202 3 AN N UAL R EP O R T
Dear Chegg Stockholder,
2023 was a solid year for Chegg. We continued to prudently invest in the future growth and
competitiveness of our business while delivering strong margins and free cash flow. Despite headwinds,
we stayed focused on executing our plans to deliver a new AI-powered product experience, all while
remaining committed to delivering on our student-first mission of helping students learn more, faster,
and to prepare for future careers.
Total revenue was $716.3 million in 2023 and profitability remained strong, including $222.4 million in
adjusted EBITDA, or 31% margin, and $173 million in free cash flow. Chegg served 7.7 million global
subscribers in 2023. We increased our new account acquisitions by 50% in 2023, the first post-COVID full
year, versus our pre-COVID all-time high in 2019.
In 2023, we made stock repurchases which reduced shares outstanding by 19% versus 2022, and we
repurchased $597 million of outstanding convertible notes at a $92 million discount to par. We believe
these actions enhance shareholder value and we will continue to look for additional opportunities to
return value to our shareholders. In the meantime, we will continue to be prudent with expense
management and prioritization, while we continue to drive strong profitability and cash flows.
Transformation Drives Business Priorities
Over the last couple of years, we have faced real challenges as we navigate the post-COVID world and
as we digest the strong growth that we experienced during an unprecedented time. I am proud of the
team and how they are navigating the reshaping of our company despite these external challenges. It is
an exciting time at Chegg. We have transformed our product offerings to leverage the latest
advancements in artificial intelligence, making it core to everything we do. In less than a year, we
redesigned our entire Chegg Study user experience, developed our own large language models, started
delivering automated solutions that are faster and more cost-effective, and built proprietary algorithms
to optimize the quality and accuracy of our exclusive content. We are now in a better position than ever
before to serve learners around the world.
For the year ahead, we are focused on the following priorities:
• Returning to new account growth globally;
• Maintaining strong margins and cash flow;
• Rolling out the next phase of Chegg’s enhanced AI services; and
•
Leveraging our momentum in Skills for continued growth.
AI-Powered for the Future
Chegg’s ability to combine new artificial intelligence and machine learning technologies with our
proprietary content and data puts us in a unique position to benefit student learning. The process of
embedding AI throughout Chegg’s platform is ongoing and iterative as we build a truly personalized
learning assistant. Ultimately, we expect that our AI-powered service will anticipate students’ needs,
adapt to their strengths and weaknesses, and support them academically, professionally, and personally.
Importantly, as we scale the implementation of these new experiences, it is critical to ensure we meet
our standards of accuracy and quality. We have invested in building our own large language models,
using more than 100 million pieces of learning content from our 150,000 subject matter experts. These
education-specific models, along with our proprietary algorithms, set our service apart from generic
models and allow students to feel confident in the quality of solutions they receive from Chegg while
getting support in real-time. Beyond quality, building these models has significant cost benefits, as the
cost to answer a new question is 75% less expensive when using our own models. This means we will be
able to serve more students at a lower cost per student, faster, and in more subjects and languages.
Introducing new learners to Chegg
There are numerous ways we intend to market our new experience because the data tells us that, once a
student tries us, they love us. Internationally, we focused on promotional pricing and packaging to help
convert the millions of students who have entered the funnel but have not yet subscribed. Additionally,
we are building sharing into our service to increase word of mouth, expanding our presence on TikTok,
and enhancing our SEO with the significantly increased number of questions from automated solutions.
Our business model benefits from more students asking more questions - as we index those questions
into search and other platforms - to drive even more customers.
Bridging the Skills gap for students and employees
The importance of skills-based training has never been more critical. In fact, half of recent graduates are
questioning how prepared they are to enter the workforce given the disruption of artificial intelligence.
Employers agree, as 79% say that workers need more training to work with AI more effectively. Chegg is
positioned to bridge the gap, serving employers looking to provide skilling opportunities to their workers
and students who are seeking to build durable skills that are valued in the work world. With our
increasing AI capabilities, we are able to build and launch courses faster and more efficiently, and better
support learners during their skills training courses. We are already seeing a reduction in the time it takes
to launch a new Skills course by approximately 40%, which allows us to offer innovative programs at
greater speeds while significantly reducing our costs. The opportunity for Chegg Skills has never been
greater or more important.
Advocating for students
In 2024, we hosted our second annual Global Student Mental Health Week (SMHW)1 to raise awareness
and support organizations tackling the crisis of student mental health. As a part of our annual Global
Student Survey2, learners told us that lack of sleep and feelings of anxiety are the two most prevalent
mental health issues. During SMHW 2024, Chegg surfaced mental health resources, organized in-person
and digital events, and brought the voices of students to lawmakers to advocate for policies that support
them.
Corporate Responsibility
Chegg is a mission-driven company. This sentiment is woven into everything we do and supports our
commitment to our Environmental, Social, and Governance (ESG) strategy. We believe that our success is
directly tied to creating shared value for our shareholders, our students, our employees, and society. We
support issues that impact our students; we empower a diverse, innovative workforce; we measure and
report our environmental footprint with the goal of minimizing our impact over time; and we effectively
govern our business practices, contributing to the shared value we provide all our stakeholders. In 2023
we continued investing in programs that support our ESG mission, including introducing a global
corporate donation matching program for employees, hosting our second annual Global Day of Impact
where 841 employees volunteered at non-profits in their communities which positively impacted
thousands of people, adding two new ERGs to support the unique experiences of our employees, and
donating $0.6 million to non-profit organizations.
Our commitment to ESG issues has awarded us the highest rating from the ESG rating agency, MSCI,
and we are honored to be rated AAA. We have a bold vision for a better future and will continue
integrating ESG into our business strategy.
Optimistic about our future
Looking ahead, we are excited about Chegg’s future. We believe that we are uniquely positioned to
serve global learners by providing them with a personalized learning experience to achieve their
academic and professional goals. As we have done since Chegg’s inception, we will continue to adapt,
evolve, and innovate to meet the needs of students globally.
The Chegg team thanks you for your continued support and for being an integral part of our mission of
helping students win at school, career, and life.
Sincerely,
Dan Rosensweig, President, Chief Executive Officer, and Co-Chairperson of the Board of Directors
Chegg, Inc.
1 https://www.chegg.org/student-mental-health-week-2024
2 https://www.chegg.org/global-student-survey-2023
Forward-Looking Statements
This letter contains forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without
limitation, Chegg's commitment to delivering on our student-first mission of helping students learn more,
faster, and to prepare for future careers, the impact of Chegg’s stock and convertible note repurchases
on Chegg shareholder value, Chegg continuing to look for opportunities to return value to Chegg
shareholders, Chegg’s continued prudence with expense management and prioritization while
continuing to drive strong profitability and cash flows, the transformation and reshaping of Chegg and
related impact on business priorities, the transformation of Chegg’s product offerings to leverage the
latest advancements in artificial intelligence (“AI”), making AI core to everything Chegg does, Chegg’s
delivery of automated solutions that are faster and more cost-effective, the impact of proprietary
algorithms on the quality and accuracy of Chegg’s content, Chegg being in a better position than ever
before to serve learners around the world, Chegg’s 2024 priorities, including returning to new account
growth globally, maintaining strong margins and cash flow, rolling out the next phase of Chegg’s
enhanced AI services, and leveraging Chegg’s momentum in Skills for continued growth, Chegg’s ability
to combine new AI and machine learning technologies with Chegg’s proprietary content and data
putting Chegg in a unique position to benefit student learning, the process of embedding AI
throughout Chegg’s platform being ongoing and iterative as Chegg builds a truly personalized learning
assistant, Chegg’s expectation that Chegg’s AI-powered service will anticipate students’ needs, adapt to
their strengths and weaknesses, and support them academically, professionally, and personally,
Chegg’s scaling of the implementation of Chegg’s new experiences and the critical nature of ensuring
Chegg meets its standards of accuracy and quality, Chegg building its own large language models,
using more than 100 million pieces of learning content from Chegg’s 150,000 subject matter experts,
Chegg’s education-specific models, along with Chegg’s proprietary algorithms, setting Chegg’s service
apart from generic models and allowing students to feel confident in the quality of solutions they
receive from Chegg while getting support in real time, the cost benefits these models, the cost to
answer a new question being 75% less expensive when using Chegg’s models, Chegg’s ability to serve
more students at a lower cost per student, faster, and in more subjects and languages, introducing new
learners to Chegg, the numerous ways Chegg intends to market Chegg’s new experience, students
loving Chegg once they try Chegg, the impact of promotional pricing and packaging on the conversion
of millions of students who have entered the funnel but have not yet subscribed, building sharing in to
Chegg’s service to increase word of mouth, expand Chegg’s presence on TikTok, and enhance Chegg’s
SEO with the significantly increased number of questions from automated solutions, Chegg’s business
model benefiting from more students asking more questions – as Chegg indexes those questions into
search and other platforms – to drive even more customers, bridging the Skills gap for students and
employees, Chegg’s positioning to bridge skills gaps, serving employers looking to provide skilling
opportunities to their workers and students who are seeking to build durable skills that are valued in the
work world, Chegg, with its increasing AI capabilities, ability to build and launch courses faster and
more efficiently, and better support learners during their skills training courses, reduction in the time it
takes for Chegg to launch a new Skills course, which allows Chegg to offer innovative programs at
greater speeds while significantly reducing Chegg’s costs, the opportunity for Chegg Skills never being
greater or more important, the sentiment of Chegg being a mission-driven company being woven into
everything Chegg does and supporting Chegg’s commitment to its Environmental, Social, and
Governance (ESG) strategy, Chegg’s belief that its success is directly tied to creating shared value for its
shareholders, students, employees, and society, Chegg’s bold vision for a better future and continued
integration of ESG into Chegg’s business strategy, Chegg’s optimism and excitement for its future,
Chegg’s belief that it is uniquely positioned to serve global learners by providing them with a
personalized learning experience to achieve their academic and professional goals, Chegg continuing
to adapt, evolve, and innovate to meet the needs of students globally, the nonGAAP presentations of
Chegg's results of operations, including adjusted EBITDA and free cash flow, financial guidance, Chegg's
ability to forecast Chegg's financial results, and all statements about Chegg's financial and business
outlook, strategy, priorities and learner outcomes. These statements are not guarantees of future
performance and are based on management's expectations as of the date of this presentation and
assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are
difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause actual results. performance or achievements to differ materially from any
future results, performance or achievements. Important factors that could cause actual results to differ
materially from those expressed or implied by these forward-looking statements include the following:
the effects of Al technology on Chegg's business and the economy generally; Chegg's ability to attract
new learners to, and retain existing learners on, Chegg’s learning platform; Chegg's innovation and
offering of new products and services in response to rapidly evolving technological and market
developments, including AI; competition in all aspects of Chegg’s business, including with respect to AI,
and Chegg’s expectation that such competition will increase; colleges facing reduced enrollment;
Chegg’s international operations, and the expansion thereof; Chegg’s limited operating history
internationally; 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; Chegg’s ability to drive user traffic, including search engine optimization, social
media campaigns, and other marketing and the related impact on student discovery of, and
engagement with, Chegg’s learning platform; Chegg’s ability to build and maintain strong brands and
grow it’s student user base; general economic conditions and their effect on spending behavior by
students and advertising budgets; Chegg’s history of losses; Chegg’s ability to retain its senior
management team and key employees; Chegg’s dependency on mobile app stores and operating
systems to grow Chegg’s user base and their engagement with our learning platform; third-party
payment processing risks; Chegg's ability to maintain its services and systems without interruption,
including as a result of technical issues, cybersecurity threats, or cyber-attacks; adoption of government
regulation of education unfavorable to Chegg; the rate of adoption of Chegg's offerings; colleges and
governments restricting online access or access to Chegg's services; Chegg's ability to strategically take
advantage of new opportunities; competitive developments, including pricing pressures and other
services targeting students; Chegg's ability to build and expand its services offerings; Chegg's ability to
integrate acquired businesses and assets; the impact of seasonality and student behavior on the
business; the outcome of any current litigation and investigations; Chegg's ability to effectively control
operating costs; changes in Chegg's addressable market; regulatory changes, in particular concerning
privacy, marketing, and education; changes in the education market, including as a result of Al
technology and COVID-19; and general economic, political and industry conditions, including inflation,
recession and war. All information provided in this letter is as of the date hereof, and Chegg undertakes
no duty to update this information except as required by law. These and other important risk factors are
described more fully in documents filed with the Securities and Exchange Commission, including
Chegg's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities
and Exchange Commission on February 20, 2024 and Chegg's Annual Report on Form 10-K for the year
ended December 31, 2023 to be filed with the Securities and Exchange Commission, and could cause
actual results to differ materially from expectations.
Chegg, Inc.
2024 Proxy Statement
[THIS PAGE INTENTIONALLY LEFT BLANK]
April 19, 2024
To Our Stockholders,
You are cordially invited to attend the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Chegg, Inc., which will be
held virtually via live audio webcast at https://web.lumiconnect.com/299143484 (password: CHGG2024) on Wednesday, June 5,
2024 at 9:00 a.m. Pacific Time. To attend and participate in the Annual Meeting, you will need the control number included in your
Notice of Internet Availability of Proxy Materials, voting instruction form or proxy card. As always, we encourage you to vote your
shares prior to the Annual Meeting.
We have elected to deliver our proxy materials to our stockholders over the Internet in accordance with SEC rules. We believe that
this delivery process reduces our environmental impact and lowers the costs of printing and distributing our proxy materials
without impacting our stockholders’ timely access to this important information. On April 19, 2024, we sent a Notice of Internet
Availability of Proxy Materials (the “Notice”) to our stockholders, which contains instructions on how to access our proxy materials
for our Annual Meeting, including our proxy statement and annual report to stockholders. The Notice also provides instructions on
how to vote by telephone or via the Internet and includes instructions on how to receive a paper copy of the proxy materials by
mail.
The matters to be acted upon are described in the accompanying notice of Annual Meeting and proxy statement.
We hope that you will be able to join us at our virtual Annual Meeting. Whether or not you plan to attend the meeting, it is
important that you cast your vote either by voting at the virtual Annual Meeting or by proxy before the Annual Meeting. YOUR
VOTE IS IMPORTANT.
Sincerely,
Dan Rosensweig
President, Chief Executive Officer and Co-Chairperson
Notice of 2024 Annual Meeting
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 2024 Annual Meeting of Stockholders (“Annual
Meeting”) of Chegg, Inc. (“Chegg,” “Company,” “we,” “us” or “our”) will be held on
Wednesday, June 5, 2024, at 9:00 a.m. Pacific Time. Stockholders will be able to listen,
vote and submit questions at https://web.lumiconnect.com/299143484 (password:
CHGG2024) during the meeting. To attend and participate in the Annual Meeting, you
will need the control number included in your Notice of Internet Availability of Proxy
Materials, voting instruction form, or proxy card.
We are holding the meeting for the following purposes, which are more fully described in
the accompanying proxy statement:
1 To elect the Class II directors to serve until the third Annual Meeting of Stockholders following
this meeting and until their successors are elected and qualified or until their resignation or
removal.
2 To approve, on a non-binding advisory basis, the compensation of our named executive
officers for the year ended December 31, 2023.
3 To approve, on a non-binding advisory basis, the frequency of future advisory votes on
executive compensation.
4 To ratify the appointment of Deloitte & Touche LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2024.
In addition, stockholders may be asked to consider and vote upon such other business as
may properly come before the meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the proxy statement
accompanying this notice. Only stockholders of record at the close of business on April 8,
2024 are entitled to notice of and to vote at the Annual Meeting and any adjournments
or postponements thereof. A list of stockholders eligible to vote at the Annual Meeting
will be available for review during our regular business hours at our principal executive
office at 3990 Freedom Circle, Santa Clara, California 95054 for the ten days prior to the
meeting for any purpose related to the Annual Meeting.
Meeting
Details
DATE
Wednesday, June 5, 2024
TIME
9:00 a.m. Pacific Time
LOCATION
web.lumiconnect.com
/299143484
YOUR VOTE IS VERY
IMPORTANT
Each share of our
common stock that you
own represents one vote.
For questions regarding
your stock ownership, if
you are a registered
holder, you can contact
our transfer agent,
Equiniti Trust Company,
LLC, through their website
at www.equiniti.com or
by phone at
1-800-937-5449.
Participation in Our Virtual Annual Meeting
The 2024 Annual Meeting will be held entirely online. As described in our proxy materials for the Annual Meeting, you are entitled
to participate in our Annual Meeting if you were a stockholder of record of our common stock at the close of business on April 8,
2024. To attend and participate in the Annual Meeting at https://web.lumiconnect.com/299143484 (password: CHGG2024), you
must enter the control number included in your Notice of Internet Availability of Proxy Materials, voting instruction form or proxy
card next to the label “Control Number.”
Online access to the Annual Meeting website will open 15 minutes prior to the start of the Annual Meeting to allow time for you to
log in and test your device. We encourage you to access the Annual Meeting website in advance of the designated start time.
You may vote during the Annual Meeting by following the instructions available on the Annual Meeting website. If you are the
beneficial owner of shares held in street name and you want to vote your shares during the Annual Meeting, you must obtain a
valid proxy from your broker or nominee. You should contact your broker or nominee or refer to the instructions provided by your
broker or nominee for further information.
It is important that you read the proxy materials made available to you, including the Notice of 2024 Annual Meeting of
Stockholders, Proxy Statement, Proxy Card and Annual Report on Form 10-K for the fiscal year ended December 31, 2023
(collectively, the “proxy materials”), and we encourage you to vote your shares of common stock in advance of the Annual
Meeting by one of the methods described in the proxy materials.
Whether or not you plan to virtually attend the Annual Meeting, we strongly urge you to vote and submit your proxy in advance
of the Annual Meeting by one of the methods described in the proxy materials.
YOUR VOTE IS VERY IMPORTANT. Each share of our common stock that you own represents one vote. For questions regarding
your stock ownership, if you are a registered holder, you can contact our transfer agent, Equiniti Trust Company, LLC, through
their website at www.equiniti.com or by phone at 1-800-937-5449.
By Order of the Board of Directors,
Woodie Dixon, Jr.
General Counsel and Corporate Secretary
Santa Clara, California
April 19, 2024
Whether or not you expect to attend the meeting, we encourage you to read the proxy statement and vote by telephone or via
the Internet or request, sign and return your proxy card as soon as possible, so that your shares may be represented at the
meeting. For specific instructions on how to vote your shares, please refer to the section entitled “General Information About the
Meeting” beginning on page 4 of the proxy statement and the instructions on the Notice of Internet Availability of Proxy
Materials that was mailed to you.
Table of Contents
PROXY SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL PROXY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .
Information About Solicitation and Voting . . . . . . . . . . . . . .
Internet Availability of Proxy Materials . . . . . . . . . . . . . . . . . .
General Information About the Meeting . . . . . . . . . . . . . . . .
ESG AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . .
Environmental, Social and Governance Matters . . . . . . . . .
Stockholder Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance Guidelines . . . . . . . . . . . . . . . . . . . . .
Board Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . .
Our Board of Directors' Role in Risk Oversight . . . . . . . . . . .
Independence of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . .
Committees of Our Board of Directors . . . . . . . . . . . . . . . . .
Compensation Committee Interlocks and Insider
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 Board and Committee Meetings and Attendance . . .
Board Attendance at Annual Meeting of Stockholders . . . .
Presiding Director of Non-Employee Director Meetings . .
Director Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Communication with Directors . . . . . . . . . . . . . . . . . . . . . . . .
Code of Business Conduct and Ethics . . . . . . . . . . . . . . . . . .
NOMINATION PROCESS AND DIRECTOR QUALIFICATIONS .
Nomination to the Board of Directors . . . . . . . . . . . . . . . . . .
Director Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Orientation and Continuing Education . . . . . . . . . .
PROPOSAL NO. 1 - ELECTION OF DIRECTORS . . . . . . . . . . . . .
Nominees to the Board of Directors . . . . . . . . . . . . . . . . . . . .
Continuing Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
4
4
4
4
9
9
13
13
14
14
14
15
18
19
19
19
19
19
20
21
21
21
22
23
24
26
31
PROPOSAL NO. 2 - NON-BINDING ADVISORY VOTE ON
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL NO. 3 - NON-BINDING ADVISORY VOTE ON THE
FREQUENCY OF FUTURE ADVISORY VOTE ON EXECUTIVE
COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL NO. 4 - RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . . . . . . . . .
Independent Registered Public Accounting Firm's Fees
Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OUR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . . . . . . . . . . . . . . .
Report of the Compensation Committee . . . . . . . . . . . . . . . .
Summary Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination and Change of Control Arrangements . . . . . .
Chief Executive Officer Pay Ratio . . . . . . . . . . . . . . . . . . . . . .
PAY VERSUS PERFORMANCE DISCLOSURE . . . . . . . . . . . . . . .
EQUITY COMPENSATION PLAN INFORMATION . . . . . . . . . . .
TRANSACTIONS WITH RELATED PARTIES . . . . . . . . . . . . . . . . .
REPORT OF THE AUDIT COMMITTEE . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A: RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
36
38
38
39
40
43
44
44
58
59
64
68
69
74
75
76
77
79
A-1
Proxy Summary
Meeting Details
2023 Business Highlights
DATE
TIME
Wednesday, June 5, 2024
9:00 a.m. Pacific Time
LOCATION
web.lumiconnect.com/
299143484 (password:
CHGG2024)
Ways to Vote
You may vote during the Annual Meeting by following the instructions on the Annual
Meeting website.
VOTE VIA INTERNET
VOTE VIA PHONE
VOTE VIA MAIL
In order to do so, please
follow the instructions
shown on your Notice or
Proxy Card.
In order to do so, please
follow the instructions shown
on your Notice or Proxy Card.
Sign, date and return proxy
card in the envelope
provided.
Voting Recommendations
Proposal
Recommendation
Page
Election of three Class II directors (Proposal No. 1).
1
• Marne Levine
Paul LeBlanc
•
Richard Sarnoff
•
2 To approve, on a non-binding advisory basis, the
compensation of our named executive officers for the year
ended December 31, 2023 (Proposal No. 2).
FOR EACH
DIRECTOR
NOMINEE
FOR
23
34
3 To approve, on a non-binding advisory basis, the frequency
of future advisory votes on executive compensation
(Proposal No. 3).
FOR ONE YEAR
36
4 To ratify the appointment of Deloitte & Touche LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2024 (Proposal No. 4).
FOR
38
(1)
See Appendix A for a reconciliation of GAAP to non-GAAP measures and other information.
7.7M
Subscription Services
Subscribers
$716M
Total Revenue
$173M
Free Cash Flow(1)
31%
Adjusted EBITDA Margin(1)
19%
Reduction in shares
outstanding vs. 2022
Chegg, Inc.
1
Proxy Statement for the 2024 Annual Meeting of Stockholders
PROXY SUMMARY
2024 Director Nominees
We introduce our 2024 director nominees below.
Age
Director Since
Independent
53
66
65
2013
2019
2012
YES
YES
YES
Committee Memberships
Audit
Committee
Compensation
Committee
Governance and
Sustainability
Committee
n
n
«
n
Name
Marne Levine
Paul LeBlanc
Richard Sarnoff
n - Member
« - Chair
Diversity of the Board
TENURE
AGE
GENDER
INDEPENDENCE
RACE/ETHNICITY
Help students achieve
better outcomes
The guiding principle behind every decision
that we make. Period.
Chegg, Inc.
2
Proxy Statement for the 2024 Annual Meeting of Stockholders
40%10%50%0-5 years5-10 years10+ years30%30%40%40-49 years50-59 years60-69 years50%50%FemaleMale90%10%IndependentNon-Independe...80%10%10%WhiteHispanic/LatinxAA/Black Board Director Experience
The matrix below highlights several of the experiences, qualifications, attributes, and skills of our directors. While these
characteristics are considered by the Board of Directors and the Governance and Sustainability Committee in connection with
the director nomination process, the following matrix is self-reported and does not encompass all experience, qualifications,
attributes, or skills of our directors.
PROXY SUMMARY
Name
Digital
International
Senior
Executive
High-
Growth
at Scale
Public
BoD
Risk
Management
Finance &
Accounting
Subscription
or D2C
Cybersecurity M&A
Sarah Bond
Renee
Budig
Paul
LeBlanc
Marne
Levine
Marcela
Martin
Dan
Rosensweig
Richard
Sarnoff
Ted Schlein
Melanie
Whelan
John (Jed)
York
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
Education
or Non-
Profit
ESG
n
n
n
n
n
n
n
n
n
n
n
n
n
n
Digital - Experience with technology, digital and social media, or partnerships.
International - Experience with international operations.
Senior Executive - Experience as a CEO or senior executive at a public company or other large organization.
High-Growth at Scale - Experience with high-growth organization with $5+ billion annual revenue.
Public BoD - Experience as a director of another public company.
Risk Management - Experience in risk management.
Finance & Accounting - Expertise in financial statements and accounting.
Subscription or D2C - Experience with direct-to-consumer or subscription services.
Cybersecurity - Expertise in technology and cybersecurity.
M&A - Expertise in M&A, debt and equity financings and other strategic transactions.
Education or Non-Profit - Expertise in education or non-corporate (non-profits).
ESG - Leadership experience with ESG, sustainability, or diversity and inclusion.
Chegg, Inc.
3
Proxy Statement for the 2024 Annual Meeting of Stockholders
General Proxy Information
Information About Solicitation and Voting
The accompanying proxy is solicited on behalf of the Board of Directors (“Board of Directors”) of Chegg, Inc. (“Chegg,” “Company,”
“we,” “us” or “our”), for use at the Company’s 2024 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on June 5,
2024, at 9:00 a.m. Pacific Time, and any adjournment or postponement thereof.
The Annual Meeting will be held in a virtual-only format. Stockholders who would like to attend the Annual Meeting should plan
to participate via live webcast, which will be available at the following address: https://web.lumiconnect.com/299143484
(password: CHGG2024). To attend and participate in the virtual Annual Meeting, you will need the control number included in
your Notice of Internet Availability of Proxy Materials, voting instruction form or proxy card. Online access to the Annual Meeting
website will open 15 minutes prior to the start of the Annual Meeting to allow time for you to log in and test your device. We
encourage you to access the Annual Meeting website in advance of the designated start time.
Internet Availability of Proxy Materials
Under rules adopted by the SEC, we are furnishing proxy materials to our stockholders primarily via the Internet instead of mailing
printed copies of those materials to each stockholder. As a result, on or about April 19, 2024, we sent our stockholders a Notice of
Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy materials, including our
proxy statement and our Annual Report. The Notice also provides instructions on how to access your proxy card to vote by
telephone or via the Internet.
This process is designed to reduce our environmental impact and lower the costs of printing and distributing our proxy materials
without impacting our stockholders’ timely access to this important information. However, if you would prefer to receive printed
proxy materials, please follow the instructions included in the Notice.
General Information About the Meeting
Purpose of the Meeting
At the meeting, stockholders will act upon the proposals described in this proxy statement. In addition, we will consider any other
matters that are properly presented for a vote at the meeting. As of April 19, 2024, we are not aware of any other matters to be
submitted for consideration at the meeting. If any other matters are properly presented for a vote at the meeting, the persons
named in the proxy, who are our officers, have the authority in their discretion to vote the shares of our common stock
represented by the proxy. Following the meeting, management will respond to questions from any stockholders who have joined
Chegg, Inc.
4
Proxy Statement for the 2024 Annual Meeting of Stockholders
the Annual Meeting with their control numbers, which is included in their Notice of Internet Availability of Proxy Materials, voting
GENERAL PROXY INFORMATION
instruction form or proxy card.
Record Date and Shares Outstanding
Stockholders of record at the close of business on April 8, 2024 (the “Record Date”) are entitled to notice of, and to vote at, the
Annual Meeting. At the close of business on April 8, 2024, the Company had 101,569,933 shares of common stock issued and
outstanding.
Quorum
The holders of a majority of the voting power of the shares of our common stock entitled to vote at the meeting as of the record
date must be present at the meeting to hold the meeting and conduct business. This presence is called a quorum. Your shares are
counted as present at the meeting if you are present and vote at the virtual meeting or if you have properly submitted a proxy.
Abstentions and broker non-votes (as defined below) will be counted towards the quorum requirement.
Voting Rights
Each holder of shares of our common stock is entitled to one vote for each share of our common stock held as of the close of
business on April 8, 2024, the Record Date. You may vote all shares owned by you as of April 8, 2024, including (1) shares held
directly in your name as the stockholder of record, and (2) shares held for you as the beneficial owner in street name through a
broker, bank, trustee, or other nominee (collectively referred to in this proxy statement as your “Broker”).
Stockholder of Record: Shares Registered in Your Name. If, on April 8, 2024, your shares of our common stock were registered
directly in your name with our transfer agent, Equiniti Trust Company, LLC, then you are considered the stockholder of record with
respect to those shares. As a stockholder of record, you may vote at the meeting or vote by telephone, via the Internet, or if you
request or receive paper proxy materials by mail, by filling out and returning the proxy card.
Beneficial Owner: Shares Registered in the Name of a Broker. If, on April 8, 2024, your shares of our common stock were held in
an account with a Broker, then you are the beneficial owner of the shares held in street name. As a beneficial owner, you have the
right to direct your Broker on how to vote the shares of our common stock held in your account. However, the Broker that holds
your shares of our common stock is considered the stockholder of record for purposes of voting at the meeting. Because you are
not the stockholder of record, you may not vote your shares at the meeting unless you request and obtain a valid proxy from the
Broker that holds your shares giving you the right to vote the shares at the meeting.
Required Vote
Proposal No. 1. Our Amended and Restated Bylaws require that each director be elected by the majority of votes cast (excluding
abstentions and broker “non-votes”) by the holders of shares present or represented at the Annual Meeting and entitled to vote
with respect to such director in uncontested elections. The election of directors pursuant to Proposal No. 1 is an uncontested
election; therefore, any of the three individuals nominated in Proposal No. 1 for election to the Board of Directors for whom the
number of votes cast “FOR” such director’s election exceeds the number of votes cast “AGAINST” such director's election will be
elected. You may also vote to “ABSTAIN” on this proposal, but abstentions and broker “non-votes” will not have any effect on this
proposal.
Proposal No. 2. The affirmative “FOR” vote of a majority of the votes cast (excluding abstentions and broker “non-votes”) by the
holders of shares present or represented at the Annual Meeting and entitled to vote with respect to this proposal is required to
approve, on an advisory and non-binding basis, the compensation awarded to our named executive officers for the year ended
December 31, 2023. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions and broker “non-votes” will not
have any effect on the proposal to approve, on an advisory and non-binding basis, the compensation awarded to our named
Chegg, Inc.
5
Proxy Statement for the 2024 Annual Meeting of Stockholders
GENERAL PROXY INFORMATION
executive officers for the year ended December 31, 2023. Although this say-on-pay vote is advisory and, therefore, will not be
binding on us, our Compensation Committee and our Board of Directors value the opinions of our stockholders. Accordingly, to
the extent there is a significant vote against the compensation of our named executive officers, we will consider our stockholders’
concerns and the Compensation Committee will evaluate what actions may be necessary or appropriate to address those
concerns.
Proposal No. 3. The choice of frequency that receives the highest number of affirmative votes cast (excluding abstentions and
broker “non-votes”) by the holders of shares present or represented at the Annual Meeting and entitled to vote with respect to
this proposal will be considered the advisory vote of our stockholders. You may vote for “ONE YEAR,” “TWO YEARS” OR “THREE
YEARS” or “ABSTAIN.” Abstentions and broker “non-votes” will not have any effect on the proposal to approve, on an advisory
and non-binding basis, the frequency of future advisory votes on executive compensation. Although your vote is advisory and,
therefore, will not be binding on us, our Compensation Committee and our Board of Directors value the opinions of our
stockholders. Accordingly, we will consider the outcome of the vote when making future decisions regarding the frequency of
holding future non-binding advisory votes on the compensation program of our named executive officers.
Proposal No. 4. The affirmative “FOR” vote of a majority of the votes cast (excluding abstentions and broker “non-votes”) by the
holders of shares present or represented at the Annual Meeting and entitled to vote on this proposal is required to ratify the
selection of Deloitte and Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2024 You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions and broker “non-votes” will not have any effect
on the proposal to ratify the selection of Deloitte and Touche LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2024.
“Broker non-votes” occur when shares of our common stock held by a Broker for a beneficial owner are not voted either because
(i) the Broker did not receive voting instructions from the beneficial owner or (ii) the Broker lacked discretionary authority to vote
the shares. Broker non-votes are counted for purposes of determining whether a quorum is present, and have no effect on the
outcome of the matters voted upon. A Broker is entitled to vote shares held for a beneficial owner on “routine” matters without
instructions from the beneficial owner of those shares. Absent instructions from the beneficial owner of such shares, a Broker is
not entitled to vote shares held for a beneficial owner on “non-routine” matters. At our Annual Meeting, only the ratification of
Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024
(Proposal No. 4) is considered a routine matter. Proposal Nos. 1, 2 and 3 are non-routine matters. If your shares are held through a
Broker, those shares will not be voted with regard to Proposal Nos. 1, 2 or 3 unless you affirmatively provide the broker instruction
on how to vote. Accordingly, we encourage you to provide voting instructions to your Broker, whether or not you plan to attend
the Annual Meeting.
Recommendations of the Board of Directors on Each of the Proposals Scheduled to be Voted on at the Meeting
The Board of Directors recommends that you vote:
• Proposal No. 1 - FOR each of the Class II directors named in this proxy statement.
• Proposal No. 2 - FOR the approval of the compensation of our named executive officers for the year ended December 31,
2023 as disclosed in this proxy statement.
• Proposal No. 3 - ONE YEAR for the frequency of future advisory votes on named executive officer compensation.
• Proposal No. 4 - FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2024.
Chegg, Inc.
6
Proxy Statement for the 2024 Annual Meeting of Stockholders
GENERAL PROXY INFORMATION
Voting Instructions; Voting of Proxies
Stockholders as of the Record Date may:
• Vote at the Annual Meeting – You may vote during the Annual Meeting by following the instructions on the Annual
Meeting website.
• Vote via telephone or via the Internet – Please follow the instructions shown on your Notice or proxy card.
• Vote by mail – If any individual stockholders request and receive a paper proxy card and voting instructions by mail,
simply complete, sign and date the enclosed proxy card and return it before the Annual Meeting in the envelope
provided.
