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What changed in CHEGG, INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CHEGG, INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+331 added−324 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in CHEGG, INC's 2023 10-K

331 paragraphs added · 324 removed · 240 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeStudents can also upload papers to have them scanned for plagiarism by checking against billions of sources and to have them checked for over 200 types of writing and grammar errors. Students can also have a writing professional proofread their papers and receive personalized feedback. Chegg Writing also includes the popular website properties EasyBib, Citation Machine, BibMe, and CiteThisForMe.
Biggest changeSubscribers can also have a writing professional proofread papers for personalized feedback. Chegg Writing also includes the popular website properties EasyBib, Citation Machine, BibMe, and CiteThisForMe. Chegg Math. Our Chegg Math offerings, including Mathway, provide students with a computational engine to help them understand and solve math problems.
Our service and product offerings fall into two categories: Subscription Services, which encompasses our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings that can be accessed internationally through our websites and on mobile devices, and Skills and Other, which encompasses our Skills, advertising services, print textbooks and eTextbooks offerings.
Our service and product offerings fall into two categories: Subscription Services, which encompasses our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings that can be accessed internationally through our websites and on mobile devices, and Skills and Other, which encompasses our Chegg Skills, advertising services, print textbooks and eTextbooks offerings.
Chapter 1 of Part 4 of the Act includes new criminal offenses relating to completing assignments on behalf of students. It contains two new criminal offenses, specifically an offense of providing or arranging a paid-for relevant service in commercial circumstances, and an offense of advertising a relevant service to students.
Chapter 1 of Part 4 of the Act includes new criminal offenses relating to completing assignments on behalf of students. It contains two criminal offenses, specifically an offense of providing or arranging a paid-for relevant service in commercial circumstances, and an offense of advertising a relevant service to students.
Our common stock is listed on the New York Stock Exchange under the symbol “CHGG.” Our principal executive offices are located at 3990 Freedom Circle, Santa Clara, California 95054 and our telephone number is (408) 855-5700. Available Information Our website address is www.chegg.com and our Investor Relations website address is www.investor.chegg.com.
Our common stock is listed on the New York Stock Exchange under the symbol “CHGG.” Our principal executive offices are located at 3990 Freedom Circle, Santa Clara, California 95054 and our telephone number is (408) 855-5700. Available Information Our website address is www.chegg.com and our Investor Relations website address is investor.chegg.com.
The Nevada Online Privacy Law, which went into effect October 1, 2021 provides Nevada residents with the right to know our data practices and the right to opt-out of the sale of certain “covered information.” The California Privacy Rights Act (CPRA), Virginia Consumer Data Protection Act (CDPA) and Colorado Privacy Act (CPA) all come into effect on January 1, 2023.
The Nevada Online Privacy Law, which went into effect October 1, 2021, provides Nevada residents with the right to know our data practices and the right to opt-out of the sale of certain “covered information.” The California Privacy Rights Act (CPRA), Virginia Consumer Data Protection Act (CDPA) and Colorado Privacy Act (CPA) all went into effect on January 1, 2023.
In addition, many states have passed student privacy laws, some of which are more restrictive than FERPA, and therefore do not pre-empt FERPA. The Children’s Online Privacy Protection Act imposes additional restrictions on the ability of online services to collect, use, and disclose personal information from minors.
In addition, many states have passed student privacy laws, some of which are more restrictive than FERPA, and therefore do not pre-empt FERPA. The Children’s Online Privacy Protection Act (COPPA) imposes additional restrictions on the ability of online services to collect, use, and disclose personal information from minors.
We own the registered U.S. trademarks Chegg, Chegg.com, Chegg Study, EasyBib, the Chegg “C” logo, Busuu and Thinkful, among others, as well as a variety of service marks. We also have a number of pending trademark applications in the United States and unregistered marks that we use to promote our brand.
We own the registered U.S. trademarks Chegg, Chegg.com, Chegg Study, EasyBib, the Chegg “C” logo, and Busuu, among others, as well as a variety of service marks. We also have a number of pending trademark applications in the United States and unregistered marks that we use to promote our brand.
To learn more about our ESG efforts, please visit the ESG section of our investor relations site: www.investor.chegg.com/esg. 10 Table of Contents Seasonality Information about seasonality is set forth in the section “Seasonality of Our Business” in Part II, Item 7 of this Annual Report on Form 10-K.
To learn more about our ESG efforts, please visit the ESG section of our investor relations site: investor.chegg.com/esg. 10 Table of Contents Seasonality Information about seasonality is set forth in the section “Seasonality of Our Business” in Part II, Item 7 of this Annual Report on Form 10-K.
Please see the Environmental, Social, and Corporate Governance (ESG) section of our investor relations website (www.investor.chegg.com/esg) for relevant metrics and to learn more about Chegg’s efforts around culture, belonging, diversity, and inclusion.
Please see the Environmental, Social, and Corporate Governance (ESG) section of our investor relations website (investor.chegg.com/esg) for relevant metrics and to learn more about Chegg’s efforts around culture, belonging, diversity, and inclusion.
For example, we often cannot be certain how existing laws will apply in the e-commerce and online context, including with respect to such topics as privacy, cybersecurity, defamation, pricing, credit card fraud, advertising, taxation, sweepstakes, promotions, content regulation, financial aid, scholarships, student matriculation and recruitment, quality of products and services, and intellectual property ownership and infringement.
For example, we often cannot be certain how existing laws will apply in the e-commerce and online context, including with respect to such topics as privacy, cybersecurity, artificial intelligence, defamation, pricing, credit card fraud, advertising, taxation, sweepstakes, promotions, content regulation, financial aid, scholarships, student matriculation and recruitment, quality of products and services, and intellectual property ownership and infringement.
This approach is informed by the materiality assessment we conducted in late 2021, in which we engaged both internal and external stakeholders to identify the ESG topics that are most relevant to our business and to society. Focus on People We focus on people by making Chegg a great place to work.
This approach is informed by a materiality assessment we conducted, in which we engaged both internal and external stakeholders to identify the ESG topics that are most relevant to our business and to society. Focus on People We focus on people by making Chegg a great place to work.
A variety of business models are being pursued or may be considered for the provision of digital learning tools, some of which may be more profitable or successful than our business model. Intellectual Property We use proprietary technology to operate our business, and our success depends, in part, on our ability to protect our technology and intellectual property.
A variety of business models are being pursued or may be considered for the provision of digital learning tools, some of which may be more profitable or successful than our business model. 6 Table of Contents Intellectual Property We use proprietary technology to operate our business, and our success depends, in part, on our ability to protect our technology and intellectual property.
We rely on a combination of patent, copyright, trademark and trade secret laws, as well as 6 Table of Contents contractual restrictions, to establish and protect our intellectual property. We maintain a policy requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information.
We rely on a combination of patent, copyright, trademark and trade secret laws, as well as contractual restrictions, to establish and protect our intellectual property. We maintain a policy requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information.
In addition, we may be subject to state oversight for Thinkful's skills-based learning programs, including regulatory approvals and licensure for the course content, the faculty members teaching the content, and the recruiting, admissions, and marketing activities associated with the business.
In addition, we may be subject to state oversight for Chegg Skill's skills-based learning programs, including regulatory approvals and licensure for the course content, the faculty members teaching the content, and the recruiting, admissions, and marketing activities associated with the business.
We believe that we have competitive strengths that position us favorably in each aspect of our business. However, the education industry is evolving rapidly, including the utilization of artificial intelligence and machine learning, and is increasingly competitive.
We believe that we have competitive strengths that position us favorably in each aspect of our business. However, the education industry is evolving rapidly, including the utilization of AI and machine learning, and is increasingly competitive.
We foster an environment centered on respect for all people, where diversity and inclusion are celebrated, and people have the opportunity to develop and advance their careers. Our employees are one of our biggest competitive advantages, and it's our responsibility to take care of them. Help Learners Learners are evolving and so is Chegg.
We foster an environment centered on respect for all people, where diversity and inclusion are celebrated, and people have the opportunity to develop and advance their careers. Our employees are one of our biggest competitive advantages, and it's our responsibility to take care of them.
Corporate History We were incorporated in Delaware in July 2005 and launched our online print textbook rental business in 2007. We hired our current Chief Executive Officer in 2010, who implemented our current business strategy to create the leading direct-to-student learning platform for students to help them improve their outcomes.
Corporate History We were incorporated in Delaware in July 2005 and hired our current Chief Executive Officer in 2010, who implemented our current business strategy to create the leading direct-to-student learning platform for students to help them improve their outcomes.
With our recent acquisition of Busuu, a small part of our international workforce is now covered under a collective bargaining agreement, however, the majority of our workforce is still not covered by any collective bargaining agreement. We appreciate that our employees are our greatest asset and place a premium on the importance of their retention, growth, and development.
Following our acquisition of Busuu in 2022, a small portion of our international workforce is covered under a collective bargaining agreement, however, the majority of our workforce is still not covered by any collective bargaining agreement. We appreciate that our employees are our greatest asset and place a premium on the importance of their retention, growth, and development.
Operate Sustainably Chegg strives to make the planet a better place. To do our part, we are focused on sustainable operations and we are committed to finding ways to help reduce our environmental impact. We’ve taken several actions to assess potential risks of climate change and opportunities for our business to address those risks.
To do our part, we are focused on sustainable operations, and we are committed to finding ways to help reduce our environmental impact. We’ve taken several actions to assess potential risks of climate change and opportunities for our business to address those risks.
Learners need more flexibility when it comes to education, including affordable, on-demand help that delivers positive learning outcomes. We are extremely proud to have helped so many learners succeed on their learning-to-earning journey. Give Back Chegg’s business activities as well as our philanthropic, research and community efforts align with many of the United Nations’ Sustainable Development Goals.
We are extremely proud to have helped so many learners succeed on their learning-to-earning journey. Give Back Chegg’s business activities as well as our philanthropic, research and community efforts align with many of the United Nations’ Sustainable Development Goals.
Human Capital As of December 31, 2022, we had 2,071 employees, of which 1,953 were full-time and 118 were part-time, with 1,120 located outside the United States.
Human Capital As of December 31, 2023, we had 1,979 employees, of which 1,903 were full-time and 76 were part-time, with 1,140 located outside the United States.
Our student advocacy team can be reached directly through phone, email, and online chat during business hours. We also proactively monitor social media to identify and solve problems before we are otherwise informed of their existence. We endeavor to respond to students’ concerns within five minutes.
We also proactively monitor social media to identify and solve problems before we are otherwise informed of their existence. We endeavor to respond to students’ concerns within five minutes.
We hold ourselves to the highest ethical standards and strive for full compliance with applicable laws and regulations. Govern Effectively Chegg has a commitment to strong corporate governance practices. Corporate governance is part of our culture and is founded on our daily commitment to living values and principles that recognize our ethical obligations to our employees, customers and stockholders.
Govern Effectively Chegg has a commitment to strong corporate governance practices. Corporate governance is part of our culture and is founded on our daily commitment to living values and principles that recognize our ethical obligations to our employees, customers and stockholders. Operate Sustainably Chegg strives to make the planet a better place.
In 2021, we disclosed our baseline scope 1 and scope 2 emissions and are currently beginning the process of calculating our scope 3 GHG emissions. These assessments will inform future reduction opportunities and decarbonization goals.
In 2021, we disclosed our baseline scope 1 and scope 2 emissions and in 2023 we expanded our disclosure to include scope 3 GHG emission. These assessments will inform future reduction opportunities.
Sales and Marketing Students Our direct to consumer marketing strategy focuses on brand and performance marketing. Brand marketing increases awareness of the Chegg brand and its services while performance marketing drives traffic to our site. We use several major direct marketing channels to reach students. The strength of our content flywheel drives significant organic traffic to Chegg.
We use brand marketing and performance marketing to increase awareness of the Chegg brand and its services and drive traffic to our site. We use several major direct marketing channels to reach students, including social media.
We have identified three of these goals where we believe Chegg’s influence is the greatest: Quality Education, Good Health and Well-Being, and Zero Hunger. Act Responsibly We understand that to be a true customer champion and to gain and preserve our customers’ trust, we must operate all facets of our business with integrity, including a focus on protecting learners’ data.
Act Responsibly We understand that to be a true customer champion and to gain and preserve our customers’ trust, we must operate all facets of our business with integrity, including a focus on protecting learners’ data. We hold ourselves to the highest ethical standards and strive for full compliance with applicable laws and regulations.
Student Advocacy We are committed to providing a high level of customer service to our students and to fulfilling our brand promise of putting students first. We trust our students, understand the critical role our products and services have in their learning journey, and strive to resolve all problems quickly and thoroughly.
We trust our students, understand the critical role our products and services have in their learning journey, and strive to resolve all problems quickly and thoroughly. Our student advocacy team can be reached directly through phone, email, and online chat during business hours.
Our lifecycle marketing focuses on increasing activation, engagement and retention. We utilize three types of email marketing campaigns: onboarding programs to drive activation and retention, personalized cross-sell campaigns to deepen engagement, and promotional campaigns to drive sales and interests.
We utilize three types of customer relationship management campaigns: onboarding programs to drive activation and retention, personalized cross-sell campaigns to deepen engagement, and promotional campaigns to drive sales and interests. Student Advocacy We are committed to providing a high level of customer service to our students and to fulfilling our brand promise of putting students first.
