Accrued purchases of long-lived assets	$	5,879	$	4,101


		June 30,				September 30,
		2023		2022				2023		2022
Reconciliation of cash, cash equivalents and restricted cash:	Reconciliation of cash, cash equivalents and restricted cash:						Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	Cash and cash equivalents	$	175,368	$	402,089		Cash and cash equivalents	$	94,419	$	69,349
Restricted cash included in other current assets	Restricted cash included in other current assets	60		64			Restricted cash included in other current assets	60		63
Restricted cash included in other assets	Restricted cash included in other assets	2,164		2,191			Restricted cash included in other assets	2,143		2,101
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	177,592	$	404,344		Total cash, cash equivalents and restricted cash	$	96,622	$	71,513

See Notes to Condensed Consolidated Financial Statements.

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CHEGG, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Background and Basis of Presentation

Company and Background

Chegg, Inc. (“we,” “us,” “our,” “Company” or “Chegg”), headquartered in Santa Clara, California, was incorporated as a Delaware corporation in July 2005. Millions of people all around the world Learn with Chegg. Our mission is to improve learning and learning outcomes by putting students first. We support life-long learners starting with their academic journey and extending into their careers. The Chegg platform provides products and services to support learners to help them better understand their academic course materials, and also provides personal and professional development skills training, to help them achieve their learning goals.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the results of Chegg, Inc. and its wholly-owned subsidiaries. Significant intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of ~~June~~September 30, 2023, our results of operations, results of comprehensive (loss) income, ~~(loss),~~ and stockholders' equity for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 and cash flows for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022. Our results of operations, results of comprehensive (loss) income, ~~(loss),~~ stockholders' equity, and cash flows for the ~~six~~nine months ended ~~June~~September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

We have a single operating and reportable segment and operating unit structure. The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the Annual Report on Form 10-K) filed with the SEC.

Except for our policies on strategic investments, there have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K.

Strategic Investments

Investments in partnerships where we have the ability to exercise significant influence, but not control, over the investee are accounted for under the equity method of accounting. Equity method investments are initially recorded at cost and adjusted for our share of the investees' earnings or losses, based on our percentage ownership, recognized on a one-quarter lag basis within other income, net on our condensed consolidated statements of operations.

Investments in entities where we do not have the ability to exercise significant influence and which do not have readily determinable fair values are accounted for at cost, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, if any.

Strategic investments are included in other assets on our condensed consolidated balance sheets. We assess our strategic investments for impairment whenever events or changes in circumstances indicate that they may be impaired. The factors we consider in our evaluation include, but are not limited to, a significant deterioration in the earnings performance or business prospects of the investee or factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations or working capital deficiencies.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities; the disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience, knowledge of current business conditions, and various other factors we believe to be reasonable under the circumstances. These estimates are based on management’s knowledge about current events and

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expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our financial position and results of operations. There have been no material changes in our use of estimates during the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to the use of estimates disclosed in Part II, Item 8 “Consolidated Financial Statements and Supplementary Data” contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

~~Reclassification of Prior Period Presentation~~

In order to conform with current period presentation, $0.3 million of deferred tax assets during the six months ended June 30, 2022 has been reclassified from other non-cash items on our condensed consolidated statements of cash flows. This change in presentation does not affect previously reported results.

Leases

During the ~~six~~nine months ended ~~June~~September 30, 2023, we extended our existing lease agreement related to our corporate headquarters in Santa Clara and reassessed lease terms related to office spaces internationally in India, resulting in the recording of $12.4 million of right of use assets in exchange for lease liabilities.

The aggregate future minimum lease payments and reconciliation to operating lease liabilities as of ~~June~~September 30, 2023, are as follows (in thousands):


		June 30, 2023			September 30, 2023
Remaining six months of 2023		$	4,356
Remaining three months of 2023				Remaining three months of 2023	$	2,201
2024	2024	7,886		2024	7,818
2025	2025	6,622		2025	6,578
2026	2026	5,932		2026	5,903
2027	2027	5,515		2027	5,493
Thereafter	Thereafter	1,902		Thereafter	1,898
Total future minimum lease payments	Total future minimum lease payments	32,213		Total future minimum lease payments	29,891
Less imputed interest	Less imputed interest	(3,896)		Less imputed interest	(3,485)
Total lease liabilities	Total lease liabilities	$	28,317	Total lease liabilities	$	26,406

Condensed Consolidated Statements of Operations Details

Other income, net consists of the following (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Gain on early extinguishment of debt	Gain on early extinguishment of debt	$	53,777	$	—	53,777		$	—	Gain on early extinguishment of debt	$	32,149	$	93,519	$	85,926	$	93,519
Interest income	Interest income	$	10,658	$	2,032	21,921		$	3,509	Interest income	8,430		3,737		30,351		7,246
Gain on foreign currency remeasurement of purchase consideration	Gain on foreign currency remeasurement of purchase consideration	—		—		—		$	4,628	Gain on foreign currency remeasurement of purchase consideration	—		—		—		4,628
Other	Other	(332)		(223)		481		(148)		Other	(87)		2		394		(146)
Total other income, net	Total other income, net	$	64,103	$	1,809	$	76,179	$	7,989	Total other income, net	$	40,492	$	97,258	$	116,671	$	105,247

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

There were no accounting pronouncements issued during the ~~six~~nine months ended ~~June~~September 30, 2023 that would have a material impact on our financial statements.

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Recently Adopted Accounting Pronouncements

We did not adopt any accounting pronouncements during the ~~six~~nine months ended ~~June~~September 30, 2023 that had a material impact on our financial statements.

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Note 2. Revenues

Revenue Recognition

Revenues are recognized when control of the goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenues are recognized over time, with certain revenues being recognized at a point in time.

We have changed our revenue disaggregation to Subscription Services and Skills and Other to better reflect the nature and timing of revenue and cash flows. Subscription Services includes revenues from our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings. Skills and Other includes revenues from our Skills, advertising services, print textbooks and eTextbooks offerings. We no longer present our Required Materials product line separately as we no longer recognize significant revenue from our print textbook and eTextbooks offerings.

The following tables set forth our total net revenues for the periods shown disaggregated for our Subscription Services and Skills and Other product lines (in thousands, except percentages):


		Three Months Ended June 30,				Change					Three Months Ended September 30,				Change
		2023		2022		$		%			2023		2022		$		%
Subscription Services	Subscription Services	$	165,855	$	175,424	$	(9,569)	(5)	%	Subscription Services	$	139,912	$	146,001	$	(6,089)	(4)	%
Skills and Other	Skills and Other	16,998		19,297		(2,299)		(12)		Skills and Other	17,942		18,738		(796)		(4)
Total net revenues	Total net revenues	$	182,853	$	194,721	$	(11,868)	(6)		Total net revenues	$	157,854	$	164,739	$	(6,885)	(4)


		Six Months Ended June 30,				Change					Nine Months Ended September 30,				Change
		2023		2022		$		%			2023		2022		$		%
Subscription Services	Subscription Services	$	334,295	$	348,461	$	(14,166)	(4)	%	Subscription Services	$	474,207	$	494,462	$	(20,255)	(4)	%
Skills and Other	Skills and Other	36,159		48,504		(12,345)		(25)		Skills and Other	54,101		67,242		(13,141)		(20)
Total net revenues	Total net revenues	$	370,454	$	396,965	$	(26,511)	(7)		Total net revenues	$	528,308	$	561,704	$	(33,396)	(6)

During the three and ~~six~~nine months ended ~~June~~September 30, 2023, we recognized revenues of ~~$41.1~~$36.6 million and ~~$47.9~~$53.0 million, respectively, that were included in our deferred revenue balance at the beginning of each respective reporting period. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, we recognized revenues of ~~$42.2~~$35.2 million and ~~$32.9~~$33.8 million, respectively, that were included in our deferred revenue balance at the beginning of each respective reporting period.

Contract Balances

The following table presents our accounts receivable, net, contract assets and deferred revenue balances (in thousands, except percentages):


						Change						Change
		June 30, 2023		December 31, 2022			$		%			September 30, 2023		December 31, 2022		$		%

Accounts receivable, net	Accounts receivable, net	$	20,670	$	23,515		$	(2,845)	(12)	%	Accounts receivable, net	$	30,480	$	23,515	$	6,965	30	%
Contract assets	Contract assets	10,693		11,946			(1,253)		(10)		Contract assets	9,148		11,946		(2,798)		(23)
Deferred revenue	Deferred revenue	53,200		56,273			(3,073)		(5)		Deferred revenue	58,906		56,273		2,633		5

During the ~~six~~nine months ended ~~June~~September 30, 2023 our accounts receivable, net balance ~~decreased~~increased by ~~$2.8~~$7.0 million, or ~~12%~~30%, primarily due to timing of billings and seasonality of our business. During the ~~six~~nine months ended ~~June~~September 30, 2023, our contract assets balance decreased by ~~$1.3~~$2.8 million, or ~~10%~~23%, primarily due to our Thinkful service. During the ~~six~~nine months ended ~~June~~September 30, 2023, our deferred revenue balance ~~decreased~~increased by ~~$3.1~~$2.6 million, or 5%, primarily due to timing of bookings and seasonality of our business.