Votes submitted by telephone or via the Internet must be received by 11:59 p.m., Eastern Time, on June 4, 2024. Submitting your
proxy (whether by telephone, via the Internet or by mail if you request or received a paper proxy card) will not affect your right to
vote in person should you decide to attend the Annual Meeting. If you are not the stockholder of record, please refer to the voting
instructions provided by your Broker to direct it how to vote your shares. For Proposal No. 1, you may vote “FOR” or “AGAINST” or
“ABSTAIN” from voting with respect to each nominee to the Board of Directors; for Proposal No. 2, you may vote “FOR” or
“AGAINST” or “ABSTAIN” from voting; for Proposal No. 3, you may vote for “ONE YEAR,” “TWO YEARS” or “THREE YEARS” or
“ABSTAIN” from voting; and for Proposal No. 4, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. Your vote is
important. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure that your vote is
counted.
All proxies will be voted in accordance with the instructions specified on the proxy card. If you sign a physical proxy card and
return it without instructions as to how your shares of our common stock should be voted on a particular proposal at the meeting,
your shares will be voted in accordance with the recommendations of our Board of Directors stated above.
If you received the Notice, please follow the instructions included on the Notice on how to access your proxy card and vote by
telephone or via the Internet. If you do not vote and you hold your shares of our common stock in street name, and your Broker
does not have discretionary power to vote your shares, your shares may constitute “broker non-votes” (as described above) and
will not be counted in determining the number of shares necessary for approval of the proposals. However, shares of our
common stock that constitute broker non-votes will be counted for the purpose of establishing a quorum for the meeting.
If you receive more than one proxy card or more than one Notice, your shares of our common stock are registered in more than
one name or are registered in different accounts. To make certain all of your shares of our common stock are voted, please follow
the instructions included on the Notice regarding how to access each proxy card and vote each proxy card by telephone or via the
Internet. If you requested or received paper proxy materials by mail, please complete, sign and return each proxy card to ensure
that all of your shares are voted.
Even if you plan on attending the Annual Meeting virtually, we strongly recommend that you vote your shares in advance of the
Annual Meeting as instructed above.
Soliciting Proxies
The expenses of soliciting proxies will be paid by Chegg. Following the original mailing of the soliciting materials, Chegg and its
agents may solicit proxies by mail, email, telephone, facsimile or by other similar means. Our directors, officers, and other
employees, without additional compensation, may solicit proxies personally or in writing, by telephone, email, or otherwise.
Following the original mailing of the soliciting materials, Chegg will request Brokers to forward copies of the soliciting materials to
persons for whom they hold shares of our common stock and to request authority for the exercise of proxies. In such cases,
Chegg, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you choose to access
the proxy materials and/or vote via the Internet, you are responsible for any Internet access charges you may incur.
Chegg, Inc.
7
Proxy Statement for the 2024 Annual Meeting of Stockholders
GENERAL PROXY INFORMATION
Revocability of Proxies
A stockholder of record who has given a proxy may revoke it at any time before it is exercised at the meeting by:
• delivering to the Corporate Secretary of the Company by a written notice stating that the proxy is revoked;
•
•
signing and delivering a proxy bearing a later date;
voting again by telephone or via the Internet; or
• attending and voting at the meeting (although attendance at the meeting will not, by itself, revoke a proxy).
Please note, however, that if your shares are held of record by a Broker and you wish to revoke a proxy, you must contact that
firm to revoke any prior voting instructions. In the event of multiple online or telephone votes by a stockholder, each vote will
supersede the previous vote and the last vote cast will be deemed to be the final vote of the stockholder unless revoked during
the virtual meeting.
Electronic Access to the Proxy Materials
The Notice will provide you with instructions regarding how to:
•
•
view our proxy materials for the meeting via the Internet; and
instruct us to send our future proxy materials to you electronically by email.
Receiving your proxy materials by email will reduce the impact of our Annual Meeting of Stockholders on the environment and
lower the costs of printing and distributing our proxy materials. Unless you choose to receive printed copies of our proxy
materials, you will receive an email with instructions containing a link to those materials and a link to the proxy voting site. Your
election to receive proxy materials by email will remain in effect until you terminate it.
Voting Results
Voting results will be tabulated and certified by the inspector of elections appointed for the meeting. The preliminary voting
results will be announced at the meeting. The final results will be tallied by the inspector of elections and filed with the SEC in a
Current Report on Form 8-K within four business days of the meeting.
Commitment to the
learning journey
Putting students first.
Chegg, Inc.
8
Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG and Corporate
Governance
Environmental, Social and Governance Matters
Chegg is a mission-driven company. We put learners first and seek to improve their outcomes in school and beyond. We strive to
improve the overall return on investment in education by helping students learn more in less time and at a lower cost.
We aim to support and accelerate the path students take from learning to earning. This includes online tools for academia in a
digital world and extends beyond the classroom with non-academic content and offerings and into their professional careers with
skills training. We help students each step of the way to improve the outcome of their education. To do this, we focus on listening
to their needs, elevating and amplifying their voice, and taking action to provide real life solutions.
This sentiment is weaved into everything we do and supports our commitment to Environmental, Social and Governance (“ESG”)
and Sustainability matters. We are committed to making a difference on the issues that matter to learners, our employees,
stockholders, and other key stakeholders.
ESG Management and Oversight
Formal responsibilities for the implementation and management of programs that involve ESG initiatives are held by functional
team leaders throughout Chegg. At the most senior levels, including our Chief People Officer, Chief Information Security Officer,
General Counsel, and Vice President, Investor Relations & ESG, these leaders regularly report to our Board of Directors on issues
related to ESG, including our greenhouse gas emissions data.
Chegg's Governance and Sustainability Committee maintains oversight over the majority of Chegg's material ESG topics, while
some topics, such as pay equity, are overseen by our Compensation Committee, and others, such as data security and privacy, are
overseen by our Audit Committee.
ESG Materiality
In late 2021, Chegg conducted a formal materiality assessment to help prioritize our ESG roadmap and better understand which
ESG topics are most material to Chegg and our key stakeholders.
In this assessment, we engaged over 300 students, professors, employees, executives, employee resource group leaders,
investors, and members of our Board of Directors as a part of this process to help us evaluate key ESG issues. We value the
opinions of our stakeholders, both internal and external, and will continue to engage with them on ESG and other topics.
Chegg, Inc.
9
Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
The feedback from this materiality assessment reinforced our longstanding belief that Chegg’s mission and values are critical to
our business success and are deeply integrated into our culture and processes.
We believe these values remain appropriate today and continue to incorporate the conclusions from the materiality assessment
into our ESG strategy with an increased emphasis on the topics in the upper right-hand quadrant, which have been identified by
our stakeholders as important to both business and society.
The matrix below is a visual representation of the conclusions and feedback we gathered from the stakeholder groups.
Environment
Learners
Employees
Governance & Responsible
Business Practices
CATEGORIES
Chegg, Inc.
10
Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG Framework
We categorize our efforts to support key ESG issues into six pillars.
ESG AND CORPORATE GOVERNANCE
FOCUS ON
PEOPLE
ACT
RESPONSIBLY
HELP
LEARNERS
OPERATE
SUSTAINABLY
GIVE BACK
GOVERN
EFFECTIVELY
• Culture,
Belonging and
Inclusion
• Human Capital
Management
• Employee
Engagement
• Employee
Health, Safety,
and Wellbeing
• Privacy and
Cybersecurity
• Ethics/
Compliance
• Academic
Integrity
• Responsible
Marketing
• Technology
Innovation and
Performance
• Product
• Climate Change
• Community
Impacts and
Learning
Outcomes
• Access to
Education
• Holistic
Approach to
Learner
Success
Risks and
Opportunities
• Environmental
Impact
• Natural
Resource
Management
Engagement
• Philanthropy
• Research and
Advocacy
• Corporate
Governance
• Corporate
Behavior
Focus on People. We focus on people by making Chegg a great place to work. 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 is our responsibility to take care of them. We do this by
offering an array of wellness and personal development programs, including health benefits, tuition reimbursement, mental health
support, childcare credit and tools, paid parental leave, flexible PTO, professional leadership coaching, student debt repayment
and ergonomic workplace design, to name a few.
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. We hold ourselves to the highest ethical standards and strive for full compliance
with applicable laws and regulations. Our mission-driven nature is what attracted many of us to Chegg and keeps us here year
after year. We believe this contributes to our strong values-driven culture and our shared respect for both legal and ethical
business practices.
Help Learners. Learners are evolving and so is Chegg. The modern learner looks very different than they once did. They are older,
many have families, and they are juggling work and school at the same time, so it comes as no surprise that they need more
flexibility when it comes to education. Learners tell us that they need affordable, on-demand help and unfortunately, they are
often unable to get that help from the institutions they pay to teach them. We combine our proprietary student data and artificial
intelligence technology to serve as a personalized learning assistant for students and provide conversational, interactive, on-
demand learning tools that are better able to predict students’ needs without them having to ask. We are extremely proud to offer
an integrated platform for learning that has helped so many learners on their education journey by providing them with the type
of help they need, when they need it, in the format they want to receive it.
Chegg, Inc.
11
Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
Operate Sustainably. We are focused on sustainable operations and are committed to minimizing the environmental impact of
our business. We know that we owe it to our customers, employees, and society to use environmentally sound practices. This
commitment impacts our operations, energy usage, and office buildings. Further, we strive to work with vendors that have similar
values around operating sustainably. As part of our commitment to operate sustainably, Chegg measures and discloses its scope 1,
2, and 3 greenhouse gas emissions, with the goal of minimizing these emissions over time.
Give Back. Chegg and Chegg.org address issues facing the modern learner. We support organizations whose initiatives benefit
learners and our communities such as those that remove barriers to education, empower student physical and mental well-being,
tackle food insecurity, aid regions or groups impacted by disasters, celebrate and protect diversity, or support sustainability. We
also empower our employee resource groups' work to support their shared communities by providing annual funding for
philanthropic grants, leadership training, and executive sponsorship. Chegg’s business activities and major themes of our
philanthropic and community efforts align with many of the U.N.’s Sustainable Development Goals, and we have identified four of
these goals (#4 – Quality Education, #3 – Good Health and Well-Being, #2 – Zero Hunger, #8 – Decent Work and Economic
Growth, and #10 – Reduced Inequalities) for which Chegg’s influence is greatest.
Govern Effectively. Chegg has a commitment to strong corporate governance practices. Corporate governance is part of our
culture and is founded in our daily commitment to living values and principles that recognize our ethical obligations to our
employees, customers and stockholders.
Awards and Recognition
•
Chegg has a AAA MSCI ESG Rating, the highest possible rating.1.
• We are pleased to share our recognition as a company committed to sustainability in our industry and we are honored to
•
•
•
be included in the 2024 S&P Global Sustainability Yearbook and to be designated an industry mover.
Chegg has been certified as a "Great Place to Work" since 2018.
In 2023, Chegg was voted one of Fortune’s Best Small and Medium Workplaces for Women, Parents, Millennials, and
Technology, one of Fortune’s Best Medium Workplaces, and one of Fortune’s Best Small Workplaces in the Bay Area.
Chegg won 15 best workplace awards from Comparably’s 2023 lists: Best Places to Work in the Bay Area, Best Global
Culture, Best Company Outlook, Best Company for Career Growth, Best Company Leadership, Best Company Perks &
Benefits, Best Company Work-Life Balance, Best Company Compensation, Best CEO for Diversity, Best CEO for Women,
Best Company Happiness, Best Product & Design Team, Best HR Team, Best Marketing Team, and Best Engineering
Team.
Additional information on our ESG efforts is available on the Investor Relations section of our website, which is located at https://
investor.chegg.com/esg. Our website addresses in this proxy statement are included as inactive textual references only. The
information contained on or accessible through these websites is not incorporated by reference into this proxy statement.
(1)
As of 03/13/2024.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
Stockholder Engagement
We believe that effective corporate governance includes engagement with our stockholders and other stakeholders. In addition to
our Annual Meeting each year, we regularly offer stockholders opportunities to deliver feedback on topics of interest to them,
including, but not limited to, our: compensation program, corporate governance, diversity, equity and inclusion (“DEI”) initiatives,
ESG matters, data security, artificial intelligence, academic integrity initiatives and continued plans for stockholder outreach and
engagement. In addition, our Investor Relations team regularly meets with investors, prospective investors, and investment
analysts. In 2023, we contacted each of our largest 15 stockholders offering engagement discussions, of which 6 actively engaged
in meetings or email discussions with us. Over the past few years, our engagement with stockholders has helped us better
understand their priorities, perspectives, and issues of concern, while giving us an opportunity to elaborate on our initiatives and
practices and to address the extent to which various aspects of these matters are or are not significant given the scope and nature
of our operations and our existing practices.
The feedback received from our stockholders is shared and discussed with our Board of Directors and the appropriate committees
thereof. We have made a number of enhancements in 2023 to our operations related to the topics discussed with our
stockholders, for example:
• We made certain changes to the structure of our compensation program for 2023, incorporating a free cash flow
performance metric into our 2023 PSU program, which is described in more detail in the “Executive Compensation—
Compensation Discussion and Analysis” section of this proxy statement.
• We also improved our corporate governance policies and procedures, including an amendment and restatement of our
Amended and Restated Bylaws in 2023, which, among other things, changed the voting standard for uncontested
director elections from a plurality voting standard to a majority voting standard.
We plan to continue our annual cadence of stockholder outreach. This outreach is complementary to the hundreds of touchpoints
our Investor Relations team and executives have with stockholders each year. We find it beneficial to have ongoing dialogue with
our stockholders throughout the year on a full range of investor priorities, instead of engaging with stockholders only prior to our
annual meeting on issues to be voted on in the proxy statement. Depending on the circumstance, one of our independent
directors may engage in these conversations with stockholders as well.
Corporate Governance Guidelines
Chegg is strongly committed to good corporate governance practices. These practices provide an important framework within
which our Board of Directors and management can pursue our strategic objectives for the benefit of our stockholders.
Our Board of Directors has adopted Corporate Governance Guidelines that set forth our expectations for directors, director
independence standards, board committee structure and functions, and other policies regarding our corporate governance. Our
Corporate Governance Guidelines are available without charge on the Investor Relations section of our website, which is located
at https://investor.chegg.com, under “Corporate Governance.” The Corporate Governance Guidelines are reviewed at least
annually by our Governance and Sustainability Committee, and any warranted changes are recommended to our Board of
Directors. On March 15, 2023, our Corporate Governance Guidelines were updated, and, on December 6, 2023, our Code of
Business Conduct and Ethics was updated upon the recommendation of our Governance and Sustainability Committee.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
Board Leadership Structure
Our Corporate Governance Guidelines provide that our Board of Directors shall be free to choose its Chairperson, or Co-
Chairperson, in any way that it considers in the best interests of our Company, and that the Governance and Sustainability
Committee shall periodically consider the leadership structure of our Board of Directors and make such recommendations related
thereto to our Board of Directors as the Governance and Sustainability Committee deems appropriate. Our Board of Directors
does not have a policy on whether the role of the Chairperson, or of the Co-Chairperson, and Chief Executive Officer should be
separate and believes that it should maintain flexibility in determining a board leadership structure appropriate for us from time to
time.
Our Board of Directors believes that we and our stockholders currently are best served by having Dan Rosensweig, our President
and Chief Executive Officer, serve as a Co-Chairperson of our Board of Directors, considering his experience, expertise, knowledge
of our business and operations and strategic vision. As Co-Chairperson of our Board of Directors, Mr. Rosensweig presides over
meetings of the Board of Directors along with the other Co-Chairperson, and holds such other powers and carries out such other
duties as are customarily carried out by a Co-Chairperson of the Board of Directors. Our other Co-Chairperson of the Board is
Richard Sarnoff, an independent director. Our Board of Directors believes that its independence and oversight of management is
maintained effectively through this leadership structure, the composition of our Board of Directors and sound corporate
governance policies and practices.
Our Board of Directors’ Role in Risk Oversight
Our Board of Directors, as a whole, has responsibility for risk oversight, although the committees of our Board of Directors oversee
and review risk areas which are particularly relevant to them. The risk oversight responsibility of our Board of Directors and its
committees is supported by our management reporting processes, which are designed to provide visibility to the Board of
Directors and to our personnel that are responsible for risk assessment and information management about the identification,
assessment and management of critical risks and management’s risk mitigation strategies. These areas of focus include, but are
not limited to, competitive, economic, operational, strategic, financial (accounting, credit, liquidity and tax), legal, regulatory,
cybersecurity, compliance and reputational risks.
Each committee of the Board of Directors meets in executive session with key management personnel and representatives of
outside advisers to oversee risks associated with their respective principal areas of focus. The Audit Committee reviews our major
financial and cybersecurity risk exposures and the steps management has taken to monitor and limit such exposures, including our
risk assessment and risk management policies and guidelines. With respect to cybersecurity, the Audit Committee provides
independent oversight of our Information Security and Governance Program (the “ISP”). As a component of the ISP, the Audit
Committee receives a report on the health and performance of the ISP quarterly. The Governance and Sustainability Committee
provides oversight with respect to director selection, effectiveness and independence of our Board of Directors, committee
functions and charters, adherence to our ESG framework, and other corporate governance matters. The Compensation
Committee reviews our major compensation-related risk exposures, human capital management, diversity and inclusion, senior
management succession planning, including consideration of whether compensation rewards and incentives encourage undue or
inappropriate risk taking by our personnel, and the steps management has taken to monitor or mitigate such exposures.
Independence of Directors
The rules, regulations and listing standards of the New York Stock Exchange (the “NYSE”) generally require that a majority of the
members of our Board of Directors be independent. In addition, the NYSE rules, regulations and listing standards generally require
that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate
governance committees to be independent.
Chegg, Inc.
14
Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
Our Board of Directors determines the independence of our directors by applying the independence principles and standards
established by the NYSE. These provide that a director is independent only if the Board of Directors affirmatively determines that
the director has no direct or indirect material relationship with Chegg. They also specify various relationships that preclude a
determination of director independence. Material relationships may include commercial, industrial, consulting, legal, accounting,
charitable, family and other business, professional and personal relationships.
Applying these standards, our Board of Directors annually reviews the independence of our directors, taking into account all
relevant facts and circumstances. In its most recent review, the Board of Directors considered, among other things, the
relationships that each non-employee director has with Chegg and all other facts and circumstances our Board of Directors
deemed relevant in determining their independence, including the beneficial ownership of our common stock by each non-
employee director.
Based upon this review, our Board of Directors has determined that none of the members of our Board of Directors, other than
Mr. Rosensweig, has a relationship that would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director and that each of the members of our Board of Directors, other than Mr. Rosensweig, is “independent”
as that term is defined under the rules, regulations and listing standards of the NYSE.
All members of our Audit Committee, Compensation Committee, and Governance and Sustainability Committee must be
independent directors as defined by our Corporate Governance Guidelines. Members of the Audit Committee and the
Compensation Committee must also satisfy separate SEC independence requirements, as described in more detail below. Our
Board of Directors has determined that all members of our Audit Committee, Compensation Committee and Governance and
Sustainability Committee are independent and all members of our Audit Committee satisfy the relevant SEC additional
independence requirements for the members of such committee.
Committees of Our Board of Directors
Our Board of Directors has established three standing committees: an Audit Committee, a Compensation Committee, and a
Governance and Sustainability Committee. Members serve on these committees until they resign or until otherwise determined by
our Board of Directors. Our Board of Directors assesses the composition of the committees at least annually to consider whether
committee assignments should be rotated. Each committee is governed by a written charter. The charters for each committee can
be obtained, without charge, on the Investor Relations section of our website, https://investor.chegg.com, under “Corporate
Governance.” The composition and responsibilities of each committee are described below:
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
AUDIT COMMITTEE
The composition of our Audit Committee meets the requirements for independence under the rules, regulations and listing
standards of the NYSE and the rules and regulations of the SEC, which provide that the members may not accept directly or
indirectly any consulting, advisory or other compensatory fee from Chegg or any of its subsidiaries other than their directors’
compensation (including in connection with such member’s service as a partner, member or principal of a law firm, accounting
firm or investment banking firm that accepts consulting or advisory fees from Chegg or any of its subsidiaries). Each member of
our Audit Committee is financially literate as required by the rules, regulations and listing standards of the NYSE. In addition, our
Board of Directors has determined that Mses. Budig and Martin are Audit Committee financial experts within the meaning of
Item 407(d) of Regulation S-K of the Securities Act of 1933, as amended (Regulation S-K of the Securities Act of 1933, as amended,
shall be referred to herein as “Regulation S-K”). The Audit Committee’s responsibilities include, among others:
Audit Committee
• Assisting our Board of Directors in overseeing the integrity of our financial statements
CURRENT MEMBERS
Renee Budig, Chair
Marcela Martin
Richard Sarnoff
Ted Schlein
NUMBER OF MEETINGS
5
and accounting and financial reporting processes and the audits of our financial
statements, as well as our compliance with legal and regulatory requirements;
• Selecting and overseeing our independent auditors;
• Reviewing and evaluating the qualifications, independence, and performance of our
independent auditors;
• Monitoring the periodic reviews of the adequacy of the accounting and financial
reporting processes and systems of internal control that are conducted by our
independent auditors and our financial and senior management;
• Overseeing the performance of our internal audit function;
• Facilitating communication among our independent auditors, our financial and senior
management, and our Board of Directors;
• Discussing the results of the audit with our independent auditors, and reviewing, with
management and the independent auditors, our interim and year-end operating results;
and
• Reviewing with management our major financial, accounting, tax, and cybersecurity risk
exposures and the steps management has taken to monitor such exposures, including
our procedures and any related policies with respect to risk assessment and risk
management.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
COMPENSATION COMMITTEE
The composition of our Compensation Committee meets the requirements for independence under the rules, regulations and
listing standards of the NYSE and the rules and regulations of the SEC. Each member of our Compensation Committee is a non-
employee director, as defined pursuant to Rule 16b-3 promulgated under the Securities Act of 1934, as amended, and an outside
director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended. The purpose of our
Compensation Committee is to discharge the responsibilities of our Board of Directors relating to the compensation of our
executive officers and directors. The Compensation Committee’s responsibilities include the following, among others:
Compensation
Committee
CURRENT MEMBERS
Melanie Whelan, Chair
Marne Levine
Renee Budig
Sarah Bond
John (Jed) York
• Reviewing our overall compensation strategy, including base salary, incentive
compensation, and equity-based grants, to assure that it promotes stockholder interests
and supports our strategic and tactical objectives, and that it provides for appropriate
rewards and incentives for our management and employees;
• Reviewing and determining the compensation of our executive officers, including the
corporate goals and objectives to be considered in determining such compensation;
• Recommending to our Board of Directors the compensation for our directors;
• Administering our stock and equity incentive plans; and
NUMBER OF MEETINGS
• Reviewing, approving, and making recommendations to our Board of Directors regarding
6
incentive compensation equity-based grants and equity plans.
At least annually, our Compensation Committee reviews and approves our executive compensation strategy and principles to
assure that they promote stockholder interests and support our strategic and tactical objectives, and that they provide for
appropriate rewards and incentives for our executives. Our Compensation Committee also reviews and makes recommendations
to our Board of Directors regarding the compensation of our non-employee directors. Except for the delegations described below
with respect to non-executive and Advisory Board grants, our Compensation Committee retains and does not delegate any of its
exclusive power to determine all matters of executive compensation and benefits. In determining the compensation of each of our
executive officers, other than our Chief Executive Officer, our Compensation Committee considers the recommendations of our
Chief Executive Officer, our human resources department, and our independent compensation consultant. In the case of the Chief
Executive Officer, our Compensation Committee evaluates his performance and independently determines, considering the
recommendations of our independent compensation consultant, whether to make any adjustments to his compensation.
Our Compensation Committee retained an independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), to
assist in structuring our executive officer compensation and non-employee director compensation for fiscal year 2023. As
described in more detail the “Executive Compensation—Compensation Discussion and Analysis—2023 Compensation Peer
Group” section of this proxy statement, FW Cook provided our Compensation Committee with market data and analyses from a
peer group of similarly-sized technology companies with similar business and financial characteristics. During fiscal year 2023,
other than executive and general compensation survey consulting services, FW Cook did not provide Chegg or our Compensation
Committee with any other services. No work performed by FW Cook during 2023 raised a conflict of interest. For fiscal year 2024,
the Compensation Committee has retained Aon Consulting, Inc. as its independent compensation consultant.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
The Compensation Committee has delegated, in accordance with applicable law, rules and regulations, and our Certificate of
Incorporation and Bylaws, authority to an equity awards committee comprised of certain of our executive officers, including our
Chief Executive Officer, who is also a member of the Board of Directors, the authority to make certain types of equity award
grants under Chegg’s 2023 Equity Incentive Plan, or any successor plan, to any employee who is not an executive officer or
director subject to the terms of such plan and equity award guidelines and limits approved by our Compensation Committee. Our
Compensation Committee has also delegated to our Chief Executive Officer the authority to make certain types of equity award
grants under Chegg’s 2023 Equity Incentive Plan, or any successor plan, to members of our Advisory Board.
GOVERNANCE AND SUSTAINABILITY COMMITTEE
The composition of our Governance and Sustainability Committee meets the requirements for independence under the rules,
regulations and listing standards of the NYSE. The Governance and Sustainability Committee’s responsibilities include the
following, among others:
Governance and
Sustainability
Committee
CURRENT MEMBERS
Paul LeBlanc, Chair
Marne Levine
Ted Schlein
John (Jed) York
•
Identifying, recruiting, evaluating, and recommending nominees to our Board of Directors
and committees of our Board of Directors;
• Evaluating and reviewing with our Board of Directors the criteria for identifying and
selecting new directors;
• Evaluating the performance of our Board of Directors and its committees;
• Considering and making recommendations to our Board of Directors regarding the
composition and leadership structure of our Board of Directors and its committees;
• Overseeing and periodically reviewing our policies, initiatives, strategy, disclosures and
NUMBER OF MEETINGS
engagement with investors and other key stakeholders related to ESG matters;
7
• Evaluating the adequacy of our corporate governance practices and reporting, taking into
account developments in corporate governance practices; and
• Making recommendations to our Board of Directors concerning corporate governance
and ESG matters.
Compensation Committee Interlocks and Insider Participation
The members of our Compensation Committee during 2023 were Mses. Levine, Whelan and Bond and Mr. York. None of the
members of our Compensation Committee in 2023 were at any time during 2023, or at any other time, an officer or employee of
Chegg or any of its subsidiaries, and none had or has any relationships with Chegg that are required to be disclosed under
Item 404 of Regulation S-K. None of our executive officers has served as a member of the Board of Directors, or as a member of
the compensation or similar committee, of any entity that has one or more executive officers who served on our Board of
Directors or Compensation Committee during 2023.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
2023 Board and Committee Meetings and Attendance
Our Board of Directors meets periodically during our fiscal year to review significant developments affecting us and to act on
matters requiring the Board of Directors approval. During 2023, our Board held six meetings and acted four times by unanimous
written consent; the Audit Committee held five meetings and acted two times by unanimous written consent; the Compensation
Committee held six meetings and acted three times by unanimous written consent; and the Governance and Sustainability
Committee held seven meetings. During 2023 each member of the Board of Directors, except for Paul LeBlanc, participated in at
least 75% of the aggregate of all meetings of the Board of Directors and of all meetings of committees on which such member
served that were held during the period in which such director served.
The following table sets forth the number of meetings held by our Board of Directors and the Committees during fiscal year 2023:
Name
Board of Directors
Audit Committee
Compensation
Committee
Governance and
Sustainability Committee
Number of meetings held in 2023
Number of unanimous written consents in 2023
6
4
5
2
6
3
7
0
Board Attendance at Annual Meeting of Stockholders
Our policy is to invite and encourage our Board of Directors to attend our Annual Meeting. All of our then-serving directors
attended our last Annual Meeting of Stockholders held on June 7, 2023.
Presiding Director of Non-Employee Director Meetings
The non-employee directors meet in regularly scheduled executive sessions without management to promote open and honest
discussion. Mr. Sarnoff, Co-Chairperson of the Board of Directors, is the presiding director at these meetings.
Director Commitments
Each member of the Board of Directors is expected to spend the time and effort necessary to properly discharge their
responsibilities as directors in accordance with the criteria set forth in our Corporate Governance Guidelines. No director may
serve on more than four public company boards, including our Board of Directors, in order to devote adequate time and effort to
their responsibilities as our directors.
Communication with Directors
Stockholders and interested parties who wish to communicate with our Board of Directors, non-management members of our
Board of Directors as a group, a committee of the Board of Directors or a specific member of our Board of Directors (including our
Co-Chairpersons) may do so by mailing letters addressed to the attention of our Corporate Secretary.
All communications are reviewed by the Corporate Secretary and provided to the members of the Board of Directors consistent
with a screening policy providing that unsolicited items, sales materials, and other routine items and items unrelated to the duties
and responsibilities of the Board of Directors not be relayed on to directors.
The address for these communications is:
Chegg, Inc.
3990 Freedom Circle
Santa Clara, CA 95054
Attn: Corporate Secretary
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
ESG AND CORPORATE GOVERNANCE
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. Our Code of
Business Conduct and Ethics is publicly available on our Investor Relations section of our website located at https://
investor.chegg.com, under “Corporate Governance.” To satisfy the disclosure requirement under Item 5.05 of Form 8-K, any
amendments or waivers of our Code of Business Conduct and Ethics pertaining to a member of our Board of Directors or one of
our executive officers will be disclosed on our website at the above-referenced address. There were no waivers of the Code of
Business Conduct and Ethics for any of our directors or executives during fiscal year 2023. On December 6, 2023, our Code of
Business Conduct and Ethics was updated upon the recommendation of our Governance and Sustainability Committee.
Proactive
We understand students at a deep level and anticipate
their needs at every step.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
Nomination Process and
Director Qualification
Nomination to the Board of Directors
Candidates for nomination to our Board of Directors are selected by our Board of Directors based on the recommendation of our
Governance and Sustainability Committee in accordance with such committee’s charter, our Certificate of Incorporation and
Bylaws, our Corporate Governance Guidelines and any criteria adopted by our Board of Directors regarding director candidate
qualifications. In recommending candidates for nomination, the Governance and Sustainability Committee considers candidates
recommended by directors, officers, employees, stockholders and others, using the same criteria to evaluate all candidates.
Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected
candidates as appropriate and, in addition, the committee may engage consultants or third-party search firms to assist in
identifying and evaluating potential nominees.
Additional information regarding the process for properly submitting stockholder nominations for candidates for membership on
our Board of Directors is set forth below under the “Additional Information—Stockholder Proposals to Be Presented at the Next
Annual Meeting” section of this proxy statement.
Director Qualifications
With the goal of developing a diverse, experienced and highly qualified Board of Directors, the Governance and Sustainability
Committee is responsible for developing and recommending to our Board of Directors the desired qualifications, expertise and
characteristics of members of our Board of Directors that the committee believes must be met by a committee-recommended
nominee for membership to our Board of Directors and any specific qualities or skills that the committee believes are necessary for
one or more of the members of our Board of Directors to possess.
Since the identification, evaluation and selection of qualified directors is a complex and subjective process that requires
consideration of many intangible factors, and will be significantly influenced by the particular needs of the Board of Directors from
time to time, our Board of Directors has not adopted a specific set of minimum qualifications, qualities or skills that are necessary
for a nominee to possess, other than those that are necessary to meet U.S. legal and regulatory requirements, the listing rules of
the NYSE, and the provisions of our Certificate of Incorporation, Bylaws, Corporate Governance Guidelines, and charters of the
committees of the Board of Directors. In addition, neither our Board of Directors nor our Governance and Sustainability Committee
has a formal policy with regard to the consideration of diversity in identifying nominees. When considering candidates for
nomination, the Governance and Sustainability Committee may take into consideration many factors, including, among other
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
NOMINATION PROCESS AND DIRECTOR QUALIFICATION
things, a candidate’s independence, integrity, skills, financial and other expertise, breadth of experience, knowledge about our
business or industry and willingness and ability to devote adequate time and effort to responsibilities of the Board of Directors, in
the context of its existing composition. Through the nomination process, the Governance and Sustainability Committee seeks to
promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds and
other characteristics that are expected to contribute to the Board of Directors overall effectiveness and the needs of the Board of
Directors and its committees. The brief biographical description of the nominees set forth in Proposal No. 1 below includes the
primary individual experience, qualifications, attributes and skills of each director nominee that led to the conclusion that such
director nominee should serve as a member of our Board of Directors at this time.
Director Onboarding and Continuing Education
Our director orientation program familiarizes new directors with Chegg’s businesses, strategies and policies, and assists them in
developing the skills and knowledge required for their service on the Board of Directors and assigned committees. New directors
are provided a comprehensive orientation about Chegg, including our business operations, strategy and governance. New
directors have one-on-one sessions with the Chief Executive Officer, other directors and other members of management. New
Audit Committee members also have one-on-one sessions with our independent registered public accounting firm. Members of
our management team regularly review with the Board of Directors the operating plan of the business and Chegg as a whole. The
Board of Directors also visits our headquarters in Santa Clara and our office in New York City as part of its regularly scheduled
meetings. Directors are encouraged to attend outside director continuing education programs sponsored by educational and
other institutions that provide educational briefings on business, corporate governance, regulatory and compliance matters and
other topics that help to enhance the skills and knowledge of our Board members.
Board Evaluations
Each year, our directors complete an assessment of Board of Directors and committee performance through evaluations
facilitated by our Governance and Sustainability Committee and our outside counsel. The assessment includes a written
evaluation, as well as director interviews conducted by our outside counsel and the Chair of our Governance and Sustainability
Committee and one-on-one interview sessions with only our outside counsel. The evaluation and interview process is designed to
allow for assessment of Board of Directors and committee meeting content, structure, processes, practices and performance, an
individual director’s own performance and contributions as well as the performance and contributions of such director’s fellow
members of the Board of Directors, and the structure and performance of the leadership of the Board of Directors and its
committees. To protect the anonymity and the integrity of the Board of Directors and committee evaluation process, our outside
counsel, who utilizes the information to formulate recommendations for the Board of Directors and committees, does not attribute
any comments provided in the surveys and interviews to individual directors. The Governance and Sustainability Committee and
the full Board of Directors then each discuss the report and recommendations from our outside counsel and determine if any
follow-up actions are appropriate, as well as using some information obtained through the process as an input to the board
refreshment process. If follow-up action is needed, the Board of Directors and any applicable committee develops a plan to
address matters raised in the report and recommendations, as appropriate.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
Proposal No. 1
Election of Directors
Our Board of Directors currently consists of 10 directors and is divided into three classes, with each class serving for three years
and with the terms of office of the respective classes expiring in successive years. Directors in Class II will stand for election at this
meeting. The terms of office of directors in Class III and Class I do not expire until the Annual Meetings of Stockholders to be held
in 2025 and 2026, respectively. At the recommendation of our Governance and Sustainability Committee, our Board of Directors
proposes that each of the three Class II nominees named below be elected as a Class II director for a three-year term expiring at
the Annual Meeting of Stockholders to be held in 2027 and until such director’s successor is duly elected and qualified, or until
such director’s earlier resignation or removal.
