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Background and Basis of Presentation | 9 Months Ended
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Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Background and Basis of Presentation | 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. Chegg provides individualized learning support to students as they pursue their educational journeys. Available on demand 24/7 and powered by over a decade of learning insights, the Chegg platform offers students AI-powered academic support thoughtfully designed for education coupled with access to a vast network of subject matter experts who ensure quality. No matter the goal, level, or style, Chegg helps millions of students around the world learn with confidence by helping them build essential academic, life, and job skills to achieve success. 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 September 30, 2024, our results of operations, results of comprehensive (loss) income and stockholders' equity for the three and nine months ended September 30, 2024 and 2023, and our cash flows for the nine months ended September 30, 2024 and 2023. Our results of operations, results of comprehensive (loss) income, stockholders' equity, and cash flows for the nine months ended September 30, 2024 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, 2023 (the Annual Report on Form 10-K) filed with the SEC. 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. 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 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 nine months ended September 30, 2024 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, 2023. Reclassification of Prior Period Presentation In order to conform with current period presentation, $3.6 million of impairment of intangible assets has been reclassified from general and administrative expense to impairment expense on our condensed consolidated statements of operations for the three and nine months ended September 30, 2023 as well as from impairment of intangible asset to impairment expense on our condensed consolidated statements of cash flows for the nine months ended September 30, 2023. These changes in presentation do not affect previously reported results. Components of Results of Operations Aside from the addition of impairment expense as a component within our operating expenses on our condensed consolidated statements of operations, there have been no other changes to the components on our consolidated statements of operations described in our Annual Report on Form 10-K. Operating Expenses Impairment Expense Our impairment expense consists of impairments of goodwill, intangible assets, and property and equipment, net. For further information, see “Note 5, Property and Equipment, Net” and “Note 6, Goodwill and Intangible Assets.” The following table presents our impairment expense (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Goodwill, net | $ | 195,708 |  |  | $ | — |  |  | $ | 635,391 |  |  | $ | — |
Intangible assets, net | — |  |  | 3,600 |  |  | 31,862 |  |  | 3,600 |
Property and equipment, net | — |  |  | — |  |  | 9,986 |  |  | — |
Total impairment expense | $ | 195,708 |  |  | $ | 3,600 |  |  | $ | 677,239 |  |  | $ | 3,600 |
Securities Repurchase Program In November 2024, our board of directors approved a $300.0 million increase to our existing securities repurchase program authorizing the repurchase 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, alternative investment opportunities, and other factors. After the November 2024 increase, we had $303.7 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. Leases In July 2024, we entered into an amendment related to our office in India that primarily modifies our existing lease payments, increases the square footage, and extends the lease term, resulting in the recording of $9.0 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 September 30, 2024, are as follows (in thousands):
| September 30, 2024
Remaining three months of 2024 | $ | 1,938 |
2025 | 6,802 |
2026 | 6,388 |
2027 | 6,134 |
2028 | 3,518 |
2029 | 1,946 |
Thereafter | 8,340 |
Total future minimum lease payments | 35,066 |
Less imputed interest | (5,770) |
Total operating lease liabilities | $ | 29,296 |
In November 2024, we exercised our termination option related to our office in New York that reduces the lease term through November 2025, resulting in a decrease to our future minimum lease payments of approximately $3.8 million. This reduction in minimum lease payments is not reflected in the table above. We expect this decrease to reduce both right of use assets and long-term operating lease liabilities on our condensed consolidated balance sheets. The accounting for the event is in process as of the issuance date of our condensed consolidated financial statements and therefore we are unable to make any additional disclosures. Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. ASU 2024-03 requires disclosure of specified information about certain costs and expenses in the notes to financial statements. Early adoption is permitted, and the guidance will be applied prospectively with the option to apply retrospectively. The guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. We did not early adopt ASU 2024-03 and we are currently in the process of evaluating the impact of this guidance. In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. ASU 2024-02 removes various references to the FASB’s Concepts Statements from the FASB’s Accounting Standards Codification. Early adoption is permitted, and the guidance will be applied prospectively with the option to apply retrospectively. The guidance is effective for annual periods beginning after December 15, 2024. We did not early adopt ASU 2024-02 and do not believe it will have a significant impact on our financial statements, however, we are currently in the process of evaluating the impact. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid that meet a quantitative threshold. Early adoption is permitted, and the guidance will be applied prospectively with the option to apply retrospectively. The guidance is effective for annual periods beginning after December 15, 2024. We did not early adopt ASU 2023-09 and we are currently in the process of evaluating the impact of this guidance. In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. ASU 2023-07 enhances current interim and annual reportable segment disclosures and requires additional disclosures about significant segment expenses. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. Early adoption is permitted, and we are required to adopt the changes on a retrospective basis. The guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. We did not early adopt ASU 2023-07 and we are currently in the process of evaluating the impact of this guidance. Recently Adopted Accounting Pronouncements We did not adopt any accounting pronouncements during the nine months ended September 30, 2024 that had a material impact on our financial statements.

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