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Note 3. Net (Loss) Income ~~(Loss)~~ Per Share

The following tables set forth the computation of basic and diluted net (loss) income ~~(loss)~~ per share (in thousands, except per share amounts):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Basic	Basic									Basic
Numerator:	Numerator:									Numerator:
Net income		$	24,612	$	7,476	$	26,798	$	13,218
Net (loss) income										Net (loss) income	$	(18,283)	$	251,562	$	8,515	$	264,780
Denominator:	Denominator:									Denominator:
Weighted average shares used to compute net income per share, basic		117,977		126,272		120,828		129,201
Weighted average shares used to compute net (loss) income per share, basic										Weighted average shares used to compute net (loss) income per share, basic	115,407		126,132		119,001		128,166

Net income per share, basic		$	0.21	$	0.06	$	0.22	$	0.10
Net (loss) income per share, basic										Net (loss) income per share, basic	$	(0.16)	$	1.99	$	0.07	$	2.07

Diluted	Diluted									Diluted
Numerator:	Numerator:									Numerator:
Net income		$	24,612	$	7,476	$	26,798	$	13,218
Net (loss) income										Net (loss) income	$	(18,283)	$	251,562	$	8,515	$	264,780
Convertible senior notes activity, net of tax(1)	Convertible senior notes activity, net of tax(1)	(39,398)		1,212		(38,446)		—		Convertible senior notes activity, net of tax(1)	—		(69,042)		(38,079)		(66,630)
Net (loss) income, diluted	Net (loss) income, diluted	$	(14,786)	$	8,688	$	(11,648)	$	13,218	Net (loss) income, diluted	$	(18,283)	$	182,520	$	(29,564)	$	198,150
Denominator:	Denominator:									Denominator:
Weighted average shares used to compute net income per share, basic		117,977		126,272		120,828		129,201
Weighted average shares used to compute net (loss) income per share, basic										Weighted average shares used to compute net (loss) income per share, basic	115,407		126,132		119,001		128,166
Shares related to stock plan activity	Shares related to stock plan activity	—		427		—		733		Shares related to stock plan activity	—		504		—		674
Shares related to convertible senior notes	Shares related to convertible senior notes	14,967		22,875		16,588		—		Shares related to convertible senior notes	—		21,409		2,875		22,381
Weighted average shares used to compute net (loss) income per share, diluted	Weighted average shares used to compute net (loss) income per share, diluted	132,944		149,574		137,416		129,934		Weighted average shares used to compute net (loss) income per share, diluted	115,407		148,045		121,876		151,221

Net (loss) income per share, diluted	Net (loss) income per share, diluted	$	(0.11)	$	0.06	$	(0.08)	$	0.10	Net (loss) income per share, diluted	$	(0.16)	$	1.23	$	(0.24)	$	1.31

(1) Includes the gain on early extinguishment and interest expense on our notes, net of ~~tax.~~tax, when dilutive. For further information, see Note 5, “Convertible Senior Notes.”

The following potential weighted-average shares of common stock outstanding were excluded from the computation of diluted net (loss) income ~~(loss)~~ per share because including them would have been anti-dilutive (in thousands):


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2023	2022	2023	2022		2023	2022	2023	2022
Shares related to stock plan activity	Shares related to stock plan activity	9,982	8,041	7,661	3,645	Shares related to stock plan activity	8,732	7,534	8,349	4,148
Shares related to convertible senior notes	Shares related to convertible senior notes	—	—	—	22,875	Shares related to convertible senior notes	10,280	—	10,378	—
Total common stock equivalents	Total common stock equivalents	9,982	8,041	7,661	26,520	Total common stock equivalents	19,012	7,534	18,727	4,148

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Note 4. Cash and Cash Equivalents, Investments and Fair Value Measurements

The following tables show our cash and cash equivalents, and investments’ fair value level classification, adjusted cost, unrealized gain, unrealized loss and fair value as of ~~June~~September 30, 2023 and December 31, 2022 (in thousands except for fair value levels):


		June 30, 2023										September 30, 2023
		Fair Value Level	Adjusted Cost		Unrealized Gain		Unrealized Loss		Fair Value			Fair Value Level	Adjusted Cost		Unrealized Gain		Unrealized Loss		Fair Value
Cash and cash equivalents:	Cash and cash equivalents:										Cash and cash equivalents:
Cash	Cash		$	38,597	$	—	$	—	$	38,597	Cash		$	42,015	$	—	$	—	$	42,015

Money market funds	Money market funds	Level 1	136,771		—		—		136,771		Money market funds	Level 1	52,404		—		—		52,404

Total cash and cash equivalents	Total cash and cash equivalents		$	175,368	$	—	$	—	$	175,368	Total cash and cash equivalents		$	94,419	$	—	$	—	$	94,419
Short-term investments:	Short-term investments:										Short-term investments:

Corporate debt securities	Corporate debt securities	Level 2	$	106,429	$	—	$	(805)	$	105,624	Corporate debt securities	Level 2	$	58,911	$	—	$	(258)	$	58,653
U.S. treasury securities		Level 1	30,063		—		(32)		30,031

Agency bonds	Agency bonds	Level 2	74,496		—		(465)		74,031		Agency bonds	Level 2	108,919		—		(731)		108,188
Total short-term investments	Total short-term investments		$	210,988	$	—	$	(1,302)	$	209,686	Total short-term investments		$	167,830	$	—	$	(989)	$	166,841
Long-term investments:	Long-term investments:										Long-term investments:
Corporate debt securities	Corporate debt securities	Level 2	$	195,372	$	10	$	(1,736)	$	193,646	Corporate debt securities	Level 2	$	220,649	$	8	$	(2,598)	$	218,059
U.S. treasury securities	U.S. treasury securities	Level 1	98,946		—		(1,168)		97,778		U.S. treasury securities	Level 1	98,462		—		(1,248)		97,214
Agency bonds	Agency bonds	Level 2	133,017		—		(1,683)		131,334		Agency bonds	Level 2	98,642		—		(1,374)		97,268
Total long-term investments	Total long-term investments		$	427,335	$	10	$	(4,587)	$	422,758	Total long-term investments		$	417,753	$	8	$	(5,220)	$	412,541


	December 31, 2022
	Fair Value Level	Adjusted Cost		Unrealized Gain		Unrealized Loss		Fair Value
Cash and cash equivalents:
Cash		$	33,532	$	—	$	—	$	33,532
Money market funds	Level 1	440,145		—		—		440,145

Total cash and cash equivalents		$	473,677	$	—	$	—	$	473,677
Short-term investments:
Commercial paper	Level 2	$	11,744	$	—	$	(29)	$	11,715
Corporate debt securities	Level 2	491,459		—		(4,130)		487,329
U.S. treasury securities	Level 1	85,271		—		(342)		84,929

Total short-term investments		$	588,474	$	—	$	(4,501)	$	583,973
Long-term investments:
Corporate debt securities	Level 2	$	125,735	$	158	$	(909)	$	124,984
U.S. treasury securities	Level 1	30,633		122		—		30,755
Agency bonds	Level 2	60,635		—		(141)		60,494
Total long-term investments		$	217,003	$	280	$	(1,050)	$	216,233

As of ~~June~~September 30, 2023, we determined that the unrealized losses on our investments were not driven by credit related factors. During the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, we did not recognize any losses on our investments due to credit related factors. During the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, our realized gains and losses on investments were not significant.

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The following table shows our cash equivalents and investments' adjusted cost and fair value by contractual maturity as of ~~June~~September 30, 2023 (in thousands):


		Adjusted Cost		Fair Value			Adjusted Cost		Fair Value
Due within one year	Due within one year	$	210,988	$	209,686	Due within one year	$	167,830	$	166,841
Due after one year through three years	Due after one year through three years	427,335		422,758		Due after one year through three years	417,753		412,541
Investments not due at a single maturity date	Investments not due at a single maturity date	136,771		136,771		Investments not due at a single maturity date	52,404		52,404
Total	Total	$	775,094	$	769,215	Total	$	637,987	$	631,786

Investments not due at a single maturity date in the preceding table consisted of money market funds.

Strategic Investments

In May 2023, we entered into a $15.0 million commitment to invest in Sound Ventures AI Fund, L.P. (Sound Ventures), a limited partnership that invests in artificial intelligence companies, for an approximate 6% ownership. We accounted for our investment under the equity method of accounting. During the ~~three~~nine months ended ~~June~~September 30, 2023, we funded ~~$9.6~~$11.8 million of our investment commitment. As part of the conditions for entering into the investment, we are contractually required to provide additional investment commitments. As of ~~June~~September 30, 2023, we have unfunded investment commitments of ~~$5.4~~$3.2 million, which can be issued at any time within five years of the commencement of the partnership, which occurred in February 2023.

In July 2022, we completed an investment of $6.0 million in Knack Technologies, Inc. (Knack), a privately held U.S. based peer-to-peer tutoring platform for higher education institutions. We do not have the ability to exercise significant influence over Knack's operating and financial policies and have elected to account for our investment at cost as it does not have a readily determinable fair value. We did not record any impairment charges during the three and ~~six~~nine months ended ~~June~~September 30, 2023, as there were no significant identified events or changes in circumstances that would be considered an indicator for impairment. There were no observable price changes in orderly transactions for the identical or similar investments of the same issuer during the three and ~~six~~nine months ended ~~June~~September 30, 2023.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

We report our financial instruments at fair value with the exception of the ~~notes.~~notes (defined below). The estimated fair value of the notes was determined based on the trading price of the notes as of the last day of trading for the period. We consider the fair value of the notes to be a Level 2 measurement due to the limited trading activity. The estimated fair value of the 2026 notes as of ~~June~~September 30, 2023 and December 31, 2022 was ~~$312.7~~$191.3 million and $385.0 million, respectively. The estimated fair value of the 2025 notes as of ~~June~~September 30, 2023 and December 31, 2022 was ~~$318.5~~$324.1 million and $640.5 million, respectively. For further information on the notes, refer to Note 5, “Convertible Senior Notes.”

Note 5. Convertible Senior Notes

In August 2020, we issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 (2026 notes). The aggregate principal amount of the 2026 notes includes $100 million from the initial purchasers fully exercising their option to purchase additional notes. In March 2019, we issued $700 million in aggregate principal amount of 0.125% convertible senior notes due in 2025 (2025 notes, together with the 2026 notes, the notes) and in April 2019, the initial purchasers fully exercised their option to purchase $100 million of additional 2025 notes for aggregate total principal amount of $800 million. The notes were issued in private placements to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended.

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The total net proceeds from the notes are as follows (in thousands):


	2026 Notes		2025 Notes
Principal amount	$	1,000,000	$	800,000
Less initial purchasers’ discount	(15,000)		(18,998)
Less other issuance costs	(904)		(822)
Net proceeds	$	984,096	$	780,180

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The notes are our senior, unsecured obligations and are governed by indenture agreements by and between us and Computershare Trust Company, National Association (as successor to Wells Fargo Bank, National Association), as Trustee (the indentures). The 2026 notes bear no interest and will mature on September 1, 2026, unless repurchased, redeemed or converted in accordance with their terms prior to such date. The 2025 notes bear interest of 0.125% per year which is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2019. The 2025 notes will mature on March 15, 2025, unless repurchased, redeemed or converted in accordance with their terms prior to such date.

Each $1,000 principal amount of the 2026 notes will initially be convertible into 9.2978 shares of our common stock. This is equivalent to an initial conversion price of approximately $107.55 per share, which is subject to adjustment in certain circumstances. Each $1,000 principal amount of the 2025 notes will initially be convertible into 19.3956 shares of our common stock. This is equivalent to an initial conversion price of approximately $51.56 per share, which is subject to adjustment in certain circumstances.