Shares of our common stock represented by proxies will be voted “FOR” the election of each of the three nominees named
below, unless the proxy is marked to abstain. If any of the nominees for any reason are unable to serve or for good cause will not
serve, the proxies may be voted for such substitute nominee as the proxy holder may determine. Each nominee has consented to
being named in this proxy statement and to serve if elected. Proxies may not be voted for more than three directors. Stockholders
may not cumulate votes in the election of directors.
Surpass the class
Learning tools that go beyond graduation.
Chegg, Inc.
23
Proxy Statement for the 2024 Annual Meeting of Stockholders
PROPOSAL ONE
Nominees to the Board of Directors
The nominees, and their ages, occupations, and length of service on our Board of Directors are provided in the table below.
Additional biographical descriptions of each nominee are set forth in the text below the table. This description includes the
primary individual experience, qualifications, qualities and skills of the nominees that led to the conclusion that the nominees
should serve as members of our Board of Directors at this time.
Name of Director/Nominee
Age(6) Principal Occupation
Marne Levine(1)(2)
Paul LeBlanc(3)
53
Former Chief Business Officer, Meta Platforms, Inc.
66
President, Southern New Hampshire University
Joined Our Board
May 2013
July 2019
Richard Sarnoff(4)(5)
65
Chairman of Media, KKR Americas Private Equity
August 2012
(1)
(2)
(3)
Member of the Compensation Committee.
Member of the Governance and Sustainability Committee.
Chair of the Governance and Sustainability Committee.
(4) Member of the Audit Committee.
(5)
(6)
Board of Directors Co-Chairperson.
Age as of the Record Date of the 2024 Annual Meeting.
Member of
Compensation
Committee and
Governance and
Sustainability
Committee
DIRECTOR SINCE:
2013
Marne Levine
Marne Levine brings extensive experience in the policy, communication, and technology fields,
and has served on our Board of Directors since May 2013. From September 2021 to February
2023, Ms. Levine served as the Chief Business Officer at Meta Platforms, Inc. (doing business as
Meta and formerly known as Facebook, Inc.), a social media company, and served as its Vice
President of Global Partnerships, Business and Corporate Development from February 2019 to
June 2021. Previously, Ms. Levine served as Chief Operating Officer of Instagram from
December 2014 to February 2019 where she was responsible for helping to scale the company’s
business and operations globally and turn Instagram from a beloved app into a thriving
business. She joined Meta in 2010 as Meta’s first Vice President of Global Policy, a position she
held for four years. Prior to Meta, Ms. Levine served in the Obama Administration as Chief of
Staff of the National Economic Council (NEC) at the White House and Special Assistant to the
President for Economic Policy. From 2006 to 2008, Ms. Levine was Head of Product
Management for Revolution Money, an early-stage start-up working on person-to-person
online money transfers, which was ultimately sold to American Express. Prior to this, she served
as Chief of Staff to Larry Summers, then President of Harvard University. Ms. Levine began her
career in 1993 at the United States Department of Treasury under President Bill Clinton where
she held several leadership positions. She holds a B.A. in Political Science and Communications
from Miami University and an M.B.A. from Harvard Business School.
We believe that Ms. Levine should continue to serve on our Board of Directors due to her
extensive experience scaling brands globally and serving in executive positions at global
technology companies.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
PROPOSAL ONE
Paul LeBlanc
Paul LeBlanc has served on our Board of Directors since July 2019. Since 2003, Mr. LeBlanc has
served as the President of Southern New Hampshire University, a private non-profit university.
From 1996 to 2003, Mr. LeBlanc served as the President of Marlboro College, a private liberal
arts college. Prior to Marlboro College, Mr. LeBlanc served as Director of Sixth Floor Media, a
division of Houghton Mifflin Harcourt, Publishing Company. Mr. LeBlanc holds a B.A. in English
from Framingham State University, a M.A. in English Language, Literature and Letters from
Boston College, and a Ph.D. in Rhetoric, Composition and Technology from the University of
Massachusetts, Amherst.
Chair of Governance
and Sustainability
Committee
DIRECTOR SINCE:
2019
We believe that Mr. LeBlanc should continue to serve on our Board of Directors due to his
extensive experience in the education sector and his expertise utilizing technological
innovation in higher education.
Member of Audit
Committee and Co-
Chairperson of the
Board of Directors
DIRECTOR SINCE:
2012
Richard Sarnoff
Richard Sarnoff has served on our Board of Directors since August 2012 and as a Co-
Chairperson of our Board of Directors since July 2018. Since 2022, Mr. Sarnoff has served as the
Chairman of Media, KKR Americas Private Equity. From 2014 through 2022, he served first as
Managing Director and then as Partner and Head of the Media and Communications industry
group at KKR, leading investments in the Media, Telecom, Information Services, Digital Media
and Education sectors in the United States. From 2011 to 2014, Mr. Sarnoff was a Senior Adviser
to KKR. Before 2011, Mr. Sarnoff was a longstanding senior executive at Bertelsmann AG,
Europe’s largest media company, where he served in the early 2000s as EVP and Chief Financial
Officer of Bertelsmann’s book publishing division, Random House, during which time he also
chaired the Association of American Publishers (AAP). In 2006, Mr. Sarnoff established
Bertelsmann's digital media arm, BDMI, and, as President, oversaw the corporation’s global
investment activities in digital media. In 2008, Mr. Sarnoff was named Co-Chairman of
Bertelsmann’s US holding company, Bertelsmann Inc., and served on the Supervisory Board of
Bertelsmann AG for six years. Mr. Sarnoff currently serves on the board of directors of RBMedia,
OverDrive, Teaching Strategies, AST SpaceMobile and EMSI Burning Glass, as well as numerous
not-for-profit organizations. Mr. Sarnoff holds a B.A. in Art History from Princeton University and
an M.B.A. from Harvard Business School.
We believe that Mr. Sarnoff should continue to serve on our Board of Directors due to his
extensive experience serving in senior leadership roles in media and digital technology
companies and investing in education companies.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
PROPOSAL ONE
Continuing Directors
The directors who are serving for terms that end in 2025 and 2026, and their ages, principal occupations and length of service on
our Board of Directors are provided in the table below. Additional biographical descriptions of each continuing director are set
forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of
each continuing director that led to the conclusion that each director should continue to serve as a member of our Board of
Directors at this time.
Name of Director
Age(7) Principal Occupation
Joined Our Board
CLASS III DIRECTORS - TERMS EXPIRING 2025:
Sarah Bond(1)
45
President of Xbox, Microsoft Corporation
Marcela Martin(4)
52
Chief Financial Officer, Ouro
Melanie Whelan(2)
46 Managing Director, Summit Partners
John (Jed) York(1)(3)
43
Chief Executive Officer, San Francisco 49ers
CLASS I DIRECTORS - TERMS EXPIRING 2026:
December 2020
September 2021
June 2019
June 2013
Renee Budig(1)(5)
63
Former Executive Vice President and Chief Financial Officer, Paramount Streaming,
a division of Paramount Global, Inc.
November 2015
Dan Rosensweig(6)
62
President, Chief Executive Officer and Co-Chairperson, Chegg, Inc.
March 2010
Ted Schlein(3)(4)
60
General Partner, Kleiner Perkins
December 2008
(1)
(2)
(3)
Member of the Compensation Committee.
Chair of the Compensation Committee.
Member of the Governance and Sustainability Committee.
(4) Member of the Audit Committee.
(5)
(6)
(7)
Chair of the Audit Committee.
Co-Chairperson of the of Board of Directors.
Age as of the Record Date of the 2024 Annual Meeting.
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always-answers-when-you-call partner.
Chegg, Inc.
26
Proxy Statement for the 2024 Annual Meeting of Stockholders
Class II Directors
PROPOSAL ONE
Member of
Compensation
Committee
DIRECTOR SINCE:
2020
Member of Audit
Committee.
DIRECTOR SINCE:
2021
Sarah Bond
Sarah Bond has served on our Board of Directors since December 2020. Since October 2023,
Ms. Bond has served as President of Xbox at Microsoft. From June 2020 to October 2023, Ms.
Bond served as the Corporate Vice President, Game Creator Experience and Gaming Ecosystem
at Microsoft, and from April 2017 to June 2020, Ms. Bond served as the Corporate Vice
President of Gaming Partnerships and Business Development. Previously, Ms. Bond served in
several senior roles at T-Mobile USA Inc., a telecommunications company, including as Senior
Vice President of Emerging Businesses from August 2013 to September 2015, and Chief of Staff
to the CEO from March 2011 to July 2013. Ms. Bond started her career at McKinsey & Company
in 2001 and was as an Associate Partner before joining T-Mobile in 2011. Ms. Bond currently
serves on the Board of Councilors at the USC School of Cinematic Arts, as well as on the boards
of directors at the Entertainment Software Association (ESA) and Zuora Inc. Ms. Bond holds a
B.A. in Economics from Yale University and an M.B.A. from Harvard Business School.
We believe that Ms. Bond should continue to serve on our Board of Directors due to her
extensive experience in leadership positions at large, global technology companies.
Marcela Martin
Marcela Martin has served on our Board of Directors since September 2021. Since January
2024, Ms. Martin has served as the Chief Financial Officer of Ouro, a financial technology
company. Previously, Ms. Martin served as the President of BuzzFeed, Inc., an internet media
company, from August 2022 to January 2024. Ms. Martin served as Chief Financial Officer of
Squarespace, a website building and hosting company, from November 2020 to July 2022 and
as Senior Vice President and Chief Financial Officer of Booking.com, a digital travel company,
from January 2019 to November 2020. Ms. Martin was Executive Vice President and Chief
Financial Officer of National Geographic Partners, a media and publishing company, from
January 2016 to December 2018. From 2007 to 2016, Ms. Martin was Executive Vice President
and Chief Financial Officer of Fox International Channels, a media and broadcasting company,
and its Vice President and Deputy Chief Financial Officer from 2003 to 2007. Ms. Martin
currently serves on the board of directors of Cvent. Ms. Martin holds a B.S. in Accounting from
the University of Moron, Argentina, and an M.B.A. from the University of Liverpool, United
Kingdom.
We believe that Ms. Martin should continue to serve on our Board of Directors due to her
extensive financial experience through her service as a Chief Financial Officer of public and
private entities.
Chegg, Inc.
27
Proxy Statement for the 2024 Annual Meeting of Stockholders
Melanie Whelan
Melanie Whelan has served on our Board of Directors since June 2019. Ms. Whelan has served
as a Managing Director at Summit Partners, a growth equity investment firm, since June 2020
and served as an Executive in Residence from January 2020 to June 2020. Previously, Ms.
Whelan served as Chief Executive Officer of SoulCycle Inc., an indoor cycling fitness company,
from June 2015 to November 2019 and as Chief Operating Officer from April 2012 until May
2015. Prior to joining SoulCycle, Ms. Whelan was Vice President of Business Development at
Equinox Holdings, Inc., a luxury fitness company, from January 2007 to April 2012. Prior to
Equinox, she also held leadership positions with Virgin Management, where she was on the
founding team of Virgin America, and with Starwood Hotels & Resorts, a hospitality company.
Ms. Whelan currently serves on the Board of Trustees of Southern New Hampshire University.
Ms. Whelan holds a B.A. in Engineering and Economics from Brown University.
We believe that Ms. Whelan should continue to serve on our Board of Directors due to her
extensive experience in business operations, international growth, and consumer marketing.
John (Jed) York
John York has served on our Board of Directors since June 2013. Since February 2010, Mr. York
has served as the Chief Executive Officer of the San Francisco 49ers, a professional football
team in the National Football League, where he previously served as President from 2008 to
February 2010 and as Vice President of Strategic Planning from 2005 to 2008. Prior to those
roles, Mr. York served as a financial analyst at Guggenheim Partners. Mr. York holds a B.A. in
Finance from the University of Notre Dame.
We believe that Mr. York should continue to serve on our Board of Directors due to his
extensive leadership experience and strong corporate development background.
PROPOSAL ONE
Chair of Compensation
Committee
DIRECTOR SINCE:
2019
Member of
Compensation
Committee and
Governance and
Sustainability
Committee
DIRECTOR SINCE:
2013
Chegg, Inc.
28
Proxy Statement for the 2024 Annual Meeting of Stockholders
Class III Directors
PROPOSAL ONE
Renee Budig
Renee Budig has served on our Board of Directors since November 2015. From September 2012
to January 2021, Ms. Budig served as the Executive Vice President and Chief Financial Officer of
Paramount Streaming, a division of Paramount Global Inc. (formerly CBS Interactive, a division
of CBS Inc.), an online content network for information and entertainment. From 2010 to
September 2012, Ms. Budig served as Chief Financial Officer of Hightail, Inc. (formerly branded
YouSendIt and acquired by OpenText), a cloud service that allowed users to send, receive,
digitally sign and synchronize files. From 2006 to 2010, Ms. Budig was the Vice President of
Finance at Netflix, Inc., a multinational provider of on-demand Internet streaming media. Ms.
Budig served on the board of directors of iRhythm Technologies from April 2020 to May 2023.
Ms. Budig holds a B.S. in Business Administration from the University of California, Berkeley.
We believe that Ms. Budig should continue to serve on our Board of Directors due to her
extensive background in consumer technology companies and her financial expertise through
her service as a Chief Financial Officer.
Dan Rosensweig
Dan Rosensweig has served as our President and Chief Executive Officer since February 2010,
as Co-Chairperson of our Board of Directors since July 2018, and served as the Chairperson of
our Board of Directors from March 2010 to July 2018. From 2009 to 2010, Mr. Rosensweig
served as President and Chief Executive Officer of RedOctane, a business unit of Activision
Publishing, Inc. and developer, publisher, and distributor of Guitar Hero. From 2007 to 2009, Mr.
Rosensweig was an Operating Principal at the Quadrangle Group, a private investment firm.
From 2002 to 2009, Mr. Rosensweig served as Chief Operating Officer of Yahoo! Inc., an
internet content and service provider. Prior to serving at Yahoo!, Mr. Rosensweig served as the
President of CNET Networks and prior to that as Chief Executive Officer and President of ZDNet,
until it was acquired by CNET Networks. Mr. Rosensweig currently serves on the boards of
directors of Adobe Systems Inc,.UpGrad, Inc. and Yumi, each a privately held company. Mr.
Rosensweig holds a B.A. in Political Science from Hobart and William Smith Colleges.
We believe that Mr. Rosensweig should continue to serve on our Board of Directors due to the
perspective and experience he brings as our Chief Executive Officer and his extensive
experience with consumer internet and media companies.
Chair of
Audit Committee and
Member of
Compensation
Committee
DIRECTOR SINCE:
2015
Co-Chairperson of the
Board of Directors
DIRECTOR SINCE:
2010
Chegg, Inc.
29
Proxy Statement for the 2024 Annual Meeting of Stockholders
PROPOSAL ONE
Member of Audit
Committee and
Governance and
Sustainability
Committee
DIRECTOR SINCE:
2008
Ted Schlein
Ted Schlein has served on our Board of Directors since December 2008. Mr. Schlein has served
as a General Partner of Kleiner Perkins, a venture capital firm, since November 1996. Mr. Schlein
is also Chairman and a General Partner of Ballistic Ventures. From 1986 to 1996, Mr. Schlein
served in various executive positions at Symantec Corporation, a provider of internet security
technology and business management technology solutions, including as Vice President of
Enterprise Products. Mr. Schlein currently serves on the boards of directors of a number of
privately held companies. Mr. Schlein holds a B.A. in Economics from the University of
Pennsylvania.
We believe that Mr. Schlein should continue to serve on our Board of Directors due to his
extensive experience working with and investing in technology companies.
There are no familial relationships among our directors and officers.
Chegg, Inc.
30
Proxy Statement for the 2024 Annual Meeting of Stockholders
PROPOSAL ONE
Director Compensation
We compensate our non-employee directors with a combination of cash and equity. The form and amount of compensation paid
to our non-employee directors for serving on our Board of Directors and its committees is designed to be competitive in light of
industry practices and the obligations imposed by such service. In order to align the long-term interests of our directors with those
of our stockholders, the majority of director compensation is provided in equity-based compensation. The Compensation
Committee, after considering the information, analysis and recommendations provided by Aon Consulting, Inc., its independent
compensation consultant, including data regarding compensation paid to non-employee directors by companies in our “peer
group” (as described in the “Executive Compensation—Compensation Discussion and Analysis” section of this proxy statement),
evaluates the appropriate level and form of compensation for non-employee directors and recommends compensation changes
to the Board when appropriate.
Annual Fees
Our non-employee directors were compensated in 2023 as follows:
• an annual cash retainer of $40,000 for serving on our Board of Directors;
• an annual cash retainer of $10,000 for serving in a non-chair position on a standing committee of the Board of Directors;
and
• an annual cash retainer of $20,000 for serving as the Chair of a standing committee of the Board of Directors.
We pay the annual retainer fee and any additional fees to each director in arrears in equal quarterly installments.
Equity Awards
Our non-employee director equity compensation policy provides that annually each non-employee director will be granted,
immediately following our Annual Meeting of Stockholders, a Restricted Stock Unit Award (“RSU”) having a fair market value on
the date of grant equal to $200,000 that vests in full on the one-year anniversary of the date of grant.
In connection with the adoption of the Co-Chairperson of the Board of Directors structure, we adopted a compensation program
to provide for an initial RSU grant for a non-employee Co-Chairperson of the Board, having a fair market value on the grant date
equal to $150,000 that vests in full on the one-year anniversary of the date of grant. This grant is in addition to any other annual
board service compensation. Further, under the compensation program, upon completion of each full year of service, each non-
employee Co-Chairperson of the Board of Directors was granted, immediately following our Annual Meeting of Stockholders for
the respective year, additional RSUs having a fair market value on the date of grant equal to $150,000, vesting in full on the one-
year anniversary of the date of grant. On February 29, 2024, the Compensation Committee amended the compensation program
to provide for an annual cash retainer of $75,000 for each non-employee Co-Chairperson of the Board of Directors in lieu of an
RSU award. This amendment was adopted to align to peer group practices and to help manage our objectives regarding our
equity burn rate.
Awards granted to non-employee directors under the policies described above will accelerate and vest in full in the event of a
change of control. In addition to the awards provided for above, non-employee directors are eligible to receive discretionary
equity awards.
Non-employee directors receive no other form of remuneration, perquisites or benefits, but are reimbursed for their expenses in
attending meetings, including travel, meals and other expenses incurred to attend meetings solely among the non-employee
directors.
Chegg, Inc.
31
Proxy Statement for the 2024 Annual Meeting of Stockholders
PROPOSAL ONE
Stock Ownership Guidelines for Directors
In 2019, our Board of Directors established minimum Stock Ownership Guidelines for non-employee directors (the “Director Stock
Ownership Guidelines”) that require each director to own Chegg equity having a value of at least three times his or her base
annual cash retainer of $40,000. Shares subject to stock options, RSUs, and performance-based RSUs (“PSUs”) do not count
towards the satisfaction of these guidelines. Each non-employee director who was a director at the time the Director Stock
Ownership Guidelines were adopted was given until May 2023 to reach this ownership level. Each director elected after the
establishment of the Director Stock Ownership Guidelines has five years from the year elected to reach the specified ownership
level. Each of our non-employee directors is in compliance with the minimum ownership requirement.
The following table provides information for the year ended December 31, 2023 regarding all compensation awarded to, earned
by or paid to each person who served as a non-employee director for some portion or all of 2023. Mr. Rosensweig, our current
President, Chief Executive Officer and Co-Chairperson of the Board of Directors, did not receive any compensation for his service
as a director during the fiscal year ended December 31, 2023.
2023 Director Compensation Table
Name
Fees Earned
or Paid in Cash
($)(3)
RSU
Awards
($)(4)
Option
Awards
($)(4)
Sarah Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000
199,999
Renee Budig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,000
199,999
Paul LeBlanc(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55,659
199,999
Marne Levine(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66,841
199,999
Marcela Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000
199,999
Richard Sarnoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,000
349,992
Ted Schlein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,000
199,999
Melanie Whelan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,000
199,999
John (Jed) York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60,000
199,999
—
—
—
—
—
—
—
—
—
Total
($)(5)
249,999
259,999
255,658
266,840
249,999
399,992
259,999
259,999
259,999
(1)
(2)
(3)
(4)
Committee fees for Mr. LeBlanc are prorated to reflect his transition to the Governance and Sustainability Committee Chair effective June 7, 2023.
Committee fees for Ms. Levine are pro-rated to reflect her transition from the Governance and Sustainability Committee Chair effective June 7, 2023.
All director fees were paid at the end of the quarter for which services were provided.
Amounts shown in this column do not reflect dollar amounts actually received by non-employee directors. Instead these amounts reflect the aggregate grant
date fair value calculated in accordance with Financial Accounting Standards Board, Accounting Standards Codification Topic 718, Compensation-Stock
Compensation, (formerly SFAS 123R) (“ASC 718”), for awards granted during 2023. During 2023, each non-employee member of the Board of Directors, who
was a director as of the close of our 2023 Annual Meeting of Stockholders on June 7, 2023, was granted an RSU award covering 19,305 shares of our common
stock with an aggregate grant date fair value of $199,999. In consideration for Richard Sarnoff's service as non-executive Co-Chairperson of the Board of
Directors, Mr. Sarnoff received an additional RSU award covering 14,478 shares of our common stock with an aggregate grant date fair value of $149,992. The
grant date fair value for RSUs was determined using the closing share price of our common stock on the date of grant. For information on other valuation
assumptions with respect to stock awards, refer to notes 2 and 12 of the notes to consolidated financial statements contained in our Annual Report on Form 10-
K for the fiscal year ended December 31, 2023. There can be no assurance that this grant date fair value will ever be realized by the non-employee director.
(5)
Non-employee directors receive no other form of remuneration, perquisites or benefits for their service as members of our Board of Directors, but they are
reimbursed for their reasonable travel expenses incurred in attending Board of Directors and committee meetings and certain Chegg events and approved
continuing education programs.
Chegg, Inc.
32
Proxy Statement for the 2024 Annual Meeting of Stockholders
Our non-employee directors held the following number of stock options and unvested RSU awards as of December 31, 2023.
PROPOSAL ONE
Name
Option
Awards
RSU Awards
Sarah Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Renee Budig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,445
Paul LeBlanc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Marne Levine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,426
Marcela Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard Sarnoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ted Schlein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Melanie Whelan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
John (Jed) York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80,456
19,305
19,305
19,305
19,305
20,370
33,783
19,305
19,305
19,305
Our Board of Directors recommends a vote “FOR” each of the three Class II director
nominees.
Chegg
Helping students thrive.
Chegg, Inc.
33
Proxy Statement for the 2024 Annual Meeting of Stockholders
Proposal No. 2
Non-Binding Advisory Vote on Executive Compensation
In accordance with Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “Dodd-Frank Act”) we are required to seek, on a non-binding advisory basis,
stockholder approval of the compensation of our named executive officers as described in this proxy statement. This proposal,
commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on the compensation
of our named executive officers.
Compensation Program and Philosophy
Our executive compensation program is designed to:
• Attract, motivate and retain highly qualified executive officers in a competitive market;
• Provide compensation to our executives that are competitive and reward the achievement of challenging business
objectives; and
• Align our executive officers’ interests with those of our stockholders by providing a significant portion of total
compensation in the form of equity awards.
Our Board of Directors believes that our current executive compensation program has been effective at aligning our executive
officers’ interests with those of our stockholders. Stockholders are urged to read the “Executive Compensation” section of this
proxy statement, which further discusses how our executive compensation policies and procedures implement our compensation
philosophy and which contains tabular information and narrative discussion about the compensation of our named executive
officers. The “Executive Compensation—Compensation Discussion and Analysis—Stockholder Engagement and Results of 2023
Stockholder Advisory Vote on Executive Compensation” section of this proxy statement also discusses our actions in response to
the input of our stockholders with respect to our executive compensation policies and procedures.
The Compensation Committee and the Board of Directors believe that these policies and procedures are effective in implementing
our compensation philosophy and in achieving our goals. Accordingly, we are asking our stockholders to indicate their support for
the compensation of our named executive officers as described in this proxy statement by voting in favor of the following
resolution:
Chegg, Inc.
34
Proxy Statement for the 2024 Annual Meeting of Stockholders
“RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation of Chegg, Inc.’s named executive
officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the
compensation tables, and the accompanying narrative disclosures set forth in the proxy statement relating to Chegg, Inc.’s 2024
Annual Meeting of Stockholders.”
PROPOSAL TWO
Our Board of Directors recommends a vote “FOR” the approval of the compensation
of our named executive officers as disclosed in this proxy statement.
A real world of possibility
Supporting students in their learning journey.
Chegg, Inc.
35
Proxy Statement for the 2024 Annual Meeting of Stockholders
Proposal No. 3
Non-Binding Advisory Vote on the Frequency of Future
Advisory Votes on Executive Compensation
In accordance with Section 14A of the Exchange Act and the Dodd-Frank Act, we are asking our stockholders to provide their
input with regard to the frequency of future stockholder advisory votes on the compensation program for our named executive
officers. In particular, we are asking whether the advisory vote on executive compensation should occur once every year, every
two years, or every three years. This non-binding advisory vote must be submitted to stockholders at least once every six years.
After careful consideration of the frequency alternatives, our Board of Directors has determined that an annual advisory vote on
executive compensation is the most appropriate alternative for us and our stockholders at this time. The Board of Directors’
determination was influenced by the fact that the compensation of our named executive officers is evaluated, adjusted and
approved on an annual basis. As part of the annual review process, our Board of Directors believes that stockholder sentiment
should be a factor that is taken into consideration by the Board of Directors and the Compensation Committee in making decisions
with respect to executive compensation. By providing an advisory vote on executive compensation annually, our stockholders will
be able to provide us with direct input on our compensation philosophy, policies and practices as disclosed in our annual proxy
statement. We understand that our stockholders may have different views as to what is the best approach for us, and we look
forward to hearing from our stockholders on this agenda item every year.
Stockholders are not voting to approve or disapprove the Board of Directors' recommendation. Instead, stockholders may indicate
their preference regarding the frequency of future non-binding advisory “say-on-pay” votes by selecting one year, two years, or
three years. For the reasons discussed above, we are asking our stockholders to select “one year” and vote to hold advisory votes
on the compensation for our named executive officers once every year.
Chegg, Inc.
36
Proxy Statement for the 2024 Annual Meeting of Stockholders
You may cast your vote by choosing the option of one year, two years, or three years in response to the resolution set forth
below:
“RESOLVED, that the option of once every year, two years, or three years that receives the highest number of votes cast for this
resolution will be determined to be the preferred frequency with which Chegg, Inc. is to hold an advisory vote by stockholders to
approve the compensation of Chegg, Inc. named executive officers as set forth in the proxy statement relating to Chegg, Inc.’s
Annual Meeting of Stockholders under the caption “Executive Compensation,” including the section captioned “Compensation
Discussion and Analysis,” the tabular disclosure regarding executive compensation and the accompanying narrative disclosure.
PROPOSAL THREE
Our Board of Directors recommends a vote for "ONE YEAR" as the frequency of
future advisory votes on executive compensation.
Moments that inspire
Real life. Real possibilities.
Chegg, Inc.
37
Proxy Statement for the 2024 Annual Meeting of Stockholders
Proposal No. 4
Ratification of Independent Registered Public Accounting
Firm
Our Audit Committee is responsible for the appointment, compensation, retention and oversight of the work of our independent
registered public accounting firm. Our Audit Committee has selected Deloitte & Touche LLP (“Deloitte”) as our principal
independent registered public accounting firm to perform the audit of our consolidated financial statements for fiscal year ending
December 31, 2024. As a matter of good corporate governance, our Audit Committee has decided to submit its selection of its
principal independent registered public accounting firm to stockholders for ratification. In the event that the appointment of
Deloitte is not ratified by our stockholders, the Audit Committee will review its future selection of Deloitte as our principal
independent registered public accounting firm.
Deloitte audited our financial statements for the fiscal year ended December 31, 2023. Representatives of Deloitte are expected to
be present at the Annual Meeting, and they will be given an opportunity to make a statement at the meeting if they desire to do
so, and will be available to respond to appropriate questions.
Independent Registered Public Accounting Firm’s Fees Report
We regularly review the services and fees of our independent registered public accounting firm. These services and fees are also
reviewed with our Audit Committee annually.
In addition to performing the audit of our consolidated financial statements, Deloitte, the member firm of Deloitte Touche
Tohmatsu Limited and their respective affiliates (the “Deloitte Group”), provided various other services during 2023 and 2022. Our
Audit Committee has determined that the Deloitte Group’s provisioning of these services, which are described below, does not
impair Deloitte’s, or the Deloitte Group’s, independence from Chegg.
Fees Paid to Independent Registered Public Accounting Firm
Fees billed to us by the Deloitte Group for services rendered in 2023 and 2022 totaled $4,171,977 and $4,002,809, respectively,
and consisted of the following:
Fees Billed to Chegg
Fiscal Year 2023 ($)
Fiscal Year 2022 ($)
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,811,464
Audit related fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
352,768
7,745
Total fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,171,977
3,457,949
—
544,860
—
4,002,809
Chegg, Inc.
38
Proxy Statement for the 2024 Annual Meeting of Stockholders
Audit Fees
Audit Fees include the aggregate fees incurred for the audits of the annual consolidated financial statements and the effectiveness
of our internal control over financial reporting, including accounting consultations and the review of our quarterly financial
statements. In addition, this category also includes fees for services that were incurred in connection with statutory and regulatory
PROPOSAL FOUR
filings or engagements.
Audit-Related Fees
There were no audit-related fees billed by or to be billed by the Deloitte Group for the fiscal years ended December 31, 2023 and
December 31, 2022.
Tax Fees
Tax fees primarily included tax compliance, tax advisory and consulting services.
All Other Fees
All other fees primarily included training conferences.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accounting Firm
Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent
registered public accounting firm. These services may include audit services, audit-related services, tax services and other services.
Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The
independent registered public accounting firm and management are required to periodically report to the Audit Committee
regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-
approval, and the fees for the services performed to date. Our Audit Committee may also pre-approve particular services on a
case-by-case basis. All of the services relating to the fees described in the table above were approved by our Audit Committee.
Our Board of Directors recommends a vote “FOR” approval of Proposal No. 4.
Chegg, Inc.
39
Proxy Statement for the 2024 Annual Meeting of Stockholders
Security Ownership of
Certain Beneficial Owners
and Management
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 8, 2024
by:
• each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
• each of our directors or director nominees;
• each of our named executive officers; and
• all of our directors and executive officers as a group.
Percentage ownership of our common stock is based on 101,569,333 shares of our common stock outstanding on April 8, 2024.
We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or
investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities
named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to
community property laws where applicable. We have deemed shares of our common stock subject to equity awards that are
currently vested or will become vested within 60 days of April 8, 2024 to be outstanding and to be beneficially owned by the
person holding the award for the purpose of computing the percentage ownership of that person but have not treated them as
outstanding for the purpose of computing the percentage ownership of any other person.
Chegg, Inc.
40
Proxy Statement for the 2024 Annual Meeting of Stockholders
Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Chegg, Inc., 3990 Freedom
Circle, Santa Clara, California 95054.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Name of Beneficial Owner
NAMED EXECUTIVE OFFICERS AND DIRECTORS:
Number of Shares
Beneficially Owned
Percentage
Owned
Dan Rosensweig(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,826,600
1.8%
Andrew Brown(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nathan Schultz(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John Fillmore(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Esther Lem(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sarah Bond(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Renee Budig(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Paul LeBlanc(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marne Levine(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marcela Martin(10)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard Sarnoff(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ted Schlein(12)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Melanie Whelan(13)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John (Jed) York(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directors and Executive Officers as a Group(15)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5% STOCKHOLDERS:
227,829
233,267
103,480
126,425
15,528
83,508
11,861
155,139
12,800
225,959
280,879
24,530
119,039
3,471,990
The Vanguard Group(16)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,630,011
BlackRock, Inc.(17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,718,187
Sylebra Capital LLC(18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,410,827
*
*
*
*
*
*
*
*
*
*
*
*
*
3.4%
11.5%
10.6%
9.3%
*
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Represents beneficial ownership of less than 1% of our outstanding shares of common stock.
Consists of (a) 1,752,758 shares held by Mr. Rosensweig, (b) 25,000 shares held by The Rosensweig Family Revocable Trust U/A/D 03-12-07 where Mr.
Rosensweig is a Co-Trustee, (c) 48,842 shares held by The Rosensweig 2012 Irrevocable Children's Trust U/A/D 11-06-12 where Mr. Rosensweig is a Co-
Trustee.
Consists of (a) 135,907 shares held by Mr. Brown and (b) 91,922 shares held by The Andy and Pam Brown Family Trust where Mr. Brown is a Co-Trustee.
Consists of (a) 71,620 shares held by Mr. Schultz and (b) 161,647 shares held by the Schultz Family Trust, of which Mr. Schultz in a Co-Trustee.
Consists of 103,480 shares held by Mr. Fillmore as reported on Form 4, filed with the SEC on March 14, 2023. Mr. Fillmore was no longer obligated to report
Chegg stock transactions as of May 2023
Consists of 126,425 shares held by Ms. Lem as reported on Form 4, filed with the SEC on March 14, 2023. Ms. Lem was no longer obligated to report Chegg
stock transactions as of March 2023.
Consists of 15,528, shares held by Ms. Bond.
Consists of (a) 40,063 shares held by Ms. Budig, and (b) 43,445 shares subject to stock options held by Ms. Budig that are exercisable within 60 days of April 8,
2024.
Consists of 11,861 shares held by Mr. LeBlanc.
Consists of (a) 46,713 shares held by Ms. Levine and (b) 108,426 stock options held by Ms. Levine that are exercisable within 60 days of April 8, 2024.