We use industry standard logging and monitoring tools to ensure uptime. The architecture is also designed to allow for expansion into new international markets. Information Security . Our learning platform includes encryption, antivirus, firewall, intrusion prevention, and patch-management technologies to help protect our systems distributed across cloud-hosting providers and our offices. Our existing products and services undergo periodic security assessment.
Information Security Our learning platform includes encryption, antivirus, firewall, intrusion prevention, and patch-management technologies to help protect our systems distributed across cloud-hosting providers and our offices. Our existing products and services undergo periodic security assessments. New features are developed according to our secure software development lifecycle 5 Table of Contents process.
Programmatic Advertising Our programmatic advertising technology includes a combination of a deep understanding of programmatic technology trends with data science, engineering and machine learning.
We also monitor for anomalies relating to authentication, data transfers, system, and user behavior as well as cloud configuration changes. Programmatic Advertising Our programmatic advertising technology includes a combination of a deep understanding of programmatic purchasing trends with data analytics, engineering, and machine learning.
Our Chegg Writing subscription service consists of a premium paid subscription service providing students with a suite of tools, including plagiarism detection scans, grammar and writing fluency checking, expert personalized writing feedback, and premium citation generation. Students can create citations from over 7,000 citation styles including MLA, APA, and The Chicago Manual of Style.
Chegg Study Pack is a premium subscription bundle that includes all of the benefits of Chegg Study, as well as Chegg Writing and Chegg Math (both described further below). Chegg Writing. Our Chegg Writing subscription service consists of a suite of essential tools including plagiarism detection scans, grammar and writing fluency checking, expert personalized writing feedback, and premium citation generation.
Additionally, with the reopening of our physical offices, we increased our employee training offerings to include workshops in effectively managing and working in a hybrid environment along with award winning health and welfare benefits to support our full time employees as they navigate the lingering difficulties of a fully remote environment. 9 Table of Contents Environmental, Social, and Corporate Governance (ESG) At Chegg, our approach to ESG is tied to our mission to help every learner achieve their best, in school and beyond.
Additionally, we established our first ever employee charitable contribution matching program worldwide. 9 Table of Contents Environmental, Social, and Corporate Governance (ESG) At Chegg, our approach to ESG is tied to our mission to help every learner achieve their best, in school and beyond.
Our Busuu language learning platform 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.
Subscribers to Busuu have access to a premium learning language platform that offers comprehensive support through self-paced lessons, live classes with expert tutors and a huge community of members to practice alongside. A team of leading experts have developed an online learning pedagogy to bring students from novice to advanced speakers in a fast-paced, enjoyable environment.
Competition While we do not have any competitors that compete with us across our business in its entirety, we face significant global competition in each of our product and service offerings. For Chegg Study, our competitors primarily include platforms that provide study materials and online instructional systems, such as Course Hero, Quizlet, Khan Academy, Bartleby, and Brainly.
Our services face competition from other education and learning companies based on the particular offering. These competitors are using AI technology to build on their historical offerings. For Chegg Study, our competitors primarily include platforms that provide study materials and online instructional systems, such as Course Hero, Quizlet, Khan Academy, and Brainly.
Chegg Math. Our Chegg Math subscription service, including Mathway, helps students understand math by providing a step-by-step math problem solver and calculator that help students instantly receive guided instructional explanations to better understand the why and how for each step within a range of math topics. Busuu .
They can work through difficult math problems with the help of a step-by-step math problem solver and calculator for instant guided instructional explanations that break things down in a range of math topics. Busuu .
We work with leading brands and programmatic partners to deliver advertising across our platforms. Other. We provide other educational offerings to help students with their coursework. Technology and Platform Integration Our technology is designed to create a learning platform that will continue to enable our growth at scale.
We provide other educational offerings to help students with their coursework. Technology and Platform Integration Technology is at the core of our learning platform. We leverage the latest in distributed systems, machine learning, data analytics, and generative AI to increase efficiency and scale in our business.
In 2022, in order to continue to attract and retain a highly engaged workforce, we expanded our employee benefits, including fertility care and additional retirement savings for all 401(k) savings plan participants.
In 2023, in order to continue to attract and retain a highly engaged workforce, we expanded our employee benefits, to include counseling and services for employees or their dependents struggling with substance abuse, travel benefits for employees needing medical services outside their normal geographic areas and additional contributions to employees’ health savings accounts.
Once they discover that we have step-by-step solutions, we can also build awareness of our other services, such as our Math, Writing and Textbook offerings, or our bundle, Chegg Study Pack. Infrastructure and Applications Our technology resides at major cloud-hosting providers globally. Our architecture consists primarily of front end applications, backend services, operational databases, and reporting subsystems.
This infrastructure resides at major cloud-hosting providers globally. Our architecture consists primarily of front-end applications, backend services, operational databases, and reporting subsystems. We use industry standard logging and monitoring tools to ensure uptime. The architecture is also designed to allow for expansion into new international markets.
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ITEM 1. BUSINESS 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 all over the world, starting with their academic journey and extending through their careers.
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ITEM 1. BUSINESS Overview Millions of people all around the world learn with Chegg. No matter the goal, level, or style, Chegg helps learners learn with confidence.
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The Chegg platform provides products and services to support learners with their academic course materials, as well as their career and personal skills developments.
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We provide 24/7 on-demand support, and our personalized learning assistant leverages the power of artificial intelligence (“AI”), more than a hundred million pieces of proprietary content, as well as a decade of learning insights.
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In 2022, 8.2 million students subscribed to our Subscription Services, an increase of 5% year over year from 7.8 million in 2021. Subscription Services Chegg Study Pack. Our Chegg Study Pack is a premium subscription bundle including our Chegg Study, Chegg Writing, and Chegg Math services, which are described further below.
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Our platform also helps learners build essential life and job skills to accelerate their path from learning to earning, and we work with companies to offer learning programs for their employees. We are combining the power of generative AI and human capabilities to provide a personalized learning assistant to be included in our Chegg Study offering.
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Chegg Study Pack creates an integrated platform of connected academic support services which have millions of pieces of educational learning content and enhanced features, such as concept video walkthroughs, flashcards and practice tests, that are ever-changing and evolving to increase our value proposition to students.
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Our new experience is trained on our proprietary content and unique data sets, allowing us to offer a high quality, high value personalized learning journey that can anticipate students' needs, adapt to their strengths and weaknesses, provide personal learning plans, and suggest interactive tools to optimize and reinforce the learning process.
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We launched instructor-created materials from educators within our Uversity platform as part of the Chegg Study Pack in 2022. Chegg Study.
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Students can currently engage with a simple conversational user interface, personalized learning, and more in-depth content. As the new experience evolves, we plan to have the ability to transform our content automatically into innovative study tools, such as practice tests, assessments, study guides and flash cards, as well as connect our learning community, enabling real-time sharing among community members.
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Our Chegg Study subscription service helps students master challenging concepts on their own through the use of “Expert Questions and Answers” and “Textbook Solutions.” Our Expert Questions and Answers service allows students to ask questions on our website and receive detailed explanations from subject matter experts.
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We aim to build personalized coaching and analytics so students can assess and compare their progress with others, while also extending beyond academic support to help navigate real-time challenges and learn core job skills.
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For high demand print textbooks and eTextbooks, we offer Textbook Solutions, which are step-by-step explanations to help students learn how to solve the questions at the end of each chapter in their textbooks. Chegg Writing.
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In 2023, 7.7 million students subscribed to our Subscription Services, a decrease of 6% year over year from 8.1 million in 2022. Subscription Services Chegg Study. Chegg Study subscribers have access to personalized, step-by-step learning support powered by AI, computational engines, and subject matter experts. Subscribers engage with our conversational experience that delivers the right support, at the right time.
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The Busuu methodology has been developed by leading experts in online language learning pedagogy and can bring students from novice to advanced speakers of a language rapidly and enjoyably.
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Chegg Study also includes a collection of free perks where available, including services students care about in and out of the classroom, such as Tinder Gold and DashPass Student. Chegg Study Pack.
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When students want to learn a new language for work, study or personal interest, they can use our service to access comprehensive courses in 14 languages, connect with Busuu’s community of native speakers to practice their conversation and receive expert instruction from our highly qualified teachers. Skills and Other Skills.
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The Busuu offering currently offers comprehensive courses, taught by highly qualified teachers in 14 languages. 4 Table of Contents Skills and Other Chegg Skills. Chegg Skills seeks to ensure that companies have the right talent, with the right skills, at the right time by aligning employer needs with learner outcomes.
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Our skills-based learning service offers professional courses along with networking, interviewing, and career services and is offered directly through our website, through partners that connect employers with top learning providers to provide employees with upskilling opportunities, and directly to large employers committed to investing in their workforce skills training needs. 4 Table of Contents Advertising Services.
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We offer programs designed to train learners on the latest technical skills, such as AI, coding, data analytics, and cybersecurity. Our programs are available directly through our website, through partners that connect employers with top learning providers, and directly to large employers.
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We employ technological innovations whenever possible to increase efficiency and scale in our business. For example, we utilize various artificial intelligence (AI) technologies such as large language models, generative AI, and a symbolic math solver engine in our products and services.
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We expect to expand our skills-based learning service with durable skills programs, which cover competencies, such as emotional intelligence, mindset, emerging leadership and decision making, increasing the likelihood of success in the modern workplace. Advertising Services. We work with leading brands and programmatic partners to deliver advertising across our platforms. Other.
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Our products and services rely upon and leverage the information underlying our “Student Graph” and “Content Graph Technology” discussed in more detail below. We will continue to invest in building technologies around our data, search and solutions.
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The key elements of our technology platform are: AI Our technology, which includes computational engines, machine learning, decision tools, proprietary generative AI capabilities, allow us to build an industry-leading personalized learning assistant without compromising quality and safety. We are building large language models specific to academic subjects and use cases that cater to learner needs.
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The key elements of our technology platform are: Personalization and Merchandising Technology We create a personalized experience for each student throughout our learning platform, building awareness of our multiple services and connecting them with opportunities through third-party partners and brands. This personalization and customization results from our Student Graph and our search technology. Student Graph .
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Our AI capabilities allow us to leverage our data and expertise to optimize the learning experience effectively and efficiently. Proprietary Data We have over a hundred million pieces of proprietary learning content powering our personalized learning assistant.
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Our Student Graph is the accumulation of the collective activity of students on our learning platform. Students generate valuable information each time they engage with our learning platform. Our Student Graph also includes information we access from public and private sources such as information about colleges and scholarship data.
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We are leveraging this data for our large language models and have built proprietary algorithms to optimize the quality and accuracy of our content. Our unique dataset enables personalized learning and powers new capabilities to enhance the learning experience.
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We collect, organize and process this information to algorithmically create a personalized experience for each student on our network. Search . Search is an easy on-ramp for students to discover all of our products and services. Students often find us within a search engine results page as they seek explanations for academic problems or concepts.
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Personalization As learners engage with our platform, the conversational experience generates valuable data that we can, in turn, use to further personalize the learning experience. We combine this data with other public information about learners and their schools to tailor our offerings and predict student needs.
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New features are developed according to our secure software development lifecycle process. We also monitor for anomalies relating to authentication, data transfers, system, and user behavior as well as cloud configuration changes. Internal Management Systems .
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Search Search is a very efficient platform for Chegg, as learners increasingly turn online for academic support. Our business model benefits from more students asking more questions, as we index those questions in to search and other platforms, to drive even more customers. Shared Infrastructure We leverage shared infrastructure to allow us to efficiently build products across our learning platform.
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We rely on third-party technology solutions and products as well as internally developed and proprietary systems, in which we have made substantial investment, to provide rapid, high-quality customer service, internal communication, software development, deployment, and maintenance. Mobile Solutions We have mobile applications on Apple iOS and Google Android.
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The result is an online advertising platform that continuously maximizes the value of the digital impressions we serve. Customers In 2023, 2022 and 2021, 7.7 million, 8.1 million, and 7.8 million customers subscribed to our Subscription Services, respectively. Sales and Marketing Students Our direct-to-consumer marketing strategy focuses on brand and performance marketing.
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Our mobile apps are built as hybrid applications leveraging the Chegg application programming interface (API). Taking advantage of capabilities unique to the mobile platform, we offer some functionality on mobile that is not available on our website.
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The strength of our content flywheel drives significant organic traffic to Chegg, and we have a full funnel approach to building brand awareness and consideration. Our lifecycle marketing focuses on increasing activation, engagement and retention.
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The result is an online advertising platform that maximizes the value of the digital impressions we serve. 5 Table of Contents Data Sourcing and Content Graph Technology Not all information relevant to students on our platform is made available by service, product, list or user-input. Therefore, we have developed proprietary technologies to collect disparate, distributed sets of data.
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Competition While we do not have any competitors that compete with us across our business in its entirety, we face significant competition from education and learning companies, many of which are developing their own AI products and technologies, as well as other companies that are not specifically focused on education and learning services but whose broad AI offerings may nonetheless significantly impact education and learning.
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Customers In 2022, 2021 and 2020, 8.2 million, 7.8 million, and 6.6 million customers subscribed to our Subscription Services, respectively. Subscription Services customers include Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu customers who have paid to access the service during the time period.
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Our competitors that are not specifically focused on education and learning services but whose AI offerings may impact education and learning include companies such as Google, OpenAI, Microsoft, Meta, and Anthropic. Certain educational institutions, such as the University of Michigan, are also developing AI tools which may compete with our offerings.
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Brands We secure contracts with brands through direct sales by our field sales organization, which sells brand advertising services to large brand advertisers seeking to reach and engage college and high school students. This team has field sales people and marketing support.