Prior to the close of business on the business day immediately preceding June 1, 2026 for the 2026 notes and December 15, 2024 for the 2025 notes, the notes are convertible at the option of holders only upon satisfaction of the following circumstances:

•during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 for the 2026 notes and June 30, 2019 for the 2025 notes, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the respective conversion price for the notes on each applicable trading day;

•during the five-business day period after any 10 consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

•if we call any or all of the notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

•upon the occurrence of certain specified corporate events described in the indentures.

On or after June 1, 2026 for the 2026 notes and December 15, 2024 for the 2025 notes until the close of business on the second scheduled trading day immediately preceding the respective maturity dates, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon conversion, the notes may be settled in shares of our common stock, cash or a combination of cash and shares of our common stock, at our election.

If we undergo a fundamental change, as defined in the indentures, prior to the respective maturity dates, subject to certain conditions, holders of the notes may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if specific corporate events, described in the indentures, occur prior to the respective maturity dates, we will also increase the conversion rate for a holder who elects to convert their notes in connection with such specified corporate events.

In August 2023, in connection with our securities repurchase program, we extinguished $169.7 million aggregate principal amount of the 2026 notes in privately-negotiated transactions for a total consideration of $135.8 million, which was paid to the holders in cash. We also incurred approximately $0.4 million in fees resulting in a total reacquisition price of $136.2 million. The carrying amount of the extinguished notes was $168.3 million resulting in a $32.1 million gain on early extinguishment of debt. We elected to reacquire and not cancel the extinguished 2026 notes.

In May 2023, in connection with our securities repurchase program, we extinguished $85.8 million and $341.1 million aggregate principal amount of the 2026 notes and 2025 notes, respectively, in privately-negotiated transactions for a total consideration of $368.6 million, which was paid to the holders in cash. We also incurred approximately $1.2 million in fees

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resulting in a total reacquisition price of $369.8 million. The carrying amount of the extinguished notes was $423.5 million resulting in a $53.8 million gain on early extinguishment of debt. We elected to reacquire and not cancel the extinguished 2026 notes and the 2025 notes were canceled with the trustee. Additionally, we terminated 2025 notes capped call transactions underlying 6,615,161 shares of our common stock and received aggregate cash proceeds of $0.3 million.

As of ~~June~~September 30, 2023, we had 9,297,800 and 6,961,352 shares remaining underlying the 2026 notes and 2025 notes, respectively.

During the three months ended ~~June~~September 30, 2023, the conditions allowing holders of the 2026 notes and 2025 notes to convert were not met and therefore the 2026 notes and 2025 notes are not convertible the following quarter.

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The net carrying amount of the notes is as follows (in thousands):


		June 30, 2023				December 31, 2022				September 30, 2023						December 31, 2022
		2026 Notes		2025 Notes		2026 Notes		2025 Notes				2026 Notes		2025 Notes			2026 Notes		2025 Notes
Principal	Principal	$	414,198	$	358,914	$	500,000	$	699,979		Principal	$	244,479	$	358,914		$	500,000	$	699,979

Unamortized issuance costs	Unamortized issuance costs	(3,466)		(2,603)		(4,837)		(6,549)			Unamortized issuance costs	(1,883)		(2,219)			(4,837)		(6,549)
Net carrying amount	Net carrying amount	$	410,732	$	356,311	$	495,163	$	693,430		Net carrying amount	$	242,596	$	356,695		$	495,163	$	693,430

The following table sets forth the total interest expense recognized related to the notes (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
2026 notes:	2026 notes:									2026 notes:
Contractual interest expense	Contractual interest expense	$	—	$	—	$	—	$	—	Contractual interest expense	$	—	$	—	$	—	$	—
Amortization of issuance costs	Amortization of issuance costs	310		657		635		1,307		Amortization of issuance costs	238		556		873		1,863
Total 2026 notes interest expense	Total 2026 notes interest expense	$	310	$	657	$	635	$	1,307	Total 2026 notes interest expense	$	238	$	556	$	873	$	1,863
2025 notes:	2025 notes:									2025 notes:
Contractual interest expense	Contractual interest expense	$	182	$	219	$	398	$	434	Contractual interest expense	$	112	$	220	$	510	$	654
Amortization of issuance costs	Amortization of issuance costs	621		740		1,353		1,472		Amortization of issuance costs	384		749		1,737		2,221
Total 2025 notes interest expense	Total 2025 notes interest expense	$	803	$	959	$	1,751	$	1,906	Total 2025 notes interest expense	$	496	$	969	$	2,247	$	2,875

Capped Call Transactions

Concurrently with the offering of the 2026 notes and 2025 notes, we used $103.4 million and $97.2 million, respectively, of the net proceeds to enter into privately negotiated capped call transactions which are expected to reduce or offset potential dilution to holders of our common stock upon conversion of the notes or offset the potential cash payments we would be required to make in excess of the principal amount of any converted notes. The capped call transactions automatically exercise upon conversion of the notes and as of ~~June~~September 30, 2023, cover 9,297,800 and 6,961,352 shares of our common stock for the 2026 notes and 2025 notes, respectively. These are intended to effectively increase the overall conversion price from $107.55 to $156.44 per share for the 2026 notes and $51.56 to $79.32 per share for the 2025 notes. The effective increase in conversion price as a result of the capped call transactions serves to reduce potential dilution to holders of our common stock and/or offset the cash payments we are required to make in excess of the principal amount of any converted notes. As these transactions meet certain accounting criteria, they are recorded in stockholders’ equity as a reduction of additional paid-in capital on our condensed consolidated balance sheets and are not accounted for as derivatives. The fair value of the capped call instrument is not remeasured each reporting period. The cost of the capped call is not expected to be deductible for tax purposes.

Note 6. Commitments and Contingencies

We may from time to time be subject to certain legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, patents, copyrights, and other intellectual property rights; employment claims; and general contract or other claims. We may also, from time to time, be subject to various legal or government claims, demands, disputes, investigations, or requests for information. Such matters may include, but not be limited to, claims, disputes, or investigations related to warranty, refund, breach of contract, employment, intellectual property, government regulation, or compliance or other matters.

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On March 1, 2023, Plaintiff Shiva Stein, derivatively on behalf of Chegg, filed a stockholder derivative complaint in the Court of Chancery of the State of Delaware (Case No. 2023-0244-NAC) asserting breach of fiduciary duty, unjust enrichment, and waste of corporate asset claims against members of Chegg’s Board and certain Chegg officers. The matter is stayed. The Company disputes these claims and intends to vigorously defend itself in this matter.

On February 14, 2023, Plaintiff Brian Stansell, individually and on behalf of other similarly situated stockholders of Chegg, filed a putative class action complaint in the Court of Chancery of the State of Delaware (Case No. 2023-0180) on behalf of all Chegg stockholders who were eligible to vote at Chegg's 2022 Annual Stockholders' Meeting, asserting breach of fiduciary duty claims against the members of Chegg's Board. The Company disputes these claims and intends to vigorously defend itself in this matter.

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On December 27, 2022, Plaintiff Sheri Moyer, individually and on behalf of all others similarly situated, filed a putative consumer class action in the United States District Court for the Northern District of California (Case No. 22-cv-09123) on behalf of all purchasers of a Chegg product or service as part of an automatic renewal plan or continuous service offer within the past four years. On July 25, 2023, the Company received an order granting its motion to compel arbitration, and the case will be stayed pending arbitration. The Company ~~disputes these claims~~ and ~~intends to vigorously defend itself~~Plaintiff have resolved this matter by agreement and dismissal is in ~~this matter.~~process.

On December 22, 2022, JPMorgan Chase Bank, N.A. (JPMC) asserted a demand for repayment by the Company of certain investment proceeds received by the Company in its capacity as an investor in TAPD, Inc. (more commonly known as “Frank”). JPMC seeks such repayment pursuant to certain provisions in the existing Support Agreement between JPMC and the Company that was entered into in connection with JPMC's acquisition of Frank. JPMC has alleged fraud on the part of certain former Frank executives regarding the quantity and quality of its customer accounts. The Company is not at fault however is pursuing a settlement agreement with JPMC. As of ~~June~~September 30, 2023, we believe a loss is probable and reasonably estimable, ~~therefore~~and we have previously recognized an estimated loss contingency accrual of $7.0 million within general and administrative expense on our condensed consolidated statements of ~~operations.~~operations during the three months ended June 30, 2023.

On November 9, 2022, Plaintiff Joshua Keller, individually and on behalf of all others similarly situated, filed a putative class action in the United States District Court for the Northern District of California (Case No. 22-cv-06986) on behalf of individuals whose data was allegedly impacted by past data breaches. On August 15, 2023, the Company received an order granting its motion to compel arbitration, and the case will be stayed and administratively closed pending the conclusion of arbitration, if Plaintiff decides to pursue arbitration. The Company disputes ~~these~~Plaintiff's claims and intends to vigorously defend itself in this ~~matter.~~matter should it continue.

On March 30, 2022, Joseph Robinson, derivatively on behalf of Chegg, filed a shareholder derivative complaint against Chegg and certain of its current and former directors and officers in the United States District Court for the Northern District of California, alleging violations of securities laws and breaches of fiduciary duties. On February 22, 2023, Plaintiff filed an Amended Shareholder Derivative Complaint. This matter has been consolidated with Choi, below, and both matters are stayed. The Company disputes these claims and intends to vigorously defend itself in this matter.

On January 12, 2022, Rak Joon Choi, derivatively on behalf of Chegg, filed a shareholder derivative complaint against Chegg and certain of its current and former directors and officers in the United States District Court for the Northern District of California, alleging violations of securities laws, breaches of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. On February 22, 2023, Plaintiff filed an Amended Shareholder Derivative Complaint. This matter has been consolidated with Robinson, above, and both matters are stayed. The Company disputes these claims and intends to vigorously defend itself in this matter.