(10) Consists of (a) 12,534 shares held by Ms. Martin, and (b) 266 restricted stock units that will vest within 60 days of April 8, 2024.
(11)
(12)
(13)
(14)
Consists of 225,959 shares held by Mr. Sarnoff.
Consists of (a) 200,409 shares held by Mr. Schlein, and (b) 80,470 shares held by the Schlein Family Trust dated April 20, 1999.
Consists of 24,530 shares held by Ms. Whelan.
Consists of (a) 38,583 shares held by Mr. York, and (b) 80,456 shares subject to stock options held by Mr. York that are exercisable within 60 days of April 8,
2024.
Chegg, Inc.
41
Proxy Statement for the 2024 Annual Meeting of Stockholders
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(15)
(16)
(17)
(18)
Consists of (a) 3,109,742 shares, (b) 232,327 shares subject to stock options that are exercisable within 60 days of April 8, 2024, and (c) 3,496 restricted stock
units which are subject to vesting conditions expected to occur within 60 days of April 8, 2024, each of which are held by our directors and officers as a group.
Consists of 11,630,011 shares of Chegg’s common stock beneficially owned as of December 29, 2023, based on a Schedule 13G/A filed with the SEC on
February 13, 2024, by The Vanguard Group. In such filing, The Vanguard Group lists its address as 100 Vanguard Blvd., Malvern, PA 19355, and indicates that it
has sole voting power with respect to 0 shares of Chegg’s common stock, shared voting power with respect to 265,491 shares of Chegg’s common stock, sole
dispositive power with respect to 11,247,110 shares of Chegg’s common stock, and shared dispositive power with respect to 382,901 shares of Chegg’s
common stock.
Consists of 10,718,187 shares of Chegg’s common stock beneficially owned as of December 31, 2023, based on a Schedule 13G/A filed with the SEC on January
24, 2024, by Blackrock, Inc. In such filing, Blackrock, Inc. lists its address as 55 East 52nd Street, New York, NY 10055, and indicates that it has sole voting power
with respect to 10,383,095 shares of Chegg’s common stock, shared voting power with respect to 0 shares of Chegg’s common stock, sole dispositive power
with respect to 10,718,187 shares of Chegg’s common stock, and shared dispositive power with respect to 0 shares of Chegg’s common stock.
Consists of 9,410,827 shares of Chegg’s common stock beneficially owned as of December 31, 2023, based on a Schedule 13G/A filed with the SEC on January
30, 2024, by Sylebra capital LLC In such filing, Sylebra Capital LLC lists its address as 3000 El Camino Real, Building 5, Suite 450, Palo Alto, CA 94306, and
indicates that it has sole voting power with respect to 0 shares of Chegg’s common stock, shared voting power with respect to 9,410,827 shares of Chegg’s
common stock, sole dispositive power with respect to 0 shares of Chegg’s common stock, and shared dispositive power with respect to 9,410,827 shares of
Chegg’s common stock.
Chegg
Dedicated to empowering students.
Chegg, Inc.
42
Proxy Statement for the 2024 Annual Meeting of Stockholders
Our Management
The names of our executive officers, their ages as of April 8, 2024, and their positions are shown below.
Name
Age(2)
Position(s)
Dan Rosensweig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David Longo(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nathan Schultz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62
56
46
President, Chief Executive Officer and Co-Chairperson of
our Board of Directors
Chief Financial Officer and Treasurer
Chief Operating Officer
(1)
Mr. Longo was appointed Chief Financial Officer and Treasurer on February 21, 2024. His previous title, which applied during fiscal year 2023, was Vice
President, Chief Accounting Officer, Corporate Controller, Principal Accounting Officer and Assistant Treasurer.
(2)
Age as of the Record Date of the 2024 Annual Meeting.
For information regarding Mr. Rosensweig, please refer to the “Proposal No. 1 — Election of Directors” section of this proxy
statement above.
David Longo has served as our Chief Financial Officer and Treasurer since February 21, 2024. From December 2021 to February
2024, Mr. Longo served as our Vice President, Chief Accounting Officer, Corporate Controller, Principal Accounting Officer and
Assistant Treasurer. Prior to joining the Company, Mr. Longo served as Chief Accounting Officer at Spire Global, Inc., a data and
analytics company, from October 2021 to December 2021. From August 2020 to October 2021, Mr. Longo served as Chief
Accounting Officer for Shutterfly, Inc., a digital retailer and manufacturer of personalized products and services, and from
February 2013 to July 2020, he served in roles of increasing responsibility at CBS Inc. most recently as Senior Vice President,
Controller at CBS Interactive, Inc., a division of CBS Inc. Prior to CBS, Mr. Longo held positions at Netflix and Deloitte. Mr. Longo
holds a B.S. in Business Administration, with a concentration in accounting, from Boston University and is a licensed CPA.
Nathan Schultz has served as our Chief Operating Officer since October 2022 and previously served as our President of Learning
Services from December 2018 to October 2022, our Chief Learning Officer from June 2014 until December 2018, our Chief
Content Officer from May 2012 until June 2014, our Vice President of Content Management from 2010 to May 2012 and our
Director of Textbook Strategy from 2008 to 2010. Prior to joining us, Mr. Schultz served in various management positions at R.R.
Bowker LLC, a provider of bibliographic information and management solutions; Monument Information Resource, a marketing
intelligence resource acquired by R.R. Bowker; Pearson Education, an education publishing and assessment service; and Jones &
Bartlett Learning LLC, a division of Ascend Learning Company and provider of education solutions. Mr. Schultz holds a B.A. in
History from Elon University.
Chegg, Inc.
43
Proxy Statement for the 2024 Annual Meeting of Stockholders
Executive Compensation
Compensation Discussion and Analysis
Executive Summary
In this Compensation Discussion and Analysis, we address our compensation program for our executive officers and specifically
the compensation, as listed in the Summary Compensation Table that follows this discussion, paid or awarded to the following
executive officers of our Company for the year ended December 31, 2023, who we refer to as our “named executive officers” or
“NEOs”:
Name
Title
Dan Rosensweig . . . . . . . . . . . . . . . . . . . . . . . . . President, Chief Executive Officer and Co-Chairperson of our Board of Directors
Andrew Brown(1) . . . . . . . . . . . . . . . . . . . . . . . . . Former Chief Financial Officer
Nathan Schultz . . . . . . . . . . . . . . . . . . . . . . . . . . . Chief Operating Officer
Esther Lem(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Former Chief Marketing Officer
John Fillmore(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . Former President of Chegg Skills
(1)
(2)
(3)
Mr. Brown served as Chief Financial Officer through the year ended December 31, 2023 and in connection with his retirement, he resigned from his position as
Chief Financial Officer, effective February 21, 2024. As previously disclosed, David Longo was appointed as our new Chief Financial Officer and Treasurer on
February 21, 2024. Mr. Longo is not listed as an NEO because he did not serve in the role of “principal financial officer” for any portion of the year ended
December 31, 2023, and is not required to be listed as an NEO on any other basis.
Ms. Lem served as our Chief Marketing Officer through the year ended December 31, 2023 and in connection with her retirement, Ms. Lem resigned from her
position as Chief Marketing Officer, effective April 5, 2024. As previously disclosed, Ms. Lem will remain an employee of Chegg until July 5, 2024.
Mr. Fillmore resigned from his position as President of Chegg Skills, effective May 12, 2023 and thereafter remained an employee of the Company through
August 16, 2023. Thereafter, Mr. Fillmore was engaged as an independent consultant until September 15, 2023.
References in this section to “fiscal year 2023,” “fiscal year 2022” and “fiscal year 2021” refer to our fiscal years ended December
31, 2023, December 31, 2022, and December 31, 2021, respectively.
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. 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. 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.
Chegg, Inc.
44
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
2023 Performance Highlights
2023 was a solid year for Chegg. We prudently invested in the future growth and competitiveness of our company while
continuing to deliver strong margins and free cash flow. Over the last couple of years, we have faced challenges as we navigate
the post-COVID world, and as we digest the strong growth that we experienced during an unprecedented time. Despite these
headwinds, we stayed focused on executing our plans to deliver a new AI-powered personal learning assistant experience, all
while remaining committed to delivering on our student-first mission of helping students learn more, faster, and to prepare for
future careers.
Total 2023 revenue was $716.3 million, and profitability remained strong. We delivered $222.4 million in adjusted EBITDA, or 31%
margin, and $173 million in free cash flow. Chegg served 7.7 million global subscribers in 2023, with 26% of them outside the
United States. During the year, we made stock repurchases which reduced shares outstanding by 19% versus 2022, and we
repurchased $597 million of outstanding convertible notes at a $92 million discount to par. We believe these actions enhance
stockholder value and we will continue to look for additional opportunities to return value to our stockholders.
It is an exciting time at Chegg. We have transformed our product offerings to leverage the latest advancements in AI, making it
core to everything we do. Over the last year, we redesigned our entire Chegg Study user experience, developed our own large
language models, started delivering automated solutions that are faster and more cost-effective, and built proprietary algorithms
to optimize the quality and accuracy of our exclusive content. We believe we are now in a better position than ever before to
serve learners around the world.
2023 Compensation Highlights
Our executive compensation programs, which are reviewed in the first fiscal quarter of each year, reflect our commitment to pay
for performance and our prioritization of stockholder alignment while being designed to attract and retain leadership in our next
phase of growth. Our Compensation Committee determined that Chegg’s compensation philosophy and objectives would be best
served and fulfilled with a mix of base salary and equity grants. To our NEOs receiving annual cycle equity compensation, our
Compensation Committee granted a target mix of 50% RSUs and 50% PSUs.
In 2023, the Compensation Committee maintained base salaries at the 2022 level with no increase for our NEOs. In addition, the
size of equity awards for our NEOs receiving annual cycle equity compensation, excepting Nathan Schultz (as further described
below in the section titled “Elements of Fiscal Year 2023 Compensation”), was reduced in overall size to one-third of the 2022
grant levels and with a corresponding overall term of one year.
Total net revenues, adjusted EBITDA, and free cash flow targets each represented one-third of the PSU targets for our NEOs.
Total net revenues for fiscal year 2023 of $716.3 million was achieved at 51.7% of our target of $752.5 million for our annual PSUs
(“2023 PSUs”). Adjusted EBITDA of $222.4 million did not meet the threshold target of $225 million, and free cash flow of $172.9
million was achieved at 55.1% of the $190 million target. As a result, our NEOs performance-based compensation was paid
accordingly at a blended 35.6% of target.
Chegg, Inc.
45
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
(1)
See Appendix A for a reconciliation of GAAP to a non-GAAP measures and other information.
Adjusted EBITDA and free cash flow are non-GAAP financial measures. We define “adjusted EBITDA” as earnings before interest,
taxes, depreciation and amortization, or EBITDA, adjusted for print textbook depreciation expense and to exclude share-based
compensation expense, other income (expense), net, acquisition-related compensation costs, content and related assets charge,
restructuring charges, loss contingency, transitional logistics charges, and impairment of lease related assets. We define “free cash
flow” as net cash provided by operating activities adjusted for purchases of property and equipment, purchases of textbooks and
proceeds from disposition of textbooks. A reconciliation of net income to EBITDA and to adjusted EBITDA and a reconciliation of
net cash provided by operating activities to free cash flow, in each case prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”), is included as Appendix A to this proxy statement.
CEO Realizable Compensation
In addition, by delivering the majority of our NEOs' compensation in the form of equity, the value ultimately realized by our
executives continues to be closely linked to our stock price performance. As of December 31, 2023, our CEO’s “realizable value” of
compensation (see below chart) is only 60% of target, further demonstrating alignment between pay and performance.
Target total direct compensation reflects salary paid through 2023 and the grant date fair value of the 2023 equity awards,
including RSUs and PSUs. Realizable value reflects salary paid during 2023 and value of the 2023 equity awards based on Chegg’s
closing stock price of $11.36 on December 29, 2023 (the last trading day of the year ended December 31, 2023), with the 2023
PSUs earned at 35.6% of target.
Chegg, Inc.
46
Proxy Statement for the 2024 Annual Meeting of Stockholders
TOTAL NET REVENUE ($MIL.)$767$716Total Net Revenues20222023ADJUSTED EBITDA ($MIL.)$255$222Adjusted EBITDA20222023FREE CASH FLOW ($MIL.)$155$173Free Cash Flow20222023CEO 2023 TARGET TOTAL COMPENSATION VS REALIZABLE COMPENSATION ($MIL)$4.8$2.9Base SalaryRSUsPSUsTarget Total Direct CompensationRealizable Value as of Fiscal Year End EXECUTIVE COMPENSATION
Stockholder Engagement and Results of 2023 Stockholder Advisory Vote on Executive Compensation
We value the input of our stockholders on our compensation program, and we critically assess our compensation program taking
into account such input. We regularly engage with our stockholders on a variety of issues, including their views on our executive
compensation practices. Our regular on-going discussions with stockholders provide an opportunity for us to receive input
regarding our executive compensation program design and to discuss the philosophy and structure of our executive
compensation program, all of which help to guide us in refining the design of our executive compensation program. In response
to stockholder feedback, we incorporated a free cash flow performance metric in the 2023 PSU program. We expect to continue
our dialogue with stockholders and to take their feedback into account when evaluating our executive compensation program
going forward.
We hold an advisory vote on executive compensation, or a Say-on-Pay vote, on an annual basis. At the Annual Meeting of
Stockholders on June 7, 2023, 84.8% of our stockholders voted “FOR” our executive compensation program. The Compensation
Committee viewed the results of the 2023 Say-on-Pay vote as evidence that a substantial majority of stockholders are aligned
with our executive compensation program.
Compensation Practices
We designed our executive compensation program with the intention of aligning pay with performance while balancing risk and
reward. To help us accomplish these key objectives, we have adopted the following policies and practices:
• Pay-for-Performance
• Prioritize stockholder alignment with a majority of pay mix allocated to equity compensation,
half of which is performance-conditioned for our executive officers
• Use a representative and relevant peer group for assessing compensation
• Consider stockholder dilution, burn rate, and stock-based compensation expense in our equity
compensation decisions
•
Include caps on individual payouts in incentive plans
• Maintain a recoupment policy on cash or equity incentive awards in the event of a financial
restatement
• Maintain stock ownership guidelines for our executive officers and non-employee directors
• Maintain a Compensation Committee comprised solely of independent directors
What We Do
• Retain an independent compensation consultant
• Conduct ongoing stockholder outreach
• Conduct an annual Say-On-Pay vote
• Provide guaranteed annual salary increases or bonuses
• Provide excise tax gross-ups
• Provide defined benefit or contribution retirement plans or arrangements, other than our
What We
Don't Do
Section 401(k) plan which is generally available to all employees
• Provide excessive benefits and/or perquisites to our executive officers
•
Include “single-trigger” vesting change of control provisions in equity awards
• Allow hedging or monetization transactions, such as zero cost collars and forward sale
transactions
Chegg, Inc.
47
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
Process for Setting Executive Compensation
Compensation Philosophy and Objectives
Our executive compensation program is designed to:
• Attract, motivate and retain highly qualified executive officers in a competitive market;
• Reward the achievement of challenging business objectives; and
• Align our executive officers’ interests with those of our stockholders by providing a majority of total compensation in the
form of equity awards.
We operate in a fast-paced, innovative education software and services industry, which is an emerging category with very few
public company peers in the United States. Our executive team possesses a unique mix of education software industry experience
and the ability to scale for high growth and profitability. Our leaders are difficult to replace, and we compete for talent in the
highly competitive San Francisco Bay Area market. To retain key talent and remain competitive in our labor market, we provide
compensation to our employees that recognizes and incentivizes high performance.
Our total direct compensation to our executive officers consists of two components: base salary and equity incentive
compensation. Our base salaries provide a stable source of income and keep our compensation competitive. Our time and
performance-based equity compensation provides an incentive for our executive officers to achieve both short-term and long-
term corporate goals. We generally do not grant cash bonuses to our executives. We recognize that short-term cash incentives
are a standard component of executive compensation. However, we have opted to break from this common practice because we
feel that linking a significant portion of executive compensation to equity provides for sustainable growth and aligns our
executives’ goals with our stockholders’ interests. We believe that allocating a meaningful percentage of compensation to equity-
based opportunities motivates our executive officers to create long-term stockholder value. To that end, our equity compensation
is comprised of time-based RSUs and PSUs, with vesting of the PSUs based on three equally weighted metrics. Our total direct
compensation is generally targeted at market competitive ranges, and while competitive market data informs the pay decisions of
our Compensation Committee, it is not the determinative factor in setting our executives’ compensation. In setting compensation
levels, our Compensation Committee further takes into account our financial and market performance on an absolute basis and
relative to our peer group, as well as individual factors, including, but not limited to, job responsibilities and complexity of the role,
contributions to Chegg, market competition for talent, experience and tenure.
Role of Our Compensation Committee, Management and Independent Compensation
Consultant
Role of Our Compensation Committee
Our Compensation Committee is responsible for developing, implementing, and overseeing our compensation and benefit
programs and policies, including administering our equity incentive plans. On an annual basis, the Compensation Committee
reviews and approves compensation decisions relating to our executive officers, including our Chief Executive Officer, taking into
consideration compensation on a role-specific basis as well as relative to positions at a similar level and for the executive team
overall, and our corporate financial performance and overall financial condition.
The Compensation Committee also evaluates risk as it relates to our compensation programs, including our executive
compensation program. As discussed under the “Risk Considerations” section of this proxy statement below, the Compensation
Committee does not believe that our compensation and benefits programs and policies encourage excessive or inappropriate risk
taking.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
Role of Our Management
Our Chief Executive Officer reviews the annual performance of each executive (except his own performance) and makes
recommendations to the Compensation Committee regarding each executive’s base salary and equity compensation (other than
for himself). The Compensation Committee may modify individual compensation levels and components for executive officers and
EXECUTIVE COMPENSATION
is not bound to accept our Chief Executive Officer’s recommendations.
Role of Our Independent Compensation Consultant
For fiscal year 2023, the Compensation Committee retained FW Cook as its independent compensation consultant, and for fiscal
year 2024 the Compensation Committee has retained Aon Consulting, Inc. (“Aon”) as its independent compensation consultant.
The Compensation Committee determined that each of FW Cook and Aon is an independent compensation advisor including for
purposes of the Dodd-Frank Act and other applicable SEC and NYSE regulations. During fiscal year 2023, FW Cook was retained
to, among other activities, review our compensation philosophy and objectives, to develop an updated compensation peer group,
to gather and analyze compensation data for our compensation peer group, to evaluate compensation practices and pay levels
for our executives and non-employee directors, and to review certain compensation arrangements with our executives. In the
course of fulfilling these responsibilities, representatives of FW Cook attended Compensation Committee meetings and met with
management from time to time to gather relevant information. Neither FW Cook nor Aon performed services for us in fiscal year
2023, other than executive and general compensation survey consulting services. Both compensation consultants only reported to
the Compensation Committee and did not provide services to our management.
2023 Compensation Peer Group
Our Compensation Committee considered market data compiled by its independent compensation consultant to better inform its
determination of the key components of our executive compensation program and to develop a program that it believes will
enable us to compete effectively for new executives and retain existing executives. In general, this market data consists of
compensation information from both broad-based third-party compensation surveys and a compensation “peer group”. Our peer
group for purposes of making determinations with respect to 2023 compensation consists of software companies that are similar
to us in revenue, market capitalization, market capitalization to revenue ratio, growth, and relevant geographic locations where
we compete for executive talent (generally San Francisco Bay Area, Los Angeles, and New York). While Chegg is classified by
MSCI and S&P under the Global Industry Classification Standard (GICS) in the “Education Services” sub-industry, our peer group
and competitive market consists primarily of other software, SaaS, and internet companies. Therefore, the industries considered
for our peer group extend beyond Education Services and also include companies in the following GICS industries: “Application
Software,” “Interactive Media and Services,” “Internet & Direct Retail Marketing” and “Systems Software.”
Each year, the Compensation Committee, with the assistance of its independent compensation consultant, conducts an annual
review of the compensation levels and practices of our peer companies. As part of the review, the Compensation Committee
assesses our compensation peer group to ensure the constituents continue to generally meet the selection criteria listed above.
For the 2023 compensation peer group, the Compensation Committee in November 2022 approved changes to the peer group
taking into account Chegg’s market capitalization as it existed at that time and for the prior fiscal year, resulting in the removal of
seven companies that were more than three times Chegg’s then-market capitalization previously included in the peer group
approved by the Compensation Committee. Chegg was in the 44th percentile of the peer group’s market capitalization and the
41st percentile of the peer group's revenue for the trailing four quarters.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
For our 2023 compensation decisions, our compensation peer group consisted of the 18 companies set forth below:
2U, Inc.
Alteryx, Inc.
Guidewire Software, Inc.
Progress Software Corporation
LivePerson, Inc.
Qualys, Inc.
Blackbaud, Inc.
Momentive Global Inc.
Ring Central, Inc.
Box, Inc.
New Relic, Inc.
Smartsheet, Inc.
Coupa Software Inc.
Nutanix, Inc.
Sumo Logic, Inc.
Dropbox, Inc.
Okta, Inc.
Yelp, Inc.
The peer group information serves as a data point in determining the appropriate pay mix and overall compensation, but the
Compensation Committee does not seek to align its compensation against any specific company member of our compensation
peer group.
Elements of Fiscal Year 2023 Compensation
Fiscal Year 2023 Pay Mix
Consistent with our compensation philosophy and objectives, we provide compensation to our Chief Executive Officer and our
executive officers in the form of base salaries, RSUs and PSUs. We generally do not provide annual cash incentive opportunities to
our executive officers, which are typically provided by our peer companies, as our equity incentive compensation is intended to tie
the majority of our executive officers’ pay to the delivery of stockholder value. Our 2023 PSUs include a one-year performance
period to incentivize the achievement of critical short-term goals. Equity compensation in fiscal year 2023 constitutes 76% of the
total pay mix for our Chief Executive Officer and 74% on average for our other NEOs.
Chegg
A learning partner that understands.
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
2023 Total Direct Compensation and Target Pay Mix(1)
CEO
OTHER NEOs
DESCRIPTION
Base Salary
EXECUTIVE COMPENSATION
Fixed cash compensation component based on the market-
competitive value of the executive’s responsibilities and individual
performance.
Performance-Based RSUs
Time-Based RSUs
Represents 50% of the target incentive value of our annual equity
awards.
Designed to motivate and reward executives to drive critical annual
performance goals. Performance is measured based on three equally
weighted financial metrics in 2023, consisting of (1) total net revenues,
(2) adjusted EBITDA and (3) free cash flow. To the extent performance
is achieved, the PSU awards granted in 2023 vest after one year,
except Mr. Schultz’s award, which vests over 36 months, with one-
third vested on March 12, 2024 and then in quarterly installments over
the subsequent 24 months, subject to his continued service up to and
through the applicable vesting dates.
Represents 50% of the target incentive value of our annual equity
awards.
Intended to provide retention value and align the interests of
executives and stockholders. Awards granted in 2023 vest after one
year, except Mr. Schultz’s award, which vests over 36 months, with
one-third vested on March 12, 2024 and then in quarterly installments
over the subsequent 24 months, subject to his continued service up to
and through the applicable vesting dates.
(1)
Target pay mix represents annual base salary rates as of the fiscal year end, RSUs at grant date fair value, and PSUs at grant date fair value, assuming the
target performance level is achieved. Percentages may not sum to 100% due to rounding. Mr. Fillmore is omitted from the totals for the Other NEOs as a result
of his non-receipt of any equity award in 2023.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
23%26%38%37%38%37% EXECUTIVE COMPENSATION
Base Salaries
We pay an annual base salary to each of our executive officers in order to attract and retain executive talent and provide them
with a fixed and stable rate of cash compensation during the year. The base salary for any newly hired executive officer is
established through arm’s-length negotiations at the time the executive officer is hired, considering the position and the
executive’s experience, qualifications and the competitive market. Base salaries for our continuing executive officers are reviewed
by the Compensation Committee (annually, or, on occasion, semi-annually) during the first or last quarter of the calendar year. The
Compensation Committee takes into consideration a variety of factors when determining base salary adjustments, including our
compensation objectives, each executive’s responsibilities and individual performance, and the compensation peer group and
third-party survey market analysis provided by the Compensation Committee's independent compensation consultant, as well as
the Company’s needs and business outlook.
During the first quarter of 2023, the Compensation Committee reviewed each of our NEOs cash compensation and the factors
described above and determined that the salaries that it had approved for 2022 remained appropriate. Therefore, the
Compensation Committee did not make any changes to the salaries of the NEOs for 2023, which remained as follows:
Named Executive Officer
2023 Salary
($)
Salary Increase
(%)
Dan Rosensweig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,100,000
No change
Andrew Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
825,000
No change
Nathan Schultz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
900,000
No change
Esther Lem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
605,000
No change
John Fillmore(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
715,000
No Change
(1)
Mr. Fillmore resigned from his position as President of Chegg Skills, effective May 12, 2023 and remained an employee of the Company through August 16,
2023. Thereafter, Mr. Fillmore was engaged as an independent consultant until September 15, 2023.
Equity Incentive Compensation
The Compensation Committee believes that equity compensation should represent a significant amount of our executive officers’
total compensation so that the interests of our executive officers are aligned with those of our stockholders. The Compensation
Committee determines the amount of equity compensation appropriate for each NEO based on a variety of factors, including our
compensation objectives; corporate operational and financial performance and relative stockholder return; each executive’s
responsibilities; the compensation peer group and third-party survey market analysis provided by its independent compensation
consultant; historical equity grants and equity holdings; and internal parity, overall share usage and equity pool availability and, for
executive officers other than the Chief Executive Officer, recommendations from the Chief Executive Officer.
Executive officers are initially granted an equity award, generally in the form of RSUs, when they join us, based on their position
and their relevant prior experience. Thereafter, equity awards are generally granted annually to eligible executive officers around
March of each year. The Compensation Committee has the discretion to grant equity awards in addition to these annual grants
based on, among other factors, changes in job responsibilities, performance and experience, or material changes in market
compensation.
In October 2022, the Compensation Committee determined to increase Mr. Schultz’s 2023 annual target equity award value to
$6.6 million in connection with his promotion to Chief Operating Officer. Rather than granting Mr. Schultz an off-cycle grant in
connection with his promotion, Mr. Schultz was granted this annual equity award on March 27, 2023, and it was split into 50%
RSUs and 50% PSUs.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
In March 2023, the Compensation Committee granted annual cycle equity compensation to our NEOs other than Mr. Fillmore,
with a target mix of 50% RSUs and 50% PSUs. The Compensation Committee believes that a 50/50 mix of time-based and
performance-based equity awards for 2023 continues to be the most effective incentive for driving and rewarding achievement of
short-term company objectives while also creating equity incentives to sustain that performance and supporting the retention of
our executive officers.
In light of a challenging operating environment and our efforts to prudently manage our objectives regarding our equity burn rate
and stock based compensation, and to ensure executive retention, for 2023, we modified our equity grant practices by reducing
the grant size and vesting period of both the RSUs and PSUs that were granted to Mr. Rosensweig, Mr. Brown, and Ms. Lem, as
further described below.
The Compensation Committee routinely evaluates and considers the type of awards granted under our equity incentive program
and may, in the future, decide that other types of awards or a different mix of awards are appropriate to provide incentives to our
executive officers.
Restricted Stock Units
We grant RSUs because they provide retentive value for our executive officers and are linked to creating stockholder value as the
award value increases with our stock price appreciation. On March 27, 2023, the Compensation Committee granted RSUs to Mr.
Rosensweig, Mr. Brown, and Ms. Lem, vesting in full on March 12, 2024, conditioned on the executive officer’s service up to and
through the applicable vesting date. In consideration of the Company’s operating environment and need to prudently manage
our objectives regarding burn rate, dilution and stock based compensation, the Compensation Committee significantly reduced
Mr. Rosensweig’s, Mr. Brown’s, and Ms. Lem’s 2023 RSU awards to one-third of their 2022 RSU awards. At the same time, the
Compensation Committee decreased the vesting period from three years to one year to ensure executive retention during this
period.
Mr. Schultz’s RSU award, which the Compensation Committee issued in connection with his promotion to Chief Operating Officer,
was also granted effective March 27, 2023, and vested as to one-third of the underlying shares of common stock on March 12,
2024, with the remaining amount vesting in equal quarterly installments over the next 24 months conditioned on his service up to
and through the applicable time-based vesting dates.
Performance-Based Restricted Stock Units
We grant PSUs because they are linked to stockholder value creation, like RSUs, but are also leveraged to our financial
performance and allow us to set appropriate annual goals that we believe are critical to drive long-term success. On March 27,
2023, the Compensation Committee granted PSUs to our NEOs other than Mr. Fillmore, subject to the achievement of certain
financial performance goals and conditioned on such NEOs (other than Mr. Fillmore) service up to and through the applicable
time-based vesting dates.
The Compensation Committee determined the achievement of these PSUs in March 2024 based on three equally weighted
performance metrics: (1) fiscal year 2023 total net revenue, (2) fiscal year 2023 adjusted EBITDA, and (3) fiscal year 2023 free cash
flow (each as defined below). These three metrics were selected because the Compensation Committee believes that the three
measures appropriately balance growth and profitability. The Compensation Committee included free cash flow as an additional
performance metric for fiscal 2023 in response to stockholder feedback and because it is an important indicator of, among other
things, (i) the amount of cash that the business is generating, (ii) the leverage in our business model, (iii) our liquidity, and (iv) what
drives stockholder value for Chegg. The Compensation Committee selected total net revenue, rather than Chegg Services revenue
which it had used previously, to recognize the importance of the diversity of the Company’s revenue sources. Along with total net
revenue, the Committee selected adjusted EBITDA, a non-GAAP measure of profitability, as both are the most important drivers of
stockholder value for Chegg and are primary components of our overall revenue growth and profitability. We believe that each of
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Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
these are appropriate performance measures for our executive officers, as their decisions can significantly impact these metrics,
and the selection of these three measures as PSU metrics ensures our executive officers are incentivized in accordance with the
long-term interests of our stockholders. The performance metrics are synchronized with the corporate strategic plan and
associated metrics and targets approved by our Board of Directors.
We currently use a one-year performance period for our annual cycle PSUs to allow us the flexibility to set appropriate annual
goals to drive stockholder value given our growth expectations and the rapidly changing nature of the industry in which we
operate. As with the 2023 RSU awards, the Compensation Committee significantly reduced Mr. Rosensweig’s, Mr. Brown’s, and
Ms. Lem’s 2023 PSU awards to one-third of their 2022 PSU awards, and correspondingly shortened the vesting period to one
year. Upon the determination of the level of attainment of the performance metrics, a percentage of PSUs may be earned based
on actual achievement. Any PSUs that are not earned are forfeited at the end of the performance period.
The number of PSUs that may be earned range from 0% to 150% of the total number of shares subject to the PSU award
depending on the level of performance achieved for each goal. No payout will be made for performance below the threshold
level. The metrics are equally weighted (each representing one-third of the target number of shares) and measured separately,
and the resulting number of earned PSUs with respect to each metric are added together for the total number of earned PSUs
that are eligible to vest over time. If actual performance falls between the threshold, target, or maximum levels, linear interpolation
will be used to determine the number of PSUs earned, as set forth in the table below:
Performance Level
Threshold
Target
Maximum
Payout % of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50%
100%
150%
Total Net Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$715,500,000
$752,500,000
$790,500,000
Adjusted EBITDA* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$225,000,000
$250,000,000
$275,000,000
Free Cash Flow* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$171,000,000
$190,000,000
$209,000,000
* Adjusted EBITDA and free cash flow are non-GAAP financial measures, as defined above. A reconciliation of net income to EBITDA and to adjusted EBITDA and a
reconciliation of net cash provided by operating activities to free cash flow, in each case prepared in accordance with GAAP, is included as Appendix A to this proxy
statement.
The Compensation Committee recognizes the importance of establishing rigorous but realistic performance targets with respect
to our annual cycle PSUs in order to motivate executives to drive strong performance that translates to value creation for
stockholders, and the 2023 performance targets were established in consideration of those factors and our business environment.
2023 Equity Incentive Awards
The grant date fair value calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) Topic 718 (“ASC 718”) of the annual cycle RSUs and PSUs is set forth in the table below, denominated at target
payout levels.
Number of Shares Granted
Grant Date Fair Value of Awards
Named Executive Officer
Time-Vesting RSUs
(#)
PSUs (Target)
(#)
Time-Vesting RSUs
($)
PSUs (Target)
($)
Dan Rosensweig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115,376
Andrew Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,688
Nathan Schultz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
207,677
Esther Lem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,920
115,376
57,688
207,677
36,920
1,833,323
1,833,323
916,662
916,662
3,299,988
3,299,988
586,659
586,659
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Proxy Statement for the 2024 Annual Meeting of Stockholders
Fiscal Year 2023 Performance-Based Restricted Stock Units Payout
In February 2024, the Compensation Committee certified our financial performance in 2023 with respect to the 2023 PSU metrics.
We achieved the following results, resulting in a weighted average payout of 35.6% of Target:
EXECUTIVE COMPENSATION
Performance Metric
Achievement
Percent of
Award Earned
Component
Weighting
Subtotal
Total Net Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$716,295,000
Adjusted EBITDA* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$222,389,000
Free Cash Flow* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$172,933,000
51.7%
0.0%
55.1%
1/3
1/3
1/3
Total Performance (rounded) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17.2%
0.0%
18.4%
35.6%
The Compensation Committee did not use any discretionary authority to adjust the resulting corporate performance from the
financial measures reflected in the table above.
The 2023 PSUs that were earned for Mr. Schultz vest over a three-year, time-based vesting schedule as follows: one-third vested
on March 12, 2024 and the remaining earned 2023 PSUs vest in quarterly installments over the subsequent 24-month period, with
vesting subject to his continued service up to and through the applicable vesting dates. The 2023 PSUs that were earned for Mr.
Rosensweig, Mr. Brown, and Ms. Lem vested in full on March 12, 2024.
Total Stockholder Return PSUs
During 2021, to incentivize our executives' long-term engagement, drive the next phase of our growth and support retention, we
granted special absolute total stockholder return PSUs (the “TSR PSUs”) to certain of our executive officers. The TSR PSUs were
eligible to be earned based on share price growth over a three-year performance period from March 1, 2021 through February 29,
2024 (subject to a four-year time-vesting period from the grant date).
