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Acquisitions | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
Acquisitions | Acquisitions 2020 Acquisition On June 4, 2020, we completed our acquisition of Mathway, LLC (Mathway), an online, on-demand math problem solving company that provides a vast range of subject areas in mathematics, including pre-algebra, algebra, trigonometry, pre-calculus, calculus, and linear algebra, and related disciplines. This acquisition helps to strengthen our existing Chegg Math Solver service with the addition of new subjects, languages, and international reach. The total fair value of the purchase consideration was $101.0 million, of which $93.5 million was paid in cash on the acquisition date and $7.5 million, included within accrued liabilities, was held in escrow as security for general representations and warranties and potential post-closing adjustments. Any remaining escrow amount will be released 15 months after the acquisition date. The Mathway purchase agreement provides for additional payments of up to $15.0 million subject to the achievement of specified milestones and continued employment of the sellers. These payments are not included in the fair value of the purchase consideration but rather are expensed ratably as acquisition-related compensation costs classified as research and development and general and administrative expenses, based on the seller's job function, on our consolidated statement of operations. We have recorded approximately $2.9 million as of December 31, 2020, included within accrued liabilities on our consolidated balance sheet for these payments. The following table presents the preliminary total allocation of purchase consideration recorded on our consolidated balance sheet as of the acquisition date (in thousands):
| Mathway
Cash | $ | 712 |
Accounts receivable | 1,132 |
Other acquired assets | 779 |
Acquired intangible assets | 30,320 |
Total identifiable assets acquired | 32,943 |
Deferred revenue | (1,423) |
Liabilities assumed | (727) |
Net identifiable assets acquired | 30,793 |
Goodwill | 70,167 |
Total fair value of purchase consideration | $ | 100,960 |
Goodwill is primarily attributable to the potential for enhancing our existing offerings and expanding our reach by providing additional mathematics support for students and helping them through their academic journey. The amounts recorded for intangible assets and goodwill are deductible for tax purposes. The following table presents the details of the allocation of purchase consideration to the acquired intangible assets (in thousands, except weighted-average amortization period):
| Mathway
| Amount |  | Weighted-Average Amortization Period (in months)
Trade name | $ | 520 |  |  | 18
Domain names | 220 |  |  | 18
Customer lists | 6,220 |  |  | 48
Developed technology | 23,360 |  |  | 84
Total acquired intangible assets | $ | 30,320 |  |  | 75
During the year ended December 31, 2020, we incurred $3.1 million of acquisition-related expenses associated with our acquisition of Mathway, which have been included in general and administrative expense on our consolidated statement of operations. We have recorded immaterial amounts of revenue and earnings from Mathway since the acquisition date. The following unaudited supplemental pro forma net loss is for informational purposes only and presents our combined results as if the acquisition of Mathway had occurred on January 1, 2019. The unaudited supplemental pro forma information includes the historical combined operating results adjusted for acquisition-related compensation costs, amortization of intangible assets, share-based compensation expense and acquisition-related expenses and does not necessarily reflect the actual results that would have been achieved, nor is it necessarily indicative of our future consolidated results. During the years ended December 31, 2020 and 2019, our supplemental pro forma net loss would have been $6.1 million and $27.3 million, respectively. Revenues from Mathway were immaterial during the years ended December 31, 2020 and 2019. 2019 Acquisition On October 1, 2019, we completed our acquisition of Thinkful, Inc. (Thinkful), our skills-based learning platform that offers professional courses in software engineering, UX/UI design, digital marketing, data science, product management, data analytics, product design, and technical project management directly to students across the United States to expand our existing offerings by adding affordable and high-quality courses focused on the most in-demand technology skills. The total fair value of the purchase consideration was $79.2 million, which was paid in cash and included an escrow amount of $9.0 million for general representations and warranties and potential post-closing adjustments. Any remaining escrow amount will be released 18 months after the acquisition date. Included in the purchase agreement for the acquisition of Thinkful are additional payments of up to $20.0 million subject to the achievement of specified milestones and continued employment of key employees. These payments are not included in the fair value of the purchase consideration and are expensed ratably as acquisition related compensation costs classified as research and development, general and administrative, and sales and marketing expenses, based on the key employee's job function, on our consolidated statement of operations. These payments may be settled by us, at our sole discretion, either in cash or shares of our common stock. During the year ended December 31, 2020, the terms of the purchase agreement were amended such that the retention incentive was reduced to $12.8 million, half of which remains subject to the achievement of specified milestones and payable in cash and half of which will be settled in equity grants, to adjust for employee departures. As of December 31, 2020 and 2019, we have recorded approximately $5.7 million and $3.0 million, respectively, included within accrued liabilities on our consolidated balance sheet for the cash payments. Goodwill is primarily attributable to the potential for expanding our existing offerings and reach by providing educational services for students and helping them through their professional journey. The amounts recorded for intangible assets and goodwill are not deductible for tax purposes. The following table presents the total allocation of purchase consideration recorded on our consolidated balance sheet as of the acquisition date (in thousands):