On December 22, 2021, Steven Leventhal, individually and on behalf of all others similarly situated, filed a purported securities fraud class action on behalf of all purchasers of Chegg common stock between May 5, 2020 and November 1, 2021, inclusive, against Chegg and certain of its current and former officers in the United States District Court for the Northern District of California (Case No. 5:21-cv-09953), alleging that Chegg and several of its officers made materially false and misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On September 7, 2022, KBC Asset Management and The Pompano Beach Police & Firefighters Retirement System were appointed as lead plaintiff in the case. On December 8, 2022, Plaintiff filed his Amended Complaint and seeks unspecified compensatory damages, costs, and expenses, including counsel and expert fees. The Company disputes these claims and intends to vigorously defend itself in this matter.

On September 13, 2021, Pearson Education, Inc. (Pearson) filed a complaint captioned Pearson Education, Inc. v. Chegg, Inc. (Pearson Complaint) in the United States District Court for the District of New Jersey against the Company (Case 2:~~21-cv-16866)~~21-

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cv-16866), alleging infringement of Pearson’s registered copyrights and exclusive rights under copyright in violation of the United States Copyright Act. Pearson is seeking injunctive relief, monetary damages, costs, and attorneys’ fees. The Company filed its answer to the Pearson Complaint on November 19, 2021. Pearson’s June 29, 2022 Motion for Leave to File Amended Complaint seeking to add Bedford, Freeman & Worth Publishing Group, LLC d/b/a Macmillan Learning as a plaintiff was denied. Pearson filed an Amended Complaint on May 10, 2023, and the Company filed an amended answer on June 7, 2023. The Company disputes these claims and intends to vigorously defend itself in this matter.

On June 18, 2020, we received a Civil Investigative Demand (CID) from the Federal Trade Commission (FTC) regarding certain alleged deceptive or unfair acts or practices related to consumer privacy and/or data security. On October 31, 2022, the FTC published the parties’ agreed-upon consent order regarding Chegg’s privacy and data security practices. On January 27, 2023, the FTC finalized its order ("Final Order") requiring Chegg to implement a comprehensive information security program, limit the data the Company can collect and retain, offer users multi factor authentication to secure their accounts, and allow users to request access to and delete their data. No monetary penalties or fines were included in the Final Order.

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Aside from the loss contingency accrual recorded related to the Frank matter, we have not recorded any additional loss contingency accruals related to the above matters as we do not believe that a loss is probable in these matters. We are not aware of any other pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on our consolidated financial position, results of operations, or cash flows. However, our analysis of whether a claim will proceed to litigation cannot be predicted with certainty, nor can the results of litigation be predicted with certainty. Nevertheless, defending any of these actions, regardless of the outcome, may be costly, time consuming, distract management personnel and have a negative effect on our business. An adverse outcome in any of these actions, including a judgment or settlement, may cause a material adverse effect on our future business, operating results and/or financial condition.

Note 7. Guarantees and Indemnifications

We have agreed to indemnify our directors and officers for certain events or occurrences, subject to certain limits, while such persons are or were serving at our request in such capacity. We may terminate the indemnification agreements with these persons upon termination of employment, but termination will not affect claims for indemnification related to events occurring prior to the effective date of termination. We have a directors’ and officers’ insurance policy that limits our potential exposure up to the limits of our insurance coverage. In addition, we also have other indemnification agreements with various vendors against certain claims, liabilities, losses, and damages. The maximum amount of potential future indemnification is unlimited.

We believe the fair value of these indemnification agreements is immaterial. We have not recorded any liabilities for these agreements as of ~~June~~September 30, 2023.

Note 8. Common Stock

We are authorized to issue 400 million shares of our common stock, with a par value per share of $0.001. As of ~~June~~September 30, 2023, we have reserved the following shares of our common stock for future issuance:


			~~June~~September 30, 2023

Outstanding stock options			~~257,542~~254,209
Outstanding RSUs and PSUs			~~11,162,669~~10,295,610
Shares available for grant under the 2023 Equity Incentive Plan			~~12,070,617~~12,166,070
Shares available for issuance under the Amended and Restated 2013 Employee Stock Purchase Plan			4,000,000
Total common shares reserved for future issuance			~~27,490,828~~26,715,889

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Stock Plans

2023 Equity Incentive Plan

On April 7, 2023, our Board of Directors adopted our 2023 Equity Incentive Plan (the “2023 EIP”), which was subsequently approved by our stockholders and became effective on June 7, 2023, replacing our 2013 Equity Incentive Plan (the “2013 Plan”). On the effective date of the 2023 EIP, 12,000,000 shares of our common stock were reserved for issuance under the 2023 EIP. On June 6, 2023, the date on which the 2013 Plan expired, all remaining shares available for grant under the 2013 Plan were cancelled, and we will not make any additional grants under the 2013 Plan. In addition, any shares subject to awards, including shares subject to awards granted under the 2013 Plan that were outstanding on June 7, 2023, that are cancelled, forfeited, repurchased, expire by their terms without shares being issued, are used to pay the exercise price of an option or stock appreciation right or withheld to satisfy the tax withholding obligations related to any award, will be returned to the pool of shares available for grant and issuance under the 2023 ~~Plan.~~EIP. As of ~~June~~September 30, 2023, there were ~~12,070,617~~12,166,070 shares available for grant under the 2023 EIP. The 2023 EIP permits the granting of incentive stock options, non-qualified stock options, RSUs, restricted stock awards, stock bonus awards, stock appreciation rights and performance awards. The 2023 EIP terminates on April 7, 2033.

Amended and Restated 2013 Employee Stock Purchase Plan

On April 7, 2023, our Board of Directors adopted our Amended and Restated 2013 Employee Stock Purchase Plan (the “A&R ESPP”), which was subsequently approved by our stockholders and became effective on June 7, 2023. The A&R ESPP permits eligible employees to purchase shares of our common stock by accumulating funds through periodic payroll deductions.

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The A&R ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Code. Under the A&R ESPP, eligible employees will be granted an option to purchase shares of our common stock at a 15% discount to the lesser of the fair market value of our common stock on (i) the first trading day of the applicable offering period or (ii) the last day of each purchase period in the applicable offering period. The Compensation Committee of our Board of Directors shall determine the duration and commencement date of each offering period, provided that an offering period shall in no event be longer than twenty-seven (27) months, except as otherwise provided by an applicable sub-plan. Upon approval of the A&R ESPP, the available share pool under our existing 2013 Employee Stock Purchase Plan was reduced, and we have reserved 4,000,000 shares of our common stock under the A&R ESPP. As of ~~June~~September 30, 2023, there were 4,000,000 shares of common stock available for future issuance under the A&R ESPP.

2023 Equity Inducement Plan

On October 11, 2023, our Board of Directors approved and adopted our 2023 Equity Inducement Plan (the “2023 EINP”). On the effective date of the 2023 EINP, 2,000,000 shares of our common stock were reserved for issuance under the 2023 EINP. The 2023 EINP permits the granting of non-qualified stock options and restricted stock unit awards. The 2023 EINP terminates on the later of (i) October 11, 2033 or (ii) ten years from the last date that additional shares are added to the EINP by the Compensation Committee of our Board of Directors.

Note 9. Stockholders' Equity

Share Repurchases

In June 2023, we repurchased 3,433,157 shares of our common stock in open market transactions for $34.5 million.

In February 2023, we entered into an accelerated share repurchase (ASR) agreement with a financial institution (2023 ASR). We accounted for the 2023 ASR as two separate transactions, a repurchase of our common stock and an equity-linked contract indexed to our common stock that met certain accounting criteria for classification in stockholders' equity. Upon execution, we paid a fixed amount of $150.0 million and received an initial delivery of 7,599,747 shares of our common stock, which were retired immediately. The initial delivery of shares of our common stock represented approximately 80 percent of the fixed amount paid of $150.0 million, which was based on the share price of our common stock on the date of execution. The 2023 ASR, along with $1.9 million in associated costs, primarily consisting of an estimated 1% excise tax, were recorded as a reduction to additional paid in capital on our condensed consolidated statements of stockholders’ equity. The 2023 ASR settled during the three months ended June 30, 2023 and we received an additional delivery of 1,974,762 shares of our common stock, which were retired immediately. The 2023 ASR resulted in a total repurchase of 9,574,509 shares of our common stock at a

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volume-weighted-average price, less an agreed upon discount, of $15.67 per share. We were not required to make any additional cash payments or delivery of common stock to the financial institution upon settlement.

In February 2022 and December 2021, we entered into ASR agreements with financial institutions. During the year ended December 31, 2022, we received a total of 11,562,475 shares of our common stock from these ASR agreements, which were retired immediately. Additionally, during the year ended December 31, 2022, we repurchased 1,146,803 shares of our common stock in open market transactions.

Securities Repurchase Program

As of December 31, 2022, we had $642.6 million remaining under the securities repurchase program. During the ~~six~~nine months ended ~~June~~September 30, 2023, we increased our existing securities repurchase program by $200.0 million, repurchased shares of our common stock for $184.5 million and a portion of our notes for ~~$368.6~~$504.4 million. As of ~~June~~September 30, 2023, we had ~~$89.4~~$153.7 million remaining under the securities repurchase program, which has no expiration date and will continue until otherwise suspended, terminated or modified at any time for any reason by our board of directors.

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Share-based Compensation Expense

Total share-based compensation expense recorded for employees and non-employees is as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Cost of revenues	Cost of revenues	$	560	$	669	$	1,087	$	1,292	Cost of revenues	$	598	$	653	$	1,685	$	1,945
Research and development	Research and development	11,968		10,006		22,882		21,782		Research and development	11,027		9,172		33,909		30,954
Sales and marketing	Sales and marketing	2,182		4,019		4,681		8,405		Sales and marketing	2,435		2,771		7,116		11,176
General and administrative	General and administrative	21,210		16,393		41,016		32,692		General and administrative	17,870		21,574		58,886		54,266
Total share-based compensation expense	Total share-based compensation expense	$	35,920	$	31,087	$	69,666	$	64,171	Total share-based compensation expense	$	31,930	$	34,170	$	101,596	$	98,341

During the three and ~~six~~nine months ended ~~June~~September 30, 2023, we capitalized share-based compensation expense of $0.7 million and ~~$1.7~~$2.4 million, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, we capitalized share-based compensation expense of ~~$2.3~~$0.7 million and ~~$4.1~~$4.8 million, respectively. As of ~~June~~September 30, 2023, total unrecognized share-based compensation expense was approximately ~~$204.8~~$170.7 million, which is expected to be recognized over the remaining weighted-average vesting period of approximately ~~2.1~~1.9 years.