The TSR PSU goal was measured by calculating the percentage of growth of our share price from $99.05 - the closing trading
price of our common stock on the March 1, 2021 grant date. The TSR PSUs were eligible to vest if the Company achieved absolute
TSR growth of between 25% and 75% during the three-year performance period. During this three-year performance period,
none of the performance goals for the TSR PSUs were achieved; and therefore, no portion of this award was earned.
Other Programs and Policies
Benefits and Perquisites
Our NEOs participate in the same employee benefit and retirement programs that are generally provided to all other employees,
including our 401(k) plan, employee stock purchase plan, health care plans, life insurance plan, and other welfare benefit
programs. We do not provide additional benefits or perquisites to our NEOs that are not made available to other employees.
Severance and Change-of-Control Arrangements
To enable us to attract talented executives, as well as ensure ongoing retention when considering potential corporate transactions
that may create uncertainty as to future employment, we offer certain post-employment and change-of-control payments and
benefits to certain NEOs. Given the nature and competitiveness of our industry, the Compensation Committee believes these
severance and change-of-control protections are essential elements of our NEOs' compensation program and assist us in
recruiting, retaining, and developing key management talent. Our change-of-control benefits are intended to allow key
employees, including our NEOs, to focus their attention on the business operations of our Company in the face of the potentially
disruptive impact of a rumored, or actual change-of-control transaction, to assess takeover bids objectively without regard to the
potential impact on their own job security and to allow for a smooth transition in the event of a change-of-control.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
We have entered into an offer letter agreement with Mr. Rosensweig and adopted a Change-of-Control Severance Plan in which
each of the NEOs, other than Mr. Rosensweig, participates. These arrangements provide, as applicable, cash severance benefits
and equity award vesting acceleration in the event of certain terminations of employment both outside a change-of-control and in
connection with a change-of-control (i.e., double-trigger severance protections). We do not provide “single trigger” protections or
tax gross-ups if an executive is subject to excise taxes as a result of severance or change-of-control benefits. A detailed description
of the terms of Mr. Rosensweig’s offer letter and the Change-of-Control Severance Plan can be found under the “Termination and
Change-of-Control Arrangements” section of this proxy statement.
Insider Trading and Hedging Policies
We have adopted an Insider Trading Policy whereby our employees, officers and directors, members of their immediate families
and others living in their households and associated entities (e.g., venture capital funds, partnerships, trusts, corporations), and
consultants are prohibited from insider trading and hedging our securities except pursuant to procedures set forth in the policy.
Under this policy, we prohibit any of the individuals from hedging or monetization transactions, such as zero cost collars and
forward sale transactions, and transactions relating to the future price of our common stock, such as put or call options and short
sales. Additionally, no individual may use Chegg securities as collateral in a margin account or pledge Chegg securities as collateral
for a loan or modify an existing pledge unless the individual wishing to pledge securities submits a request for preclearance to the
Insider Trading Compliance Officer in advance.
Compensation Recovery (“Clawback”) Policy
In October 2023, our Board of Directors adopted a new compensation recovery policy intended to comply with the requirements
of the Dodd-Frank Act, as implemented by NYSE rules and the SEC’s rules and regulations policy (“Clawback Policy”). The
Clawback Policy requires us to recover certain cash or equity-based incentive-based compensation (as defined in the Clawback
Policy) paid or granted to our officers, and such additional employees as may be identified from time to time, in the event we are
required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under
the securities laws. The Clawback Policy requires each person covered thereby to reimburse or forfeit to us all incentive-based
compensation received by them prior to the restatement that exceeds the amount they would have received had their incentive-
based compensation been calculated based on the financial restatement. The recovery period extends up to three years prior to
the date that it is, or reasonably should have been, concluded that we are required to prepare a restatement. The Clawback Policy
applies to incentive-based compensation that is received (as defined in the Clawback Policy) after the effective date of the
applicable NYSE rules. Per applicable requirements, the Clawback Policy is enforced without consideration of responsibility or fault
or lack thereof. The full text of the Clawback Policy is included as Exhibit 97.1 to our Annual Report on Form 10-K for the year
ended December 31, 2023.
Executive Stock Ownership Guidelines
We maintain stock ownership guidelines for our executive officers. These guidelines are intended to align the economic interests
of our executive officers with our stockholders by requiring them to acquire and maintain a meaningful ownership interest in our
common stock. Executive officers are required to acquire and hold an amount of our common stock equal to a multiple of base
salary within five years of the later of (i) the establishment of our guidelines in 2019 or (ii) the commencement of employment
service or promotion into an executive position. Shares subject to stock options, restricted stock units and performance based
restricted stock units do not count towards satisfaction of these guidelines. As of December 31, 2023, all of our executive officers
met such stock ownership guidelines.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
Position
CEO
Other Executive Officers
Stock Ownership Requirement
3x annual cash salary
1x annual cash salary
EXECUTIVE COMPENSATION
Accounting and Tax Considerations
While our Compensation Committee considers the deductibility of awards as one factor in determining executive compensation,
the Compensation Committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to
award compensation that it determines to be consistent with the goals of our executive compensation program even if the
awards are not deductible by us for tax purposes. We account for equity compensation paid to our employees under FASB ASC
718, which requires us to estimate and record an expense over the service period of the award. FASB ASC Topic 710 also requires
us to record cash compensation as an expense at the time the obligation is accrued.
Risk Considerations
The Compensation Committee has discussed the concept of risk as it relates to our compensation programs, including our
executive compensation program, and the Compensation Committee does not believe that our compensation programs
encourage excessive or inappropriate risk taking. As described in further detail in this Compensation Discussion and Analysis
section, we structure our pay to consist of both fixed and variable compensation. In fiscal year 2023, the Compensation
Committee and management considered whether our compensation programs for employees created incentives for employees
to take excessive or unreasonable risks that could materially harm our Company. The Compensation Committee believes that our
compensation programs are typical for companies in our industry and that the risks arising from our compensation policies and
practices are not reasonably likely to have a material adverse effect on the Company.
Achieve
Helping students reach their goals.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
Report of the Compensation Committee
The information contained in the following report of our Compensation Committee is not considered to be “soliciting material,”
“filed” or incorporated by reference in any past or future filing by us under the Securities Exchange Act of 1934 or the Securities
Act of 1933, as amended, unless and only to the extent that we specifically incorporate it by reference.
The Compensation Committee oversees our compensation policies, plans and benefit programs. The Compensation Committee
has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with
management. Based on such review and discussions, the Compensation Committee has recommended to the Board of Directors
that the “Compensation Discussion and Analysis” be included in this proxy statement.
SUBMITTED BY THE COMPENSATION COMMITTEE
Melanie Whelan (Chair)
Sarah Bond
Renee Budig
Marne Levine
John (Jed) York
Chegg, Inc.
58
Proxy Statement for the 2024 Annual Meeting of Stockholders
Summary Compensation
The following table provides information regarding all compensation awarded to, earned by or paid to our NEOs for all services
rendered in all capacities to us during fiscal years 2023, 2022 and 2021.
EXECUTIVE COMPENSATION
Name and Principal Position(1)
Year
Salary
($)
Stock Awards
($)(1)
All Other
Compensation
($)(2)
Total
($)
Dan Rosensweig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
1,100,000
3,666,649
13,200
4,779,849
President and Chief Executive Officer
2022
2021
1,075,000
10,999,964
12,200
12,087,164
1,000,000
19,999,479
6,126
21,005,605
Andrew Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
850,000
1,833,325
13,200
2,671,525
Former Chief Financial Officer
Nathan Schultz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chief Operating Officer
2022
2021
2023
2022
2021
Former President of Chegg Skills
2022
2021
806,250
5,499,946
12,200
6,318,396
750,000
9,999,672
6,500
10,756,172
900,000
6,599,975
13,200
7,513,175
821,875
5,499,946
12,200
6,334,021
750,000
9,999,672
4,875
4,767
10,754,547
451,642
698,750
4,399,986
12,200
5,110,936
650,000
7,999,725
4,875
2,017
8,654,600
1,780,334
John Fillmore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
446,875
—
Esther Lem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
605,000
1,173,318
Former Chief Marketing Officer
2022
2021
591,250
3,519,960
12,200
4,123,410
550,000
6,399,720
6,500
6,956,220
(1)
The amounts reported in this column represent the aggregate grant date fair value of RSU and PSU awards granted under our 2023 Equity Incentive Plan, as
computed in accordance with ASC 718. For fiscal year 2021, the grant date fair value for market-based conditions of the TSR PSUs was estimated using a Monte
Carlo simulation model. For fiscal year 2023, the amounts include PSUs valued at the grant date based upon the target achievement of the performance
conditions. The grant date fair values of the annual PSUs for fiscal year 2023 in the table above reflect the target potential value of the PSUs (assuming the
target level of performance achievement) and were $1,833,325 for Mr. Rosensweig, $916,662 for Mr. Brown, $3,299,988 for Mr. Schultz, and $586,659 for Ms.
Lem. If the 2023 PSUs were achieved at the maximum level of performance, the total amount reported would then be as follows: $2,749,987 for Mr.
Rosensweig, $1,374,993 for Mr. Brown, $4,949,981 for Mr. Schultz, and $ 879,988 for Ms. Lem.
(2)
Represents our contributions to the account under our 401(k) plan for each NEO.
Chegg, Inc.
59
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
Grants of Plan Based Awards
The following table sets forth certain information regarding grants of plan-based awards to each of our NEOs during fiscal year
2023.
Name
Grant
Date
Board
Approval
Date
Award
Type
Threshold
(#)
Target
(#)
Maximum
(#)
Estimated Possible Payout
Under Equity Incentive
Plan Awards(1)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(2)
Market
Value of
Shares that
Have Not
Vested
($)(3)
Dan Rosensweig . . . . .
3/27/2023
3/27/2023
3/27/2023
3/27/2023
Andrew Brown . . . . . .
3/27/2023
3/27/2023
3/27/2023
3/27/2023
Nathan Schultz . . . . . .
3/27/2023
3/27/2023
3/27/2023
3/27/2023
John Fillmore . . . . . . . .
3/27/2023
3/27/2023
3/27/2023
3/27/2023
Esther Lem . . . . . . . . . .
3/27/2023
3/27/2023
3/27/2023
3/27/2023
PSU
RSU
PSU
RSU
PSU
RSU
PSU
RSU
PSU
RSU
57,688
115,376
173,064
—
1,833,325
—
—
—
115,376
1,833,325
28,844
57,688
86,532
—
916,662
—
—
—
57,688
916,662
103,839
207,677
311,516
—
3,299,988
—
—
—
—
—
—
—
—
—
24,567
49,134
73,701
207,677
3,299,988
—
—
—
—
—
1,759,980
—
—
—
49,134
1,759,980
(1)
(2)
(3)
Upon the achievement by December 31, 2023 of certain Company performance metric measurements approved by the Compensation Committee as described
under the heading “Elements of Fiscal Year Compensation—Equity Incentive Compensation—Performance-Based Restricted Stock Units,” the PSUs earned
with respect to each performance metric vested as to 100% on March 12, 2024, except for Mr. Schultz whose PSUs vested one-third on March 12, 2024, and
8.33% shall vest on each quarterly anniversary thereafter such that the PSUs shall be fully vested on March 12, 2026, subject in each case to Mr. Schultz's
continued service up to and through the applicable vesting dates.
100% of the shares vested on March 12, 2024 except for Mr. Schultz, whose shares vested one-third on March 12, 2024 and 8.33% shall vest on each quarterly
anniversary thereafter such that the RSUs shall be fully vested on March 12, 2026. The vesting is subject to continued service through each vesting date.
Reflects the grant date fair value of each equity award at the target performance level computed in accordance with ASC 718 and described in footnote 1 to
the Summary Compensation Table. The assumptions used in the valuation of these awards are set forth in notes 2 and 15 to our consolidated financial
statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. These amounts may not correspond to the actual value that
may be realized by the NEOs.
Chegg, Inc.
60
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal Year-End Table
The following table provides information with respect to outstanding equity awards as of December 31, 2023 with respect to our
NEOs.
Option Awards
Stock Awards
Number of Securities
Underlying Unexercised
Options
Name
Grant
Date
Award
Type
Exercisable
(#)
Unexercisable
(#)
Exercise
Price
($)
Expiration
Date
Number of
Shares that
Have Not
Vested
(#)
Market
Value of
Shares that
Have Not
Vested
($)(1)
Dan Rosensweig .
3/1/2021(2)
PSU
3/1/2021(3)
TSR PSU
3/28/2022(4)
3/27/2023(5)
3/1/2021(6)
3/28/2022(7)
3/27/2023(8)
Andrew Brown . . .
3/1/2021(2)
PSU
PSU
RSU
RSU
RSU
PSU
3/1/2021(3)
TSR PSU
3/28/2022(4)
3/27/2023(5)
3/1/2021(6)
PSU
PSU
RSU
3/28/2022(7)
RSU
3/27/2023(8)
Nathan Schultz . .
3/1/2021(2)
RSU
PSU
3/1/2021(3)
TSR PSU
3/28/2022(4)
3/27/2023(9)
3/1/2021(6)
3/28/2022(7)
3/27/2023(10)
PSU
PSU
RSU
RSU
RSU
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,310
71,682
145,871
1,657,095
63,978
726,790
115,376
1,310,671
4,207
47,792
63,978
726,790
115,376
1,310,671
3,155
25,841
72,935
828,542
31,989
363,395
57,688
655,336
2,104
23,901
31,989
363,395
57,688
655,336
3,155
35,841
72,935
828,542
31,989
363,395
207,677
2,359,211
2,104
23,901
31,989
363,395
207,677
2,359,211
Chegg, Inc.
61
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
Option Awards
Stock Awards
Number of Securities
Underlying Unexercised
Options
Name
Grant
Date
Award
Type
Exercisable
(#)
Unexercisable
(#)
Esther Lem . . . . . .
3/1/2021(2)
PSU
3/1/2021(3)
TSR PSU
3/28/2022(4)
3/27/2023(5)
3/1/2021(6)
3/28/2022(7)
3/27/2023(8)
PSU
PSU
RSU
RSU
RSU
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Exercise
Price
($)
Expiration
Date
Number of
Shares that
Have Not
Vested
(#)
Market
Value of
Shares that
Have Not
Vested
($)(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,019
22,936
46,678
530,262
20,474
232,585
36,920
419,411
1,347
15,302
20,474
232,585
36,920
419,411
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
The market price for our common stock is based on the closing price per share of our common stock as listed on the New York Stock Exchange on December
29, 2023 (the last trading day of the year ended December 31,2023) of $11.36.
The shares subject to the PSU award were earned only upon achievement by December 31, 2021 of Company performance metrics consisting of Chegg
Services Revenue and Adjusted EBITDA as approved by the Compensation Committee. The Compensation Committee determined that the weighted average
percentage of 98.3% of the measurements had been achieved, therefore a weighted average of 98.3% of the shares subject to the PSU award were earned.
One-third of the achieved shares vested on March 1, 2022 and the remaining unvested portion of this PSU is scheduled to vest as to 8.33% on each quarterly
anniversary thereafter such that the PSUs shall be fully vested on March 1, 2024, subject to the officer's continued service up to and through each vesting date
and the acceleration as described in “Termination and Change-of-Control Arrangements” below.
The shares subject to the TSR PSU award will be earned only upon achievement by February 29, 2024 of the Company performance metrics consisting of TSR
as approved by the Compensation Committee. One-half of the achieved shares were to vest on March 1, 2024 and the remaining unvested portion of this TSR
PSU is scheduled to vest on March 1, 2025, subject to the officers continued service up to and through each vesting date and the acceleration as described in
"Termination and Change-of-Control Arrangements" below. None of the performance goals for the TSR PSUs were achieved; and therefore, no portion of this
award was earned.
The shares subject to the PSU award were earned only upon achievement by December 31, 2022 of Company performance metrics consisting of Chegg
Services Revenue and adjusted EBITDA as approved by the Compensation Committee. The Compensation Committee determined that the weighted average
percentage of 39.5% of the measurements had been achieved, therefore a weighted average of 39.5% of the shares subject to the PSU award were earned.
One-third of the achieved shares vested on March 12, 2023 and the remaining unvested portion of this PSU is scheduled to vest as to 8.33% on each quarterly
anniversary thereafter such that the PSUs shall be fully vested on March 12, 2025, subject to the officer's continued service up to and through each vesting date
and the acceleration as described in “Termination and Change-of-Control Arrangements” below.
The shares subject to the PSU award were earned only upon achievement by December 31, 2023 of Company performance metrics consisting of Chegg
Services Revenue, adjusted EBITDA and free cash flow as approved by the Compensation Committee. The Compensation Committee determined that the
weighted average percentage of 35.6% of the measurements had been achieved, therefore a weighted average of 35.6% of the shares subject to the PSU
award were earned. 100% of the achieved shares vested on March 12, 2024.
One-third of the shares vested on March 1, 2022 and 8.33% shall vest on each quarterly anniversary thereafter such that the RSUs were fully vested on March 1,
2024. The vesting was subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and
Change-of-Control Arrangements” below.
One-third of the shares vested on March 12, 2023 and 8.33% shall vest on each quarterly anniversary thereafter such that the RSUs shall be fully vested on
March 12, 2025. The vesting is subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination
and Change-of-Control Arrangements” below.
100% of the shares vested on March 12, 2024. The vesting was subject to the officer's continued service up to and through each vesting date and the
acceleration as described in “Termination and Change-of-Control Arrangements” below.
The shares subject to the PSU award were earned only upon achievement by December 31, 2023 of Company performance metrics consisting of Chegg
Services Revenue, adjusted EBITDA, and free cash flow as approved by the Compensation Committee. The Compensation Committee determined that the
weighted average percentage of 35.6% of the measurements had been achieved, therefore a weighted average of 35.6% of the shares subject to the PSU
award were earned. One-third of the achieved shares vested on March 12, 2024 and the remaining unvested portion of this PSU is scheduled to vest as to
8.33% on each quarterly anniversary thereafter such that the PSUs shall be fully vested on March 12, 2026, subject to the officer's continued service up to and
through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below.
(10) One-third of the shares vested on March 12, 2024 and 8.33% shall vest on each quarterly anniversary thereafter such that the RSUs shall be fully vested on
March 12, 2026. The vesting is subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination
and Change-of-Control Arrangements” below.
Chegg, Inc.
62
Proxy Statement for the 2024 Annual Meeting of Stockholders
Option Exercises and Stock Vested Table
The following table presents information concerning the aggregate number of shares of our common stock for which options
were exercised during fiscal year 2023 for each of the NEOs. In addition, the table presents information on shares of our common
stock that were acquired upon the vesting of stock awards during 2023 for each of the NEOs on an aggregated basis.
EXECUTIVE COMPENSATION
Name
Option Awards
Stock Awards
Number of
Shares
Acquired on
Exercise
Value
Realized on
Exercise
($)
Number of
Shares
Acquired on
Vesting(1)
(#)
Value
Realized
on Vesting
($)(2)
Dan Rosensweig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andrew Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nathan Schultz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John Fillmore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Esther Lem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
178,258
2,385,510
88,462
1,182,423
88,462
1,182,423
59,227
819,960
57,036
763,282
(1)
(2)
Amounts reflect the vesting of RSUs and PSUs.
The value realized on the shares acquired is the fair market value of the shares on the date of vesting, which was the closing price of our common stock on
such date as traded on the NYSE.
Invested g Chegg
We are unwavering supporters of students and a reliable,
readily-available resource.
Chegg, Inc.
63
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
Termination and Change-of-Control Arrangements
The attraction and retention of executive talent continues to be a focus for us. To ensure alignment with peer practices and offer
competitive compensation programs, the Compensation Committee periodically reviews our executive compensation and
employee benefits, including with respect to ongoing retention in connection with the consideration of potential corporate
transactions. After considering data and advice provided by FW Cook, the Compensation Committee approved a Change-of-
Control Severance Plan on July 23, 2019 (the “CIC Plan”). The CIC Plan provides ongoing retention in the event we consider
potential corporate transactions that may create uncertainty as to future employment and also allows us to attract talented
executives going forward.
Each of our NEOs, other than our Chief Executive Officer, is eligible to participate in the CIC Plan pursuant to an executed
participation agreement, which agreement superseded and replaced any then-existing severance protections to which the
applicable executives were entitled under their arrangements with us prior to the execution of the participation agreements.
Pursuant to the offer letter we entered into with Mr. Rosensweig and pursuant to the CIC Plan in which each of our other NEOs
participate, we have agreed to provide certain cash severance benefits and equity award vesting acceleration in the event of
certain terminations of employment both outside a change-of-control and in connection with a change-of-control (i.e., double-
trigger severance protections). We do not provide tax gross-ups if an executive is subject to excise taxes as a result of severance
or change-of-control benefits and we do not provide any single-trigger change of control benefit.
These arrangements are intended to attract and retain qualified executives that have alternatives that may appear to them to be
less risky absent these severance arrangements, and to mitigate a potential disincentive to consideration and execution of an
acquisition, particularly where the services of these executive officers may not be required by the acquirer. We also believe that
entering into these arrangements will help our executive officers maintain continued focus and dedication to their responsibilities
to help maximize stockholder value if there is a potential transaction that could involve a change-of- control of the Company.
Dan Rosensweig
We entered into an offer letter agreement with Mr. Rosensweig, our President, Chief Executive Officer and Co-Chairperson of our
Board of Directors, on December 3, 2009, as amended on November 29, 2012. The offer letter provides for at-will employment
and has no specific term. Pursuant to Mr. Rosensweig’s offer letter, in the event we terminate Mr. Rosensweig’s employment
without “cause” or he resigns from his employment with us for “good reason” (each as defined in the offer letter and described
below) outside of the 12-month period following a “change of control” (as defined in the offer letter), then we will pay Mr.
Rosensweig (i) a lump sum payment equal to 12 months of his then-current annual base salary and (ii), if he elects to continue
health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), his
monthly insurance premiums, until the earlier of 12 months following his termination or resignation or the date upon which he
commences full-time employment or consulting services with another company and is eligible for participation in any health
insurance program provided by such company. Additionally, pursuant to his offer letter agreement and his RSU and PSU
agreements with us, Mr. Rosensweig will be entitled to immediate vesting of 25% of his then-unvested stock options and 25% of
his then-unvested time-based RSUs (including any earned but unvested PSUs for which the performance conditions were or, as of
the date of such qualifying termination of employment, will be satisfied, and which remain subject to time-based vesting
conditions). As noted below, the performance of any unearned TSR PSUs will be determined in connection with such a qualifying
termination of employment. Mr. Rosensweig will also have a period of up to 24 months from the effective date of his termination
or resignation to exercise all options that were vested as of his termination date. These benefits are subject to Mr. Rosensweig
releasing us from all claims, resigning from our Board and returning all of our property and confidential information in his
possession to us.
Chegg, Inc.
64
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
If Mr. Rosensweig is terminated without “cause” or he resigns from his employment with us for “good reason” (each as defined in
the offer letter and described below) within 12 months following a “change-of-control” (as defined in the offer letter) of our
Company, conditioned on his execution of a release of claims, we will pay Mr. Rosensweig (i) a lump sum payment equal to 12
months of his then-current annual base salary and (ii), if he elects to continue health insurance coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, his monthly insurance premiums, until the earlier of 12 months following
his termination or resignation or the date upon which he commences full time employment or consulting services with another
company and is eligible for participation in any health insurance program provided by such company. Plus, pursuant to his offer
letter and his RSU and PSU agreements with us, Mr. Rosensweig will be entitled to immediate vesting of 100% of his then-
unvested stock options, 100% of his then-unvested RSUs, and 100% of his then-unvested earned PSUs (with the performance of
any unearned TSR PSUs to be determined in connection with the change-in-control as described below). Mr. Rosensweig will
have a period of up to 24 months from the effective date of his termination or resignation to exercise all options that were vested
as of the date of his termination.
If a change-of-control occurs prior to the end of a performance period, Mr. Rosensweig’s PSUs (other than the TSR PSUs) will be
deemed earned immediately prior to the change-of-control in an amount equal to the number of PSUs that would be earned
based on our actual performance as of the change-of-control or, if such performance is not determinable, the target level of
performance. Any annual cycle PSUs so earned will be converted into time-based RSUs vesting over a 3-year period and will be
subject to 100% acceleration, as noted above.
Pursuant to his TSR PSU agreement with us, if a change-of-control occurs prior to the end of a performance period, Mr.
Rosensweig's TSR PSUs will be earned immediately prior to the change-of-control in an amount equal to the greater of (i) the TSR
growth percentage based on the price per share paid in the change-of-control (in lieu of the 60-day average price) and (ii) the
number of TSR PSUs achieved (whether prior to or as of the change-in-control), based on the 60 day average. Any TSR PSUs so
earned will be converted into time-based RSUs vesting 50% on March 1, 2024 and 50% on March 1, 2025 and will be subject to
100% acceleration upon a qualifying termination within 12 months following a change of control, as noted above. If a qualifying
termination occurs prior to a change of control, the performance of the TSR PSUs will be measured for the period ending on such
termination of employment and any PSUs so earned will be subject to 25% acceleration of vesting, as described above.
These benefits are subject to Mr. Rosensweig releasing us from all claims.
Change-of-Control Severance Plan
As noted above, each of our NEOs other than Mr. Rosensweig participates in our CIC Plan. The CIC Plan and the participation
agreement thereunder provide that upon a termination of the executive’s employment by us without “cause” (excluding death or
disability and as defined in the CIC Plan and described below) or upon a resignation by the executive for “good reason” (as
defined in the CIC Plan and described below), in each case during the period commencing three months prior to a “change-of-
control” (as defined in the CIC Plan) and ending 12 months following a change-of-control, subject to the executive’s execution and
non-revocation of a release of claims in favor of us, the executive will be entitled to the following benefits:
• a lump sum payment equal to the sum of (i) 12 months of the executive’s base salary at the rate in effect immediately prior
to the date of such termination of employment or the change-of-control, whichever base salary is greater plus (ii) a pro-
rata target cash bonus, if applicable, for the fiscal year in which the termination of employment occurs, prorated for the
number of days the executive is employed in such fiscal year prior to the executive’s termination of employment;
•
if the executive timely elects COBRA continuation coverage for him or herself and his or her eligible dependents, then we
will reimburse the executive for COBRA premiums until the earlier of (i) a period of 12 months from the date of termination
or (ii) the date upon which executive and/or executive’s eligible dependents become covered under similar plans;
Chegg, Inc.
65
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
•
full acceleration of each of the executive’s then-outstanding unvested equity awards other than any equity awards subject
to performance-based vesting conditions for which the performance period has not yet been completed (“performance
awards”); and
•
vesting of performance awards, if at all, as set forth in the terms of the applicable award agreement or, if the treatment
upon a change-of-control is not provided for in the applicable award agreement, based on the actual performance
determined as of immediately prior to the change-of-control or, if such performance is not determinable, based on
performance at target. The terms of the award agreements for outstanding performance awards are described below.
The CIC Plan also provides that if the successor or acquiring company refuses to assume, convert, replace or substitute the
executive’s unvested equity awards, then each of the executive’s then-outstanding and unvested equity awards, other than
performance awards, will fully accelerate immediately prior to the change-of-control and the performance awards will be treated
as described below.
The award agreements for outstanding annual cycle PSUs provide that, if a change-of-control occurs prior to the end of a
performance period, the PSUs will be deemed earned immediately prior to the change-of-control in an amount equal to the
number of performance awards that would be earned based on our actual performance as of the change-of- control or, if such
performance is not determinable, the target level of performance. Any annual cycle PSUs so earned will be converted into time-
based RSUs that are eligible for the 100% acceleration, as noted above.
Pursuant to the TSR PSU agreement, if a change-of-control occurs prior to the end of a performance period, the executive's TSR
PSUs will be earned immediately prior to the change-of-control in an amount equal to the greater of (i) the number of TSR PSUs
achieved by calculating the TSR growth percentage using the price per share paid in the change-of-control (in lieu of the 60-day
average price) and (ii) the number of TSR PSUs achieved (whether prior to or as of the change-in-control) by calculating the TSR
growth percentage using based on the 60-day average stock price. Any TSR PSUs so earned will be converted into time-based
RSUs vesting 50% on March 1, 2024 and 50% on March 1, 2025 and will be eligible for 100% acceleration, as noted above.
Cause and Good Reason Definitions
For purposes of this section, “cause” means a determination by our Board of Directors that employment is terminated because of
(i) a failure or refusal to comply in any material respect with lawful policies, standards or regulations of our Company within 30
days after written notice of such violations and/or failure to comply; (ii) a material violation of a federal or state law or regulation
applicable to our business; (iii) a conviction or plea of no contest to a felony or other crime of moral turpitude under the laws of
the United States or any state; (iv) fraud or material misappropriation of property belonging to us or our affiliates; (v) a material
breach of the terms of any confidentiality, invention assignment or proprietary information agreement with us or with a former
employer and failure to correct or cure such material breach within 30 days after written notice of such breach; or (vi) material
misconduct or gross negligence in connection with the performance of duties and, for executives other than Mr. Rosensweig, the
failure to correct of cure such action or conduct, if curable, within 30 days after written notice.
For purposes of this section, “good reason” for Mr. Rosensweig occurs upon (i) removal from the executive’s current position as
Chief Executive Officer or no longer reporting directly to our Board of Directors; (ii) any material change or reduction in duties in
the executive’s current position or assignment to duties inconsistent with such position, responsibilities, authority or status;
(iii) reduction of then-current annual base compensation (other than a similar reduction that applies to our other senior
executives); or (iv) relocation to a primary work location more than 50 miles from our principal office in Santa Clara, California.
Chegg, Inc.
66
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
For purposes of this section “good reason” for CIC Plan participants (all NEOs other than Mr. Rosensweig) means (i) a material
reduction in the executive’s annual base salary, other than a reduction generally applicable to all our executive officers and in
generally the same proportion as affects the executive; (ii) a material diminution in the executive’s authority, duties or
responsibilities; (iii) a change in the geographic location in which the executive must perform services, resulting in an increase in
the one-way commute by the executive of more than 50 miles; or (iv) our breach of the CIC Plan or the executive’s participation
agreement thereunder, including but not limited to, our failure to ensure the CIC Plan’s assumption by our successor in interest.
Estimated Payments and Benefits as of December 31, 2023
The following table sets forth the estimated payments and benefits that would be received by each of the NEOs upon (i) a
termination of employment without cause or following a resignation for good reason other than in connection with a change-of-
control of Chegg and (ii) a termination of employment without cause or following a resignation for good reason during the period
commencing three months before a change-of-control and ending 12 months after a change-of-control of Chegg. This table
reflects amounts payable to each NEO assuming that his or her employment was terminated on December 31, 2023, and the
change-of-control of Chegg also occurred on that date. The closing market price per share of our common stock on the NYSE on
December 29, 2023 (the last trading day of the year ended December 31, 2023), was $11.36.
Termination of Employment
No Change-of-Control
Termination of Employment
Change-of-Control
Named Executive
Officer
Severance
Payment
($)(1)
Medical
Benefits
Continuation
($)(2)
Accelerated
Vesting of
Equity
Awards
($)(3)
Total
($)
Severance
Payment
($)(1)
Medical
Benefits
Continuation
($)(2)
Accelerated
Vesting of
Equity
Awards
($)(3)
Total
($)
Dan Rosensweig . . . .
1,100,000
27,563
720,931
1,848,494
1,100,000
27,563
4,194,396
5,321,959
Andrew Brown . . . . . .
Nathan Schultz . . . . . .
Esther Lem(4)
. . . . . . . .
—
—
—
—
—
33,930
—
—
—
—
—
825,000
23,845
2,097,204
2,946,049
900,000
34,487
5,504,954
6,439,441
33,930
605,000
33,930
1,342,229
1,981,159
(1)
(2)
(3)
(4)
The amounts reported reflect cash severance that is calculated based on each NEOs 2023 base salary as of December 31, 2023. As noted above, the Company
does not provide annual cash-based bonuses and therefore cash severance does not include any pro-rata target bonuses.
The amounts reported represent costs for COBRA.
The value of the accelerated vesting of unvested equity awards has been calculated based on the closing market price of our common stock on the NYSE on
December 29, 2023, (the last trading day of the year ended December 31, 2023) which was $11.36 per share. All outstanding stock options were fully vested on
December 31, 2023, and as such are not included in the total. The number of earned and unvested PSUs relating to the performance periods ending December
31, 2021, 2022, and 2023 were calculated as set forth above in footnotes 4, 6, and 8 to the Outstanding Equity Awards at Fiscal Year End Table.
Based on the closing market price of our common stock on the NYSE on December 31, 2023, no portion of the TSR PSU would be achieved or eligible for
acceleration.
In connection with her retirement, Ms. Lem resigned from her position as Chief Marketing Officer, effective April 5, 2024. She will remain an employee of
Chegg until July 5, 2024. Ms. Lem is expected to receive COBRA reimbursement of $2,827.49 for 12 months, for a total of 33,929.88 upon her termination of
employment with the Company.
Chegg, Inc.
67
Proxy Statement for the 2024 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION
Chief Executive Officer Pay Ratio
Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K
(“Item 402(u)”), we are required to disclose the ratio of our principal executive officer’s annual total compensation to the annual
total compensation of our median employee. As disclosed in the Summary Compensation Table, the 2023 annual total
compensation for our Chief Executive Officer was $4,779,849. The 2023 annual total compensation of our median employee was
$79,041. Accordingly, the ratio of the 2023 annual total compensation of our Chief Executive Officer to the 2023 annual total
compensation of our median employee is 60 to 1. We believe this ratio, which was calculated in a manner consistent with Item
402(u), to be a reasonable estimate, based upon the assumptions and adjustments described below.
Identifying the Median Employee
We identified our median employee, taking into account all individuals, excluding our Chief Executive Officer, who were employed
by us on a worldwide basis as of December 31, 2023 (the “employee population determination date”), whether employed on a
full-time, part-time, seasonal or temporary basis, and including employees on a partial year leave of absence. We did not include
any contractors or other non-employee workers in our employee population.
Compensation Measures and Calculation Methodology
To identify our median employee in 2023, we chose to use a consistently applied compensation measure, which we selected as
base salary or wages paid to each of our employees for the 12-month period from January 1, 2023 and December 31, 2023. For
employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using foreign exchange rates in effect
on December 31, 2023. For permanent employees hired during 2023, we annualized their base salary or wages as if they had
been employed for the entire measurement period. We did not make any cost-of-living adjustments for employees outside of the
United States.
