Acquisitions

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

2022 Acquisition

On January 13, 2022, we completed our acquisition of 100% of the outstanding shares of Busuu Online S.L. (Busuu), an online language learning company that offers a comprehensive solution 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, for approximately $417 million in an all-cash transaction. The acquisition helps to expand our existing offerings and global reach through language learning, allowing us to drive further into international markets. There are additional payments of up to $25 million, subject to continued service of certain key employees of Busuu, that are not included in the fair value of the purchase consideration. During the year ended December 31, 2021, we incurred $5.3 million of acquisition-related expenses associated with our acquisition of Busuu, which have been included in general and administrative expense on our consolidated statements of operations. We plan to account for the acquisition as a business combination and the initial accounting for this acquisition, including the valuation of acquired tangible and intangibles assets and liabilities assumed, is in process as of the issuance date for our financial statements, therefore, we are unable to make any additional disclosures.

2021 Acquisition

On February 22, 2021, we completed an acquisition, accounted for as a business combination, of 100% of the outstanding shares of a company for a technology that will strengthen our content creation abilities for a purchase consideration of $8.0 million in cash. Our total allocation of purchase consideration included acquired assets of $0.4 million, acquired developed technology intangible asset of $3.3 million and goodwill of $5.3 million less assumed liabilities of $1.0 million. This acquisition did not have a material impact on our consolidated financial statements and is not expected to have a material impact in future periods.

2020 Acquisition

On June 4, 2020, we completed our acquisition of 100% of the outstanding shares 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 Chegg Math 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 was held in escrow as security for general representations and warranties and potential post-closing adjustments. The escrow amount was released in September 2021.

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. During the year ended December 31, 2021, the milestones were met. As of December 31, 2021 and 2020, we have recorded approximately $0.4 million and $2.9 million, respectively, within accrued liabilities on our consolidated balance sheets for these payments.

The following table presents the 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 during the period since the acquisition date through December 31, 2020.

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 100% of the outstanding shares of Thinkful, Inc. (Thinkful), our skills-based learning platform 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. The escrow amount was released in April 2021.

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 is 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. During the year ended December 31, 2021, the milestones were met and all cash payments were made therefore we have no amounts recorded as of December 31, 2021. 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 during the period since the acquisition date through December 31, 2019.

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 year ended December 31, 2019, our supplemental pro forma net loss would have been $25.0 million. Revenues from Thinkful were immaterial during the year ended December 31, 2019.