Activity for RSUs and PSUs is as follows:


		RSUs and PSUs Outstanding				RSUs and PSUs Outstanding
		Shares Outstanding	Weighted Average Grant Date Fair Value			Shares Outstanding	Weighted Average Grant Date Fair Value
Balance at December 31, 2022	Balance at December 31, 2022	9,155,680	$	36.03	Balance at December 31, 2022	9,155,680	$	36.03
Granted	Granted	5,269,726	15.68		Granted	5,546,566	15.39
Released	Released	(2,080,263)	36.20		Released	(2,852,092)	35.71
Forfeited	Forfeited	(1,182,474)	30.53		Forfeited	(1,554,544)	32.67
Balance at June 30, 2023		11,162,669	26.98
Balance at September 30, 2023					Balance at September 30, 2023	10,295,610	25.51

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Note 10. Restructuring

In June 2023, we announced a reduction in workforce to better position the Company to execute against its AI strategy and to create long-term, sustainable value for its students and investors. This resulted in a management approved restructuring plan that impacted approximately 90 employees primarily in the United States. During the ~~three~~nine months ended ~~June~~September 30, 2023, we recorded restructuring charges of $5.7 million related to one-time employee termination benefits classified on our condensed consolidated statements of operations based on the employees' job function. As of ~~June~~September 30, 2023, ~~$2.0~~$4.7 million in payments have been made and the ~~$3.7~~$1.0 million liability is included within accrued liabilities on our condensed consolidated balance sheets. The total cost of the restructuring plan of $5.7 million has been recorded and we expect it to be substantially completed by the end of fiscal 2023. We expect cost savings from the restructuring plan to be reinvested in future growth opportunities.

Note 11. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Content	$	325,811	$	339,879
Software	43,595		45,422
Leasehold improvements	10,784		10,860
Furniture and fixtures	5,147		4,952
Computer and equipment	3,514		3,321
Property and equipment	388,851		404,434
Less accumulated depreciation and amortization	(220,116)		(200,051)
Property and equipment, net	$	168,735	$	204,383

Depreciation and content amortization expense during the three and nine months ended September 30, 2023 was $56.9 million and $108.9 million, respectively, which included the $34.2 million accelerated depreciation discussed below. Depreciation and content amortization expense during the three and nine months ended September 30, 2022 was $22.4 million and $64.3 million, respectively.

As part of the design and build of our new generative AI experience, in August 2023, we streamlined our product experiences. As a result, we elected to abandon certain content and software assets and accelerated depreciation over shortened useful lives for completed assets as well as impaired in-progress software assets prior to their completion. We also recognized other costs associated with abandoning these content and software assets. Additionally, we impaired our internships.com trade name and adjusted the carrying value to zero. The total content and related assets charge has been recorded during the three months ended September 30, 2023.

Condensed consolidated statements of operations classification and total charge recorded is as follows (in thousands):


	Classification	Total charge
Accelerated depreciation of content and software	Cost of revenues	$	34,195
Impairment of in-progress software	Cost of revenues	2,616
Other costs	Cost of revenues	1,431
Total costs of revenues		38,242
Impairment of indefinite-lived trade name	General and administrative	3,600
Total general and administrative expense		3,600
Total content and related assets charge		$	41,842

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See the section titled “Note about Forward-Looking Statements” for additional information. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q.

Overview

Millions of people all around the world Learn with Chegg. Our mission is to improve learning and learning outcomes by putting students first. We support life-long learners starting with their academic journey and extending into their careers. The Chegg platform provides products and services to support learners to help them better understand their academic course materials, and also provides personal and professional development skills training, to help them achieve their learning goals.

Our long-term strategy is centered upon our ability to utilize our Subscription Services to increase student engagement with our learning platform. We continue to invest in the expansion of our offerings and technology platform to provide a more compelling and personalized solution and deepen engagement with students. ~~More recently,~~As AI technologies continue to advance, we ~~have~~are taking advantage of the increased opportunities by leveraging new tools to better serve our students. We rapidly realigned our investments and resources around ~~our artificial intelligence efforts,~~AI earlier this year, and we continue to position ourselves for success, including ~~developing the~~utilizing Chegg technology as well as third-party AI tools to develop large language models ~~required for~~(LLMs) that will allow our students to ~~have~~see a ~~fully generative,~~much simpler, conversational ~~experience. In addition, we believe these investments will allow us~~user interface, personalized learning pathways, more in-depth content, and the ability to ~~sustain profitability and remain cash-flow positive in the long-term.~~transform it automatically into innovative study tools. Our ability to achieve these long-term objectives is subject to numerous risks and uncertainties, including our ability to attract, retain, and increasingly engage the student population, reduced traffic to our services, and other factors, such as the rapidly changing development of artificial intelligence technologies and global macroeconomic conditions, which continue to evolve and affect our business and results of operations. Student interest in and usage of artificial intelligence technologies have increased, which we believe has and may continue to negatively impact the number of subscriber acquisitions. As a result, we are experiencing an adverse effect on our operating results, growth and financial condition, which may continue. These risks and uncertainties are described in greater detail in Part I,II, Item 1A, “Risk Factors.”

During the three and ~~six~~nine months ended ~~June~~September 30, 2023, we generated net revenues of ~~$182.9~~$157.9 million and ~~$370.5~~$528.3 million, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, we generated net revenues of ~~$194.7~~$164.7 million and ~~$397.0~~$561.7 million, respectively.

We have changed our revenue disaggregation to Subscription Services and Skills and Other to better reflect the nature and timing of revenue and cash flows. Subscription Services includes revenues from our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings. Skills and Other includes revenues from our Skills, advertising services, print textbooks and eTextbooks offerings. We no longer present our Required Materials product line separately as we no longer expect to have significant revenue from our print textbook and eTextbooks offerings.

We have presented revenues for our two product lines, Subscription Services and Skills and Other, based on how students view us and the utilization of our products by them. More detail on our two product lines is discussed in the next two sections titled “Subscription Services” and “Skills and Other.”

Subscription Services

Our Subscription Services can be accessed internationally through our websites and on mobile devices and include Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu and students typically pay to access our Subscription Services on a monthly basis. Revenues from our Subscription Services are primarily recognized ratably over the monthly subscription period whereas the number of subscribers are determined as those who have paid to access our services at any time during the period. Changes in revenues are primarily related to changes in subscribers however they may not necessarily coincide as a result of timing. Our Chegg Study subscription service provides “Expert Questions and Answers” and step-by-step “Textbook Solutions,” helping students with their course work. When students need writing help, including plagiarism detection scans and creating citations for their papers, they can use our Chegg Writing subscription service. Our Chegg Math subscription service, including Mathway, helps students understand math by providing a step-by-step math solver and calculator. We also offer our Chegg Study Pack as a premium subscription bundle of our Chegg Study, Chegg Writing, and Chegg Math services, which also includes additional features such as flashcards, concept videos, practice questions and quizzes,

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and instructor-created materials through Uversity. Our Busuu language learning platform offers a comprehensive solution

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through a combination of self-paced lessons, live classes with expert tutors and the ability to learn and practice with members of the Busuu language learning community.

In the aggregate, Subscription Services revenues were ~~91%~~89% and 90% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~90%~~89% and 88% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

Skills and Other

Our Skills and Other product line includes revenues from Skills, advertising services, print textbooks and eTextbooks. Our skills-based learning platform offers professional courses focused on the most in-demand technology skills. We work with leading brands and programmatic partners to deliver advertising across our platforms. We also provide a platform for students to rent or buy print textbooks and eTextbooks, which helps students save money compared to the cost of buying new.

In the aggregate, Skills and Other revenues were 9%11% and 10% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~10%~~11% and 12% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

Seasonality of Our Business

Revenues from Subscription Services are primarily recognized ratably over the subscription term which has generally resulted in our highest revenues and profitability in the fourth quarter as it reflects more days of the academic year. Certain variable expenses, such as marketing expenses, remain highest in the first and third quarters such that our profitability may not provide meaningful insight on a sequential basis. As a result of these factors, the most concentrated periods for our revenues and expenses do not necessarily coincide, and comparisons of our historical quarterly results of operations on a sequential basis may not provide meaningful insight into our overall financial performance.

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Results of Operations

The following table summarizes our historical condensed consolidated statements of operations (in thousands, except percentage of total net revenues):


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022					2023				2022				2023				2022
Net revenues	Net revenues	$	182,853	100	%	$	194,721	100	%	$	370,454	100	%	$	396,965	100	%	Net revenues	$	157,854	100	%	$	164,739	100	%	$	528,308	100	%	$	561,704	100	%
Cost of revenues(1)	Cost of revenues(1)	47,412		26		45,684		23		96,562		26		100,769		25		Cost of revenues(1)	83,575		53		45,203		27		180,137		34		145,972		26
Gross profit	Gross profit	135,441		74		149,037		77		273,892		74		296,196		75		Gross profit	74,279		47		119,536		73		348,171		66		415,732		74
Operating expenses:	Operating expenses:																	Operating expenses:
Research and development(1)	Research and development(1)	52,872		29		52,480		27		99,779		27		104,895		27		Research and development(1)	46,202		30		45,426		28		145,981		27		150,321		27
Sales and marketing(1)	Sales and marketing(1)	30,956		17		35,279		18		67,973		18		77,777		20		Sales and marketing(1)	28,872		18		31,803		19		96,845		18		109,580		20
General and administrative(1)	General and administrative(1)	70,309		38		53,935		28		129,282		35		100,805		25		General and administrative(1)	57,075		36		53,742		33		186,357		35		154,547		27

Total operating expenses	Total operating expenses	154,137		84		141,694		73		297,034		80		283,477		72		Total operating expenses	132,149		84		130,971		80		429,183		80		414,448		74
(Loss) income from operations	(Loss) income from operations	(18,696)		(10)		7,343		4		(23,142)		(6)		12,719		3		(Loss) income from operations	(57,870)		(37)		(11,435)		(7)		(81,012)		(14)		1,284		—
Total interest expense, net and other income, net	Total interest expense, net and other income, net	62,989		34		193		0		73,797		20		4,776		1		Total interest expense, net and other income, net	39,759		25		95,733		58		113,556		21		100,509		18
Income before provision for income taxes		44,293		24		7,536		4		50,655		14		17,495		4
Provision for income taxes		(19,681)		(11)		(60)		0		(23,857)		(7)		(4,277)		(1)
Net income		$	24,612	13	%	$	7,476	4	%	$	26,798	7	%	$	13,218	3	%
(Loss) income before (provision for) benefit from income taxes																		(Loss) income before (provision for) benefit from income taxes	(18,111)		(12)		84,298		51		32,544		7		101,793		18
(Provision for) benefit from income taxes																		(Provision for) benefit from income taxes	(172)		0		167,264		102		(24,029)		(5)		162,987		29
Net (loss) income																		Net (loss) income	$	(18,283)	(12)	%	$	251,562	153	%	$	8,515	2	%	$	264,780	47	%