The median employee identified in 2023 was an employee based in Spain, and who continued to be employed on December 31,
2023. We calculated the annual total compensation for this individual using the same methodology we use to calculate the
amount reported for our CEO in the “Total” column of the Summary Compensation Table as set forth in this proxy statement.
Chegg, Inc.
68
Proxy Statement for the 2024 Annual Meeting of Stockholders
Pay Versus Performance
Disclosure
Provided below is our “pay versus performance” disclosure as required pursuant to Item 402(v) of Regulation S-K promulgated
under the Exchange Act. As required by Item 402(v), we have included:
•
•
A list of the most important financial measures linking a measure of pay calculated in accordance with Item 402(v)
(referred to as “Compensation actually paid”, or “CAP”) to Company performance for our most recent fiscal year;
A table that compares the total compensation of our named executive officers or NEOs as presented in the Summary
Compensation Table (“SCT”) to their CAP and that compares their CAP to specified performance measures for the four
most recent fiscal years; and
•
Graphs that describe:
◦
◦
the relationships between CAP and our cumulative total stockholder return (“TSR”), GAAP Net Income, and our
Company selected measure, Adjusted EBITDA; and
the relationship between our TSR and the TSR of the Nasdaq Composite Index (“Index TSR”).
The only difference between the SCT and CAP amounts for our NEOs is the value of stock awards, which for purposes of the SCT
is based on the grant date fair value of stock awards granted during the year, and for purposes of CAP is based on the year over
year change in the fair value of stock awards that are unvested as of the end of the year, or that vested or were forfeited during
the year.
This disclosure has been prepared in accordance with Item 402(v) and does not necessarily reflect value actually realized by the
NEOs. Please refer to our Compensation Discussion and Analysis on pages 44 to 57 for a discussion of our executive
compensation program objectives and the ways in which we align executive compensation with performance.
Our Most Important Metrics Used for Linking Pay and Performance
As required by Item 402(v), below are the most important performance measures used by the Company to link our NEOs
compensation actually paid for 2023 to the Company's performance. The metrics below are used for purposes of determining
payouts under our annual cycle PSU program.
•
•
•
Total Net Revenues
Adjusted EBITDA
Free Cash Flow
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
PAY VERSUS PERFORMANCE DISCLOSURE
Our 2023 PSUs, which represent a significant portion of our NEOs target direct compensation for the year, were eligible to be
earned and vest contingent on the achievement of three equally weighted performance metrics: (1) fiscal year 2023 Total Net
Revenues, (2) fiscal year 2023 Adjusted EBITDA, and (3) Free Cash Flow (each as defined in our Compensation Discussion and
Analysis on page 46). Adjusted EBITDA is the Company-selected measure included in the table and graphs below.
Pay Versus Performance Table
In accordance with Item 402(v), we provide below the tabular disclosure for the Company's President, Chief Executive Officer and
Co-Chairperson (our Principal Executive Officer or “PEO”) and the average of our NEOs other than the PEO (“non-PEO NEOs”) for
2023, 2022 and 2021 and 2020.
Value of Initial Fixed S100
Investment Based On:
Summary
Compensation
Table Total for
PEO(1)
($)
Compensation
Actually Paid
to PEO(2)
($)
Average Summary
Compensation
Table Total for
non-PEO NEOs(1)
($)
Fiscal Year
Average
Compensation
Actually Paid
to non-PEO
NEOS(3)
($)
Total
Stockholder
Return
($)
NASDAQ
Composite
Total
Stockholder
Return(4)
($)
Net Income
(Loss) (in
thousands)
($)
Adjusted
EBITDA
(in
thousands)(5)
($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
2023
4,779,849
(688,671)
3,104,169
196,528
29.97
167.30
18,180
222,400
2022
12,087,164
(4,776,037)
5,471,691
2,348,120
67.34
116.65
266,638
254,525
2021
21,005,605
(2,978,784)
9,280,385
(826,037)
80.98
174.36
(1,458)
265,859
2020
10,381,080
36,270,875
4,285,861
13,669,798
238.27
143.64
(6,221)
207,058
(1)
Dan Rosensweig is the PEO for each year shown. The non-PEO NEOs for each year shown were Andrew Brown, Nathan Schultz, John Fillmore and Esther
Lem.
(2)
To calculate CAP to the PEO in column (c) the following amounts were deducted from and added to the applicable SCT Total Compensation:
Fiscal Year
Summary Compensation
Table Total for PEO
($)
Deductions from Summary
Compensation Table Total(a)
($)
Inclusion of Equity Values
Total l(b)
($)
Compensation
Actually Paid to PEO
($)
2023
4,779,849
(3,666,649)
(1,801,871)
(688,671)
(a)
(b)
Represents the grant date fair value of equity awards reported in the “Stock Awards” column in the Summary Compensation Table for 2023.
Reflects the value of equity calculated in accordance with the SEC methodology for determining compensation actually paid under Item 402(v) of
Regulation S-K. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts
deducted or added in calculating the equity values included in CAP are as follows:
Year End Fair
Value of
Equity
Awards
Granted in
the Year
($)
Year Over Year
Change in Fair
Value of
Outstanding
and Unvested
Equity Awards
($)
Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year
($)
Year
Year over Year
Change in Fair
Value of Equity
Awards
Granted in
Prior Years
that Vested in
the Year
($)
Fair Value at
the End of the
Prior Year of
Equity Awards
that Failed to
Meet Vesting
Conditions in
the Year
($)
Value of Dividends
or Other Earnings
Paid on Stock or
Option Awards not
Otherwise
Reflected in Fair
Value or Total
Compensation
($)
(a)
(b)
2023
1,777,270
(1,412,126)
(c)
—
(d)
(2,167,015)
(e)
—
(f)
—
Equity Value
Included in
Compensation
Actually Paid
($)
(g) = (a) + (b) +
(c) + (d) - (e) +
(f)
(1,801,871)
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
PAY VERSUS PERFORMANCE DISCLOSURE
(3)
To calculate CAP to the non-PEO NEOs in the column (e) the following amounts were deducted from and added to the applicable SCT Total compensation:
Summary Compensation Table
Total for non-PEO NEOs
($)
Deductions from Summary
Compensation Table Total(a)
($)
Additions to Summary
Compensation Table Total(b)
($)
Compensation Actually
Paid to non-PEO NEOs
($)
Fiscal Year
2023
3,104,169
(2,401,654)
(505,986)
196,528
(a)
(b)
Represents the grant date fair value of equity awards reported in the “Stock Awards" column in the Summary Compensation Table for 2023.
Reflects the value of equity calculated in accordance with the SEC methodology for determining compensation actually paid under Item 402(v) of
Regulation S-K. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts
deducted or added in calculating the equity values included in CAP are as follows:
Year End Fair
Value of
Equity
Awards
Granted in
the Year
($)
Year Over Year
Change in Fair
Value of
Outstanding
and Unvested
Equity Awards
($)
Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year
($)
Year
Year over Year
Change in Fair
Value of Equity
Awards
Granted in
Prior Years that
Vested in the
Year
($)
Fair Value at
the End of the
Prior Year of
Equity Awards
that Failed to
Meet Vesting
Conditions in
the Year
($)
Value of Dividends
or Other Earnings
Paid on Stock or
Option Awards not
Otherwise
Reflected in Fair
Value or Total
Compensation
($)
(a)
(b)
2023
1,164,112
(466,013)
(c)
—
(d)
(e)
(884,954)
(319,131)
(f)
—
Equity Value
Included in
Compensation
Actually Paid
($)
(g) = (a) + (b) +
(c) + (d) - (e) +
(f)
(505,986)
(4)
Reflects TSR indexed to $100 for the Nasdaq Composite Index, which is an industry line peer group reported in the performance graph included in the
Company's 2023 Annual Report on Form 10-K.
(5)
Please see page 46 for a definition of Adjusted EBITDA.
Chegg, Inc.
71
Proxy Statement for the 2024 Annual Meeting of Stockholders
PAY VERSUS PERFORMANCE DISCLOSURE
Relationship between CAP and TSR
The chart below reflects the relationship between the PEO and average non-PEO NEO CAP versus our TSR and the NASDAQ
Composite Index TSR.
Relationship between CAP and GAAP Net Income
The chart below reflects the relationship between the PEO and average non-PEO NEO CAP and our GAAP Net Income.
Chegg, Inc.
72
Proxy Statement for the 2024 Annual Meeting of Stockholders
Compensation Actually Paid ($ millions)Total Shareholder Return (TSR)$36.3($3.0)$4.8($0.7)$13.7($0.8)$2.3$0.2$100$238$81$67$30$100$144$174$117$167PEO CAPAvg. Other NEOs CAPCHGG TSRIndex TSR2020202120222023($5.0)$0.0$5.0$10.0$15.0$20.0$25.0$30.0$35.0$40.0$45.0$50.0$-25$0$25$50$75$100$125$150$175$200$225$250Compensation Actually Paid ($ millions)GAAP Net Income ($ millions)$36.3($3.0)$4.8($0.7)$13.7($0.8)$2.3$0.2($6)($1)$267$18PEO CAPAvg. Other NEOs CAPGAAP Net Income2020202120222023($5.0)$0.0$5.0$10.0$15.0$20.0$25.0$30.0$35.0$40.0$45.0$50.0$-30$0$30$60$90$120$150$180$210$240$270$300 Relationship between CAP and Adjusted EBITDA (our Company-Selected Measure)
The chart below reflects the relationship between the PEO CAP and average non-PEO NEO CAP and our Adjusted EBITDA.
PAY VERSUS PERFORMANCE DISCLOSURE
Chegg, Inc.
73
Proxy Statement for the 2024 Annual Meeting of Stockholders
Compensation Actually Paid ($ millions)Adj. EBITDA ($ millions)$36.3($3.0)$4.8($0.7)$13.7($0.8)$2.3$0.2$207$266$255$222PEO CAPAvg. Other NEOs CAPAdj. EBITDA2020202120222023($5.0)$0.0$5.0$10.0$15.0$20.0$25.0$30.0$35.0$40.0$45.0$50.0$-30$0$30$60$90$120$150$180$210$240$270$300 Equity Compensation Plan
Information
The following table presents information as of December 31, 2023 with respect to compensation plans under which shares of our
common stock may be issued. The category “Equity compensation plans approved by security holders” in the table below consists
of the 2005 Stock Incentive Plan (the “2005 Incentive Plan”), the 2013 Equity Incentive Plan (the “2013 Incentive Plan”), the 2023
Equity Incentive Plan (the “2023 Incentive Plan”), and the Amended and Restated 2013 Employee Stock Purchase Plan (the “A&R
2013 ESPP”). The category “Equity compensation plans not approved by security holders” in the table below consists of the 2023
Equity Inducement Plan (the “2023 Inducement Plan”). The table does not include information with respect to shares of our
common stock subject to outstanding options or other equity awards granted under equity compensation plans or arrangements
assumed by us in connection with our acquisition of the companies that originally granted those awards.
Number of securities to be
issued upon exercise
of outstanding options,
warrants and rights
Weighted-
average exercise price of
outstanding options,
warrants and rights
Plan category
Equity compensation plans approved by
security holders
Equity compensation plans not approved by
security holders(3)
(a)
10,065,783(1)
243,902(4)
(b)
$6.02(2)
—
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
11,877,920
1,756,098
(1)
(2)
(3)
Excludes purchase rights accruing under the A&R 2013 ESPP and includes 10,065,783 shares subject to outstanding RSUs and PSUs.
The weighted average exercise price relates solely to outstanding stock option shares since shares subject to RSUs and PSUs have no exercise price.
On October 10, 2023, our Board of Directors approved the 2023 Inducement Plan pursuant to the Employment Inducement Award exception under the NYSE
Listed Company Manual Section 303A.08.
(4)
Includes 243,902 shares subject to outstanding RSUs.
Chegg, Inc.
74
Proxy Statement for the 2024 Annual Meeting of Stockholders
Transactions with Related
Parties
Other than the compensation arrangements, including employment, termination of employment and change-of-control
arrangements and indemnification arrangements, discussed, when required, above in the “Executive Compensation” section of
this proxy statement, since January 1, 2023, we have not been a party to any transaction or series of similar transactions in which:
• we have been or are to be a participant;
•
the amount involved exceeded or exceeds $120,000; and
• any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member
of or person sharing the household with any of these individuals, had or will have a direct or indirect material interest.
Review, Approval or Ratification of Transactions with Related Parties
Our related-party transactions policy requires approval of transactions to which we are a party and in which an officer, director,
nominee for director, stockholder beneficially owning more than five percent of our outstanding capital stock or an immediate
family member of a person sharing a household with such person has a material interest. Any transaction that we intend to
undertake with such persons, irrespective of the amounts involved (unless such transaction is subject to standing pre-approval as
provided under the policy or pursuant to a resolution adopted by our Compensation Committee), will be submitted to our Ethics
Counselor for his or her determination of what approvals are required under the related-party transactions policy. The Ethics
Counselor will refer to the Chair of our Audit Committee (or another member of our Audit Committee if the Chair is a party to the
transaction) any such transaction for review. In the event our Ethics Counselor becomes aware of a transaction with a related
person that has not been previously approved or previously ratified under the related-party transactions policy that required such
approval, it will be submitted promptly to the Chair or other member of our Audit Committee for review. Based on the conclusions
reached, the Chair or other member of our Audit Committee will evaluate all options, including but not limited to ratification,
amendment or termination of the transaction with the related person.
In approving or rejecting the proposed transaction, the Chair or other member of our Audit Committee will consider the relevant
and available facts and circumstances, including such facts as (i) the impact on a director’s independence in the event the related
person is a director, immediate family member of a director or an entity with which a director is affiliated; (ii) the terms of the
transaction; and (iii) any other relevant information and considerations with respect to the proposed transaction. The Chair or
other member of our Audit Committee will approve only those transactions with related persons that, in light of known
circumstances, are in or are not inconsistent with, the best interests of our Company and our stockholders, as such Chair or other
member of our Audit Committee determines in the good faith exercise of his or her discretion.
Chegg, Inc.
75
Proxy Statement for the 2024 Annual Meeting of Stockholders
Report of the Audit
Committee
The information contained in the following report of Chegg’s Audit Committee is not considered to be “soliciting material,” “filed”
or incorporated by reference in any past or future filing by Chegg under the Securities Exchange Act of 1934, as amended, or the
Securities Act of 1933, as amended, unless and only to the extent that Chegg specifically incorporates it by reference.
The Audit Committee has reviewed and discussed with Chegg’s management and Deloitte & Touche LLP the audited consolidated
financial statements of Chegg as of and for the year ended December 31, 2023, and the effectiveness of internal control over
financial reporting as of December 31, 2023. The Audit Committee has also discussed with Deloitte & Touche LLP the matters
required to be discussed by Auditing Standard 1301, “Communications with Audit Committees” issued by the Public Company
Accounting Oversight Board.
The Audit Committee has received and reviewed the written disclosures and the letter from Deloitte & Touche LLP required by
applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s
communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche LLP its
independence from Chegg.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements be included in Chegg’s Annual Report on Form 10-K for the year ended December 31,
2023 for filing with the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
Renee Budig (Chair)
Marcela Martin
Richard Sarnoff
Ted Schlein
Chegg, Inc.
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Proxy Statement for the 2024 Annual Meeting of Stockholders
Additional Information
Stockholder Proposals to be Presented at the Next Annual Meeting
Chegg’s Bylaws provide that, for stockholder nominations to the Board of Directors or other proposals to be considered at an
Annual Meeting of Stockholders, the stockholder must give timely notice thereof in writing to the Corporate Secretary at Chegg,
Inc., 3990 Freedom Circle, Santa Clara, California 95054, Attn: Corporate Secretary.
To be timely for the 2025 Annual Meeting of Stockholders, a stockholder’s notice must be delivered to or mailed and received by
our Corporate Secretary at the principal executive office of Chegg not earlier than 5:00 p.m. Pacific Time on February 20, 2025
and not later than 5:00 p.m. Pacific Time on March 22, 2025. A stockholder’s notice to the Corporate Secretary must set forth as to
each matter the stockholder proposes to bring before the 2025 Annual Meeting of Stockholders the information required by
Chegg’s Bylaws.
Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at Chegg’s 2025
Annual Meeting of Stockholders must be received by us no later than December 20, 2024 in order to be considered for inclusion
in Chegg’s proxy materials for that meeting. In addition, to comply with the universal proxy rules, stockholders who intend to
solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the
information required by Rule 14a-19 under the Exchange Act no later than April 6, 2025. A stockholder’s notice to the Corporate
Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required
by applicable law and our Bylaws.
Available Information
Chegg will mail without charge, upon written request, a copy of Chegg’s annual report on Form 10-K for the year ended
December 31, 2023, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should
be sent to:
Chegg, Inc.
3990 Freedom Circle
Santa Clara, CA 95054
Attn: Investor Relations
The Annual Report is also available at https://investor.chegg.com.
Chegg, Inc.
77
Proxy Statement for the 2024 Annual Meeting of Stockholders
ADDITIONAL INFORMATION
“Householding” - Stockholders Sharing the Same Last Name and Address
The SEC has adopted rules that permit companies and intermediaries (such as Brokers) to implement a delivery procedure called
“householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our
Annual Report and proxy materials, including the Notice, unless the affected stockholder has provided contrary instructions. This
procedure reduces printing costs and postage fees, and helps protect the environment as well.
We expect that a number of Brokers with account holders who are our stockholders will be “householding” our Annual Report and
proxy materials, including the Notice. A single Notice and, if applicable, a single set of Annual Report and other proxy materials will
be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected
stockholders. Once you have received notice from your Broker that it will be “householding” communications to your address,
“householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their
consent at any time by contacting Broadridge, either by calling toll-free (800) 542-1061, or by writing to Broadridge, Householding
Department, 51 Mercedes Way, Edgewood, New York, 11717.
Upon written or oral request, Chegg will promptly deliver a separate copy of the Notice and, if applicable, Annual Report and
other proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To
receive a separate copy of the Notice and, if applicable, annual report and other proxy materials, you may write to Chegg’s
Investor Relations department at 3990 Freedom Circle, Santa Clara, California 95054, Attn: Investor Relations, or via email to
ir@chegg.com.
Any stockholders who share the same address and currently receive multiple copies of Chegg’s Notice or Annual Report and other
proxy materials who wish to receive only one copy in the future can contact their Broker to request information about
householding or Chegg’s Investor Relations department at the address listed above.
Chegg, Inc.
78
Proxy Statement for the 2024 Annual Meeting of Stockholders
Other Matters
Our Board of Directors does not presently intend to bring any other business before the meeting and, so far as is known to our
Board of Directors, no matters are to be brought before the meeting except as specified in the Notice of the meeting. As to any
business that may arise and properly come before the meeting, however, it is intended that proxies, in the form enclosed, will be
voted in respect thereof in accordance with the judgment of the persons voting such proxies.
Chegg
Embrace the possibilities.
Chegg, Inc.
79
Proxy Statement for the 2024 Annual Meeting of Stockholders
[THIS PAGE INTENTIONALLY LEFT BLANK]
Appendix A
Reconciliation of Non-GAAP Financial Measures
We believe that certain non-GAAP financial measures, including adjusted EBITDA and free cash flow, when taken together with
the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by
excluding items that may not be indicative of our core business, operating results or future outlook. Our management uses these
non-GAAP financial measures in assessing our operating results, as well as when planning, forecasting and analyzing future
periods and believes that such measures enhance investors' overall understanding of our current financial performance. These
non-GAAP financial measures also facilitate comparisons of our performance to prior periods. The presentation of additional
information is not meant to be considered in isolation or as a substitute for or superior to net income or net cash provided by
operating activities determined in accordance with GAAP. Management strongly encourages stockholders to review our financial
statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
The following is a reconciliation of net income to EBITDA and Adjusted EBITDA for the year ended December 31, 2023 (in
thousands, unaudited):
Year Ended December 31, 2023
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,180
3,773
32,132
129,718
183,803
133,502
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(121,810)
Acquisition-related compensation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Content and related asset charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss contingency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transitional logistics charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,290
7,647
5,704
7,000
253
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
222,389
Chegg, Inc.
A-1
Proxy Statement for the 2023 Annual Meeting of Stockholders
APPENDIX A
The following is a reconciliation of net cash provided by operating activities to free cash flow for the year ended December 31,
2023 (in thousands, unaudited):
Year Ended December 31, 2023
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from disposition of textbooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246,198
(83,052)
9,787
172,933
Chegg, Inc.
A-2
Proxy Statement for the 2023 Annual Meeting of Stockholders
Chegg, Inc.
2023 Form 10-K
[THIS PAGE INTENTIONALLY LEFT BLANK]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 001-36180
CHEGG, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Delaware
20-3237489
3990 Freedom Circle
Santa Clara, CA, 95054
(Address of principal executive offices)
(408) 855-5700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.001 par value per share
Trading symbol(s)
CHGG
Name of each exchange on which registered
The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
•
•
•
•
•
•
•
•
•
•
•
•
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Non-accelerated filer
Emerging growth company
☒
☐
☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2023, the last business day of the registrant’s most recently completed
second fiscal quarter, based upon the closing price of such stock on such date as reported by the New York Stock Exchange on such date, was $998,567,864. Shares of Common
Stock held by each executive officer and director have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily
a conclusive determination for other purposes.
As of January 31, 2024, the Registrant had 102,949,023 outstanding shares of Common Stock.
Portions of the Registrant's definitive proxy statement for the Registrant's 2024 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report
on Form 10-K to the extent stated herein. The Proxy Statement will be filed within 120 days of the Registrant's fiscal year ended December 31, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
PART I
Page
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A.
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B.
Item IC.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and Analysis of Financial Condition and Result of Operations . . . . . .
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Consolidated Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
11
35
35
36
36
36
37
38
39
50
51
88
88
88
88
89
89
89
89
89
90
90
93
Unless the context requires otherwise, the words “we,” “us,” “our,” “Company” and “Chegg” refer to Chegg, Inc. and its
subsidiaries taken as a whole.
Chegg, Chegg.com, Chegg Study, EasyBib, the Chegg “C” logo, and Busuu, are some of our trademarks used in this
Annual Report on Form 10-K. Solely for convenience, our trademarks, trade names and service marks referred to in this Annual
Report on Form 10-K appear without the ®, ™ and SM symbols, but those references are not intended to indicate, in any way,
that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and trade names. Other
trademarks appearing in this Annual Report on Form 10-K are the property of their respective holders.
2
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements contained in this Annual Report on Form 10-K other than statements of historical
fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and
our objectives for future operations are forward-looking statements. The words “believe,” “may,” “will,” “would,” “could,”
“estimate,” “continue,” “anticipate,” “intend,” “project,” “endeavor,” “expect,” “plan to,” “if,” “future,” “likely,” “potentially,”
and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements
largely on our current expectations and projections about future events and trends that we believe may affect our financial
condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial
needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those
described in Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. Moreover, we operate in a very competitive
and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all
risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of
these risks, uncertainties and assumptions, the future events and trends discussed in this Annual Report on Form 10-K may not
occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking
statements. You should read this Annual Report on Form 10-K completely and with the understanding that our actual future
results may be materially different from what we expect.
Our forward-looking statements speak only as of the date of this Annual Report on Form 10-K, and we undertake no
obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by
law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
3
PART I
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. 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. 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. 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.
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. 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.
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. 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. 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. 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.
Subscribers 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. 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. 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. The Busuu offering currently offers comprehensive courses, taught by highly qualified teachers in 14
languages.
4
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. 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. 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. 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. 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. 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. 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.
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.
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. 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.
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
process. 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. 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. 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. 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. 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 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. 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.
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. 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. For Chegg Writing, we primarily face competition from other citation
generating and grammar and plagiarism services, such as Grammarly. For Chegg Math, we face competition from other
equation solver services, such as Photomath, Gauthmath, and Symbolab. For Busuu, our competitors primarily include language
learning platforms, such as Duolingo and Babbel. 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. 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.
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. 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
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
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. These laws, procedures and restrictions provide only limited protection and any of our intellectual
property rights may be challenged, invalidated, circumvented, infringed or misappropriated. Further, the laws of certain
countries do not protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain
jurisdictions, we may be unable to protect our proprietary technology.
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. From time to time, we expect to file additional patent,
copyright, and trademark applications in the United States and abroad.
Government Regulation
We are subject to a number of laws and regulations in the United States and abroad that affect companies conducting
business on the Internet and in the education industry, many of which are still evolving and could be interpreted in ways that
could harm our business. The manner in which existing laws and regulations will be applied to the Internet and students in
general and how they will relate to our business in particular, are often unclear. 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. 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.
Numerous laws and regulatory schemes have been adopted at the national and state level in the United States, and
internationally, that have a direct impact on our business and operations. For example:
The CAN-SPAM Act of 2003 (CAN-SPAM) establishes requirements for sending commercial email and requires
commercial email senders to honor consumers’ requests to not receive email. Violators of CAN-SPAM are subject to both civil
and potentially criminal penalties. The U.S. Federal Trade Commission (FTC) has guidelines that impose responsibilities on us
with respect to communications with consumers and impose fines and liability for failure to comply with rules with respect to
advertising or marketing practices it may deem misleading or deceptive. Similarly, several states have enacted laws that prohibit
“falsity or deception” in commercial emails and that give recipients of such emails a right of action and ability to seek damages.
The Telephone Consumer Protection Act of 1991 (TCPA) restricts telemarketing and the use of automated telephone
dialing systems. The TCPA regulates the use of artificial or prerecorded voice messages, fax messages, and the use of automatic
dialing systems for both voice calls and sending text messages. Additionally, a number of states have enacted statutes that
address telemarketing. For example, some states, such as Colorado, Florida, Indiana, Louisiana, Massachusetts, Mississippi,
Missouri, Oklahoma, Pennsylvania, Tennessee, Texas and Wyoming, still have do-not-call lists. Other states, such as Oregon
and Washington, have enacted “no rebuttal statutes” that require the telemarketer to end the call when the consumer indicates
that he or she is not interested in the product being sold. Restrictions on telephone marketing, including calls and text messages,
are enforced by the FTC, the Federal Communications Commission, states, and through the availability of statutory damages
and class action lawsuits for violations of the TCPA.
The Credit Card Accountability Responsibility and Disclosure Act of 2009, or CARD Act, and similar laws and
regulations adopted by a number of states regulate credit card and gift certificate use fairness, including expiration dates and
fees. Our business also requires that we comply with payment card industry data security and other standards. In particular, we
are subject to payment card association operating rules, certification requirements, and rules governing electronic funds
transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with
these rules or requirements, or if our data security systems are breached or compromised, we may be liable for card issuing
banks’ costs, subject to fines and higher transaction fees, reputational damage, and lose our ability to accept credit and debit
card payments from our customers, process electronic funds transfers, or facilitate other types of online payments, and our
business and results of operations could be adversely affected.
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Regulations related to the Program Participation Agreement of the U.S. Department of Education and other similar laws
that regulate the recruitment of students to colleges and other institutions of higher learning.
The Family Educational Rights and Privacy Act (FERPA) protects the privacy of student records and gives students (and
their parents in the case of minors), certain rights (such as data correction and data production), with respect to their student
records. FERPA restricts the circumstances in which we can disclose student records. 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. The FTC has proposed updates to COPPA which are currently in
a notice-and-comment period. In addition, certain states, including Utah and Massachusetts, have laws that impose criminal
penalties on the production and distribution of content that is “harmful to a minor.” Delaware Code 1204C prohibits websites
and applications directed at children from marketing or advertising products or services that are inappropriate for children.
California’s Privacy Rights for California Minors in the Digital World Act (Eraser Bill) permits minors to remove or
request and obtain removal of content or information posted on our services. The Eraser Bill also has special requirements for
marketing and advertising certain products based on personal information specific to a minor or knowingly using, disclosing or
compiling or allowing a third party to do so.
California has several laws protecting the literary works read by California residents. The California Reader Privacy Act
protects information about the books California residents read from electronic services. Such information cannot be disclosed
except pursuant to an individual’s affirmative consent, a warrant or court order with limited exceptions, such as imminent
danger of serious injury. California Education Code Section 99122 requires for-profit postsecondary educational institutions to
post a social media privacy policy on their website.
The Digital Millennium Copyright Act (DMCA) provides relief for claims of circumvention of copyright protected
technologies and includes a safe harbor intended to reduce the liability of online service providers for hosting, listing, or linking
to third-party content that infringes copyrights of others.
The Communications Decency Act provides that online service providers will not be considered the publisher or speaker
of content provided by others, such as individuals who post content on an online service provider’s website.
The California Consumer Privacy Act (CCPA), which went into effect on January 1, 2020, provides consumers the right
to know what personal data companies collect, how it is used, and the right to access, delete, and opt out of the sale of their
personal information to third parties. It also expands the definition of personal information and gives consumers increased
privacy rights and protections for that information. The CCPA also includes special requirements for California consumers
under the age of 16.
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. These laws provide consumers with the right to know what personal data
companies collect, how it is used, and the right to access, delete, and opt out of the sale of their personal information to third
parties. The CPRA also includes special requirements for California consumers under the age of 16.
The General Data Protection Regulation (GDPR) which went into effect in May 2018 gives European Union (EU)
residents, among other things, rights to right to know what personal data we collect from them, how it is used, and the right to
access, correct, delete, and opt out of the sale of their personal information to third parties. We are also required to obtain
consent from consumers in certain circumstances and adhere to certain data transfer mechanisms to transfer EU personal data to
certain other jurisdictions. The Safe Harbor framework that many companies relied on to transfer data was recently found to be
invalid. We rely on standard contracts for data transfers from the EU, and the standard contractual clauses were recently
substantially revised, and we do not yet fully comply with implementing the new standard contractual clauses. As regulatory
authorities continue to issue further guidance on personal data, we could suffer additional costs, complaints or regulatory
investigations or fines. The GDPR sets a maximum fine of €20 million or 4% of annual global turnover for infringements –
whichever is greater. If we are unable to transfer data between and among countries in which we operate, it could affect the
manner in which we provide our services, the geographical location or segregation of our systems and operations and could
adversely affect our financial results.
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The United Kingdom’s Data Protection Act 2018 (Data Protection Act) and UK General Data Protection Regulation
(“UK GDPR”) apply to our activities in the United Kingdom. They have similar requirements to those noted above relating to
GDPR. The Data Protection Act and UK GDPR set a maximum fine of £17.5 million or 4% of annual global turnover for
infringements – whichever is greater – for infringements.
Israel’s Basic Law: Human Dignity and Liberty, 5752 1992 (IBL HDL), the Protection of Privacy Law, 5741-1981 and
the regulations promulgated thereunder (collectively, the PPL), and the guidelines of the Israel Privacy Authority (IPA
Guidelines) apply to our activities in Israel. PPL gives Israeli residents, among other things, the right to know what personal
data we collect from them, how it is used, and the right to access, correct, and erase their personal information to third parties.
Under the PPL, we are required to, among other things, register our databases in Israel, take steps to secure personal data and
sensitive data such as creating a database settings document, developing an information security policy and training employees.
PPL also has strict regulations regarding transferring data outside of Israel. PPL provides for both civil and criminal penalties
with a maximum financial penalty of ILS 25,000 and additional fines if the violation is on-going, and a maximum criminal
penalty of imprisonment for up to five years.
The Skills and Post-16 Education Act 2022 established the government’s skills and training strategy for the United
Kingdom. 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. For both offenses, a body corporate and/
or director (and equivalents) guilty of an offense is liable on summary conviction to a fine.
The Tertiary Education Quality and Standards Agency Act 2011, or TEQSA Act, established the Tertiary Education
Quality and Standards Agency (TEQSA) in 2011 and a new national regulatory and quality assurance environment for
Australian higher education. The Act contains requirements relating to registered higher education providers and regulated
entities. Section 114 (A) makes it an offense for a person to provide, offer to provide, or arrange for a third-party person to
provide academic cheating services to a student. Section 114 (B) makes it an offense for a person to advertise academic
cheating services to students. TEQSA may apply under section 127A to the Federal Court for an injunction requiring carriage
service providers to take steps to disable access to websites found to contravene or facilitate a contravention of sections 114A or
114B of the TEQSA Act, and the Act also provides for other financial or custodial penalties where an offense is proven.
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. 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. We offer competitive compensation, including salary and equity, and benefits packages
tailored to each of our locations around the world. All employees are offered training and development opportunities, from
leadership training and coaching to career development programs for all levels of employees. We believe that a diverse
workforce makes us a stronger company and helps us better serve the needs of our customers. We are focused on understanding
our culture, belonging and inclusion strengths and opportunities and defining and executing on a strategy to support further
progress. We have employee-driven resource groups that are aligned around creating a culture of belonging and awareness for
our diverse workforce. These groups are centered around gender, ethnicity, sexual orientation or other shared attributes, which
we believe help build community and enable opportunities for both personal and professional development. We continue to
focus on building a strong talent pipeline to create more opportunities for workplace diversity, support greater representation
within the organization, and build a company that is truly reflective of the diverse audience we serve. 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.
On June 12, 2023, we announced a reduction of our global workforce by about 90 employees, or approximately 4% of
our current workforce, to better position us to execute against our AI strategy and to create long-term, sustainable value for our
students and investors.
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. Additionally, we established our first ever employee charitable contribution matching program worldwide.
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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. We
believe our greatest impact is enabling students to succeed and improving the outcome of their education so that they can
quickly move from learning to earning. To do this, we focus on listening to their needs, elevating and amplifying their voices,
and taking action to provide real life solutions.
Just like our approach with students, we take the same level of care to engage with our stakeholders to help prioritize our
ESG efforts, which we categorize into six pillars, as outlined below. 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. 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. We are proud to have
received numerous awards for our outstanding workplace culture, including Fortune’s Best Workplaces (for Women, Parents,
Technology, and Millennials), and fifteen Comparably awards in 2023.
Help Learners
Learners are evolving and so is Chegg. 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 have identified goals where we believe Chegg’s influence is the greatest: Quality
Education, Good Health and Well-Being, Zero Hunger, decent work and economic growth, and reduced inequalities.
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.
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. 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. 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. We know that we owe it to our customers, employees, and society to use environmentally sound
practices and to find ways to limit our contribution to global climate change.
To learn more about our ESG efforts, please visit the ESG section of our investor relations site: investor.chegg.com/esg.
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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.
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. 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. Our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed
pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are filed with the
U.S. Securities and Exchange Commission (SEC), which maintains an Internet site at www.sec.gov to access such reports. We
are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements, and other
information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge
on our website at www.investor.chegg.com when such reports are available on the SEC’s website. We use our
www.chegg.com/press website as a means of disclosing material non-public information and for complying with our disclosure
obligations under Regulation FD. Accordingly, investors should monitor www.chegg.com/press, in addition to following our
press releases, SEC filings, and public conference calls and webcasts.