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The FTC has proposed updates to COPPA which are currently in a notice-and-comment period.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our efforts are not successful, our business, results of operations, and financial condition could be adversely affected. • Our historical growth may not be indicative of our future growth, and we expect our revenue growth rate to decline compared to prior years. • We face competition in all aspects of our business, and we expect such competition to increase. • If we fail to innovate in response to rapidly evolving technological and market developments, including artificial intelligence, our competitive position and business prospects may be harmed. • We have a history of losses and we may not achieve or sustain profitability in the future. • Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets. • If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives. • We depend on mobile app stores and operating systems to grow our student user base and their engagement with our learning platform. • Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks, including risks associated with credit card fraud. • We rely on AWS and other third-party software and service providers to provide systems, storage, and services for our website and any disruption of such services or a material change to our arrangements could adversely affect our business. • Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully. • If we fail to convince brands of the benefits of advertising on our learning platform, or if platforms such as Google Chrome, Safari, or Firefox limit our access to advertising and marketing audiences, or the data required to effectively reach those audiences, our business could be harmed. • We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at all. • Our core value of putting students first may conflict with the short-term interests of our business. • Adverse litigation judgments or settlements resulting from legal proceedings in which we are or may be involved could expose us to monetary damages or limit our ability to operate our business. • If we are not able to manage the growth of our business both in terms of scale and complexity, our business could be adversely affected. • Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict. 12 Table of Contents Risks Related to Our Industry • Government regulation of education and student information is evolving, and unfavorable developments could have an adverse effect on our business, results of operations, and financial condition. • Colleges and certain governments may restrict online access or access to our website, which could lead to the loss of or slowing of growth in our student user base and their level of engagement with our platform. • If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be adversely affected. • We are subject to U.S. trade control laws that may restrict growth prospects and impose liability if we are non-compliant.
Biggest changeRisks Related to Our Business and Growth • Our future revenue and growth depend on our ability to continue to attract new learners to, and retain existing learners on, our learning platform. • If we fail to innovate and offer new products and services in response to rapidly evolving technological and market developments, including AI, our competitive position and business prospects may be harmed. • We face competition in all aspects of our business, including with respect to AI, and we expect such competition to increase. • U.S. colleges have faced, and may continue to face, reduced enrollment, which could negatively impact our business and results of operations. • Our international operations, and the expansion thereof, subject us to increased challenges, risks, and costs, which could adversely affect our business, financial condition, and results of operations. 11 Table of Contents • We have a limited operating history in international jurisdictions and our expansion efforts into international markets may not be successful. • The uncertainty surrounding the evolving educational landscape, including the impact of AI on learning and education, the state of the student including the amount and the extent to which AI will impact study habits and how students learn and/or complete their assignments, and the demand for our evolving offerings make it difficult to predict our operational trends and results of operations. • If our efforts to drive user traffic, including search engine optimization, social media campaigns, and other marketing, are not successful, student discovery of, and engagement with, our learning platform could decline, which may harm our business and results of operations. • If our efforts to build and maintain strong brands are not successful, we may not be able to grow our student user base, which could adversely affect our results of operations. • Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets. • We have a history of losses, and we may not achieve or sustain profitability in the future. • If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives. • We depend on mobile app stores and operating systems to grow our student user base and their engagement with our learning platform. • Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks, including risks associated with credit card fraud. • We rely on AWS and other third-party software and service providers to provide systems, storage, and services for our website and any disruption of such services or a material change to our arrangements could adversely affect our business. • Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully. • If we fail to convince brands of the benefits of advertising on our learning platform, or if platforms such as Google Chrome, Safari, or Firefox limit our access to advertising and marketing audiences, or the data required to effectively reach those audiences, our business could be harmed. • We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at all. • Our core value of putting students first may conflict with the short-term interests of our business. • Adverse litigation judgments or settlements resulting from legal proceedings in which we are or may be involved could expose us to monetary damages or limit our ability to operate our business. • If we are not able to manage the growth of our business both in terms of scale and complexity, our business could be adversely affected. • Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict.
In addition: • we may encounter difficulties or unforeseen expenditures to integrate an acquired company; • an acquisition may disrupt our business, divert resources, increase expenses, and distract our management; • an acquisition may reduce or delay adoption and engagement rates for our acquired products and services because of student uncertainty about continuity and effectiveness; • an acquisition may subject us to laws and operational challenges in new jurisdictions with which we are unfamiliar; • we may not successfully transition acquired users to the Chegg platform and therefore may not realize the potential benefits of these acquisitions; • we may incur unforeseen costs as a result of the pre-acquisition activities of businesses and technologies we acquire; • we may be required to honor the pre-existing contractual relationships of businesses we acquire, which contracts may be on terms that we would not have otherwise accepted; • it may be difficult to monetize any acquired products and services; • an acquisition may not ultimately be complementary to our offerings; and • an acquisition may involve the entry into markets where we have little or no prior experience.
In addition: • we may encounter difficulties or unforeseen expenditures to integrate an acquired company; • an acquisition may disrupt our business, divert resources, increase expenses, and distract our management; • an acquisition may reduce or delay adoption and engagement rates for our acquired products and services because of student uncertainty about continuity and effectiveness; • an acquisition may subject us to laws and operational challenges in new jurisdictions with which we are unfamiliar; • we may not successfully transition acquired users to the Chegg platform and therefore may not realize the potential benefits of these acquisitions; • we may incur unforeseen costs as a result of the pre-acquisition activities of businesses and technologies we acquire; • we may be required to honor the pre-existing contractual relationships of businesses we acquire, which contracts may be on terms that we would not have otherwise accepted; • it may be difficult to monetize any acquired products and services; • an acquisition may not ultimately be complementary to our offerings; and • an acquisition may involve entry into markets where we have little or no prior experience.
We make critical estimates and assumptions involving accounting matters including revenue recognition and deferred revenue, impairment of acquired intangible assets and other long-lived assets, goodwill and indefinite lived intangible assets, share-based compensation expense, and benefit from (provision for) income taxes. These estimates and assumptions involve matters that are inherently uncertain and require us to make subjective and complex judgments.
We make critical estimates and assumptions involving accounting matters including revenue recognition and deferred revenue, impairment of acquired intangible assets and other long-lived assets, goodwill and indefinite lived intangible assets, share-based compensation expense, and (provision for) benefit from income taxes. These estimates and assumptions involve matters that are inherently uncertain and require us to make subjective and complex judgments.
To succeed in our efforts to strengthen our brands’ identities, we must, among other activities: • maintain our reputation as a trusted technology platform and source of content, services, and textbooks for students; • maintain and improve the quality of our existing products, services, and technologies; • introduce compelling products and services; • adapt to changing technologies, including artificial intelligence and machine learning, and changes in the learning environment; • protect user data, such as passwords and personally identifiable information; • adapt to students’ rapidly changing tastes, preferences, behavior, and brand loyalties; • continue to expand our reach to students in high school, college, graduate school, lifelong learners throughout their careers, and internationally; • ensure that the student-posted content to our website is reliable and does not infringe on third-party copyrights or violate other applicable laws, our terms of use, or the ethical codes of those students’ colleges; • ensure that our experts' content is reliable and helpful; • protect our trademarks and other intellectual property rights; • convert and integrate the brands and students that we acquire into the Chegg brand and Chegg.com; and • maintain and control the quality of our brand.
To succeed in our efforts to strengthen our brands’ identities, we must, among other activities: • maintain our reputation as a trusted technology platform and source of content, services, and textbooks for students; • maintain and improve the quality of our existing products, services, and technologies; • introduce compelling products and services; • adapt to changing technologies, including AI and machine learning, and changes in the learning environment; • protect user data, such as passwords and personally identifiable information; • adapt to students’ rapidly changing tastes, preferences, behavior, and brand loyalties; • continue to expand our reach to students in high school, college, graduate school, lifelong learners throughout their careers, and internationally; • ensure that the student-posted content to our website is reliable and does not infringe on third-party copyrights or violate other applicable laws, our terms of use, or the ethical codes of those students’ colleges; • ensure that our experts' content is reliable and helpful; • protect our trademarks and other intellectual property rights; • convert and integrate the brands and students that we acquire into the Chegg brand and Chegg.com; and • maintain and control the quality of our brand.
The ongoing effects of the new tax laws and the refinement of provisional estimates could make our results difficult to predict. • Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve subjective judgments and estimates by our management.
The ongoing effects of the new tax laws and the refinement of provisional estimates could make our results difficult to predict. • Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve subjective judgments and estimates formulated by our management.
Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve subjective judgments and estimates by our management. Our actual results could differ from the estimates and assumptions used to prepare our consolidated financial statements.
Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve subjective judgments and estimates formulated by our management. Our actual results could differ from the estimates and assumptions used to prepare our consolidated financial statements.
In addition to our employee base in the United States, we have employees in Germany, Canada, Israel, India, the United Kingdom and Spain, and we have retained professional employer organizations and staffing agencies to engage personnel in certain additional international locations.
In addition to our employee base in the United States, we have employees in Canada, Israel, India, the United Kingdom, and Spain, and we have retained professional employer organizations and staffing agencies to engage personnel in certain additional international locations.
In addition, we may be unable to obtain long-term licenses from third-party content providers and/or government regulatory approvals and licenses necessary to allow a new or existing product or service to function.
In addition, we may be unable to obtain long-term licenses from third-party providers and/or government regulatory approvals and licenses necessary to allow a new or existing product or service to function.
If they cannot adapt to the increase in demand or fail to ensure availability of their software and services, our ability to service users’ requests may be impacted, which could have an adverse impact on our result of operations. AWS may terminate its agreement with us upon 30 days’ notice.
If they cannot adapt to the increase in demand or fail to ensure availability of their software and services, our ability to service users’ requests may be impacted, which could have an adverse impact on our results of operations. AWS may terminate its agreement with us upon 30 days’ notice.
For instance, we have been subject to litigation and investigations as a result of past security incidents, as further described in the risk factor titled “ The compromise of our information technology systems or data, including through computer malware, viruses, hacking, phishing attacks, spamming and other security incidents, could harm our business and results of operations ,” and a consent order has been finally approved and entered by the FTC related to the same, as further described in Note 13, “Commitments and Contingencies,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
For instance, we have been subject to litigation and investigations as a result of past security incidents, as further described in the risk factor titled “ The compromise of our information technology systems or data, including through computer malware, viruses, hacking, phishing attacks, spamming and other security incidents, could harm our business and results of operations ,” and a consent order has been finally approved and entered by the FTC related to the 31 Table of Contents same, as further described in Note 10, “Commitments and Contingencies,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Our ability to deliver course content to students enrolled in Thinkful skills-based learning programs may be subject to state oversight including regulatory approvals and licensure for the course content, the faculty members teaching the content, and the recruiting, admissions, and marketing activities associated with the business.
Our ability to deliver course content to students enrolled in Chegg Skills (formerly Thinkful) skills-based learning programs may be subject to state oversight including regulatory approvals and licensure for the course content, the faculty members teaching the content, and the recruiting, admissions, and marketing activities associated with the business.
If the protection of our intellectual property and proprietary rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may 25 Table of Contents be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace, and our ability to attract customers may be adversely affected.
If the protection of our intellectual property and proprietary rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace, and our ability to attract customers may be adversely affected.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be 32 Table of Contents beneficial to our existing stockholders.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders.
The legal landscape with respect to privacy and data security in the U.S. and elsewhere is similarly in flux with a number of pending legislative and regulatory proposals that could have significant impacts on our business, if effected. 31 Table of Contents Risks Related to Ownership of Our Common Stock Our stock price has been and will likely continue to be volatile.
The legal landscape with respect to privacy and data security in the U.S. and elsewhere is similarly in flux with a number of pending legislative and regulatory proposals that could have significant impacts on our business, if effected. Risks Related to Ownership of Our Common Stock Our stock price has been and will likely continue to be volatile.
As individuals become increasingly aware of and resistant to the collection, use, and sharing of personal information in connection with advertising, some users have opted out of our processing of personal data for advertising purposes, which has negatively impacted our ability to collect certain user data and our advertising partners’ ability to deliver relevant content, and more may do so in the future.
As individuals become increasingly aware of and resistant to the collection, use, and sharing of personal information in connection with advertising, some users have opted out of our processing of personal data for advertising 30 Table of Contents purposes, which has negatively impacted our ability to collect certain user data and our advertising partners’ ability to deliver relevant content, and more may do so in the future.
Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully 11 Table of Contents considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.
Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefor or pay cash with respect to notes being converted.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefore or pay cash with respect to notes being converted.
We monitor changes to the state regulatory requirements applicable to our business activities, including Thinkful; however, if we do not obtain the appropriate licenses or address evolving state requirements, it may result in governmental or regulatory proceedings or actions by private litigants, which could potentially harm our business, results of operations, and financial condition.
We monitor changes to the state regulatory requirements applicable to our business activities, including Chegg Skills; however, if we do not obtain the appropriate licenses or address evolving state requirements, it may result in governmental or regulatory proceedings or actions by private litigants, which could potentially harm our business, results of operations, and financial condition.
Newly enacted laws such CDPA and CPA will place additional restrictions on our marketing practices. Notwithstanding existing laws, we may discontinue use or support of these activities if we become concerned that students or potential students deem them intrusive or they otherwise adversely affect our reputation, goodwill and brand.
Newly enacted laws such CDPA and CPA will place additional restrictions on our marketing practices. 23 Table of Contents Notwithstanding existing laws, we may discontinue use or support of these activities if we become concerned that students or potential students deem them intrusive, or they otherwise adversely affect our reputation, goodwill and brand.