(1) Includes share-based compensation expense as follows:	(1) Includes share-based compensation expense as follows:																	(1) Includes share-based compensation expense as follows:
Cost of revenues	Cost of revenues	$	560			$	669			$	1,087			$	1,292			Cost of revenues	$	598			$	653			$	1,685			$	1,945
Research and development	Research and development	11,968				10,006				22,882				21,782				Research and development	11,027				9,172				33,909				30,954
Sales and marketing	Sales and marketing	2,182				4,019				4,681				8,405				Sales and marketing	2,435				2,771				7,116				11,176
General and administrative	General and administrative	21,210				16,393				41,016				32,692				General and administrative	17,870				21,574				58,886				54,266
Total share-based compensation expense	Total share-based compensation expense	$	35,920			$	31,087			$	69,666			$	64,171			Total share-based compensation expense	$	31,930			$	34,170			$	101,596			$	98,341

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Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

Net Revenues

The following tables set forth our total net revenues for the periods shown for our Subscription Services and Skills and Other product lines (in thousands, except percentages):


		Three Months Ended June 30,				Change				Three Months Ended September 30,						Change
		2023		2022		$		%				2023		2022			$		%
Subscription Services	Subscription Services	$	165,855	$	175,424	$	(9,569)	(5)	%		Subscription Services	$	139,912	$	146,001		$	(6,089)	(4)	%
Skills and Other	Skills and Other	16,998		19,297		(2,299)		(12)			Skills and Other	17,942		18,738			(796)		(4)
Total net revenues	Total net revenues	$	182,853	$	194,721	$	(11,868)	(6)			Total net revenues	$	157,854	$	164,739		$	(6,885)	(4)


		Six Months Ended June 30,				Change					Nine Months Ended September 30,				Change
		2023		2022		$		%			2023		2022		$		%
Subscription Services	Subscription Services	$	334,295	$	348,461	$	(14,166)	(4)	%	Subscription Services	$	474,207	$	494,462	$	(20,255)	(4)	%
Skills and Other	Skills and Other	36,159		48,504		(12,345)		(25)		Skills and Other	54,101		67,242		(13,141)		(20)
Total net revenues	Total net revenues	$	370,454	$	396,965	$	(26,511)	(7)		Total net revenues	$	528,308	$	561,704	$	(33,396)	(6)

Subscription Services revenues decreased ~~$9.6~~$6.1 million, or 5%4%, and ~~$14.2~~$20.3 million, or 4%, during the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to the same periods in 2022. The decrease was primarily due to a 8%, 9%, and 5% decrease in subscribers who have paid to access our services during the three months ended September 30, 2023, June 30, 2023 and March 31, 2023, respectively, compared to the same periods in 2022. Subscription Services revenues were ~~91%~~89% and 90% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~90%~~89% and 88% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

Skills and Other revenues decreased ~~$2.3~~$0.8 million, or ~~12%, and $12.3 million, or 25%~~4%, during the three ~~and six~~ months ended ~~June~~September 30, 2023 ~~respectively,~~ compared to the same ~~periods~~period in 2022, remaining relatively flat. Skills and Other revenues decreased $13.1 million, or 20% during the nine months ended September 30, 2023, compared to the same period in 2022. The decrease was primarily due to lower revenues of $22.5 million from print textbooks and eTextbooks as a result of recognizing revenue on a net basis from our partnership with GT Marketplace, LLC that began in April ~~2022 of $4.9 million and $19.2 million, respectively.~~2022. Skills and Other revenues were 9%11% and 10% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~10%~~11% and 12% of net revenues during the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

Cost of Revenues

The following tables set forth our cost of revenues for the periods shown (in thousands, except percentages):


		Three Months Ended June 30,				Change				Three Months Ended September 30,						Change
		2023		2022		$		%				2023		2022			$		%
Cost of revenues(1)	Cost of revenues(1)	$	47,412	$	45,684	$	1,728	4	%		Cost of revenues(1)	$	83,575	$	45,203		$	38,372	85	%

(1) Includes share-based compensation expense of:	(1) Includes share-based compensation expense of:	$	560	$	669	$	(109)	(16)	%		(1) Includes share-based compensation expense of:	$	598	$	653		$	(55)	(8)	%


		Six Months Ended June 30,				Change					Nine Months Ended September 30,				Change
		2023		2022		$		%			2023		2022		$		%
Cost of revenues(1)	Cost of revenues(1)	$	96,562	$	100,769	$	(4,207)	(4)	%	Cost of revenues(1)	$	180,137	$	145,972	$	34,165	23	%

(1) Includes share-based compensation expense of:	(1) Includes share-based compensation expense of:	$	1,087	$	1,292	$	(205)	(16)	%	(1) Includes share-based compensation expense of:	$	1,685	$	1,945	$	(260)	(13)	%

Cost of revenues increased during the three and nine months ended September 30, 2023, compared to the same periods in 2022, due to the $38.2 million content and related assets charge, primarily comprised of accelerated depreciation expense, recorded as we realign our resources around our AI strategy. As a result, we expect cost of revenues to decrease in the near term, resulting in an increase in gross margin. See Note 11, “Property and Equipment, Net” of our accompanying Notes to

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Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q for additional information.

Cost of revenues increased ~~$1.7~~$38.4 million, or 4%85%, during the three months ended ~~June~~September 30, 2023, compared to the same period in 2022 primarily attributable to the content and related assets charge. Gross margins decreased to 47%during the three months ended September 30, 2023, from 73% during the same period in 2022.

Cost of revenues increased $34.2 million, or 23%, during the nine months ended September 30, 2023, compared to the same period in 2022. The increase was primarily attributable to the content and related assets charge of $38.2 million and higher other depreciation and amortization expense of ~~$4.9~~$11.0 million partially offset by ~~the absence of transitional logistic charges of $1.2 million. Gross margins decreased to 74%during the three months ended June 30, 2023, from 77% during the same period in 2022.~~

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~~Cost of revenues decreased $4.2 million, or 4%, during the six months ended June 30, 2023, compared to the same period in 2022. The decrease was primarily attributable to~~ the absence of print textbook and eTextbook related costs of ~~$9.5~~$9.2 million, ~~lower transitional logistic charges of $1.3 million, and~~ lower employee-related expenses, including share-based compensation expense, of ~~$1.3~~$2.3 million, ~~partially offset by higher other depreciation~~ and ~~amortization expense~~lower transitional logistic charges of ~~$10.2~~$1.9 million. Gross margins decreased to ~~74%~~66% during the ~~six~~nine months ended ~~June~~September 30, 2023, from ~~75%~~74% during the same period in 2022.

Operating Expenses

The following tables set forth our total operating expenses for the periods shown (in thousands, except percentages):


		Three Months Ended June 30,				Change				Three Months Ended September 30,						Change
		2023		2022		$		%				2023		2022			$		%
Research and development(1)	Research and development(1)	$	52,872	$	52,480	$	392	1	%		Research and development(1)	$	46,202	$	45,426		$	776	2	%
Sales and marketing(1)	Sales and marketing(1)	30,956		35,279		(4,323)		(12)			Sales and marketing(1)	28,872		31,803			(2,931)		(9)
General and administrative(1)	General and administrative(1)	70,309		53,935		16,374		30			General and administrative(1)	57,075		53,742			3,333		6

Total operating expenses	Total operating expenses	$	154,137	$	141,694	$	12,443	9			Total operating expenses	$	132,149	$	130,971		$	1,178	1

(1) Includes share-based compensation expense of:	(1) Includes share-based compensation expense of:										(1) Includes share-based compensation expense of:
Research and development	Research and development	$	11,968	$	10,006	$	1,962	20	%		Research and development	$	11,027	$	9,172		$	1,855	20	%
Sales and marketing	Sales and marketing	2,182		4,019		(1,837)		(46)			Sales and marketing	2,435		2,771			(336)		(12)
General and administrative	General and administrative	21,210		16,393		4,817		29			General and administrative	17,870		21,574			(3,704)		(17)
Share-based compensation expense	Share-based compensation expense	$	35,360	$	30,418	$	4,942	16			Share-based compensation expense	$	31,332	$	33,517		$	(2,185)	(7)


		Six Months Ended June 30,				Change				Nine Months Ended September 30,						Change
		2023		2022		$		%				2023		2022			$		%
Research and development(1)	Research and development(1)	$	99,779	$	104,895	$	(5,116)	(5)	%		Research and development(1)	$	145,981	$	150,321		$	(4,340)	(3)	%
Sales and marketing(1)	Sales and marketing(1)	67,973		77,777		(9,804)		(13)			Sales and marketing(1)	96,845		109,580			(12,735)		(12)
General and administrative(1)	General and administrative(1)	129,282		100,805		28,477		28			General and administrative(1)	186,357		154,547			31,810		21

Total operating expenses	Total operating expenses	$	297,034	$	283,477	$	13,557	5			Total operating expenses	$	429,183	$	414,448		$	14,735	4

(1) Includes share-based compensation expense of:	(1) Includes share-based compensation expense of:										(1) Includes share-based compensation expense of:
Research and development	Research and development	$	22,882	$	21,782	$	1,100	5	%		Research and development	$	33,909	$	30,954		$	2,955	10	%
Sales and marketing	Sales and marketing	4,681		8,405		(3,724)		(44)			Sales and marketing	7,116		11,176			(4,060)		(36)
General and administrative	General and administrative	41,016		32,692		8,324		25			General and administrative	58,886		54,266			4,620		9
Share-based compensation expense	Share-based compensation expense	$	68,579	$	62,879	$	5,700	9			Share-based compensation expense	$	99,911	$	96,396		$	3,515	4

Research and Development

Research and development expenses increased ~~$0.4~~$0.8 million, or 1%2%, during the three months ended ~~June~~September 30, 2023 compared to the same period in 2022, ~~primarily attributable to restructuring charges of $1.7 million.~~remaining relatively flat. Research and development expenses as a percentage of net revenues were ~~29%~~30% during the three months ended ~~June~~September 30, 2023 compared to ~~27%~~28% during the same period in 2022.