The contents of the websites referred to above and throughout this Annual Report on Form 10-K are not incorporated
into this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only.
ITEM 1A. RISK FACTORS
The risks and uncertainties set forth below, as well as other risks and uncertainties described elsewhere in this Annual
Report on Form 10-K including on our consolidated financial statements and related notes and the section titled
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” or in other filings by Chegg with
the SEC, could adversely affect our business, financial condition, results of operations, and the trading price of our common
stock. Additional risks and uncertainties that are not currently known to us or that are not currently believed by us to be
material may also harm our business operations and financial results. Because of the following risks and uncertainties, as well
as other factors affecting our financial condition and results of operations, past financial performance should not be considered
to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in
future periods.
Summary of Risk Factors
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This
summary does not address all of the risks that we face. 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.
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.
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.
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• 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.
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.
Risks Related to Taxes and Accounting Matters
•
• We may be subject to greater than anticipated liabilities for income, property, sales, and other taxes, and any
successful action by federal, state, foreign, or other authorities to collect additional taxes could adversely harm our
business.
Our effective tax rate may fluctuate as a result of new U.S. and worldwide tax laws and our interpretations of those
new tax laws, which are subject to significant judgments and estimates. 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 actual results could differ from the
estimates and assumptions used to prepare our consolidated financial statements.
•
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.
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• 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.
Risks Related to Data Privacy
•
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.
• We collect, process, store and use personal information and other sensitive data, which subjects us to stringent and
evolving U.S. and foreign laws, governmental regulation, contractual obligations, policies and other legal obligations.
Public scrutiny of Internet privacy issues and actual or perceived failure to comply with our obligations with respect to
privacy and data security could harm our business, including by damaging our reputation and relationships with
students and educators.
•
• We are subject to privacy and cybersecurity laws across multiple jurisdictions which are highly complex, overlapping,
and which create compliance challenges that may expose us to substantial costs, liabilities, or loss of customer trust.
Our actual or perceived failure to comply with these laws could harm our business.
• Our business, including our ability to operate internationally, could be adversely affected if new legislation or
regulations are adopted or due to changes in interpretations or implementations of current legislation and regulations.
Risks Related to Ownership of Our Common Stock
Our stock price has been and will likely continue to be volatile.
•
• We may be subject to short-selling strategies that may drive down the market price of our common stock.
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.
The growth of our business depends on our ability to attract new students to use our products and services and to increase
retention and the level of engagement by existing students with our learning platform. The substantial majority of our revenues
depends on small transactions made by a widely dispersed student population with an inherently high rate of turnover primarily
as a result of graduation. 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 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. Attracting new students depends not only on our investment in our brand and content and our
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marketing efforts, but also on the perceived value of our products and services versus alternatives, some of which are free. If
our efforts to satisfy our existing student user base are not successful or become less effective, or if the cost of such efforts were
to significantly increase, we may not be able to attract new students as successfully or efficiently and we may not be able to
retain existing students on our platform. As a result, our business, growth, results of operations, and financial condition could be
adversely affected.
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. If we fail to
maintain and expand our user base, our business, results of operations, and financial condition could be adversely affected.
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.
Our future success depends, in part, on our ability to anticipate and respond effectively to the threat and opportunity
presented by new technology disruption and developments. These include new software applications or related services based
on AI and machine learning, among other developments. New technologies, including those based on AI, can provide students
with more immediate responses than traditional tools. Over time, the accuracy of these tools and their ability to handle complex
questions may improve, which may be disruptive to education technology businesses, such as ours. Our success also depends,
in part, on our ability to develop and scale a high-performance technology infrastructure to efficiently handle increased usage
by students, especially during peak periods each academic term. We may develop new products, services, and technologies
independently, by acquisition, or in conjunction with third parties.
In April 2023, we announced our pivot to AI with a partnership with OpenAI to utilize GPT-4 in our offerings; and in
August 2023, we announced a partnership with Scale AI to develop proprietary LLMs to provide a generative experience
through Chegg as a personalized learning assistant. Beginning in September 2023, we started to roll out the first phase of our
new AI-powered user experience, and we are continuing to make significant investments in AI initiatives. If our new offerings
or changes to existing offerings fail to engage students, or if our business plans are unsuccessful, we may fail to attract or retain
students or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be
materially adversely affected.
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. We may not be successful in anticipating or responding to these developments on a
timely and cost-effective basis. We may invest in new products, services, and other initiatives, but there is no guarantee these
approaches will be successful. 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. 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 we cannot
offer new technologies as quickly as our competitors, or if our competitors develop more cost-effective technologies or product
offerings, we could experience a material adverse effect on our operating results, growth and financial condition.
We face competition in all aspects of our business, including with respect to AI, and we expect such competition to increase.
Our products and services compete for students, and we expect such competition to increase as our industry evolves
rapidly. 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. 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. For Chegg Writing, we primarily face
competition from other citation generating and grammar and plagiarism services, such as Grammarly. For Chegg Math, we face
competition from other equation solver services, such as Photomath, Gauthmath, and Symbolab. For Busuu, our competitors
primarily include language learning platforms, such as Duolingo and Babbel. 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. Our
competitors that are not specifically focused on education and learning services but whose AI offerings may impact education
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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. AI technologies may
also significantly facilitate the entry of new competitors into our industry. Our competition may develop products and
technologies that are similar or superior to our technologies or are more cost-effective to develop and deploy. Given the long
history of development in the AI sector, other parties may have (or in the future may obtain) patents or other proprietary rights
that would prevent, limit, or interfere with our ability to make, use, or sell our own AI products. Further, our ability to continue
to develop and effectively deploy AI technologies is dependent on access to specific third-party large language models,
equipment and other physical infrastructure, such as processing hardware and network capacity, as to which we cannot control
the availability or pricing, especially in a highly competitive environment.
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. New
competition may come from companies with greater brand recognition, and have significantly greater financial, marketing, and
other resources than we do. We may, in the future, establish alliances or relationships with other competitors or potential
competitors. To the extent such alliances are terminated or new alliances and relationships are established, our business could
be harmed.
U.S. colleges have faced, and may continue to face, reduced enrollment, which could negatively impact our business and
results of operations.
According to the National Student Clearinghouse, since 2010, total undergraduate college enrollment in the United States
has decreased by approximately 2.8 million. Chegg derives a significant portion of its revenue from students attending U.S.
colleges; and as such, a continued decrease in the number of students enrolled in U.S. colleges could materially negatively
impact our business, growth, results of operations, and financial condition.
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.
Operating in international markets requires significant resources and management attention and subjects us to regulatory,
economic, and political risks that are different from those in the United States. 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. Our international
operations subject us to the compensation and benefits regulations of those jurisdictions, as well as other employer duties and
obligations, that differ from the compensation and benefits regulations and duties and obligations in the United States. Further,
enrollments of learners from other countries requires us to comply with international data privacy and education regulations of
those countries. Failure to comply with international regulations or to adequately adapt to international markets could harm our
ability to successfully operate our business and pursue our business goals.
We have a limited operating history in international jurisdictions and our expansion efforts into international markets may
not be successful.
We intend to expand our international operations and presence, and to make our products and services available in more
international markets. However, we have a limited operating history in international jurisdictions and expanding our
international operations will require considerable management attention and resources to attract talented employees and
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students. Our expansion efforts into international markets may not be successful. In addition, we face risks in doing business
internationally that could constrain our operations, increase our cost structure, and compromise our growth prospects, including:
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the need to localize and adapt content for specific countries, including translation into foreign languages;
local laws restricting students from accessing online education platforms such as ours;
data privacy laws that may require data to be handled in a specific manner, including storing, processing, and
encrypting data solely on local servers;
varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service
provider costs;
difficulties in staffing and managing foreign operations, including in countries in which foreign employees may
become part of labor unions, employee representative bodies, workers’ councils or collective bargaining agreements,
and challenges relating to work stoppages or slowdowns;
different pricing environments, difficulties in adopting and supporting new and different payment preferences, and
collections issues;
new and different sources of competition and practices which may favor local competitors;
the ability to protect and enforce intellectual property rights abroad;
the educational regulatory regime in certain countries and their ability to levy civil and criminal penalties on, or
completely block students from accessing, services like Chegg;
compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and
regulations, legal systems, and alternative dispute systems, including, but not limited to, employment, tax, privacy and
data protection, economic sanctions and export controls, U.S. and other anti-boycott authorities, anti-money laundering
laws, and anti-bribery laws and regulations such as the U.S. Foreign Corrupt Practices Act, the Office of Foreign
Assets Controls, and the U.K. 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.
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.
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.
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. 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. Additionally, we
expect our results of operations to fluctuate in the future based on a variety of factors, many of which are outside our control
and difficult to predict. As a result, period-to-period comparisons of our results of operations may not be a good indicator of our
future or long-term performance. The following factors, including the risks more fully described throughout this "Risk Factors"
section, may affect us from period-to-period and may affect our long-term performance:
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our ability to attract, retain and engage students with our offerings;
rapidly changing technological developments, such as AI and machine learning, that may disrupt the education
landscape and our response to those developments, including our ability to successfully integrate AI technology into
our offerings;
increased competition as a result of advances in AI technology from companies that have not historically competed
with us in education services, such as Alphabet, OpenAI, Microsoft, Meta, and Anthropic;
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changes to the way students discover our content or a decline in our search engine result page rankings;
the rate of adoption of our offerings;
the trend of declining college enrollment;
changes by our competitors to their product and service offerings, including price and content;
our ability to accurately forecast financial results for future periods, especially at the time we present our second
quarter financial results, which will generally occur midsummer and precede our “fall rush”;
our ability to integrate acquired businesses, including personnel;
government regulations, in particular regarding privacy, academic integrity, advertising and taxation policies;
operating costs and capital expenditures relating to content and the expansion of our business; and
general macroeconomic conditions, including inflation, recession, and global conflicts.
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.
We have depended in the past on various search engines and free marketing tools to direct a significant amount of traffic
to our website, but we are increasingly investing in other channels, including social media campaigns, to drive traffic and make
us more discoverable to students. 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. Our competitors’ efforts to drive student
discovery of, and engagement with, their offerings may be more successful than ours. Their websites may receive a higher
search result page ranking than ours, or search engines could revise their methodologies or algorithms in ways that could
adversely affect the placement of our search result page ranking or otherwise make it harder for students to find our learning
platform. Our website has experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in
the future. Similarly, our competitors may achieve higher social media engagement than ours, social media companies may alter
their algorithms in ways that disadvantage our content, or the social media platforms we use may become less popular with
students, each of which may adversely impact the effectiveness of our campaigns. If our competitors’ efforts to increase user
traffic are more successful than ours, overall growth could slow, including the number of Subscription Services subscribers,
student engagement could decrease, and fewer students may use our platform. Any reduction in the number of students directed
to our learning platform could 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.
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.
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;
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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
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Our ability to successfully achieve these goals is not entirely within our control and we may not be able to maintain the
strength of our brands or do so cost-effectively. Factors that could negatively affect our brands include, among others:
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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 business depends on general economic conditions and their effect on spending behavior by students and advertising
budgets.
Our business is dependent on, among other factors, general economic conditions, which affect student spending, and
brand advertising. Adverse economic conditions, including inflation, rising interest rates, market uncertainty, and war
(including the war in Ukraine and the Israel-Hamas war), may adversely impact our ability to attract new students to, and retain
existing students on, our platform. To the extent that these conditions continue, students may elect to not attend colleges and
universities and may reduce the amount they spend on educational content. In addition to decreased spending by students as a
result of these economic conditions, business partners may reduce their spend on our offerings and brands may reduce their
spend on our advertising services. 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. As of December 31, 2023, we had an accumulated deficit of $52.4 million. 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 incur significant losses in the future for a number of reasons,
including slowing or lower demand for our products and services, increasing competition, decreased spending on education,
and other risks described in this Annual Report on Form 10-K. We may encounter unforeseen expenses, challenges,
complications, delays, and other unknown factors, as we pursue our business plan. During the year ended December 31, 2023,
we have experienced a 6% decrease in Subscription Services subscribers and a 5% decrease in Subscription Services revenue
year-over-year. Although we expect to continue to make significant investments in efforts to attract new, and retain existing,
subscribers and increase Subscription Services revenue, we may not succeed in doing so. 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. 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 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. All of our executive officers
and key employees are at-will employees, meaning they may terminate their employment relationship at any time. If we lose the
services of one or more members of our senior management team or other key personnel, or if one or more of them decides to
join a competitor or otherwise compete directly or indirectly with us, we may not be able to successfully manage our business
or achieve our business objectives. Our future success also depends on our ability to identify, attract, and retain highly skilled
personnel. Competition for these employees is intense. Qualified individuals are in high demand, particularly in the San
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Francisco Bay Area where our executive offices are located, and if we cannot attract or retain the personnel we need to succeed,
our business may suffer.
As of December 31, 2023, there were 11,877,920 shares available for grant under the 2023 Equity Incentive Plan. Given
the number of shares available for grant and given the decrease in our stock price, we may need to request that our shareholders
vote on a new equity incentive plan sooner than previously anticipated. 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. In addition, we may not be able to attract their replacements. If we cannot retain our key employees or
attract adequate replacements, we may not be able to achieve our business objectives and our financial condition could be
materially negatively impacted.
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 are dependent on the interoperability of our mobile apps with popular
third-party mobile operating systems such as Google's Android and Apple's iOS, and their placement in popular app stores like
the Google Play Store and the Apple App Store, and any changes in such systems that degrade our products’ functionality or
give preferential treatment or app store placement to competitive products could adversely affect the access and usage of our
applications on mobile devices. Each operating system provider has broad discretion to make changes to its operating systems
or payment services or change the manner in which their mobile operating systems function and to change and interpret its
terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us. For
example, such changes could limit, eliminate or otherwise interfere with our products, our ability to distribute our applications
through their stores, our ability to update our applications, including to make bug fixes or other feature updates or upgrades, the
features we provide, the manner in which we market our products, our ability to access native functionality, or other aspects of
mobile devices, and our ability to access information about our users that they collect. If it is more difficult for students to
access and use our apps on their mobile devices, our student growth and engagement levels could be harmed.
Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks, including risks
associated with credit card fraud.
We accept payments from students using a variety of methods, including credit cards, debit cards, and PayPal. As we
offer new payment options to students, we may be subject to additional regulations, compliance requirements and incidents of
fraud. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase
over time and raise our operating costs and lower our profit margins. For example, we have in the past experienced higher
transaction fees from our third-party processors as a result of chargebacks on credit card transactions.
We rely on third parties to provide payment processing services, including the processing and information storage of
credit cards and debit cards. If these companies become unwilling or unable to provide these services to us, our business could
be disrupted. We are also subject to payment card association operating rules, certification requirements, and rules governing
electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail
to comply with these rules or requirements, we may be subject to additional fines and higher transaction fees; lose our ability to
accept credit and debit card payments from our students or process electronic funds transfers; or facilitate other types of online
payments, and our business and results of operations could be adversely affected.
We may experience some loss from fraudulent credit card transactions, including potential liability for not obtaining
signatures from students in connection with the use of credit cards or fraudulent payments to educators as part of Uversity.
While we do have safeguards in place, we cannot be certain that other fraudulent schemes will not be successful. A failure to
adequately control fraudulent transactions could harm our business and results of operations.
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.
We rely on AWS and other third-party software and service providers to provide systems, storage, and services,
including user login authentication, for our website. Our reliance makes us vulnerable to any errors, interruptions, or delays in
their operations. 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. Further, these third-party software and service providers may experience operational difficulties, including increased
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usage of their software and services from time to time. 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. Upon expiration or termination of our agreement with
AWS, we may not be able to replace the services provided to us in a timely manner or on terms and conditions, including
service levels and cost, that are favorable to us, and a transition from one vendor to another vendor could subject us to
operational delays and inefficiencies until the transition is complete.
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. To be successful, we must timely and efficiently integrate acquired companies, including their
technologies, products, services, operations, and personnel. Acquired companies can be complex and time consuming to
integrate and we may incur significant integration costs and we may not be able to offset our acquisition costs. Acquisitions
involve many risks that may negatively impact our financial condition and results of operations, including the risks that the
acquisitions may:
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require us to incur charges and substantial debt or liabilities;
cause adverse tax consequences, substantial depreciation, or deferred compensation charges;
result in acquired in-process research and development expenses or in the future may require the amortization, write-
down, or impairment of amounts related to deferred compensation, goodwill, and other intangible assets; and
give rise to various litigation and regulatory risks.
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.
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. 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. If we fail to successfully complete any acquisitions or integrate them into our company, or identify and address
liabilities associated with the acquisition, our business, results of operations, and financial condition could be 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.
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.
Our business strategy includes increasing our revenues from brand advertising. 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
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programs effectively, or if they do not believe that their investment will generate a competitive return relative to other
alternatives. 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. For example, the release of iOS 14 on Apple devices brought with it a number of new changes, including the need
for app users to opt in before their identifier for advertisers (IDFA) can be accessed by an app. Apple’s IDFA is a string of
numbers and letters assigned to Apple devices which advertisers use to identify app users to deliver personalized and targeted
advertising. As more users opt out of granting IDFA access, the ability of advertisers to accurately target and measure their
advertising campaigns at the user level may become significantly limited and we may experience increased cost per registration.
Our ability to grow the number of brands that use our brand advertising, and ultimately to generate advertising revenues,
depends on a number of factors, some of which are outside of our control, such as the impact of macroeconomic conditions and
legal developments relating to data privacy, advertising, legislation and regulation and litigation.
We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at
all.
Historically, investments in our business have substantially exceeded the cash we have generated from our operations.
We have funded our operating losses and capital expenditures through proceeds from equity and debt financings, and cash flow
from operations. Although we currently anticipate that our available funds and cash flow from operations will be sufficient to
meet our cash needs for the foreseeable future, we may require additional financing. Additional financing may not be available
to us on favorable terms when required or at all. If we raise additional funds through the issuance of equity, equity-linked, or
debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our
stockholders may experience substantial dilution.
Our core value of putting students first may conflict with the short-term interests of our business.
We believe that adhering to our core value of putting students first is essential to our success and in the best interests of
our company and the long-term interests of our stockholders. In the past, we have forgone, and in the future, we may forgo,
short-term revenue opportunities that we do not believe are in the best interests of students, even if our decision negatively
impacts our results of operations in the short term. For example, we offer free services to students that require investment by us,
such as our Chegg Internships service, to promote a more comprehensive solution. Our philosophy of putting students first may
cause us to make decisions that could negatively impact our relationships with publishers, colleges, and brands, whose interests
may not always be aligned with ours or those of our students. Our decisions may not result in the long-term benefits that we
expect, in which case our level of student satisfaction and engagement, business, and results of operations could be harmed.
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.
Currently, we are involved in various legal proceedings, including securities litigation, derivative suits, putative class
actions, and other matters described elsewhere herein. We have in the past and may in the future become involved in other
private actions, collective actions, investigations, and various other legal proceedings by subscribers, employees, suppliers,
competitors, government agencies, stockholders, or others. The results of any such litigation, investigations, and other legal
proceedings are inherently unpredictable and expensive. Any claims against us, whether meritorious or not, could be time
consuming, result in costly litigation, damage our reputation, require significant amounts of management time, and divert
significant resources. If any of these legal proceedings were to be determined adversely to us, or we were to enter into a
settlement arrangement, we could be exposed to monetary damages or limits on our ability to operate our business in the way
that it is currently operated, which could have an adverse effect on our business, financial condition, and operating results.
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.
As we grow, the operations and technology infrastructure we use to manage and account for our operations will become
more complex, and managing these aspects of our business will become more challenging. Acquisitions of new companies,
products, and services create integration risk, while developing and enhancing products and services involves significant time,
labor, and expense as well as other challenges, including managing the length of the development cycle, entering new markets,
regulatory compliance, evolution of sales and marketing, and protecting proprietary rights. Any future expansion will likely
place significant demand on our resources, capabilities and systems, and we may need to develop new processes and procedures
and expand our infrastructure to respond to these demands. If we are not able to manage the growth of our business, we may not
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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.
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
typically experience our greatest number of subscriber acquisitions during the last two weeks of August and first two weeks of
September and to a lesser degree in January and February. The increased volume of subscribers during these limited periods of
time means that any shortfalls or disruptions in our operations during these peak periods will have a disproportionately large
impact on our revenues. Additionally, our students could become dissatisfied with such delays and discontinue their use of our
service, which could adversely affect our results of operations.
As a result of this seasonality, which corresponds to the academic calendar, our revenues may fluctuate significantly
quarter to quarter depending upon the timing of where we are in our “rush” cycle and sequential quarter-over-quarter
comparisons of our net revenues and operating results are not likely to be meaningful. In addition, shifting enrollments could
impact the seasonality of our business and further make our results of operations difficult to predict.
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.
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. Chegg
Skills' efforts to obtain necessary approvals and licenses began prior to our acquisition of the business and continues following
the acquisition. 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.
Our business may also be subject to laws specific to students, such as the Family Educational Rights and Privacy Act, the
Delaware Higher Education Privacy Act, and a California statute which restricts the access by postsecondary educational
institutions of prospective students’ social media account information. Compliance requires, without limitation, making
disclosures, obtaining consents, and restrictions on transferring data for which we may in the future need to build further
infrastructure to support. We cannot guarantee that we or our acquired companies have been or will be fully compliant in every
jurisdiction, due to lack of clarity concerning how existing laws and regulations governing educational institutions affect our
business and lengthy governmental compliance process timelines.
Moreover, as the education industry continues to evolve, increasing regulation by federal, state, and foreign agencies
becomes more likely. For example, California adopted the Student Online Personal Information Protection Act which prohibits
operators of online services used for K-12 school purposes from using or sharing student personal information, Illinois adopted
the Student Online Personal Protection Act which went into effect on July 1, 2021 and regulates how we collect and process
data, and Colorado adopted House Bill 16-1423 designed to protect the use of student personal data in elementary and
secondary school. These acts do not apply to general audience Internet websites but it is unclear how these acts will be
interpreted and the breadth of services that will be restricted by them. Other states may adopt similar statutes. Additionally, for-
profit postsecondary institutions, many of which provide course offerings predominantly online, remain under intense
regulatory and other scrutiny. Allegations of abuse of federal financial aid funds and other statutory violations against for-profit
higher education companies, even if unfounded, could negatively impact our opportunity to succeed due to increased regulation
or decreased demand for our offerings.
Certain jurisdictions have also adopted statutes, such as California Education Code § 66400, which prohibit the
preparation or sale of material that should reasonably be known will be submitted for academic credit. These laws and
regulations are directed at enterprises selling term papers, theses, dissertations, and the like, which we do not offer, and were
not designed for services like ours which are designed to help students understand the relevant subject matter. 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
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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.
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. Future regulations, or changes in laws and regulations or their existing interpretations or applications, could also
hinder our operational flexibility, raise compliance costs, and result in additional historical or future liabilities for us, resulting
in adverse impacts on our business and our results of operations.
Similarly, the adoption of any laws or regulations affecting the ability of service providers to periodically charge
consumers for, among other things, recurring subscription payments may materially adversely affect our business, financial
condition and results of operations. Legislation or regulation regarding the foregoing, or changes to existing legislation or
regulation governing subscription payments, are being considered in many U.S. States. We have been in the past, and may be in
the future, subject to claims under such laws or regulations.
As the regulatory framework for machine learning, artificial intelligence, and automated decision making evolves, our
business, financial condition, and results of operations may be adversely affected by related laws or regulations. It is possible
that new laws and regulations will be adopted in the U.S. (at the federal or state level) or in non-U.S. jurisdictions, or that
existing laws and regulations may be interpreted in ways that would affect the operation of our business, including our learning
platform and the ways in which we use artificial intelligence and machine learning technology. We may not always be able to
anticipate how regulators will apply existing laws to AI, predict how new legal frameworks will develop to address AI, or
otherwise respond to these frameworks as they are still rapidly evolving.
While we expect and plan for new laws, regulations, and standards to be adopted over time that will be directly
applicable to the Internet and to our student-focused activities, any existing or new legislation applicable to our business could
expose us to substantial liability, including significant expenses necessary to comply with such laws and regulations and
potential penalties or fees for non-compliance, and could negatively impact the growth in the use of the Internet for educational
purposes and for our services in particular. We may also run the risk of retroactive application of new laws to our business
practices that could result in liability or losses. Due to the global nature of the Internet, it is possible that the governments of
other states and foreign countries might attempt to change previous regulatory schemes or choose to regulate transmissions or
prosecute us for violations of their laws. We might unintentionally violate such laws, such laws may be modified, and new laws
may be enacted in the future. Any such developments could harm 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.
The growth of our business and our brand depends on the ability of students to access the Internet and the products and
services available on our website, in particular in non-U.S. countries. Colleges that provide students with access to the Internet
either through on-campus computer terminals or Internet access points on campus could block or restrict access to our website,
content, or services or the Internet generally for a number of reasons, including security, confidentiality, regulatory concerns, or
if they believe our products or services contradict or violate their policies. If governments or colleges modify their laws or
policies, or choose to apply laws or policies, in ways that are detrimental to the growth of our student user base or in ways that
make it harder for students to use our website, the overall growth in our student user base would slow, student engagement
would decrease and we would lose revenues. Any reduction in the number of students directed to our website would harm our
business and results of operations.
If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be
adversely affected.
Laws or regulations may be enacted which restrict or prohibit use of emails or similar marketing activities that we
currently rely on. For example: CAN-SPAM regulates unsolicited commercial emails and imposes civil and criminal penalties
for abusive practices; the FTC imposes penalties on companies for misleading and deceptive marketing practices; TCPA
restricts telemarketing and the use of automated telephone equipment; and CCPA requires us to make certain disclosures
regarding our marketing practices, allows consumers to opt-out of certain data sharing practices. Newly enacted laws such
CDPA and CPA will place additional restrictions on our marketing practices.
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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 our
marketing activities are curtailed, 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.
As a U.S. company with U.S. origin software applications, we are required to comply with U.S. trade controls. Our
activities are subject to U.S. economic sanctions laws and regulations administered by the Department of the Treasury, Office
of Foreign Assets Control (OFAC), which prohibit most transactions with embargoed jurisdictions or prohibited parties without
a specific or general license from OFAC. Additionally, the U.S. Department of Commerce, Bureau of Industry and Security
(BIS) administers the Export Administration Regulations (EAR), which restrict exports of software subject to the EAR to
embargoed countries and prohibited parties. Although we have taken precautions to prevent our platform, services and software
applications from being provided in embargoed jurisdictions and to prohibited parties, and we continue to enhance our policies
and procedures relating to sanctions and export compliance, we may not be able to prevent all transactions that are
noncompliant with U.S. trade controls. Sanctions and export violations can result in significant fines or penalties, as well as
reputational harm and loss of business.
Our customers outside of the United States generated approximately 14% of our net revenues during the year ended
December 31, 2023, and our growth strategy includes further expanding our operations and customer base across all major
global markets. An escalation in sanctions or export controls against regions where we operate, or the issuance of new sanctions
designations or export restrictions against individuals and entities located in various regions, could result in decreased ability to
provide our platform, services and software applications to existing or potential customers. Any limitation on our ability to
operate in various global markets could adversely affect our business performance and growth prospects.
Risks Related to Taxes and Accounting Matters
We may be subject to greater than anticipated liabilities for income, property, sales, and other taxes, and any successful
action by federal, state, foreign, or other authorities to collect additional taxes could adversely harm our business.
We are subject to regular review and audit by both U.S. federal and state and foreign tax authorities and such
jurisdictions may assess additional taxes against us. Although we believe our tax estimates are reasonable, the final
determination of tax audits and any related litigation could be materially different from our historical tax provisions and
accruals and could have a negative effect on our financial position and results of operations. The taxing authorities of the
jurisdictions in which we operate may challenge our methodologies for valuing and allocating income from our intercompany
transactions, which could increase our worldwide effective income tax rate. We collect sales taxes in all U.S. states with a sales
tax and most local jurisdictions on our sales, rentals, and digital services sold through our commerce system including sales and
rentals on behalf of our third-party publishers. In June 2018, the U.S. Supreme Court in South Dakota v. Wayfair, Inc. et al
ruled that a state can require an online retailer with no in-state property or personnel to collect and remit sales and use tax on
sales made to the state’s residents. It is possible that such taxes could be assessed by certain states retroactively for periods
before the Wayfair decision on acquired products that are not sold through our commerce system. Any successful action by
federal, state, foreign or other authorities to impose or collect additional income tax or compel us to collect and remit additional
sales, use, value-added or similar taxes, either retroactively, prospectively or both, could harm our business, financial condition,
and results of operations.
Our effective tax rate may fluctuate as a result of new U.S. and worldwide tax laws and our interpretations of those new tax
laws, which are subject to significant judgments and estimates. The ongoing effects of the new tax laws and the refinement
of provisional estimates could make our results difficult to predict.
Our effective tax rate may fluctuate in the future as a result of new tax laws. Due to the complexities involved in
applying the provisions of new tax legislation, we may make reasonable estimates of the effects in our financial statements. As
we collect and prepare necessary data and interpret the new tax legislation, we may make adjustments that could affect our
financial position and results of operations as well as our effective tax rate in the period in which the adjustments are made.
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.
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
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reported values of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. 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. 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. If we
used different estimates and assumptions or used different methods to determine these estimates, our financial results could
differ, which could have a material negative impact on our financial condition and reported results of operations. For more
information about our critical accounting policies and use of estimates, see Part II, Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations-Critical Accounting Policies, Significant Judgments and Estimates.”
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.
Our success and ability to compete depends in part on our intellectual property and our other proprietary business
information. We rely and expect to continue to rely on a combination of trademark, copyright, patent, and trade secret
protection laws, as well as confidentiality and license agreements with our employees, consultants, and third parties with whom
we have relationships to protect our intellectual property and proprietary rights. However, we may be unable to secure
intellectual property protection for all of our technology and methodologies or the steps we take to enforce our intellectual
property rights may be inadequate. 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.
Third parties may challenge any patents, copyrights, trademarks, and other intellectual property and proprietary rights
owned or held by us. Third parties may knowingly or unknowingly infringe, misappropriate, or otherwise violate our patents,
copyrights, trademarks, and other proprietary rights and we may not be able to prevent infringement, misappropriation, or other
violations. Any attempt by us to prevent or address such violations may involve substantial expense to us. Additionally, if we
fail to protect our domain names, it could adversely affect our reputation and brand and make it more difficult for students to
find our website, our content, and our services. If we pursue litigation to assert our intellectual property or proprietary rights, an
adverse decision could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual
property or proprietary rights, or otherwise negatively impact our business, financial condition, and results of operations.
We are a party to a number of third-party intellectual property license agreements. For example, we have entered into
agreements with textbook publishers that provide access to textbook questions and other content for our Chegg Study
subscription service. We cannot guarantee that the third-party intellectual property we license will not be licensed to our
competitors or others in our industry. In the future, we may want or need to obtain additional licenses or renew existing license
agreements. We cannot predict whether other license agreements can be obtained or renewed on acceptable terms, or at all. For
example, our license agreements with multiple textbook publishers, including Pearson Education, Inc. expired or terminated
without renewal. Any failure to obtain or renew such third-party intellectual property license agreements on commercially
competitive terms could adversely affect our business and results of operations.
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.
A substantial portion of our revenue comes from our Subscription Services and the distribution of our educational
content to our paid subscribers through our learning platform. Our content has been subject to unauthorized copying and
widespread digital dissemination without an economic return to us. Some students may misuse 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. We have experienced improper sharing and misappropriation of user credentials, allowing for parties to
access content and services that they have not paid for. Through such misuse of our platform and content, students may be able
to access our offerings for free or at a reduced cost relative to our paid subscription, which has and may continue to negatively
impact our ability to attract students to, and retain students on, our platform. The impact of misuse of our platform and content
on our revenues and subscriptions is hard to quantify, but we believe that illegal copying and dissemination of our content,
improper sharing and misappropriation of user credentials, and other forms of unauthorized activity have had a substantial
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negative impact on our revenues and subscriptions. Also, despite the potential benefits of AI technology, the advancement of AI
may increase certain risks and adverse impacts associated with misuse of our content, including the development of AI
applications that may facilitate piracy and new forms of intellectual property infringement through the unauthorized
reproduction of copyrighted content to “train” AI applications and to create unauthorized derivative works.
If we fail to obtain appropriate relief through the judicial process or the complete enforcement of judicial decisions
issued in our favor (or if judicial decisions are not in our favor) or fail to develop effective means of protecting our content and
enforcing our intellectual property rights, our business, financial condition, and results of operations may be negatively
impacted.
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.
As a publisher and distributor of online content, including content uploaded by both by Chegg itself and by our users, we
face potential liability for claims related to intellectual property rights including copyright and trademark infringement, rights of
publicity or privacy, defamation, personal injury torts, laws regulating hate speech or other types of content, online safety,
consumer protection, or other claims based on the nature and content of materials that we publish or distribute. In addition, the
applicability and scope of these and other laws and regulations, as interpreted by the courts, remain uncertain and could be
interpreted in ways that harm our business. For example, we rely on statutory safe harbors, like those set forth in the Digital
Millennium Copyright Act and Section 230 of the Communications Decency Act in the U.S. and the E-Commerce Directive in
Europe, to protect against liability. Legislation or court rulings affecting these safe harbors may adversely affect us and may
impose significant operational challenges. There are legislative proposals and pending litigation in the U.S. (such as Gonzalez v.
Google), EU, and around the world that could diminish or eliminate safe harbor protection for websites and online platforms.
We have in the past and may in the future receive communications containing allegations of infringement, which we
assess on a case-by-case basis. We may elect not to respond to the communication if we believe it is without merit or we may
try to resolve disputes out-of-court by removing content or services we offer or paying licensing or other fees. If we fail to
resolve such disputes, litigation may result. For example, on September 13, 2021, Pearson Education, Inc. (Pearson) filed a
complaint captioned Pearson Education, Inc. v. Chegg, Inc. (Pearson Complaint) in the United States District Court for the
District of New Jersey against the Company (Case 2:21-cv-16866), alleging infringement of Pearson’s registered copyrights
and exclusive rights under copyright in violation of the United States Copyright Act. Litigation to defend these claims could be
costly, divert our technical and management personnel, render us unable to use our current website or to market our service or
sell our products and therefore harm our results of operations. We may not be adequately insured to cover claims of these types
or indemnified for all liability that may be imposed on us. Any adverse publicity resulting from actual or potential litigation
may also materially and adversely affect our reputation, which in turn could adversely affect our results of operations.