If we elect to deliver shares of our common stock to settle such conversion, the issuance of our common stock may cause immediate and significant dilution. In addition, our ability to repurchase the notes or to pay cash upon conversions of notes may be limited by law, regulatory authority or agreements governing any future indebtedness.
If we elect to deliver shares of our common stock to settle such conversion, the issuance of our common stock may cause immediate and significant dilution. 34 Table of Contents In addition, our ability to repurchase the notes or to pay cash upon conversions of notes may be limited by law, regulatory authority or agreements governing any future indebtedness.
Additionally, such events could lead to loss of customers; interruptions or stoppages in our business operations; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize 30 Table of Contents our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
Additionally, such events could lead to loss of customers; interruptions or stoppages in our business operations; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
For Skills, we face competition from other online learning platforms and online “skills accelerator” courses both in the direct-to-consumer category, including General Assembly, Galvanize, Inc., Flatiron School, Codecademy, DataCamp, and Lambda, Inc., as well as 17 Table of Contents white-label and co-branded providers who compete for adult learners through third party institutions, including 2U, Inc., Simplilearn, and Kenzie Academy.
For Skills, we face competition from other online learning platforms and online “skills accelerator” courses both in the direct-to-consumer category, including General Assembly, Galvanize, Inc., Flatiron School, Codecademy, DataCamp, and Lambda, Inc., as well as white-label and co-branded providers who compete for adult learners through third party institutions, including 2U, Inc., Simplilearn, and Kenzie Academy.
Similarly, we depend on mobile app stores such as Google Play Store and the Apple App Store to allow students to locate and download Chegg mobile applications that enable our services. Our ability to maintain the number of students directed to our website is not entirely within our control.
Similarly, we depend on mobile app stores such as the Google Play Store and the Apple App Store to allow students to locate and download Chegg mobile applications that enable our services. Our ability to maintain the number of students directed to our learning platform is not entirely within our control.
The accounting standards that we use in preparing our financial statements are often complex and require us to make significant estimates and assumptions in interpreting and applying those standards. These estimates and assumptions affect the reported values of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities.
The accounting standards that we use in preparing our financial statements are often complex and require us to make significant estimates and assumptions in interpreting and applying those standards. These estimates and assumptions affect the 24 Table of Contents reported values of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities.
We use open source software in connection with certain of our products and services. Companies that incorporate open source software into their products have, from time to time, faced claims challenging the ownership of open source software 26 Table of Contents and/or compliance with open source license terms.
We use open source software in connection with certain of our products and services. Companies that incorporate open source software into their products have, from time to time, faced claims challenging the ownership of open source software and/or compliance with open source license terms.
Although we believe we have the experience and processes to enable us to formulate appropriate assumptions and produce reasonably dependable estimates, these assumptions and estimates may change significantly in the future and could result in the reversal of previously recognized revenues and profit.
Although we believe we have the experience and processes to enable us to formulate appropriate assumptions and produce reasonably dependable estimates, these assumptions and estimates may change significantly in the future and could result in the reversal of previously recognized amounts.
For example, in the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the United States or other countries. Europe and 29 Table of Contents other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.
For example, in the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the United States or other countries. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.
This exclusive forum provision will not apply to claims that are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of Chancery of the State of Delaware does not have subject matter jurisdiction.
This exclusive forum provision will not apply to claims that are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of 33 Table of Contents Chancery of the State of Delaware does not have subject matter jurisdiction.
We have encountered and will continue to encounter 15 Table of Contents these risks, and if we do not manage them successfully, our business, financial condition, results of operations, and prospects may be materially and adversely affected.
We have encountered and will continue to encounter these risks, and if we do not manage them successfully, our business, financial condition, results of operations, and prospects may be materially and adversely affected.
Risks Related to Our Business and Growth Our future revenue and growth depend on our ability to continue to attract new students to, and retain existing students on, our learning platform.
Risks Related to Our Business and Growth Our future revenue and growth depend on our ability to continue to attract new learners to, and retain existing learners on, our learning platform.
Additionally, if platforms such as Google Chrome, Safari, or Firefox, limit our access to or understanding of 20 Table of Contents advertising and marketing audiences, they could reduce our advertising rates and ultimately reduce our revenues from brand advertising.
Additionally, if platforms such as Google Chrome, Safari, or Firefox, limit our access to or understanding of advertising and marketing audiences, they could reduce our advertising rates and ultimately reduce our revenues from brand advertising.
We may not be able to effectively shift our operations due to disruptions arising from the occurrence of such events, and our business and results of operations could be affected adversely as 34 Table of Contents a result.
We may not be able to effectively shift our operations due to disruptions arising from the occurrence of such events, and our business and results of operations could be affected adversely as a result.
Brands may not do business with us, or may reduce their advertising spend with us, if we do not deliver ads, sponsorships, and other commercial content and marketing programs effectively, or if they do not believe that their investment will generate a competitive return relative to other alternatives.
Brands may not do business with us, or may reduce their advertising spend with us, if we do not deliver ads, sponsorships, and other commercial content and marketing 20 Table of Contents programs effectively, or if they do not believe that their investment will generate a competitive return relative to other alternatives.
During times of war and other major conflicts, we, and our service providers and other third parties upon which we rely, may be vulnerable to a heightened risk of these attacks.
During times of war and other major conflicts, we, our service providers and other third parties 27 Table of Contents upon which we rely, may be vulnerable to a heightened risk of these attacks.
Any disruption in the services provided by third-party providers, including AWS, could harm our reputation or 19 Table of Contents brand, cause us to lose subscribers or revenues or incur substantial recovery costs and distract management from operating our business.
Any disruption in the services provided by third-party providers, including AWS, could harm our reputation or brand, cause us to lose subscribers or revenues or incur substantial recovery costs and distract management from operating our business.
As of December 31, 2022, we had $642.6 million remaining under the 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. Repurchases pursuant to our securities repurchase program could affect the price of our common stock and increase its volatility.
As of December 31, 2023, we had $3.7 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. Repurchases pursuant to our securities repurchase program could affect the price of our common stock and increase its volatility.
In June 2022, our board of directors approved a $1.0 billion increase to our existing securities repurchase program authorizing the repurchase of up to $2.0 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.
In August 2023, our Board of Directors approved a $200.0 million increase to our existing securities repurchase program authorizing the repurchase of up to $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.
Additionally, even if we succeed in establishing brand awareness and loyalty, we may be unable to maintain and grow our student user base if we cannot offer competitive prices for our products and services or adequately prevent unauthorized account sharing of our subscription program services.
Additionally, even if we succeed in establishing brand awareness and loyalty, we may be unable to maintain and grow our student user base if we cannot offer competitive prices for our products and services, adequately prevent unauthorized account sharing of our subscription program services, or prevent the piracy and illegal reproduction of our content.
In addition to the factors discussed in this Annual Report on Form 10-K, the trading price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including, among others: • our announcement of actual results for a fiscal period that are higher or lower than projected results or our announcement of revenues or earnings guidance that is higher or lower than expected; • issuance of new or updated research or reports by securities analysts, including unfavorable reports or change in recommendation or downgrading of our common stock; • announcements by us or our competitors of significant products or features, technologies, acquisitions, strategic relationships and partnerships, joint ventures, or capital commitments; • actual or anticipated changes in our growth rate relative to our competitors; • changes in the economic performance or market valuations of actual or perceived comparable companies; • future sales of our common stock by our officers, directors, and existing stockholders or the anticipation of such sales; • issuances of additional shares of our common stock or convertible instruments in connection with acquisitions and capital raising transactions; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares, including any common stock issued upon conversion of the notes; • lawsuits threatened or filed against us; • regulatory developments in our target markets affecting us, students, colleges, brands, publishers, or our competitors; • the U.S. political climate, with a focus on cutting budgets, higher education, and taxation; • terrorist attacks or natural disasters or similar events impacting countries where we operate; and • general economic and market conditions.
In addition to the factors discussed in this Annual Report on Form 10-K, the trading price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including, among others: • our announcement of actual results for a fiscal period that are higher or lower than projected results or our announcement of revenues or earnings guidance that is higher or lower than expected; • issuance of new or updated research or reports by securities analysts, including unfavorable reports or change in recommendation or downgrading of our common stock; • announcements by us, our competitors, or other parties of significant products or features, technologies (including AI-related developments), acquisitions, strategic relationships and partnerships, joint ventures, or capital commitments; • actual or anticipated changes in our growth rate relative to our competitors; • changes in the economic performance or market valuations of actual or perceived comparable companies; • future sales of our common stock by our officers, directors, and existing stockholders or the anticipation of such sales; • issuances of additional shares of our common stock or convertible instruments in connection with acquisitions and capital raising transactions; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares, including any common stock issued upon conversion of the notes; • lawsuits threatened or filed against us; • regulatory developments in our target markets affecting us, students, colleges, brands, publishers, or our competitors; • the U.S. political climate, with a focus on cutting budgets, higher education, and taxation; • terrorist attacks or natural disasters or similar events impacting countries where we operate; and • general economic and market conditions. 32 Table of Contents Furthermore, both domestic and international stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of companies in general and technology companies in particular.
We believe our brands are a key asset of our business. Developing, protecting, and enhancing our “Chegg” brands are critical to expanding our student user base and increasing student engagement. Having a strong brand can counteract the significant student turnover we experience from year to year as students graduate, and differentiate us from our competitors.
Developing, protecting, and enhancing our “Chegg” brands are critical to expanding our student user base and increasing student engagement. Having a strong brand can counteract the significant student turnover we experience from year to year as students graduate and differentiate us from our competitors.
Further, these third-party software and service providers may experience operational difficulties, including increased usage of their software and services from time to time.
Further, these third-party software and service providers may experience operational difficulties, including increased 19 Table of Contents usage of their software and services from time to time.
This case was voluntarily dismissed without prejudice in March 2019. Moreover, following the 2018 Data Incident, we received notices that an aggregate of 16,691 arbitration demands were filed against us by individuals alleging that they had suffered damages in connection with the 2018 Data Incident. All such arbitral demands have been resolved.
This case was voluntarily dismissed without prejudice in March 2019. Moreover, following the 2018 Data Incident, we received notices that an aggregate of 16,691 arbitration demands were filed against us by individuals alleging that they had suffered damages in connection with the 2018 Data Incident.
Our industry is evolving rapidly and some of our competitors have adopted, and may continue to adopt, aggressive pricing policies, less stringent standards for user-uploaded content, and devote substantially more resources to marketing, website, and systems development than we do. We also face risks from strategic alliances by other education ecosystem participants.
Some of our competitors have adopted, and may continue to adopt, aggressive pricing policies (including free offerings), less stringent standards for user-uploaded content, and devote substantially more resources to marketing, website, and systems development than we do. We also face risks from strategic alliances by other education ecosystem participants.
Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully. As part of our business strategy, we have made and intend to continue to make acquisitions to add specialized employees, complementary businesses, products, services, operations, or technologies.
Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully. As part of our business strategy, we have made and intend to continue to make acquisitions to add specialized employees, complementary businesses, products, services, operations, or technologies. Our recent prior acquisitions include Busuu, Mathway, and Thinkful.
General Risk Factor Our operations are susceptible to earthquakes, floods, rolling blackouts and other types of power loss, and public health crises, including the current COVID-19 pandemic. If these or other natural or man-made disasters were to occur, our business and results of operations would be adversely affected.
General Risk Factor Our operations are susceptible to earthquakes, floods, rolling blackouts and other types of power loss, and public health crises. If these or other natural or man-made disasters were to occur, our business and results of operations would be adversely affected.
Risks Related to Intellectual Property • If we become subject to liability for the Internet content that we publish or that is uploaded to our websites by students or other users, our results of operations could be adversely affected. • Changes in or our failure to comply with the requirements for eligibility for the Digital Millennium Copyright Act (DMCA) safe harbors could harm our business. • Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations. • We are, and may in the future be, subject to intellectual property claims, which are costly to defend and could harm our business, financial condition, and results of operations. • Some aspects of our technology include open source software, and any failure to comply with the terms of one or more of these open source licenses could harm our business.
Risks Related to Intellectual Property • Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations. 12 Table of Contents • Misuse of our platform and content, including digital piracy and improper sharing and misappropriation of user credentials, may continue to adversely affect our business, financial condition, and results of operation. • If we become subject to liability for the Internet content that we publish or that is uploaded to our websites by students or other users, our results of operations could be adversely affected. • Changes in or our failure to comply with the requirements for eligibility for the Digital Millennium Copyright Act (DMCA) safe harbors could harm our business. • We are, and may in the future be, subject to intellectual property claims, which are costly to defend and could harm our business, financial condition, and results of operations. • Some aspects of our technology include open-source software, and any failure to comply with the terms of one or more of these open-source licenses could harm our business.
Thinkful's efforts to obtain necessary approvals and licenses began prior to our acquisition of the business and continues following the acquisition.
Chegg Skills' efforts to obtain necessary approvals and licenses began prior to our acquisition of the business and continues following the acquisition.
Our ability to refinance the notes, which may not be redeemed prior to September 2023 for the 2026 notes and previously before March 2022 for the 2025 notes subject to certain conditions related to the price of our common stock, will depend on the capital markets and our financial condition at such time.
Our ability to refinance the notes which, as of September 2023 for the 2026 notes and March 2022 for the 2025 notes, may be redeemable subject to certain conditions related to the price of our common stock, will depend on the capital markets and our financial condition at such time.