| Thinkful
Cash | $ | 51 |
Accounts receivable | 547 |
Other acquired assets | 1,710 |
Acquired intangible assets | 16,360 |
Total identifiable assets acquired | 18,668 |
Deferred revenue | (2,455) |
Liabilities assumed | (1,906) |
Net identifiable assets acquired | 14,307 |
Goodwill | 64,893 |
Total fair value of purchase consideration | $ | 79,200 |
The following table presents the details of the allocation of purchase consideration to the acquired intangible assets (in thousands, except weighted-average amortization period):
| Thinkful
| Amount |  | Weighted-Average Amortization Period (in months)
Trade name | $ | 4,430 |  |  | 48
Domain names | 330 |  |  | 48
Content library | 6,940 |  |  | 60
Developed technology | 4,660 |  |  | 36
Acquired intangible assets | $ | 16,360 |  |  | 50
During the year ended December 31, 2019, we incurred $1.0 million of acquisition-related expenses associated with our acquisition of Thinkful, which have been included in general and administrative expenses on our consolidated statement of operations. During the year ended December 31, 2019, $8.6 million of our consolidated net loss was attributed to Thinkful and we have recorded an immaterial amount of revenues since the acquisition date. The following unaudited supplemental pro forma net loss is for informational purposes only and presents our combined results as if the acquisition of Thinkful had occurred on January 1, 2018. The unaudited supplemental pro forma information includes the historical combined operating results adjusted for acquisition related compensation costs, amortization of intangible assets, share-based compensation expense and transaction expenses and does not necessarily reflect the actual results that would have been achieved, nor is it necessarily indicative of our future consolidated results. During the years ended December 31, 2019 and 2018, our supplemental pro forma net loss would have been $25.0 million and $38.6 million, respectively. Revenues from Thinkful were immaterial during the years ended December 31, 2019 and 2018. 2018 Acquisitions On July 2, 2018, we acquired StudyBlue, Inc. (StudyBlue), a privately held online learning company that provides a content library that allows students to create flashcards and their own study materials. This acquisition helps strengthen our existing Chegg Services offerings by adding a substantial number of subject categories and a library of content to our learning platform. The total fair value of the purchase consideration was $20.4 million, which included an escrow amount of $3.3 million for general representations and warranties and post-closing adjustments, which was released in January 2020. On May 15, 2018, we acquired WriteLab, Inc. (WriteLab), an AI-enhanced writing platform that teaches students grammar, sentence structure, writing style, and offers instant feedback to help students revise, edit, and improve their written work. This acquisition helps to strengthen Chegg Writing with the addition of new tools, features, and functionality. The total fair value of the purchase consideration was $14.5 million, which included an escrow amount of $2.6 million for general representations and warranties and potential post-closing adjustments, which was released in January 2020. Included in the purchase agreement for the acquisition of WriteLab are additional payments of up to $5.0 million subject to continued employment of the sellers. These payments are not included in the fair value of the purchase consideration and are expensed ratably as research and development expenses on our consolidated statement of operations. These payments may be settled by us, at our sole discretion, either in cash or shares of our common stock. We have recorded approximately $1.0 million as of December 31, 2020 and 2019 included within accrued liabilities on our consolidated balance sheet for these payments. Goodwill is primarily attributable to the potential for future product offerings as well as our expanded student reach. The amounts recorded for intangible assets and goodwill are not deductible for tax purposes. The following table presents the total allocation of purchase consideration recorded on our consolidated balance sheets as of the acquisition date (in thousands):
| StudyBlue |  | WriteLab |  | Total
Cash | $ | 152 |  |  | $ | 82 |  |  | $ | 234 |
Accounts receivable | 288 |  |  | 194 |  |  | 482 |
Other acquired assets | 151 |  |  | — |  |  | 151 |
Acquired intangible assets | 7,100 |  |  | 4,450 |  |  | 11,550 |
Total identifiable assets acquired | 7,691 |  |  | 4,726 |  |  | 12,417 |
Liabilities assumed | (1,309) |  |  | (897) |  |  | (2,206) |
Net identifiable assets acquired | 6,382 |  |  | 3,829 |  |  | 10,211 |
Goodwill | 13,996 |  |  | 10,677 |  |  | 24,673 |
Total fair value of purchase consideration | $ | 20,378 |  |  | $ | 14,506 |  |  | $ | 34,884 |
The following table presents the details of the allocation of purchase consideration to the acquired intangible assets (in thousands, except weighted-average amortization period):
| StudyBlue |  | WriteLab |  | Total
| Amount |  | Weighted-Average Amortization Period (in months) |  | Amount |  | Weighted-Average Amortization Period (in months) |  | Amount |  | Weighted-Average Amortization Period (in months)
Trade name | $ | 140 |  |  | 12 |  | $ | — |  |  | 0 |  | $ | 140 |  |  | 12
Domain names | 180 |  |  | 12 |  | — |  |  | 0 |  | 180 |  |  | 12
Non-compete agreements | 220 |  |  | 36 |  | — |  |  | 0 |  | 220 |  |  | 36
Developed technology | 1,340 |  |  | 60 |  | 4,450 |  |  | 96 |  | 5,790 |  |  | 88
Content library | 5,220 |  |  | 60 |  | — |  |  | 0 |  | 5,220 |  |  | 60
Acquired intangible assets | $ | 7,100 |  |  | 57 |  | $ | 4,450 |  |  | 96 |  | $ | 11,550 |  |  | 72
During the year ended December 31, 2018, we incurred $1.0 million of acquisition-related expenses associated with the above 2018 acquisitions which have been included in general and administrative expenses on our consolidated statement of operations. We have not presented supplemental pro forma financial information as the revenues and earnings of these 2018 acquisitions were immaterial during the year ended December 31, 2018. Further, we have recorded an immaterial amount of revenues and expenses since the acquisition dates during the year ended December 31, 2018.

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