Research and development expenses decreased ~~$5.1~~$4.3 million, or 5%3%, during the ~~six~~nine months ended ~~June~~September 30, 2023 compared to the same period in 2022. The decrease was primarily attributable to lower employee-related expenses, including share-based compensation expense, of ~~$2.1~~$2.0 million, and lower contractor spend of ~~$1.0~~$1.6 million, partially offset by restructuring charges of $1.7 million. Research and development expenses as a percentage of net revenues were 27% during the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

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Sales and Marketing

Sales and marketing expenses decreased by ~~$4.3~~$2.9 million, or ~~12%~~9%, during the three months ended ~~June~~September 30, 2023, compared to the same period in 2022. The decrease was primarily attributable to lower ~~marketing expenses of $2.2 million, primarily due to Busuu, and lower~~ employee-related expenses, including share-based compensation expense, of ~~$2.0 million, partially offset by restructuring charges of $1.2~~$1.5 million. Sales and marketing expenses as a percentage of net revenues were ~~17%~~18% during the three months ended ~~June~~September 30, 2023 compared to ~~18%~~19% during the same period in 2022.

Sales and marketing expenses decreased by ~~$9.8~~$12.7 million, or ~~13%~~12%, during the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the same period in 2022. The decrease was primarily attributable to lower paid marketing expenses of ~~$5.7~~$5.6 million, primarily due to Busuu, and lower employee-related expenses, including share-based compensation expense, of ~~$3.2~~$4.7 million, partially offset by restructuring charges of $1.2 million. Sales and marketing expenses as a percentage of net revenues were 18% during the ~~six~~nine months ended ~~June~~September 30, 2023 compared to 20% during the same period in 2022.

General and Administrative

General and administrative expenses increased ~~$16.4~~$3.3 million, or ~~30%~~6%, during the three months ended ~~June~~September 30, 2023 compared to the same period in 2022. The increase was primarily due to an impairment charge related to our intangible asset of $3.6 million, which was part of the content and related assets charge as we realign our resources around our AI strategy, which was partially offset by lower employee-related expenses, including share-based compensation expense, of $2.0 million. General and administrative expenses as a percentage of net revenues were 36% during the three months ended September 30, 2023 compared to 33% during the same period in 2022.

General and administrative expenses increased $31.8 million, or 21%, during the nine months ended September 30, 2023 compared to the same period in 2022. The increase was primarily due to higher employee-related expenses, including share-based compensation expense, of ~~$10.6~~$18.2 million, a loss contingency accrual of $7.0 million, ~~and~~ restructuring charges of $2.8 million, an impairment charge related to our intangible asset of $3.6 million, which was ~~partially offset by the absence~~part of the ~~impairment on lease~~content and related assets ~~of $3.4 million. General and administrative expenses~~charge as ~~a percentage of net revenues were 38% during the three months ended June 30, 2023 compared to 28% during the same period in 2022.~~

General and administrative expenses increased $28.5 million, or 28%, during the six months ended June 30, 2023 compared to the same period in 2022. The increase was primarily due to higher employee-related expenses, including share-based compensation expense, of $20.2 million, a loss contingency accrual of $7.0 million, and restructuring charges of $2.8 million,we realign our resources around our AI strategy, which was partially offset by the absence of the impairment on lease related assets of $3.4 million. General and administrative expenses as a percentage of net revenues were 35% during the ~~six~~nine months ended ~~June~~September 30, 2023 compared to ~~25%~~27% during the same period in 2022.

Interest Expense and Other Income, Net

The following tables set forth our interest expense and other income, net, for the periods shown (in thousands, except percentages):


		Three Months Ended June 30,				Change				Three Months Ended September 30,						Change
		2023		2022		$		%				2023		2022			$		%
Interest expense, net	Interest expense, net	$	(1,114)	$	(1,616)	$	502	(31)	%		Interest expense, net	$	(733)	$	(1,525)		$	792	(52)	%
Other income, net	Other income, net	64,103		1,809		62,294		n/m			Other income, net	40,492		97,258			(56,766)		n/m
Total interest expense, net and other income, net	Total interest expense, net and other income, net	$	62,989	$	193	$	62,796	n/m			Total interest expense, net and other income, net	$	39,759	$	95,733		$	(55,974)	n/m


		Six Months Ended June 30,				Change					Nine Months Ended September 30,				Change
		2023		2022		$		%			2023		2022		$		%
Interest expense, net	Interest expense, net	$	(2,382)	$	(3,213)	$	831	(26)	%	Interest expense, net	$	(3,115)	$	(4,738)	$	1,623	(34)	%
Other income, net	Other income, net	76,179		7,989		68,190		n/m		Other income, net	116,671		105,247		11,424		n/m
Total interest expense, net and other income, net	Total interest expense, net and other income, net	$	73,797	$	4,776	$	69,021	n/m		Total interest expense, net and other income, net	$	113,556	$	100,509	$	13,047	n/m

n/m - not meaningful

Interest expense, net decreased ~~$0.5 million, or 31%, and~~ $0.8 million, or ~~26%~~52%, and $1.6 million, or 34%, during the three and ~~six~~nine months ended ~~June~~September 30, 2023 compared to the same periods in 2022, primarily due to the partial ~~extinguishment~~extinguishments of the 2026 notes in August ~~2022.~~2022 and May 2023 and the 2025 notes in May 2023.

Other income, net ~~increased $62.3~~decreased $56.8 million during the three months ended ~~June~~September 30, 2023 compared to the same period in 2022 primarily due to the absence of the $93.5 million gain on early extinguishment of a portion of the 2026 notes that occurred in August 2022, partially offset by $32.1 million gain on early extinguishment of a portion of the 2026 notes and an

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increase in interest income of $4.7 million. Other income, net increased $11.4 million, during the nine months ended September 30, 2023 compared to the same period in 2022 primarily due to a ~~$53.8~~$85.9 million gain on early ~~extinguishment~~extinguishments of a portion of the 2026 notes and 2025 notes and an increase in interest income of ~~$8.6 million. Other income, net increased $68.2~~$23.1 million, ~~during~~partially offset by the ~~six months ended June 30, 2023 compared to~~absence of the ~~same period in 2022 primarily due to a $53.8~~$93.5 million gain on early extinguishment of a portion of the

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2026 notes ~~and 2025 notes and an increase~~that occurred in ~~interest income of $18.4 million, partially offset by~~August 2022 and the absence of the $4.6 million gain on foreign currency remeasurement of purchase consideration related to our acquisition of Busuu.

(Provision ~~for Income Taxes~~for) benefit from income taxes

The following tables set forth our ~~provision for~~(provision for) benefit from income taxes for the periods shown (in thousands, except percentages):

Three Months Ended
June 30, Change
2023 2022 $ %
Provision for income taxes $ (19,681) $ (60) $ (19,621) n/m


	Three Months Ended September 30,				Change
	2023		2022		$		%
(Provision for) benefit from income taxes	$	(172)	$	167,264	$	(167,436)	n/m

Six Months Ended
June 30, Change
2023 2022 $ %
Provision for income taxes $ (23,857) $ (4,277) $ (19,580) n/m


	Nine Months Ended September 30,				Change
	2023		2022		$		%
(Provision for) benefit from income taxes	$	(24,029)	$	162,987	$	(187,016)	n/m

n/m - not meaningful

(Provision ~~for~~for) benefit from income taxes increased ~~$19.6~~$167.4 million and $187.0 million during the three and nine months ended ~~June~~September 30, 2023 compared to the same ~~period~~periods in 2022. The increase was primarily due to the absence of a valuation allowance benefit as a result of releasing our valuation allowance against a substantial amount of our U.S. deferred tax assets in 2022.

Provision for income taxes increased $19.6 million during the six months ended June 30, 2023 compared to the same period in 2022. The increase was primarily due to the absence of a valuation allowance benefit as a result of releasing our valuation allowance against a substantial amount of our U.S. deferred tax assets in 2022 partially offset by the benefit of releasing uncertain tax positions in India.

Liquidity and Capital Resources

As of ~~June~~September 30, 2023, our principal sources of liquidity were cash, cash equivalents, and investments totaling ~~$807.8~~$673.8 million, which were held for working capital purposes. The substantial majority of our net revenues are from e-commerce transactions with students, which are settled immediately through payment processors, as opposed to our accounts payable, which are settled based on contractual payment terms with our suppliers.

In ~~June 2022,~~August 2023, our board of directors approved a ~~$1.0 billion~~$200.0 million increase to our existing securities repurchase program authorizing the repurchase of up to ~~$2.0~~$2.2 billion of our common stock and/or convertible notes, through open market purchases, block trades, and/or privately negotiated transactions or pursuant to Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements. The timing, volume, and nature of the repurchases will be determined by management based on the capital needs of the business, market conditions, applicable legal requirements, and other factors. We have entered into accelerated share repurchase programs with financial institutions for $750.0 million, repurchased shares in open market transactions for $57.6 million and repurchased our convertible senior notes in privately-negotiated transactions for aggregate consideration of ~~$1,103.0~~$1,238.7 million. As of ~~June~~September 30, 2023, we had ~~$89.4~~$153.7 million remaining under the securities repurchase program, which has no expiration date and will continue until otherwise suspended, terminated or modified at any time for any reason by our board of directors.

In February 2021, we completed an equity offering in which we raised net proceeds of $1,091.5 million, after deducting underwriting discounts and commissions and offering ~~expenses (2021 equity offering).~~expenses. In August 2020 and March/April 2019, we closed offerings of our 2026 notes and 2025 notes, generating net proceeds of approximately $984.1 million and $780.2 million, respectively, in each case after deducting the initial purchasers’ discount and estimated offering expenses payable by us. The 2026 notes and 2025 notes mature on September 1, 2026 and March 15, 2025, respectively, unless converted, redeemed or repurchased in accordance with their terms prior to such dates.

As of ~~June~~September 30, 2023, we have incurred cumulative losses of ~~$43.8~~$62.0 million from our operations and we may incur additional losses in the future. Our operations have been financed primarily by equity and convertible senior notes offerings as well as cash generated from operations.