The uncertainty surrounding the evolving educational landscape, the demand and market for our products and services, and the lingering impact of the COVID-19 pandemic make it difficult to predict our operational trends and results of operations, particularly with respect to our newer offerings, and the ultimate market size for our products and services.
The uncertainty surrounding the evolving educational landscape, the state of the student, and the demand and market for our products and services make it difficult to predict our operational trends and results of operations, particularly with respect to our newer offerings, and the ultimate market size for our products and services.
Factors that could negatively affect our brands include, among others: • changes in student sentiment about the quality or usefulness of our products and services; • technical or other problems that prevent us from providing our products and services reliably or otherwise negatively affect the student experience with our products and services; 14 Table of Contents • concern from colleges and regulatory agencies regarding how students use our content offerings, such as our Expert Questions and Answers service; • student concerns related to privacy and use of data in our products and services; • the reputation of the products and services of competitive companies; and • students’ misuse of our products and services in ways that violate our terms of services, applicable laws, or the code of conduct at their colleges.
Factors that could negatively affect our brands include, among others: 17 Table of Contents • changes in student sentiment about the quality or usefulness of our products and services, especially as we introduce our new AI-enabled interactive and personalized user experience; • the quality and accuracy of our content; • technical or other problems that prevent us from providing our products and services reliably or otherwise negatively affect the student experience with our products and services; • concern from colleges and regulatory agencies regarding how students use our content offerings, such as our Expert Questions and Answers service; • student concerns related to privacy and use of data in our products and services; • the reputation of the products and services of competitive companies; and • students’ misuse of our products and services in ways that violate our Terms of Use, our Honor Code, other company policies, applicable laws, or the code of conduct at their educational institutions.
Our ability to gain market acceptance in any particular market is uncertain and the distraction of our senior management team could have an adverse effect on our business, results of operations, and financial condition.
If we cannot address these challenges, it could have an adverse effect on our business, results of operations, and financial condition. Our ability to gain market acceptance in any particular market is uncertain and the distraction of our senior management team could have an adverse effect on our business, results of operations, and financial condition.
Bribery Act; • increased financial accounting and reporting burdens, complexities, and commercial infrastructures; • risks associated with international payment methods, including risks associated with fraudulent payments; • risks associated with foreign tax regimes, trade tariffs, or similar issues, which could negatively impact international adoption of our offerings; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; • adverse tax consequences, including the potential for required withholding taxes for our overseas employees; and • regional and economic political conditions. 16 Table of Contents If we cannot address these challenges, it could have an adverse effect on our business, results of operations, and financial condition.
Bribery Act; • increased financial accounting and reporting burdens, complexities, and commercial infrastructures; • risks associated with international payment methods, including risks associated with fraudulent payments; • risks associated with foreign tax regimes, trade tariffs, or similar issues, which could negatively impact international adoption of our offerings; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; • adverse tax consequences, including the potential for required withholding taxes for our overseas employees; and • regional and economic political conditions.
In October 2022, without any admission of liability, we entered into an agreement with the FTC containing a proposed consent order that will significantly impact our data security and privacy practices. The FTC consent order was finalized in January 2023.
All such arbitral demands have been resolved. 28 Table of Contents In October 2022, without any admission of liability, we entered into an agreement with the FTC containing a proposed consent order that will significantly impact our data security and privacy practices. The FTC consent order was finalized in January 2023.
For example, various U.S. and international laws restrict the distribution of materials considered harmful to minors and impose additional restrictions on the ability of online services to collect information from minors.
Accordingly, our business is subject to certain laws covering the protection of minors. For example, various U.S. and international laws restrict the distribution of materials considered harmful to minors and impose additional restrictions on the ability of online services to collect information from minors.
If we fail to maintain and expand our user base, our business, results of operations, and financial condition could be adversely affected. If our efforts to build and maintain strong brands are not successful, we may not be able to grow our student user base, which could adversely affect our results of operations.
If our efforts to build and maintain strong brands are not successful, we may not be able to grow our student user base, which could adversely affect our results of operations. We believe our brands are a key asset of our business.
We have experienced and expect to continue to experience periodic service interruptions and delays involving our systems. While we maintain a fail-over capability to switch our operations from one facility to another in the event of a service outage, that process would still result in service interruptions that could be significant in duration.
While we maintain a fail-over capability to switch our operations from one facility to another in the event of a service outage, that process would still result in service interruptions that could be significant in duration.
If the market and demand for a comprehensive learning platform does not develop as we expect, or if we fail to address the needs of this market, our business and prospects would be harmed.
If the market and demand for a comprehensive learning platform does not develop as we expect, or if we fail to address the needs of this market, our business and prospects would be harmed. Given the current environment of uncertainty, we may not be able to provide annual financial guidance.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. 27 Table of Contents We may expend significant resources or modify our business activities to try to protect against threats to our security or systems.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
To finance any future acquisitions, we may issue equity or equity-linked securities, which could be dilutive, or debt, which could be costly, potentially dilutive, and impose substantial restrictions on the conduct of our business.
We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. To finance any future acquisitions, we may issue equity or equity-linked securities, which could be dilutive, or debt, which could be costly, potentially dilutive, and impose substantial restrictions on the conduct of our business.
Additionally, after the FTC’s preliminary approval of the consent order was publicly announced, a putative class action captioned Keller v. Chegg, Inc. (Case No. 22-cv-6986-JD) was filed in November 2022 in the U.S. District Court for the Northern District of California.
Any violations of the proposed order could expose us to significant civil penalties, further injunctions and other adverse consequences. Additionally, after the FTC’s preliminary approval of the consent order was publicly announced, a putative class action captioned Keller v. Chegg, Inc. (Case No. 22-cv-6986-JD) was filed in November 2022 in the U.S. District Court for the Northern District of California.
If we are not able to manage the growth of our business, we may not be able to maintain or increase our revenues as anticipated or recover any associated acquisition or development costs, and our business could be adversely affected. 21 Table of Contents Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict.
If we are not able to manage the growth of our business, we may not 21 Table of Contents be able to maintain or increase our revenues as anticipated or recover any associated acquisition or development costs, and our business could be adversely affected.
The markets for new products and services may be unproven, and these products may include technologies and business models with which we have little or no prior experience or may significantly change our existing products and services.
The markets for new products and services may be unproven, and these products may include technologies and business models with which we have little or no prior experience or may significantly change our existing products and services. The effort to gain technological expertise and develop new technologies in our business requires us to incur significant expenses.
Short selling occurs when an investor borrows a security and sells it on the open market, with the intention of buying identical securities at a later date to return to the lender.
We may be subject to short-selling strategies that may drive down the market price of our common stock. Short selling occurs when an investor borrows a security and sells it on the open market, with the intention of buying identical securities at a later date to return to the lender.
If we fail to timely implement these changes or we cannot implement them for any reason, including due to factors beyond our control, our business may suffer, which may hinder our ability to sustain or increase such profitability. Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets.
If we fail to timely implement these changes or we cannot implement them for any reason, including due to factors beyond our control, our business may suffer, which may hinder our ability to sustain or increase such profitability.
If we do not attract more students, retain our existing students, or if students do not increase their level of engagement with our platform, our revenues may grow more slowly than expected or decline. The student demographic is characterized by rapidly changing tastes, preferences, behavior, brand loyalty, and price sensitivity.
If we do not attract more students, retain our existing students, or if students do not increase their level of engagement with our platform, our revenues will continue to decline. The student demographic is characterized by rapidly changing tastes, preferences, behavior, brand loyalty, and price sensitivity. Developing an enduring business model to serve this population is particularly challenging.
Our newer products and services, such as skills-based learning and language learning, may not be integrated effectively into our business, achieve or sustain profitability, or achieve market acceptance at levels sufficient to justify our investment.
Our ability to acquire and integrate larger or more complex businesses, products, services, operations, or technologies in a successful manner is unproven. Our newer products and services, such as skills-based learning and language learning, may not be integrated effectively into our business, achieve or sustain profitability, or achieve market acceptance at levels sufficient to justify our investment.
Although we will continue to work with academic institutions to enforce our honor code and otherwise discourage students from misusing our services, other jurisdictions (including international jurisdictions) may adopt similar or broader versions of these types of laws and regulations, or the interpretation of the existing or future laws and regulations may impact whether they are cited against us or where we can offer our services. 22 Table of Contents The adoption of any laws or regulations that adversely affect the popularity or growth in the use of the Internet particularly for educational services, including laws limiting the content and learning programs that we can offer, and the audiences that we can offer that content to, may decrease demand for our service offerings and increase our cost of doing business.
Although we will continue to work with academic institutions to enforce our honor code and otherwise discourage students from misusing our services, other jurisdictions (including international jurisdictions) may adopt similar or broader versions of these types of laws 22 Table of Contents and regulations, or the interpretation of the existing or future laws and regulations may impact whether they are cited against us or where we can offer our services.
Although our securities repurchase program is intended to enhance long-term stockholder value, short-term price fluctuations could reduce the program’s effectiveness. 33 Table of Contents Risks Related to Our Convertible Senior Notes Servicing our convertible senior notes requires a significant amount of cash, and we may not have sufficient cash flow or cash on hand to repay them, settle conversions in cash or to repurchase them upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase.
Risks Related to Our Convertible Senior Notes Servicing our convertible senior notes requires a significant amount of cash, and we may not have sufficient cash flow or cash on hand to repay them, settle conversions in cash or to repurchase them upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase.
Failure to keep pace with these technological developments or otherwise bring to market products that reflect these technologies could have a material adverse impact on our overall business and results of operations. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis.
We cannot predict the effect of technological changes on our business. Failure to keep pace with these technological developments or otherwise bring to market products that reflect these technologies could have a material adverse impact on our overall business and results of operations.
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.
Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict. 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.
We expect to make significant investments in the development and expansion of our business and, as a result, our cost of revenues and operating expenses may increase. We may not succeed in increasing our revenues sufficiently to offset these higher expenses, and our efforts to grow the business may be more expensive than we anticipate.
We may not succeed in increasing our revenues sufficiently to offset these higher expenses, and our efforts to grow the business may be more expensive than we anticipate.
However, while we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
We may expend significant resources or modify our business activities to try to protect against threats to our security or systems. However, while we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
The rate at which we expand our student user base, including retaining existing students, and increase student engagement with our learning platform may decline or fluctuate because of several factors, including, among others: 13 Table of Contents • our ability to engage students with our suite of Chegg Services and to introduce new products and services that are favorably received by students; • our ability to produce compelling and engaging services, mobile applications and websites for students; • the efficacy of our “Learn with Chegg” initiative and the ability of the enhanced personalization of our content to further retain and engage students on our learning platform; • our ability to localize our content, localize our pricing, localize our payment and commerce tools, and create new apps in different languages and for different geographies to further our international expansion through increased conversion and retention; • our ability to grow our skills partnerships with providers who link us to employers and their learners; • changes in student spending levels and habits; • the decreasing number of students attending U.S. colleges; and • the effectiveness of our sales and marketing efforts, including generating word-of-mouth referrals.
The rate at which our student user base expands or declines, the rate at which we retain existing students, and the engagement with our learning platform may fluctuate because of several factors, including, among others: • our ability to engage students with our suite of Subscription Services and the content contained therein; • our ability to introduce new products and services that are favorably received by students, including a new AI-enabled interactive and personalized user experience; • our ability to convert visitors to paying subscribers given the availability of free competitors and content; • piracy and unauthorized use of our content; • the decreasing number of students attending U.S. colleges; • our ability to localize our content, localize our pricing, localize our payment and commerce tools, and create new apps in different languages and for different geographies to further our international expansion through increased conversion and retention; • our ability to increase our total addressable market beyond STEM-B (science, technology, engineering, mathematics and business); • our ability to grow our skills business-to-business partnerships and partnerships with providers who link us to employers and their learners; • changes in student spending levels and habits; and • the effectiveness of our sales and marketing efforts, including generating word-of-mouth referrals.
If our shareholders do not approve our new equity incentive plan, we may not be able to compensate our key employees commensurate with other companies in the San Francisco Bay Area with whom we compete for talent, and we may lose their services. In addition, we may not be able to attract their replacements.
If our shareholders do not approve a new equity incentive plan or if we are not able to grant employees the appropriate number of shares, we may not be successful in compensating our key employees commensurate with other technology companies with whom we compete for talent, and we may lose their services.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business and results of operations. We may be subject to short selling strategies that may drive down the market price of our common stock.
We have been and may continue to be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business and results of operations.
Our business and operations could be materially adversely affected in the event of earthquakes, blackouts, or other power losses, floods, fires, telecommunications failures, break-ins, acts of terrorism, public health crises, including the current COVID-19 pandemic, inclement weather, shelving accidents, or similar events. Our executive offices are located in the San Francisco Bay Area, an earthquake-sensitive area and susceptible to wildfires.
Our business and operations could be materially adversely affected in the event of earthquakes, blackouts, or other power losses, floods, fires, telecommunications failures, break-ins, acts of terrorism, wars, including the war in Ukraine and the Israel-Hamas war, public health crises, inclement weather, shelving accidents, or similar events.
While our Subscription Services revenues have grown in recent periods, this growth may not be sustainable and we may not be able to achieve or maintain profitability. To sustain profitability, we may need to change our operating infrastructure, scale our operations more efficiently, reduce our costs, or implement changes in our product and services offerings.
To sustain profitability, we may need to change our operating infrastructure, scale our operations more efficiently, reduce our costs, or implement changes in our product and services offerings.
There is no guarantee that students will use our mobile apps, such as the mobile version of our website, m.chegg.com, and Chegg Study, rather than competing products.
We depend on mobile app stores and operating systems to grow our student user base and their engagement with our learning platform. There is no guarantee that students will use our mobile apps, such as the mobile version of our website, m.chegg.com, and Chegg Study, rather than competing products.
We have a history of losses and we may not achieve or sustain profitability in the future. We have experienced significant net losses since our incorporation in July 2005, and we may continue to experience net losses in the future. As of December 31, 2022, we had an accumulated deficit of $70.6 million.
Any of the foregoing may have an adverse effect on our business. We have a history of losses, and we may not achieve or sustain profitability in the future. We have experienced cumulative net losses since our incorporation in July 2005, and we may continue to experience net losses in the future.
Any of the foregoing may have an adverse effect on our business. 18 Table of Contents If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives. We depend on the continued contributions of our senior management and other key personnel.
If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives. We depend on the continued contributions of our senior management and other key personnel. In particular, we rely on the contributions of our President, Chief Executive Officer, and Co-Chairperson, Dan Rosensweig.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur corporate office leases expire at varying times between 2023 and 2028. We believe our facilities are adequate for our current needs and for the foreseeable future.
Biggest changeOur corporate office leases expire at varying times between 2024 and 2028. We believe our facilities are adequate for our current needs and for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor further information on our legal proceedings, see Note 13, “Commitments and Contingencies,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 35 Table of Contents PART II
Biggest changeFor further information on our legal proceedings, see Note 10, “Commitments and Contingencies,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Securities by the Registrant and Affiliated Purchasers We did not repurchase any of our securities during the three months ended December 31, 2022. 36 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Chegg under the Securities Act or the Exchange Act.
Biggest changeThe average price paid per security is not applicable as final settlement did not occur during the three months ended December 31, 2023. 37 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Chegg under the Securities Act or the Exchange Act.
Securities Authorized for Issuance under Equity Compensation Plans See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K for more information regarding securities authorized for issuance. Unregistered Sales of Securities We had no unregistered sales of our securities during the three months ended December 31, 2022.
Securities Authorized for Issuance under Equity Compensation Plans See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K for more information regarding securities authorized for issuance. Unregistered Sales of Securities We had no unregistered sales of our securities during the three months ended December 31, 2023.
The graph assumes that $100 was invested at the market close on December 31, 2017 in the common stock of Chegg, Inc., the S&P 500 and the NASDAQ Composite and data for the S&P 500 and the NASDAQ Composite assumes reinvestment of dividends. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
The graph assumes that $100 was invested at the market close on December 31, 2018, in the common stock of Chegg, Inc., the S&P 500 and the NASDAQ Composite and data for the S&P 500 and the NASDAQ Composite assumes reinvestment of dividends. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the New York Stock Exchange under the symbol “CHGG.” Stockholders of Record As of January 31, 2023 , there were 27 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the New York Stock Exchange under the symbol “CHGG.” Stockholders of Record As of January 31, 2024 , there were 26 stockholders of record of our common stock.
Securities Repurchase Program In June 2022, our board of directors approved a $1.0 billion increase to our existing securities repurchase program authorizing the repurchase of up to $2.0 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.
Securities Repurchase Program In August 2023, our Board of Directors approved a $200.0 million increase to our existing securities repurchase program authorizing the repurchase of up to $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.
As of December 31, 2022, we had $642.6 million remaining under the 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.
As of December 31, 2023, we had $3.7 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.
The following graph shows a comparison from December 31, 2017 through December 31, 2022 of the cumulative total return for our common stock, the Standard & Poor’s 500 Stock Index (S&P 500) and the NASDAQ Composite Index (NASDAQ Composite).
The following graph presents a comparison from December 31, 2018, through December 31, 2023, of the cumulative total return for our common stock, the Standard & Poor’s 500 Stock Index (S&P 500) and the NASDAQ Composite Index (NASDAQ Composite).
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Purchases of Securities by the Registrant and Affiliated Purchasers The following table presents the securities repurchase activity during the three months ended December 31, 2023 (in thousands, except average price paid per security and total number of securities repurchased): Period Total Number of Securities Repurchased 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 October 1 - October 31 — $ — — $ — $ 153,665 November 1 - November 30 (1) 13,498,313 — 13,498,313 150,000 3,665 December 1 - December 31 — — — — 3,665 (1) On November 14, 2023, in connection with our securities repurchase program, we entered into an accelerated share repurchase (ASR) agreement with a financial institution to repurchase $150.0 million of our outstanding common stock.
Added
In exchange for an upfront payment of $150.0 million, we received an initial delivery of 13,498,313 shares of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following table summarizes our historical consolidated statements of operations (in thousands, except percentage of total net revenues): Years Ended December 31, 2022 2021 Net revenues $ 766,897 100 % $ 776,265 100 % Cost of revenues (1) 197,396 26 254,904 33 Gross profit 569,501 74 521,361 67 Operating expenses: Research and development (1) 196,637 26 178,821 23 Sales and marketing (1) 147,660 19 105,414 14 General and administrative (1) 216,247 28 159,019 20 Total operating expenses 560,544 73 443,254 57 Income from operations 8,957 1 78,107 10 Total interest expense, net and other income (expense), net 94,989 13 (72,368) (9) Income before benefit from (provision for) income taxes 103,946 14 5,739 1 Benefit from (provision for) income taxes 162,692 21 (7,197) (1) Net income (loss) $ 266,638 35 % $ (1,458) 0 % (1) Includes share-based compensation expense as follows: Cost of revenues $ 2,484 $ 1,621 Research and development 41,335 37,131 Sales and marketing 13,857 13,887 General and administrative 75,780 56,207 Total share-based compensation expense $ 133,456 $ 108,846 41 Table of Contents Years Ended December 31, 2022, 2021 and 2020 Net Revenues The following table sets forth our total net revenues for the periods shown for our Subscription Services and Skills and Other product lines (in thousands, except percentages): Years Ended December 31, Change in 2022 Change in 2021 2022 2021 2020 $ % $ % Subscription Services $ 671,968 $ 616,817 $ 460,612 $ 55,151 9 % $ 156,205 34 % Skills and Other 94,929 159,448 183,726 (64,519) (40) (24,278) (13) Total net revenues $ 766,897 $ 776,265 $ 644,338 $ (9,368) (1) $ 131,927 20 Subscription Services revenues increased by $55.2 million, or 9%, during the year ended December 31, 2022, compared to the same period in 2021.
Biggest change(Provision For) Benefit From Income Taxes (Provision for) benefit from income taxes consists primarily of federal and state income taxes in the United States. 41 Table of Contents Results of Operations The following table presents our historical consolidated statements of operations (in thousands, except percentage of total net revenues): Years Ended December 31, 2023 2022 Net revenues $ 716,295 100 % $ 766,897 100 % Cost of revenues (1) 225,941 32 197,396 26 Gross profit 490,354 68 569,501 74 Operating expenses: Research and development (1) 191,705 27 196,637 26 Sales and marketing (1) 126,591 18 147,660 19 General and administrative (1) 239,783 33 216,247 28 Total operating expenses 558,079 78 560,544 73 (Loss) income from operations (67,725) (10) 8,957 1 Total interest expense, net and other income (expense), net 118,037 17 94,989 13 Income before (provision for) benefit from income taxes 50,312 7 103,946 14 (Provision for) benefit from income taxes (32,132) (4) 162,692 21 Net income $ 18,180 3 % $ 266,638 35 % (1) Includes share-based compensation expense as follows: Cost of revenues $ 2,256 $ 2,484 Research and development 44,103 41,335 Sales and marketing 9,524 13,857 General and administrative 77,619 75,780 Total share-based compensation expense $ 133,502 $ 133,456 42 Table of Contents Years Ended December 31, 2023 and 2022 Net Revenues The following table presents our total net revenues for the periods shown for our Subscription Services and Skills and Other product lines (in thousands, except percentages): Years Ended December 31, Change in 2023 2023 2022 $ % Subscription Services $ 640,520 $ 671,968 $ (31,448) (5) % Skills and Other 75,775 94,929 (19,154) (20) Total net revenues $ 716,295 $ 766,897 $ (50,602) (7) Subscription Services revenues decreased by $31.4 million, or 5%, during the year ended December 31, 2023, compared to the same period in 2022.
See Note 11, “Convertible Senior Notes,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information on the gain on early extinguishment of a portion of the 2026 notes and 2025 notes.
See Note 8, “Convertible Senior Notes,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information on the gain on early extinguishment of a portion of the 2026 notes and 2025 notes.
Our marketing expenses are largely variable and to the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels shifts, we could see a corresponding change in our sales and marketing expenses.
Our marketing expenses are largely variable and to the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels' shifts, we could see a corresponding change in our sales and marketing expenses.
We intend to continue making significant investments in developing new products and services and enhancing the functionality of existing products and services. Sales and Marketing Our sales and marketing expenses consist of user and advertiser-facing marketing and promotional expenditures through a number of targeted online marketing channels, sponsored search, display advertising, email marketing campaigns, and other initiatives.
We intend to continue making significant investments in developing new products and services and enhancing the functionality of existing products and services. Sales and Marketing Our sales and marketing expenses consist of user and advertiser-facing marketing and promotional expenditures through a number of targeted online marketing channels, sponsored search, display advertising, social media campaigns, and other initiatives.
Recent Accounting Pronouncements For relevant recent accounting pronouncements, see Note 2, “Significant Accounting Policies”, of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Recent Accounting Pronouncements For relevant recent accounting pronouncements, see Note 2, “Significant Accounting Policies”, of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. 49 Table of Contents
In assessing the need for a valuation allowance, we consider all available evidence including future reversals of existing taxable temporary differences, projected future taxable income, taxable income in prior carryback years if permitted 48 Table of Contents under the tax law, and tax-planning strategies.
In assessing the need for a valuation allowance, we consider all available evidence including future reversals of existing taxable temporary differences, projected future taxable income, taxable income in prior carryback years if permitted under the tax law, and tax-planning strategies.
Research and Development Our research and development expenses consist of salaries, benefits, and share-based compensation expense for employees on our product, engineering, and technical teams who are responsible for maintaining our website, developing new products, and improving existing products. Research and development costs also include technology costs to support our research and development, and outside services.
Research and Development Our research and development expenses consist of employee-related expenses, which includes salaries, benefits, and share-based compensation expense for employees on our product, engineering, and technical teams who are responsible for maintaining our website, developing new products, and improving existing products. Research and development costs also include technology costs to support our research and development, and outside services.
Quarterly changes in the estimated forfeiture rate can have a significant impact on our share-based compensation expense as the cumulative effect of adjusting the rate is recognized in the period the forfeiture estimate is changed.
Quarterly changes in the estimated forfeiture rate can have a significant impact on our share-based compensation expense as the cumulative effect of adjusting the rate is 48 Table of Contents recognized in the period the forfeiture estimate is changed.
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.
Our future capital requirements will depend on many factors, including our rate of revenue growth, our investments in research and development activities, our 45 Table of Contents acquisition of new products and services and our sales and marketing activities.
We estimate a forfeiture rate to calculate the share-based compensation expense related to our awards. Estimated forfeitures are determined based on historical data and management’s expectation of exercise behaviors. We continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors.
We estimate a forfeiture rate to calculate the share-based compensation expense related to our awards. Estimated forfeitures are determined based on historical data and we continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors.
In June 2022, our board of directors approved a $1.0 billion increase to our existing securities repurchase program authorizing the repurchase of up to $2.0 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.
In August 2023, our Board of Directors approved a $200.0 million increase to our existing securities repurchase program authorizing the repurchase of up to $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.
We have determined these performance obligations qualify as distinct performance obligations, as the customer can benefit from the service on its own or together with other resources that are readily available to the customer, and our promise to transfer the service is separately identifiable from other promises in the contract.
Some of our customer arrangements include multiple performance obligations. We have determined these performance obligations qualify as distinct performance obligations, as the customer can benefit from the service on its own or together with other resources that are readily available to the customer, and our promise to transfer the service is separately identifiable from other promises in the contract.
Aside from our discussion on net revenues, we have omitted discussion of the earliest of the three years of financial condition and results of operations and this information can be found in Part I, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 22, 2022, which is available free of charge on the SEC's website at sec.gov and on our website at investor.chegg.com.
We have omitted discussion of the earliest of the three years of financial condition and results of operations and this information can be found in Part I, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 21, 2023, which is available free of charge on the SEC's website at sec.gov and on our website at investor.chegg.com.
We incur salaries, benefits and share-based compensation expenses for our employees engaged in marketing, business development and sales and sales support functions, and amortization of acquired intangible assets.
We incur employee-related expenses, which includes salaries, benefits and share-based compensation expenses for our employees engaged in marketing, business development and sales and sales support functions, and amortization of acquired intangible assets.
These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily 46 Table of Contents 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.
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.
If our estimates or related 47 Table of Contents assumptions change in the future, we may be required to impair these assets. We did not record any impairment charges related to acquired intangible assets or other long-lived assets during the years ended December 31, 2022 and 2021.
If our estimates or related assumptions change in the future, we may be required to impair these assets. We did not record any impairment charges related to acquired intangible assets or other long-lived assets during the years ended December 31, 2023 and 2022.
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.
To the extent that existing sources of liquidity are insufficient to fund our future operations, 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.
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.
As of December 31, 2022, $642.6 million remaining under the 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.