Aside from the changes in operating lease obligations and unfunded commitments as disclosed in Note 1, “Background and Basis of Presentation,” and Note 4, “Cash and Cash Equivalents, Investments and Fair Value Measurements,” respectively,

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of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (Unaudited)” of this Quarterly Report on Form 10-Q, there were no other material changes in our commitments under contractual obligations, as disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

We believe that our existing sources of liquidity will be sufficient to fund our operations and debt service obligations for at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, our investments in research and development activities, our acquisition of new products and services, and our sales and marketing activities. To the extent that existing cash and cash from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all. If adequate funds are not available on acceptable terms, or at all, we may be unable to adequately fund our business plans and it could have a negative effect on our business, operating cash flows and financial condition.

Most of our cash, cash equivalents, and investments are held in the United States. As of ~~June~~September 30, 2023, our foreign subsidiaries held an insignificant amount of cash in foreign jurisdictions. We currently do not intend or foresee a need to repatriate these foreign funds; however, as a result of the Tax Cuts and Jobs Act, we anticipate the U.S. federal impact to be minimal if these foreign funds are repatriated. In addition, based on our current and future needs, we believe our current funding and capital resources for our international operations are adequate.

The following table sets forth our cash flows (in thousands):


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Condensed Consolidated Statements of Cash Flows Data:	Condensed Consolidated Statements of Cash Flows Data:					Condensed Consolidated Statements of Cash Flows Data:
Net cash provided by operating activities	Net cash provided by operating activities	$	135,907	$	143,755	Net cash provided by operating activities	$	168,714	$	181,716
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	129,453		(293,819)		Net cash provided by (used in) investing activities	155,239		(237,775)
Net cash used in financing activities	Net cash used in financing activities	(563,819)		(306,113)		Net cash used in financing activities	(702,806)		(732,949)

Cash Flows from Operating Activities

Net cash provided by operating activities during the ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$135.9~~$168.7 million. Our net income of ~~$26.8~~$8.5 million was increased by significant non-cash operating expenses including share-based compensation expense of ~~$69.7~~$101.6 million, other depreciation and amortization expense of ~~$52.0~~$108.9 million, which includes $34.2 million of accelerated depreciation expense recorded as we realign our resources around our AI strategy and develop the new Chegg product experience, deferred income taxes of ~~$20.1~~$20.9 million, and a loss contingency of $7.0 million, partially offset by the gain on early extinguishment of a portion of the 2026 notes and 2025 notes of ~~$53.8~~$85.9 million.

Net cash provided by operating activities during the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$143.8~~$181.7 million. Our net income of ~~$13.2~~$264.8 million was increased by ~~the change in our prepaid expenses of $28.8 million. We also had~~ significant non-cash operating expenses including share-based compensation expense of ~~$64.2~~$98.3 million and other depreciation and amortization expense of ~~$41.9~~$64.3 million, partially offset by the gain on early extinguishment of debt of $93.5 million and the tax benefit related to release of valuation allowance of $174.6 million.

Cash Flows from Investing Activities

Net cash provided by investing activities during the ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$129.5~~$155.2 million and was related to the maturities of investments of ~~$476.9~~$561.2 million and proceeds from sale of our investments of $238.7 million, partially offset by purchases of investments of ~~$552.4~~$585.3 million and the purchases of property and equipment of ~~$33.9~~$57.3 million.

Net cash used in investing activities during the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$293.8~~$237.8 million and was related to the acquisition of a business of $401.1 million, the purchases of investments of ~~$356.6~~$534.0 million, the purchases of property and equipment of ~~$57.3~~$79.2 million and the ~~purchases~~purchase of ~~textbooks~~a strategic equity investment of ~~$3.8~~$6.0 million, partially offset by the ~~maturity~~maturities of investments of ~~$522.5 million and proceeds from the disposition of textbooks of $2.5~~$783.9 million.

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Cash Flows from Financing Activities

Net cash used in financing activities during the ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$563.8~~$702.8 million and was primarily related to the repayment of a portion of our 2026 notes and 2025 notes of ~~$369.8~~$506.0 million, repurchases of common stock of $186.4 million and payment of ~~$11.1~~$13.9 million in taxes related to the net share settlement of equity awards.

Net cash used in financing activities during the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$306.1~~$732.9 million and was primarily related to the repayment of a portion of our 2026 notes of $401.2 million, repurchases of common stock of ~~$300.5~~$323.5 million and payment of ~~$10.2~~$12.8 million in taxes related to the net share settlement of equity awards, partially offset by proceeds from issuance of common stock under stock plans of $4.6 million.

Critical Accounting Policies, Significant Judgments and Estimates

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes in our critical accounting policies and estimates during the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to the critical accounting policies and estimates disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements

For relevant recent accounting pronouncements, see Note 1, “Background and Basis of Presentation,” of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the disclosures in Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 4. CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

(b)Changes in Internal Control over Financial Reporting

During the ~~six~~nine months ended ~~June~~September 30, 2023, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties, 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, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes in our risk factors from our Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Securities

We had no unregistered sales of our securities during the three months ended ~~June~~September 30, 2023.

Purchases of Securities by the Registrant and Affiliated Purchasers

~~The following table summarizes the securities repurchase activity~~We did not purchase any of our common stock during the three months ended ~~June~~September 30, ~~2023 (in thousands, except average price paid per security and total number of securities repurchased):~~

Period
Total Number of Securities Repurchased(1)
Average Price Paid Per Security Total Number of Securities Purchased Pursuant to Publicly-Announced Plan Total Dollar Amount Purchased Pursuant to Publicly-Announced Plan
Maximum Dollar Amount Remaining Available for Repurchase Pursuant to Publicly-Announced Plan(2)
April 1 - April 30 — $ — — $ — $ 492,564
May 1 - May 31 1,974,762 15.6666 1,974,762 — 123,953
June 1 - June 30 3,433,157 10.0528 3,433,157 34,513 89,440

~~(1)~~ In May 2023, we received an additional delivery of 1,974,762 shares of our common stock related to the 2023 ASR; however, this did not impact the remaining securities repurchase amount as we made an upfront payment of $150.0 million in February 2023.

~~(2)~~ ~~In May 2023, we repurchased $368.6 million convertible senior notes resulting in $124.0 million of our securities repurchase program amount remaining.~~

See Note 5, “Convertible Senior Notes” and Note 9, “Stockholders' Equity” of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (Unaudited)” of this Quarterly Report on Form 10-Q for additional information on the repurchase of convertible senior notes, the securities repurchase program, and the 2023 ASR.

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ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

~~The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our Section 16 officers and directors for~~During the three months ended ~~June~~September 30, 2023, ~~each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act ("Rule 10b5-1 Plan"), were as follows:~~

~~Name~~

~~Title~~

~~Action~~

~~Date Adopted~~

~~Expiration Date~~

~~Aggregate # of Securities to be Purchased/Sold~~

~~Andrew Brown(1)~~

~~Chief Financial Officer~~

~~Adoption~~

~~May 19, 2023~~

~~June 28, 2024~~

~~28,241~~

~~(1)~~ Andrew Brown, the Company's Chief Financial Officer, entered into a Rule 10b5-1 Plan on May 19, 2023. Mr. Brown's plan provides for the potential sale of up to 28,241 shares of the Company's common stock. The plan expires on June 28, 2024, or upon the earlier completion of all authorized transactions under the plan.

~~None~~none of our Section 16 officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of Regulation S-K during the covered period.

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ITEM 6. EXHIBITS

Incorporated by Reference

Exhibit
No.

Exhibit

Form

File No

Filing Date

Exhibit No.

Filed
Herewith

Exhibit
No.

Exhibit

Form

File No

Filing Date

Exhibit No.

Filed
Herewith

3.1

2023 Equity Incentive Plan, and forms of agreements thereunder

8-K

001-36180

6/7/23

10.1

3.1

2023 Equity Inducement Plan , and forms of a greements thereunder

S-8

001-36180

10/11/23

99.1

3.2

Amended And Restated Chegg, Inc. 2013 Employee Stock Purchase Plan

8-K

001-36180

6/7/23

10.2

31.01

Certification of Dan Rosensweig, Chief Executive Officer and Co-Chairperson, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.01

Certification of Dan Rosensweig, Chief Executive Officer and Co-Chairperson, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02

Certification of Andrew Brown, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02

Certification of Andrew Brown, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01**

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.01**

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema

101.SCH

Inline XBRL Taxonomy Extension Schema

101.CAL

Inline XBRL Taxonomy Extension Calculation

101.CAL

Inline XBRL Taxonomy Extension Calculation

101.LAB

Inline XBRL Taxonomy Extension Labels

101.LAB

Inline XBRL Taxonomy Extension Labels

101.PRE

Inline XBRL Taxonomy Extension Presentation

101.PRE

Inline XBRL Taxonomy Extension Presentation

101.DEF

Inline XBRL Taxonomy Extension Definition

101.DEF

Inline XBRL Taxonomy Extension Definition

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).




**			This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CHEGG, INC.
~~August 7,~~October 30, 2023	By:	/S/ ANDREW BROWN
		Andrew Brown
		Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)


	Three Months Ended June 30, 2023
	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balances at March 31, 2023	119,628	$	120	$	1,120,344	$	(45,338)	$	(68,367)	$	1,006,759
Repurchases of common stock	(5,408)	(6)		(35,051)		—		—		(35,057)
Issuance of common stock upon exercise of stock options and ESPP	358	—		2,935		—		—		2,935
Net share settlement of equity awards	600	1		(3,332)		—		—		(3,331)
Share-based compensation expense	—	—		36,627		—		—		36,627
Proceeds from capped call related to extinguishment of 2025 notes				297		—				297
Other comprehensive income	—	—		—		2,159		—		2,159
Net income	—	—		—		—		24,612		24,612
Balances at June 30, 2023	115,178	$	115	$	1,121,820	$	(43,179)	$	(43,755)	$	1,035,001


Period	Total Number of Securities Repurchased(1)	Average Price Paid Per Security		Total Number of Securities Purchased Pursuant to Publicly-Announced Plan	Total Dollar Amount Purchased Pursuant to Publicly-Announced Plan		Maximum Dollar Amount Remaining Available for Repurchase Pursuant to Publicly-Announced Plan(2)
April 1 - April 30	—	$	—	—	$	—	$	492,564
May 1 - May 31	1,974,762	15.6666		1,974,762	—		123,953
June 1 - June 30	3,433,157	10.0528		3,433,157	34,513		89,440