As of December 31, 2023, we had $3.7 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 determining this estimate, we consider the single most likely amount in a range of possible amounts. This estimated amount of variable consideration requires management to make a judgment based on the forecasted amount of consideration that we expect we will earn as well as the time period in which we can reasonably rely on the accuracy of the forecast.
This estimated amount of variable consideration requires management to make a judgment based on the forecasted amount of consideration that we expect we will earn as well as the time period in which we can reasonably rely on the accuracy of the forecast.
See Note 17, “Income Taxes,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
See Note 8, “Convertible Senior Notes” of our accompanying Notes to Consolidated Financial Statements included in Part I, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information on our notes.
Other income (expense), net consists primarily of interest income, gains/losses on early extinguishment of the convertible senior notes, foreign currency gain on purchase consideration, realized gains/losses on the sale of our investments, loss on the change in fair value of derivative instruments and gains on the sale of our strategic equity investments.
Other income (expense), net consists primarily of interest income, gains on early extinguishment of the convertible senior notes, realized gains/losses on the sale of our investments, and foreign currency gain on purchase consideration.
Sales and marketing expenses as a percentage of net revenues were 19% during the year ended December 31, 2022 compared to 14% of net revenues during the same period in 2021. General and Administrative General and administrative expenses in the year ended December 31, 2022 increased by $57.2 million, or 36%, compared to the same period in 2021.
Sales and marketing expenses as a percentage of net revenues were 18% during the year ended December 31, 2023 compared to 19% of net revenues during the same period in 2022. General and Administrative General and administrative expenses in the year ended December 31, 2023 increased by $23.5 million, or 11%, compared to the same period in 2022.
We expense substantially all of our research and development expenses as they are incurred. In the past three years, our research and development expenses have increased to support new products and services as well as to expand our infrastructure capabilities to support back-end processes associated with our revenue transactions and internal systems.
We expense substantially all of our research and development expenses as they are incurred. Our research and development expenses continue to support new products and services as well as expand our infrastructure capabilities to support back-end processes associated with our 40 Table of Contents revenue transactions and internal systems.
Share-based compensation expense recognized related to PSUs with a financial and strategic performance target is subject to the achievement of performance objectives and requires significant judgment by management in determining the current level of attainment of such performance objectives.
Share-based compensation expense recognized related to PSUs with a financial and strategic performance target is subject to the achievement of performance objectives and requires significant judgment by management in determining the current level of attainment of such performance objectives. Management may consider factors such as the latest financial forecasts and general business trends in the assessment of PSU award attainment.
Skills and Other revenues decreased by $64.5 million, or 40%, during the year ended December 31, 2022 compared to the same period in 2021.
Skills and Other revenues decreased by $19.2 million, or 20%, during the year ended December 31, 2023 compared to the same period in 2022.
Research and development expenses as a percentage of net revenues were 26% during the year ended December 31, 2022 compared to 23% of net revenues during the same period in 2021. Sales and Marketing Sales and marketing expenses during the year ended December 31, 2022 increased by $42.2 million, or 40%, compared to the same period in 2021.
Research and development expenses as a percentage of net revenues were 27% during the year ended December 31, 2023 compared to 26% of net revenues during the same period in 2022. Sales and Marketing Sales and marketing expenses during the year ended December 31, 2023 decreased by $21.1 million, or 14%, compared to the same period in 2022.
For these arrangements that contain multiple performance obligations, we allocate the transaction price based on the relative standalone selling price (SSP) method by comparing the SSP of each distinct performance obligation to the total value of the contract. We determine the SSP based on our historical pricing and discounting practices for the distinct performance obligation when sold separately.
For these arrangements that contain multiple performance obligations, we allocate the transaction price based on the relative standalone selling price (SSP) method by comparing the SSP of each distinct 47 Table of Contents performance obligation to the total value of the contract.
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.
Skills and Other revenues were 11% and 12% of net revenues during the years ended December 31, 2023 and 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.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Part I, Item 1A, “Risk Factors.” Overview Millions of people all around the world Learn with Chegg. Our mission is to improve learning and learning outcomes by putting students first.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Part I, Item 1A, “Risk Factors.” Overview Millions of people all around the world learn with Chegg. No matter the goal, level, or style, Chegg helps learners learn with confidence.
As a result, this amount is not included in the above table. 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.
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.
Liquidity and Capital Resources As of December 31, 2022, our principal sources of liquidity were cash, cash equivalents, and investments totaling $1.3 billion, which were held for working capital purposes.
As of December 31, 2023, our principal sources of liquidity were cash, cash equivalents, and investments totaling $579.6 million, which were held for working capital purposes.
General and Administrative Our general and administrative expenses consist of salaries, benefits and share-based compensation expense for certain executives as well as our finance, legal, human resources and other administrative employees.
General and Administrative Our general and administrative expenses consist of employee-related expenses, which includes salaries, benefits and share-based compensation expense for certain executives as well as our finance, legal, human resources and other administrative employees. In addition, general and administrative expenses include outside services, legal and accounting services, and depreciation expense.
Benefit from (provision for) income taxes The following table sets forth our benefit from (provision for) income taxes for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2022 2022 2021 $ % Benefit from (provision for) income taxes $ 162,692 $ (7,197) $ 169,889 n/m _______________________________________ *n/m - not meaningful The change in benefit from (provision for) income taxes was primarily due to the release of the valuation allowance against a substantial amount of our U.S. and certain state jurisdictions deferred tax assets.
(Provision for) benefit from income taxes The following table presents our (provision for) benefit from income taxes for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2023 2023 2022 $ % (Provision for) benefit from income taxes $ (32,132) $ 162,692 $ (194,824) n/m _______________________________________ *n/m - not meaningful The change in (provision for) benefit from income taxes 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 and the current year provision for income taxes.
On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
Our actual results may differ from these estimates under different assumptions or conditions.
Students typically pay to access Subscription Services on a monthly basis. 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.
Students typically pay to access Subscription Services on a monthly basis. Our Chegg Study subscription service provides access to personalized, step-by-step learning support powered by AI, computational engines, and subject matter experts. 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, and instructor-created materials through Uversity.
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.
Skills and Other revenues represented 21% and 29% of net revenues during the years ended December 31, 2021 and 2020, respectively.
Skills and Other revenues represented 11% and 12% of net revenues during the years ended December 31, 2023 and 2022, respectively.
These risks and uncertainties are described in greater detail in Part I, Item 1A, “Risk Factors.” 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.
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.
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.
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. As of December 31, 2022, we had $642.6 million remaining under the securities repurchase program.
Beginning in April 2022 for print textbooks and December 2022 for eTextbooks, we have concluded that GT controls the service and we recognize revenues on a net basis based on our role in the transaction as an agent.
We have concluded that we control our Subscription Services and therefore we recognize revenues and cost of revenues on a gross basis. For print textbooks and eTextbooks, we have concluded that we do not control the service and therefore we recognize revenues on a net basis based on our role in the transaction as an agent.
The decrease was primarily due to the partial extinguishment of the 2026 notes in 2022 as well as the full redemption of the 2023 notes in 2021. Other income (expense), net increased by $166.5 million during the year ended December 31, 2022, compared to the same period in 2021.
The decrease was primarily due to partial early extinguishments of our convertible senior notes. Other income (expense), net increased by $20.8 million, or 21%, during the year ended December 31, 2023, compared to the same period in 2022.
In addition, general and administrative expenses include outside services, legal and accounting services, and depreciation expense. 40 Table of Contents Interest Expense, Net and Other Income (Expense), Net Interest expense, net consists primarily of interest expense on the amortization of debt issuance costs related to the convertible senior notes.
Interest Expense, Net and Other Income (Expense), Net Interest expense, net consists primarily of interest expense on the amortization of debt issuance costs related to the convertible senior notes.
The increase was primarily attributable to increased international marketing spend, including incremental marketing spend from Busuu, of $17.9 million, higher other depreciation and amortization expense of $9.5 million, and higher employee-related expenses, including share-based compensation expense, of $8.8 million.
The decrease was primarily attributable to lower paid marketing expenses of $9.8 million, primarily due to Busuu, lower employee-related expenses, including share-based compensation expense, of $5.7 million, and lower other depreciation and amortization expense of $1.2 million, partially offset by restructuring charges of $1.2 million.
We plan to continue to invest in the expansion of our offerings to provide a more compelling and personalized solution and deepen engagement with students.
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. As AI technologies continue to advance, we are taking advantage of the increased opportunities by leveraging new tools to better serve our students.
In any particular period, the timing of additional hires could materially affect our operating expenses, both in absolute dollars and as a percentage of revenues. Our operating expenses also contain information technology expenses such as technology costs to support our research and development, sales and marketing expenses, depreciation expenses, amortization of acquired intangible assets, and outside services.
Our operating expenses also contain information technology expenses such as technology costs to support our research and development, sales and marketing expenses, depreciation expenses, amortization of acquired intangible assets, and outside services. We allocate certain costs to each expense category, primarily based on the headcount in each group at the end of a period.
The increase was primarily due to the $93.5 million gain on early extinguishment of a portion of the 2026 notes, $5.7 million increase in interest income, the $4.6 million gain on foreign currency remeasurement of purchase consideration related to our acquisition of Busuu, and the absence of certain items in 2021 including the $78.2 million loss on early extinguishment of debt of a portion of the 2025 notes and the $7.1 million net loss on the change in fair value of derivative instruments, partially offset by a $9.5 million increase in realized losses on the sale of certain investments primarily to align with our updated investment policy, and the absence of the $12.5 million gain on the sale of the strategic equity investments in 2021.
The increase was primarily due to a $85.9 million gain on early extinguishments of a portion of the 2026 notes and 2025 notes and an increase in interest income of $25.0 million, partially offset by the absence of the $93.5 million gain on early extinguishment of a portion of the 2026 notes that occurred in August 2022 and the absence of the $4.6 million gain on foreign currency remeasurement of purchase consideration related to our acquisition of Busuu.
This variable consideration can either increase or decrease the total transaction price depending on the nature of the variable consideration. We estimate the amount of variable consideration that we will earn at the inception of the contract, adjusted during each period, and include an estimated amount each period.
We estimate the amount of variable consideration that we will earn at the inception of the contract, adjusted during each period, and include an estimated amount each period. In determining this estimate, we consider the single most likely amount in a range of possible amounts.
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 December 31, 2022, we have incurred cumulative losses of $70.6 million from our operations and we may incur additional losses in the future.
Convertible senior notes, net decreased $588.8 million primarily due to early extinguishments. 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.
General and administrative expenses as a percentage of net revenues were 28% during the year ended December 31, 2022 compared to 20% during the same period in 2021. 43 Table of Contents Interest Expense, Net and Other Income (Expense), Net The following table sets forth our interest expense, net, and other income (expense), net, for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2022 2022 2021 $ % Interest expense, net $ (6,040) $ (6,896) $ 856 (12) % Other income (expense), net 101,029 (65,472) 166,501 n/m Total interest expense, net and other income (expense), net $ 94,989 $ (72,368) $ 167,357 n/m _______________________________________ *n/m - not meaningful Interest expense, net decreased by $0.9 million, or 12%, during the year ended December 31, 2022, compared to the same period in 2021.
Interest Expense, Net and Other Income (Expense), Net The following table presents our interest expense, net, and other income (expense), net, for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2023 2023 2022 $ % Interest expense, net $ (3,773) $ (6,040) $ 2,267 (38) % Other income (expense), net 121,810 101,029 20,781 21 % Total interest expense, net and other income (expense), net $ 118,037 $ 94,989 $ 23,048 24 % 44 Table of Contents Interest expense, net decreased by $2.3 million, or 38%, during the year ended December 31, 2023, compared to the same period in 2022.
The increase was primarily due to higher employee-related expenses, including share-based compensation expense, of $44.5 million and impairment of lease related assets of $5.2 million.
The decrease was primarily attributable to lower employee-related expenses, including share-based compensation expense, of $2.1 million, and lower contractor spend of $1.5 million, partially offset by restructuring charges of $1.7 million.
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. Skills and Other revenues were 12%, 21%, and 29% of net revenues during the years ended December 31, 2022, 2021 and 2020, respectively.
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.
The decrease was primarily due to lower revenues from print textbooks as a result of our partnership with GT beginning in April 2022 and lower unit volumes driven by decreased college enrollments, partially offset by an increase in revenues related to our Skills offerings.
The decrease was primarily due to lower revenues of $26.5 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, offset by growth in our Chegg Skills offering of $13.0 million.
Our convertible senior notes are recorded on our consolidated balance sheets at the carrying amount of $1.2 billion as of December 31, 2022. (2) Represents contractual obligations primarily related to information technology services. (3) Our corporate offices are leased under operating leases, which expire at various dates through 2028.
The 2025 notes are classified as a current liability as holders may convert the 2025 notes at any time within twelve months after the reporting date, however they mature on March 15, 2025. (2) Represents contractual obligations primarily related to information technology services. (3) Our corporate offices are leased under operating leases, which expire at various dates through 2028.
We allocate certain costs to each expense category, primarily based on the headcount in each group at the end of a period. As our business grows, our operating expenses may increase over time to expand capacity and sustain our workforce.
As our business grows, our operating expenses may increase over time to expand capacity and sustain our workforce.
As of December 31, 2022, our foreign subsidiaries held an insignificant amount of cash in foreign jurisdictions. We currently do not intend or foresee a need to repatriate some of 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.
As a result of the Tax Cuts and Jobs Act, we anticipate the U.S. federal impact for the remaining foreign jurisdictions to be minimal if these 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.
(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. Our long-term strategy is centered upon our ability to utilize Subscription Services to increase student engagement with our learning platform.
Subscribers to Busuu have access to a premium learning language platform that offers comprehensive support through self-paced lessons, live classes with expert tutors and a huge community of members to practice alongside.
Gross margins increased to 74% during the year ended December 31, 2022, from 67% during the same period in 2021. 42 Table of Contents Operating Expenses The following table sets forth our total operating expenses for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2022 2022 2021 $ % Research and development (1) $ 196,637 $ 178,821 $ 17,816 10 % Sales and marketing (1) 147,660 105,414 42,246 40 General and administrative (1) 216,247 159,019 57,228 36 Total operating expenses $ 560,544 $ 443,254 $ 117,290 26 (1) Includes share-based compensation expense of: Research and development $ 41,335 $ 37,131 $ 4,204 11 % Sales and marketing 13,857 13,887 (30) 0 General and administrative 75,780 56,207 19,573 35 Share-based compensation expense $ 130,972 $ 107,225 $ 23,747 22 The increases in employee-related operating expenses noted below during the year ended December 31, 2022, compared to the same period in 2021, are largely driven by incremental employees from our acquisition of Busuu.
Gross margins decreased to 68% during the year ended December 31, 2023, from 74% during the same period in 2022. 43 Table of Contents Operating Expenses The following table presents our total operating expenses for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2023 2023 2022 $ % Research and development (1) $ 191,705 $ 196,637 $ (4,932) (3) % Sales and marketing (1) 126,591 147,660 (21,069) (14) General and administrative (1) 239,783 216,247 23,536 11 Total operating expenses $ 558,079 $ 560,544 $ (2,465) 0 (1) Includes share-based compensation expense of: Research and development $ 44,103 $ 41,335 $ 2,768 7 % Sales and marketing 9,524 13,857 (4,333) (31) General and administrative 77,619 75,780 1,839 2 Share-based compensation expense $ 131,246 $ 130,972 $ 274 0 Research and Development Research and development expenses during the year ended December 31, 2023 decreased by $4.9 million, or 3%, compared to the same period in 2022.
Cost of revenues primarily consists of content amortization expense related to content that we develop, license from publishers, or acquire through acquisitions, web hosting fees, customer support fees, payment processing costs, amortization of acquired intangible assets, order fulfillment fees primarily related to outbound shipping and fulfillment as well as publisher content fees for eTextbooks, write-downs for print textbooks, the gain or loss on print textbooks liquidated, the net book value of print textbooks purchased by students at the end of the term or on a just-in-time basis, print textbook depreciation expense, personnel costs and other direct costs related to providing content or services.
Cost of revenues primarily consists of content amortization expense related to content that we develop, license from publishers, or acquire through acquisitions, web hosting fees, customer support fees, payment processing costs, amortization of acquired intangible assets, employee-related expenses, which includes salaries, benefits and share-based compensation expense, and other direct costs related to providing content or services.
If the SSP is not directly observable, we estimate the SSP by considering information such as market conditions, and information about the customer. Some of our customer arrangements may include an amount of variable consideration in addition to a fixed revenue share that we earn.
Some of our customer arrangements may include an amount of variable consideration in addition to a fixed revenue share that we earn. This variable consideration can either increase or decrease the total transaction price depending on the nature of the variable consideration.
One of the most significant components of our operating expenses is employee-related costs, which include salaries, benefits, and share-based compensation expenses. We expect to continue to hire new employees in order to support our current and anticipated growth.
In addition, cost of revenues includes allocated information technology and facilities costs. Operating Expenses We classify our operating expenses into three categories: research and development, sales and marketing, and general and administrative. One of the most significant components of our operating expenses is employee-related expenses, which include salaries, benefits, and share-based compensation expense.
During the years ended December 31, 2022, and 2021, we generated net revenues of $766.9 million and $776.3 million, respectively, and in the same periods had net income of $266.6 million and net loss of $1.5 million, respectively.
Our ability to achieve these long-term objectives is subject to numerous risks and uncertainties, which are described in greater detail in Part I, Item 1A, “Risk Factors.” During the years ended December 31, 2023, and 2022, we generated net revenues of $716.3 million and $766.9 million, respectively, and in the same periods had net income of $18.2 million and $266.6 million, respectively.
The increase was primarily due to an increased global brand awareness and penetration, including our acquisition of Busuu, which closed in January 2022, and increased students subscribing to the Chegg Study Pack. Subscription Services revenues represented 88% and 79% of net revenues during the years ended December 31, 2022 and 2021, respectively.
The decrease was primarily due to a 6% decrease in subscribers who have paid to access our services. Subscription Services revenues represented 89% and 88% of net revenues during the years ended December 31, 2023 and 2022, respectively.
Research and Development Research and development expenses during the year ended December 31, 2022 increased by $17.8 million, or 10%, compared to the same period in 2021. The increase was primarily attributable to higher employee-related expenses, including share-based compensation expense, of $13.0 million and higher technology expenses to support our research and development of $4.7 million.
Net cash used in financing activities increased $108.0 million, or 14%, during the year ended December 31, 2023, compared to the same period in 2022 and was primarily related to higher repurchases of our convertible senior notes of $104.8 million.
Cost of revenues decreased $57.5 million, or 23%, during the year ended December 31, 2022, compared to the same period in 2021.
General and administrative expenses as a percentage of net revenues were 33% during the year ended December 31, 2023 compared to 28% during the same period in 2022.
Cash Flows from Investing Activities Net cash provided by investing activities during the year ended December 31, 2022 was $104.9 million and was related to the maturity of investments of $884.9 million and proceeds from sale of investments of $458.5 million partially offset by the purchases of investments of $730.5 million, the acquisition of business of $401.1 million, and purchases of property and equipment of $103.1 million.
Net cash provided by investing activities increased $163.8 million, or 156%, during the year ended December 31, 2023, compared to the same period in 2022 and was primarily related to the absence of acquisitions of $401.1 million, which was partially offset by lower cash from investment maturities of $287.7 million.
Revenues from Skills are recognized either ratably over a six month course offering depending on the instruction type of the course, adjusted for an estimate of non-redemption. Revenues from advertising services are recognized upon fulfillment.
Revenues from Chegg Skills are recognized over the delivery period, adjusted for an estimate of non-redemption. Revenues from advertising services are recognized upon fulfillment. Revenues from print textbooks and eTextbooks are recognized immediately. Cost of Revenues Our cost of revenues consists primarily of expenses associated with the delivery and distribution of our products and services.
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.
Subscription Services revenues were 89% and 88% of net revenues during the years ended December 31, 2023 and 2022, respectively. 39 Table of Contents 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 learning experiences focused on the latest technology skills.
Years Ended December 31, 2022 and 2021 Cost of Revenues The following table sets forth our cost of revenues for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2022 2022 2021 $ % Cost of revenues (1) $ 197,396 $ 254,904 $ (57,508) (23) % (1) Includes share-based compensation expense of: $ 2,484 $ 1,621 $ 863 53 % As a result of our partnership with GT, cost of revenues decreased due to lower order fulfillment fees, net change in the gain on textbook library, lower print textbook depreciation expense, and lower cost of textbooks purchased by students.
Cost of Revenues The following table presents our cost of revenues for the periods shown (in thousands, except percentages): Years Ended December 31, Change in 2023 2023 2022 $ % Cost of revenues (1) $ 225,941 $ 197,396 $ 28,545 14 % (1) Includes share-based compensation expense of: $ 2,256 $ 2,484 $ (228) (9) % Cost of revenues increased $28.5 million, or 14%, during the year ended December 31, 2023, compared to the same period in 2022.
Net cash used in investing activities during the year ended December 31, 2021 was $365.8 million and was related to the purchases of investments of $1.7 billion, purchases of property and equipment of $94.2 million, purchases of textbooks of $10.9 million, and the acquisition of business of $7.9 million partially offset by the maturity of investments of $1.2 billion, proceeds from sale of investments of $206.0 million, proceeds from the sale of our equity investments of $16.1 million and proceeds from disposition of textbooks of $8.7 million.
Cash, cash equivalents, and investments decreased $694.3 million during the year ended December 31, 2023 primarily due to the early extinguishments of our convertible senior notes of $506.0 million, repurchase of shares of our common stock of $334.8 million and purchases of property and equipment of $83.1 million, partially offset by the net cash provided by operating activities of $246.2 million.
Removed
We support life-long learners all over the world, starting with their academic journey and extending through their careers. The Chegg platform provides products and services to support learners with their academic course materials, as well as their career and personal skills developments.
Added
We provide 24/7 on-demand support, and our personalized learning assistant leverages the power of artificial intelligence (“AI”), more than a hundred million pieces of proprietary content, as well as a decade of learning insights.
Removed
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.
Added
Our platform also helps learners build essential life and job skills to accelerate their path from learning to earning, and we work with companies to offer learning programs for their employees. Our long-term strategy is centered upon our ability to utilize Subscription Services to increase student engagement with our learning platform.
Removed
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 due to recognizing a revenue share as a result of our partnership with GT.
Added
We realigned our investments and resources around AI early in 2023, and have redesigned our user experience, developed our own large language models, launched automated answering and built proprietary algorithms to optimize the quality and accuracy of our content to build our personalized learning assistant.
Removed
In April 2022, we entered into definitive agreements with GT Marketplace, LLC (GT) such that we will continue to offer our print textbook and eTextbook offerings on our website and maintain relationships with the students, however, GT has purchased our existing print textbook library and will continue to make print textbook investments and provide fulfillment logistics for print textbook transactions.
Added
We remain focused on rolling out the next phase of our personalized learning assistant, including integrating pathways for students with assessments and other tools. We believe the investments we have made will allow us to maintain strong operating margins and cash flows and enable us to return to revenue growth over time.
Removed
Beginning December 2022, GT also began fulfilling eTextbook transactions. We expect that our partnership with GT provides an opportunity to grow faster with higher margins as we will no longer incur significant costs of revenue such as order fulfillment fees primarily related to shipping and fulfillment, publisher content fees for eTextbooks, and print textbook depreciation and write off expense.
Added
We expect to continue to hire new employees in order to support our business. In any particular period, the timing of additional hires could materially affect our operating expenses, both in absolute dollars and as a percentage of revenues.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe fair value of the notes, however, 49 Table of Contents may fluctuate when interest rates and the market price of our stock changes. See Note 11, “Convertible Senior Notes,” of the Notes to Consolidated Financial Statements of Part II, Item 8 of this Annual Report on Form 10-K for additional information. 50 Table of Contents
Biggest changeFor more information, see Note 8, “Convertible Senior Notes,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. 50 Table of Contents
Our cash and cash equivalents consist of cash and money market funds and investments consist of commercial paper, corporate debt securities, U.S. treasury securities and agency bonds. Changes in U.S. interest rates, such as those that have occurred in 2022, affect the interest earned on our cash and cash equivalents and investments and the market value of those securities.
Our cash and cash equivalents consist of cash and money market funds and investments consist of corporate debt securities, U.S. treasury securities and agency bonds. Changes in U.S. interest rates, such as those that have occurred in 2023, affect the interest earned on our cash and cash equivalents and the market value of our investments.
A hypothetical 100 basis point increase or decrease in interest rates would result in a $6.0 million increase or decline in the fair value of our investments as of December 31, 2022. Any realized gains or losses resulting from interest rate changes would only occur if we sold the investments prior to maturity.
A hypothetical 100 basis point increase or decrease in interest rates would result in a $5.8 million increase or decline in the fair value of our investments as of December 31, 2023. Any realized gains or losses resulting from interest rate changes would only occur if we sold the investments prior to maturity.
We accept foreign currencies from our international customers and our international revenues have grown to 15% and 11% of total net revenues during the years ended December 31, 2022 and 2021, respectively. Additionally, a portion of our operating expenses are incurred outside of the United States and are denominated in foreign currencies.
We accept foreign currencies from our international customers and our international revenues were 14%, 15% and 11% of total net revenues during the years ended December 31, 2023, 2022 and 2021, respectively. Additionally, a portion of our operating expenses are incurred outside of the United States and are denominated in foreign currencies.
Because the 2026 notes and 2025 notes have a fixed annual interest rate of 0.0% and 0.125%, respectively, we do not have any economic interest rate exposure or financial statement risk associated with changes in interest rates.
The 2026 notes and 2025 notes have a fixed annual interest rate of 0.0% and 0.125%, respectively, and therefore we do not have any economic interest rate exposure or financial statement risk associated with changes in interest rates. The fair value, however, may fluctuate when interest rates and the market price of our stock changes.
Interest Rate Sensitivity We had cash and cash equivalents totaling $473.7 million and $854.1 million as of December 31, 2022 and 2021, respectively, and investments of $800.2 million and $1.4 billion as of December 31, 2022 and 2021, respectively.
Interest Rate Sensitivity We had cash and cash equivalents totaling $135.8 million and $473.7 million as of December 31, 2023 and 2022, respectively, and investments of $443.8 million and $800.2 million as of December 31, 2023 and 2022, respectively.
We were not exposed to material risks due to changes in market interest rates given the liquidity of the cash, cash equivalents, and investments in which we invested our cash. We carry our notes at face value less unamortized debt issuance costs on our consolidated balance sheets.
We were not exposed to material risks due to changes in market interest rates given the liquidity of the cash, cash equivalents, and investments in which we invested our cash.

Other CHGG 10-K year-over-year comparisons