We maintain content usage review systems that, through a combination of manual and automated blocks, monitor for and
make us aware of potentially infringing content on our platform. Nevertheless, claims may continue to be brought and
threatened against us for negligence, intellectual property infringement, or other theories and there is no guarantee that we will
be able to resolve any such claims quickly and without damage to our business, our reputation or our operations. From time to
time, we have been subject to copyright infringement claims, some of which we have settled. While these settlements have not
had a material impact on our financial condition, we may be subject to similar lawsuits in the future and the outcome of any
such lawsuits may not be favorable to us and could have a material adverse effect on our financial condition.
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.
The DMCA has provisions that limit, but do not necessarily eliminate, our liability for caching or hosting or for listing or
linking to, content or third-party websites that include materials or other content that infringe copyrights, provided we comply
with the strict statutory requirements of the DMCA. The applications and interpretations of the statutory requirements of the
DMCA are evolving and may be modified by court rulings and industry practice. Accordingly, if we fail to comply with such
statutory requirements or if the interpretations of the DMCA change, we may be subject to potential liability for caching or
hosting, or for listing or linking to, content or third-party websites that include materials or other content that infringe
copyrights. The safe harbors available under the DMCA can limit liability for copyright infringement in the U.S., but they do
not limit our liability for infringement of other intellectual property or proprietary rights, they do not apply outside the U.S., and
they do not prevent or address requests for injunctive relief. Any determination in litigation that a DMCA safe harbor does not
shield us from liability could negatively impact our business, financial condition, and results of operations.
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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.
From time to time, third parties have alleged and are likely to allege in the future that we or our business infringes,
misappropriates, or otherwise violates their intellectual property or proprietary rights beyond those circumstances discussed in
other risk factors contained in this Section, “Risks Relating to Our Intellectual Property.” Many companies, including various
“non-practicing entities” or “patent trolls,” devote significant resources to developing or acquiring patents that could affect
aspects of our business. Our patent portfolio may provide little or no deterrence in any litigation involving non-practicing
entities or other adverse patent owners that have no relevant solution revenue, as we would not be able to assert our patents
against such entities or individuals. For instance, on November 5, 2018, a non-practicing entity (NPE) filed an action against us
in the U.S. District Court for the Southern District of New York captioned NetSoc, LLC v. Chegg, Inc., Civil Action No. 1:18-
CV-10262-RAC (the NetSoc Action).
While we intend to vigorously defend any intellectual property claims, our technologies may not be able to withstand all
third-party claims or rights against their use. The costs of supporting such litigation and disputes are considerable, and there can
be no assurances that a favorable outcome will be obtained. We also may be required to settle such litigation and disputes on
terms that are unfavorable to us. The terms of any settlement or judgment may require us to cease some or all of our operations
and/or pay substantial amounts to the other party.
Additionally, because patent applications can take years to issue and are often afforded confidentiality for some period of
time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover our
technology and there is also a risk that we could adopt a technology without knowledge of a pending patent application, which
technology would infringe a third-party patent once that patent is issued.
Moreover, in a patent infringement claim against us, we may assert, as a defense, that we do not infringe the relevant
patent claims, that the patent is invalid or both. The strength of our defenses will depend on the patents asserted, the
interpretation of these patents, and our ability to invalidate the asserted patents. However, we could be unsuccessful in
advancing non-infringement and/or invalidity arguments in our defense. In the United States, issued patents enjoy a
presumption of validity, and the party challenging the validity of a patent claim must present clear and convincing evidence of
invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance of
the evidence, which is a lower burden of proof.
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.
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. As a result, we could be subject to suits by parties claiming ownership of
what we believe to be open source software or noncompliance with open source licensing terms. Some open source software
licenses require users who distribute or use open source software as part of their software to publicly disclose all or part of the
source code to such software and/or make available any derivative works of the open source code on unfavorable terms or at no
cost. Any requirement to disclose our proprietary source code or pay damages for breach of contract could have a material
adverse effect on our business, financial condition and results of operations.
Risks Related to Data Privacy
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.
We process personal data regarding various individuals, including students, tutors, educators, and our employees, as well
as other sensitive data, including intellectual property and confidential and proprietary business information. We, and our
service providers and other third parties upon which we rely, are subject to a variety of evolving security threats. Such threats
are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional
computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse),
sophisticated nation states, and nation-state-supported actors. For example, severe ransomware attacks are becoming
increasingly prevalent. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling
or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Additionally,
nation-state actors are expected to continue to engage in cyber-attacks for geopolitical reasons and in conjunction with military
conflicts and defense activities. During times of war and other major conflicts, we, our service providers and other third parties
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upon which we rely, may be vulnerable to a heightened risk of these attacks. Furthermore, remote work has become more
common and has increased risks to our information technology systems and data, as more of our employees, as well as
employees of our service providers and other third parties on which we rely, utilize network connections, computers and
devices outside our premises or network, including while working at home, while in transit and in public locations.
Future or past business transactions (such as acquisitions or integrations) could also expose us to additional cybersecurity
risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’
systems and technologies. Moreover, we rely heavily on SaaS enterprise resource planning systems to conduct our e-commerce
and financial transactions and reporting. In addition, we utilize third-party cloud computing services in connection with our
business operations. Our reliance on these and other third-party service providers and technologies to operate critical business
systems to process sensitive information in a variety of contexts and to otherwise assist in the operation of our business
increases our risk exposure as our ability to monitor these third parties’ information security practices is limited, and these third
parties may not have adequate information security measures in place. In addition, supply-chain attacks have increased in
frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’
supply chains have not been compromised.
If our data or security measures, or the security measures of our service providers, other third parties upon which we may
rely or companies we may acquire, are compromised, disrupted or breached or are perceived to have been compromised,
disrupted or breached, including as a result of any of the aforementioned threats or other cyberattacks, online or offline fraud,
other intentional misconduct by computer hackers, employee error or malfeasance, social-engineering attacks, credential
harvesting, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of
data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods or other similar
threats or activities (including those Chegg has experienced in the past, as discussed below), we could face a variety of adverse
consequences. For example, we could be required to expend significant capital and other resources to address the problem and
could face or be subject to litigation (including class action litigation such as those matters identified below) and enforcement
actions, investigations, audits, additional reporting requirements and/or oversight, data processing restrictions, indemnity
obligations, damages, penalties and costs for remediation, damage our reputation or brand, interruptions in our operations
(including availability of data), and similar harms. Security incidents, including those Chegg has experienced in the past, as
identified below, and attendant consequences may cause customers to stop using our services, deter new customers from using
our services, and negatively impact our ability to grow and operate our business. Additionally, applicable data privacy and
security obligations may require us to notify relevant stakeholders, including regulators and impacted individuals, of security
incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to
additional adverse consequences. Our contracts may not contain limitations of liability, and even where they do, there can be no
assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to
our data privacy and security obligations. 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.
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. We have not always been able in the past and may be unable in the future to
detect vulnerabilities in our information technology systems because such threats and techniques change frequently, are often
sophisticated in nature, and may not be detected until after a security incident has occurred. We have experienced security
incidents in the past. For example, in April 2018, an unauthorized individual gained access to and exfiltrated user data for
approximately 40 million users of chegg.com and certain other services in our family of brands, including EasyBib, (the “2018
Data Incident”). The types of information that may have been obtained by the threat actor included a Chegg user’s name, email
address, shipping address, Chegg username, and Chegg password. For a small percentage of the impacted users who had
entered details into our scholarship search service, the incident also exposed information about additional personal
characteristics, including dates of birth, parents’ income range, sexual orientation, religious denomination, heritage and
information concerning disabilities.
Following the 2018 Data Incident, a purported securities class action captioned Shah v. Chegg, Inc. et. al. (Case No.
3:18-cv-05956-CRB) was filed in the U.S. District Court for the Northern District of California against us and our CEO. The
complaint was filed by a purported Chegg stockholder and alleged claims under Sections 10(b) and 20(a) of the Exchange Act,
as amended, based on allegedly misleading statements regarding our security measures to protect users’ data and related
internal controls and procedures, as well as our second quarter 2018 financial results. 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.
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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. The FTC consent order requires us to establish, implement and maintain a comprehensive information security
program, provide multi-factor authentication methods as an option or requirement for consumers, document and adhere to a
detailed information retention schedule and provide consumers with online tools they can use to request access to or the
deletion of their personal information. The consent order also requires us to obtain initial and biennial assessments of our
Information Security and Governance Program ("ISP") from an independent third-party assessor and comply with detailed
reporting requirements for the 20 year-duration of the order. We have completed our first such independent assessment of our
ISP with no material findings. 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. The complaint was filed by a purported Chegg user and alleges various claims based on
Chegg’s failure to take reasonable security measures. The plaintiff asserts claims under negligence; negligence per se; the
California Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750, et seq.; the California Consumer Privacy Act, Cal. Civ.
Code § 1798.150; and the Declaratory Judgment Act, 28 U.S.C. §§ 2201, et seq. The Plaintiff seeks relief that certifies a class,
damages, a declaratory judgment, injunctive relief, and attorneys’ fees and costs. On August 15, 2023, the Company received
an order granting its motion to compel arbitration, and the case will be stayed and administratively closed pending the
conclusion of arbitration.
Actions and investigations such as the foregoing, and any similar or other actions, claims, litigation, investigations or
events, whether arising from prior or future incidents, may harm our business and cause us to suffer adverse consequences.
Furthermore, prior to our acquisition of Thinkful and Mathway, each discovered that an unauthorized party may have
gained access to certain confidential information or personal information of users.
While we have made enhancements to our cybersecurity controls, as discussed in detail in Part I, Item 1C,
“Cybersecurity” of this Annual Report on Form 10-K and considered in our independent assessment. our efforts to prevent
hackers and others from entering our computer systems or accessing our data may not be fully effective and we cannot
guarantee that future events will not occur that have a material impact on our business.
Additionally, we rely on computer systems globally to manage our operations. 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. Such interruptions could have a disproportionate effect on our operations if
they were to occur during one of our peak periods or if multiple of our service facilities experiences outages at the same time.
Our facilities are also vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications
failures, and similar events as well as the cyber-attacks and security risks and threats discussed above.
We collect, process, store and use personal information and other sensitive data, which subjects us to stringent and evolving
U.S. and foreign laws, governmental regulation, contractual obligations, policies and other legal obligations.
In the ordinary course of business, we collect, receive, process, store, disclose, make accessible and otherwise use
personal information and other sensitive data, including proprietary and confidential business data and intellectual property,
from various parties, including students, tutors, educators and employees. We may enable students and others to share their
personal information with each other and with third parties and to communicate and share information into and across our
platform. Our data processing activities may subject us to numerous data privacy and security obligations, including foreign,
federal, state, and local laws, regulations, guidance, industry standards, external and internal privacy and security policies,
contractual requirements, and other obligations regarding privacy and the collection, storing, sharing, using, processing,
disclosing and protecting of personal information and other user data, including from minors under the age of 18, the scope of
which are changing, subject to differing interpretations, and which may be costly to comply with and may be inconsistent
between countries and jurisdictions or conflict with other rules.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws,
including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal
Trade Commission Act), and other similar laws (e.g., wiretapping laws). For example, the California Consumer Privacy Act of
2018 (“CCPA”) requires businesses to provide specific disclosures in privacy notices and honor requests of California residents
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to exercise certain privacy rights. The California Privacy Rights Act of 2020 (“CPRA”), which became operative January 1,
2023, expands the CCPA’s requirements, including applying to personal information of business representatives and
employees. Thirteen other states have now passed comprehensive privacy laws, and similar state laws are being considered, as
well as laws at the federal and local levels. These developments further complicate compliance efforts and may increase legal
risk and compliance costs for us and the third parties upon whom we rely.
Students who use some of our services, including high school students who use our Chegg Writing and Chegg Prep
services, may be under the age of 18. 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. Although our policy is to avoid
knowingly collecting personal information from children under the age of 13 and we do not believe that our websites or online
services are directed to children under the age of 13, regulators or private plaintiffs could disagree with this assessment and
challenge our compliance with the federal Children’s Online Privacy Protection Act and its implementing rules (“COPPA”)
which impose enhanced notice, verifiable parental consent, data minimization, security and other data privacy requirements on
child-directed sites and online services that our services are not designed to support.
Additionally, we may be subject to certain marketing laws that govern our use of personal information. For example, the
Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM”) and the Telephone
Consumer Protection Act of 1991 (“TCPA”) impose specific requirements on communications with customers. For example,
the TCPA imposes various consumer consent requirements and other restrictions on certain telemarketing activity and other
communications with consumers by phone, fax or text message. Furthermore, under various other privacy laws and other
obligations, we may be required to obtain certain consents to process personal data.
Foreign privacy, data protection, and other laws and regulations, particularly in Europe, are often at least as restrictive as,
if not more restrictive than, those in the United States. For example, the European Union’s General Data Protection Regulation
(“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de
Dados Pessoais, or “LGPD”) (Law No. 13,709/2018), and China’s Personal Information Protection Law (“PIPL”) impose strict
requirements for processing personal data.
In addition, some countries (including Europe) and states are considering or have passed legislation implementing
requirements with respect to cross-border transfers of data or requiring local storage and processing of data or similar
requirements that could increase the cost and complexity of delivering our services. 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. In
particular, the European Economic Area (EEA) and the United Kingdom (UK) have significantly restricted the transfer of
personal data to the United States and other countries whose privacy laws it believes are inadequate. Other jurisdictions may
adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the
United States in compliance with law, such as the EEA and UK’s standard contractual clauses (“SCCs”), these mechanisms are
subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal
data to the United States. Additionally, the SCCs impose additional compliance burdens, such as conducting transfer impact
assessments to determine whether additional security measures are necessary to protect the at-issue personal data. In addition,
Switzerland similarly restricts personal data transfers outside of those jurisdictions to countries that do not provide an adequate
level of personal data protection.
Furthermore, European legislative proposals and present laws and regulations – other than the EU and UK GDPR –
apply to cookies and similar tracking technologies, electronic communications, and marketing and regulators are increasingly
focusing on compliance with requirements related to the behavioral, interest-based, or tailored advertising ecosystem. It is
anticipated that the ePrivacy Regulation and national implementing laws will replace the current national laws implementing
the ePrivacy Directive. Compliance with these laws may require us to make significant operational changes, limit the
effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, and
subject us to liabilities.
Outside of Europe, other laws further regulate behavioral, interest-based, or tailored advertising, making certain online
advertising activities more difficult and subject to additional scrutiny. For example, the CCPA grants California residents the
right to opt-out of a company’s sharing of personal data for advertising purposes in exchange for money or other valuable
consideration. 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
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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.
In addition to data privacy and security laws, we may be or may become subject to industry standards adopted by
industry groups. For example, we may rely on vendors to process payment card data, and we, or those vendors, may be subject
to the Payment Card Industry Data Security Standard (“PCI DSS”), which requires companies to adopt certain measures to
ensure the security of cardholder information, including using and maintaining firewalls, adopting proper password protections
for certain devices and software, and restricting data access. We also have internal and publicly posted policies regarding, and
are bound by contractual commitments with respect to, our collection, processing, use, disclosure, deletion and security of
information. The publication of our privacy policies, our contracts and other documentation that provide commitments about
data privacy and security can subject us to potential actions and other adverse consequences.
Public scrutiny of Internet privacy issues and actual or perceived failure to comply with our obligations with respect to
privacy and data security could harm our business, including by damaging our reputation and relationships with students
and educators.
We strive to comply with all applicable laws, policies, contractual obligations, and industry codes of conduct relating to
privacy and data protection. However, U.S. federal, state and local, and international laws and regulations regarding privacy and
data protection are rapidly evolving and may be inconsistent and we could be deemed out of compliance as such laws and their
interpretations change. Our business model materially depends on our ability to process personal data, so we are particularly
exposed to the risks associated with the rapidly changing legal landscape. Practices regarding the collection, use, storage,
display, processing, transmission and security of personal information by companies, particularly those offering online services,
have recently come under increased public scrutiny.
Any failure or perceived failure by us, our personnel, or third parties on which we rely or with which we work to comply
with the aforementioned privacy obligations or any compromise of security that results in the unauthorized release or transfer of
sensitive information, which may include personal information or other data, may result in significant consequences, including
governmental enforcement actions, litigation, additional reporting requirements and/or oversight, bans on processing personal
information, orders to destroy or not to use personal information, or public statements against us by consumer advocacy groups
or others and could cause students, tutors, educators, partners and others to lose trust in us, which could have an adverse effect
on our business. 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.
Noncompliance with certain privacy and data security laws we may be subject to could subject us to particularly
significant penalties. For example, TCPA violations can result in penalties or criminal fines imposed by the Federal
Communications Commission or statutory damages awards of up to $1,500 per violation imposed through private litigation or
fines by state authorities. Additionally, the CCPA provides for civil penalties of up to $7,500 per violation and allows private
litigants affected by certain data breaches to recover significant statutory damages. Furthermore, under the EU GDPR,
companies may face temporary or definitive bans on data processing, fines of up to 20 million Euros or 4% of annual global
revenue (whichever is greater), audits and inspections, private litigation related to processing of personal data brought by
classes of data subjects or consumer protection organizations authorized at law to represent their interests, among other
penalties.
Inability to comply with applicable data transfer restrictions may also present unique risks. If there is no lawful manner
for us to transfer personal data from the EEA, the UK or other jurisdictions to the United States, or if the requirements for a
legally-compliant transfer are too onerous, we could face the interruption or degradation of our operations, the need to relocate
part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to
regulatory actions, substantial fines and penalties, the inability to transfer data (including data regarding foreign students) and
work with partners, vendors and other third parties, injunctions against our processing or transferring of personal data necessary
to operate our business, among other consequences.
We have in the past and may in the future be subject to regulatory investigations and actions or litigation in connection
with any noncompliance with our privacy obligations or a security breach or related issue, and we could also be liable to third
parties for these types of incidents. 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
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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. We could face similar actions, or other actions related to our privacy and data security practices, in the
future.
We are subject to privacy and cybersecurity laws across multiple jurisdictions which are highly complex, overlapping, and
which create compliance challenges that may expose us to substantial costs, liabilities, or loss of customer trust. Our actual
or perceived failure to comply with these laws could harm our business.
We have internal and publicly posted policies regarding our collection, processing, use, disclosure, deletion and security
of information. Although we endeavor to comply with our policies and documentation, we may at times fail to do so or be
accused of having failed to do so. The publication of our privacy policies and other documentation that provide commitments
about data privacy and security can subject us to potential actions if they are found to be deceptive, unfair, or otherwise
misrepresent our actual practices, which could materially and adversely affect our business, financial condition and results of
operations. In addition, compliance with inconsistent or new privacy and cybersecurity laws could impact our business
strategies and the availability of previously useful data, increase our potential liability, increase our compliance costs, require
changes in business practices and policies and adversely impact our business.
Our business, including our ability to operate internationally, could be adversely affected if new legislation or regulations
are adopted or due to changes in interpretations or implementations of current legislation and regulations.
Any new or significant change to applicable laws, regulations or industry standards or practices regarding the use,
disclosure or other processing of personal data could adversely affect our business, including insofar as it may require us to
modify our products and services and limit our ability to develop new products and services.
For example, proposed or recently adopted EU laws could significantly affect our business in the future. For example,
the Digital Services Act or “DSA”, effective in February of 2024, imposes new restrictions and requirements for our products
and services, such as a prohibition on targeted advertising to minors in the EEA, and may significantly increase our compliance
costs. The European Commission's proposed Artificial Intelligence (AI) Act could also impose new obligations or limitations
affecting our business, if and when it enters into force. 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.
The trading price of our common stock has been, and is likely to continue to be, volatile. 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:
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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.
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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. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.
Technology companies have been particularly susceptible to stock price volatility. In the past, companies that have experienced
volatility in the market price of their stock have been subject to securities class action litigation. 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.
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. A short seller hopes to profit from a decline in the value of the
securities between the sale of the borrowed securities and the purchase of the replacement shares. Because it is in the short
seller’s best interests for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions
or characterizations regarding the relevant issuer, its business prospects, and similar matters calculated to or which may create
negative market momentum. Short sellers can publicly attack a company’s reputation and business on a broader scale via online
postings. In the past, the publication of such commentary about us by a disclosed short seller has precipitated a decline in the
market price of our common stock, and future similar efforts by other short sellers may have similar effects.
In addition, if we are subject to unfavorable allegations promoted by short sellers, even if untrue, we may have to expend
a significant amount of resources to investigate such allegations and defend ourselves from possible shareholder suits prompted
by such allegations, which could adversely impact our business, results of operations, and financial condition.
Delaware law and provisions in our restated certificate of incorporation and restated bylaws could make a merger, tender
offer or proxy contest difficult, thereby depressing the trading price of our common stock.
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. In addition, our restated certificate of incorporation and restated bylaws contain
provisions that may make the acquisition of our company more difficult, including the following:
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our board of directors is classified into three classes of directors with staggered three-year terms and directors can only
be removed from office for cause and by the approval of the holders of at least two-thirds of our outstanding common
stock;
subject to certain limitations, our board of directors has the sole right to set the number of directors and to fill a
vacancy resulting from any cause or created by the expansion of our board of directors, which prevents stockholders
from being able to fill vacancies on our board of directors;
only our board of directors is authorized to call a special meeting of stockholders;
our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established
and shares of which may be issued, without the approval of the holders of common stock;
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters
before an annual meeting of stockholders;
our stockholders cannot act by written consent;
our restated bylaws can only be amended by our board of directors or by the approval of the holders of at least two-
thirds of our outstanding common stock; and
certain provisions of our restated certificate of incorporation can only be amended by the approval of the holders of at
least two-thirds of our outstanding common stock.
In addition, our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware shall be
the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of
fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our restated
certificate of incorporation, or our bylaws, or any action asserting a claim against us that is governed by the internal affairs
doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds
favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits against us
and our directors, officers, and other employees. 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
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Chancery of the State of Delaware does not have subject matter jurisdiction. For instance, the provision would not preclude the
filing of claims brought to enforce any liability or duty created by the Exchange Act or Securities Act of 1933, as amended
(Securities Act) or the rules and regulations thereunder in federal court.
Our securities repurchase program could affect the price of our common stock and increase volatility and may be suspended
or terminated at any time, which may result in a decrease in the trading price of our common stock.
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. 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,
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. The existence of our securities repurchase program could also cause the price of our common stock to be higher than
it would be in the absence of such a program and could reduce the market liquidity for our common stock. Additionally,
repurchases under our securities repurchase program will diminish our cash reserves, which could impact our ability to further
develop our business and service our indebtedness. There can be no assurance that any repurchases will enhance stockholder
value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any
failure to repurchase securities after we have announced our intention to do so may negatively impact our reputation and
investor confidence in us and may negatively impact our stock price. Although our securities repurchase program is intended to
enhance long-term stockholder value, short-term price fluctuations could reduce the program’s effectiveness.
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.
In August 2020, we issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 (2026
notes). In March/April 2019, we issued $800 million in aggregate principal amount of 0.125% convertible senior notes due in
2025 (2025 notes, together with the 2026 notes, the notes). The aggregate principal amounts of both the 2026 notes and 2025
notes include $100 million from the initial purchasers fully exercising their option to purchase additional notes. As of
December 31, 2023, the outstanding principal amount of our 2026 notes and 2025 notes was $244 million and $359 million,
respectively.
The notes were issued in private placements to qualified institutional buyers pursuant to Rule 144A of the Securities Act.
Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the
notes, depends on our future performance, which is subject to many factors, including, economic, financial, competitive and
other, beyond our control. We may not be able to generate cash flow from operations, in the foreseeable future, sufficient to
service our debt and make necessary capital expenditures and may therefore be required to adopt one or more alternatives, such
as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. 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. Given the volume of our repurchases of the notes to date, our future repurchases may be
restrained by the quantity available for sale on the capital markets. We may not be able to engage in any of these activities or
engage in these activities on desirable terms, which could result in a default on our debt obligations, and limit our flexibility in
planning for and reacting to changes in our business.
Holders of the notes will have the right to require us to repurchase all or a portion of their notes upon the occurrence of a
fundamental change before the maturity date at a repurchase price equal to 100% of the principal amount of the notes to be
repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the notes, unless we elect to deliver solely
shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will
be required to make cash payments in respect of the 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. 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.
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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. Our failure to repurchase the notes at a time when the
repurchase is required by the indenture or to pay cash upon conversions of notes as required by the indenture would constitute a
default under the indenture. A default under the indenture or the fundamental change itself could also lead to a default under
agreements governing any future indebtedness. If the payment of the related indebtedness were to be accelerated after any
applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes or to
pay cash upon conversions of notes.
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.
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. Our executive offices are located in
the San Francisco Bay Area, an earthquake-sensitive area and susceptible to wildfires. If floods, fire, inclement weather
including extreme rain, wind, heat, or cold, or accidents due to human error were to occur and cause damage to our properties
or our distribution partners’ ability to fulfill orders for print textbook rentals and sales, our results of operations would suffer,
especially if such events were to occur during peak periods. 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. Moreover, damage to or total destruction of our executive offices resulting from earthquakes may not be covered in
whole or in part by any insurance we may have.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Chegg and its Board of Directors (the “Board”) recognize the critical importance of maintaining the trust and confidence
of our students, business partners, and employees. We have established an Information Security and Governance Program
(“ISP") utilizing the National Institute of Standards and Technology Cybersecurity Framework as an authoritative source of
cybersecurity standards and framework for measurement. The ISP is comprised of the following components: (i) policies which
describe the core requirements and design aspects of the program, (ii) standards that provide quantifiable and prescriptive
requirements to meet the program's design, (iii) processes that provide operational requirements to meet the ISP's policies and
standards consistently, and (iv) implementation playbooks which are created, maintained, and used by the respective team
responsible for implementation.
The ISP has three core functions underlying its design, which are intended to provide Chegg with appropriate oversight
and governance to execute, monitor, measure and report on the performance of the program in a consistent manner:
• management (control owners) have a responsibility to own and manage risks associated with day-to-day operations,
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including the design, implementation, and ongoing operation of controls;
compliance and cybersecurity teams enable the identification of emerging risks in daily operation of our business,
providing compliance and oversight in the form of frameworks, policies, tools, and techniques to support management;
and
independent assessors provide objective evaluation by assessing whether the first and second functions above are
operating successfully, providing assurance that controls are effective in both design and operation.
The Audit Committee of the Board (the “Audit Committee”) provides independent oversight of the ISP. As a component
of the ISP, the Audit Committee receives a report on the health and performance of the ISP on at least an annual basis. The
Audit Committee provides guidance and oversight to help ensure the ISP meets the needs of all interested parties and fulfills its
core functions.
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Our Trust and Security organization (“T&S”) is responsible for implementing the ISP. T&S is led by our Chief
Information Security Officer (“CISO”), John Heasman, who reports to our Chief Technology Officer (“CTO”), Chuck Geiger.
T&S is made up of three sub-teams, each led by a director who reports to the CISO:
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Information Security, which is responsible for implementing all aspects of the ISP and is structured around the
following pillars: (i) Application Security, (ii) Infrastructure (Cloud) Security, (iii) Corporate IT Security, (iv) Security
Operations, and (v) Governance and Risk Management.
Compliance and Privacy, which is responsible for assessing and preparing internal teams for regulatory compliance
pertaining to information security, secured financial reporting, and privacy and is structured around the following
pillars: (i) Privacy, (ii) Compliance, (iii) Vendor Risk Management, and (iv) Security Awareness.
• Operations and Analytics, which is responsible for identifying and measuring consumer fraud and abuse of our
customer-facing services, implementing manual and automated operations to ensure these are within acceptable
bounds, and working with our product and engineering teams to design and implement longer term solutions.
T&S also partners with a dedicated engineering team, Security and Fraud Engineering, which reports to our CTO and is
responsible for building libraries, services, and integrations that interface with both backend and vendor systems to support the
objectives of T&S.
Mr. Heasman has served as our CISO for over four years and has served in various roles in information technology and
information security for over 20 years, including serving as the Deputy CISO of a large public company prior to joining Chegg.
Mr. Heasman holds undergraduate and graduate degrees in engineering and computer science. Mr. Geiger holds an
undergraduate degree in computer science and has served in various roles in information technology for over 30 years,
including serving as either the CTO or Executive Vice President of Technology of four companies prior to joining Chegg. Our
CEO, CFO and General Counsel each hold degrees in their respective fields, and each have over 20 years of experience
managing risks at Chegg and other companies, including risks arising from cybersecurity threats.
For discussion of our risk factors relating to cybersecurity and data privacy, see the “Risks Related to Data Privacy”
section included in Part I, Item 1A, “Risk factors” of this Annual Report on Form 10-K.
ITEM 2. PROPERTIES
Our corporate headquarters are located in Santa Clara, California and consist of approximately 45,000 square feet of
space under a lease that expires in November 2028. We have additional offices in Oregon and New York in the United States
and internationally in the United Kingdom, India, and Israel. Our 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
We may from time to time be subject to certain legal proceedings and claims in the ordinary course of business,
including claims of alleged infringement of trademarks, patents, copyrights, and other intellectual property rights; employment
claims; and general contract or other claims. We may also, from time to time, be subject to various legal or government claims,
demands, disputes, investigations, or requests for information. Such matters may include, but not be limited to, claims, disputes,
or investigations related to warranty, refund, breach of contract, employment, intellectual property, government regulation, or
compliance or other matters. For 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
PART II
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. Because many of our shares of
common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number
of stockholders represented by these record holders.
Dividends
We do not intend to declare or pay any cash dividends in the foreseeable future.
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.
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. 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,
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.
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 . . . . . . . . . . . . . . . . . . . .
November 1 - November 30(1)
. . . . . . . . . . . . . . .
— $
13,498,313
—
—
— $
— $
153,665
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. In exchange for an upfront payment of
$150.0 million, we received an initial delivery of 13,498,313 shares of our common stock. The average price paid per security is not
applicable as final settlement did not occur during the three months ended December 31, 2023.
—
—
—
—
37
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.
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). 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 6. [RESERVED]
38
Chegg, Inc. Comparison of Total Return PerformanceCheggS&P 500NASDAQ Composite12/30/1812/31/1912/31/2012/31/2112/30/2212/29/230100200300400 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussion of our financial condition and results of operations in conjunction with our
audited consolidated financial statements and the related notes included in Part II, Item 8, “Consolidated Financial Statements
and Supplementary Data” of this Annual Report on Form 10-K. 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. In addition to historical consolidated financial information, the following discussion
contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially
from those discussed in the forward-looking statements. See the section titled “Note about Forward-Looking Statements” for
additional information. Factors that could cause or contribute to these differences include those discussed below and elsewhere
in this 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. 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. 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. 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. 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. 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. 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.
We have presented revenues for our two product lines, Subscription Services and Skills and Other, based on how
students view us and the utilization of our products by them. More detail on our two product lines is discussed in the next two
sections titled “Subscription Services” and “Skills and Other.”
Subscription Services
Our Subscription Services can be accessed internationally through our websites and on mobile devices and include
Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu. 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. 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.
Subscription Services revenues were 89% and 88% of net revenues during the years ended December 31, 2023 and 2022,
respectively.
39
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. 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.
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. Certain
variable expenses, such as marketing expenses, remain highest in the first and third quarters such that our profitability may not
provide meaningful insight on a sequential basis. As a result of these factors, the most concentrated periods for our revenues
and expenses do not necessarily coincide, and comparisons of our historical quarterly results of operations on a sequential basis
may not provide meaningful insight into our overall financial performance.
Components of Results of Operations
Net Revenues
We recognize revenues net of allowances for refunds or charge backs from our payment processors who process
payments from credit cards, debit cards, and PayPal. Revenues from Chegg Study Pack, Chegg Study, Chegg Writing, Chegg
Math, and Busuu are primarily recognized ratably over the monthly subscription period. 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. 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. 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. 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. 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. As our business grows, our operating expenses may increase over
time to expand capacity and sustain our workforce.
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. 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
revenue transactions and internal systems. 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. 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. 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.
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.
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. 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.
(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
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
Cost of revenues(1)
225,941
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
490,354
Operating expenses:
Research and development(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
191,705
126,591
239,783
558,079
(67,725)
Total interest expense, net and other income (expense), net . . . . . . . . . . . . . . .
118,037
Income before (provision for) benefit from income taxes . . . . . . . . . . . . . . . . .
50,312
100 % $ 766,897
197,396
569,501
32
68
100 %
26
74
27
18
33
78
(10)
17
7
196,637
147,660
216,247
560,544
8,957
94,989
103,946
26
19
28
73
1
13
14
21
(Provision for) benefit from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(32,132)
(4)
162,692
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,180
3 % $ 266,638
35 %
(1) Includes share-based compensation expense as follows:
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,256
44,103
9,524
77,619
$
2,484
41,335
13,857
75,780
Total share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 133,502
$ 133,456
42
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
Subscription Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 640,520 $ 671,968 $ (31,448)
Skills and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(19,154)
Total net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 716,295 $ 766,897 $ (50,602)
94,929
75,775
2023
2022
$
%
(5) %
(20)
(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. 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. 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. 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. Skills and Other revenues represented
11% and 12% of net revenues during the years ended December 31, 2023 and 2022, respectively.
Cost of Revenues
The following table presents our cost of revenues for the periods shown (in thousands, except percentages):
Cost of revenues(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 225,941 $ 197,396 $ 28,545
2023
2022
$
%
14 %
Years Ended December 31,
Change in 2023
(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. The increase was primarily attributable to content and related assets charge of $38.2 million and higher other
depreciation and amortization expense of $7.4 million partially offset by the absence of print textbook and eTextbook related
costs of $11.0 million, lower employee-related expenses, including share-based compensation expense, of $2.6 million, and
lower transitional logistic charges of $2.2 million. The $38.2 million content and related assets charge primarily comprised of
accelerated depreciation expense recorded as we realign our resources around our AI strategy. See Note 6, “Property and
Equipment, Net” 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. Gross margins
decreased to 68% during the year ended December 31, 2023, from 74% during the same period in 2022.
43
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
$
%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 191,705 $ 196,637 $
Research and development(1)
Sales and marketing(1)
General and administrative(1)
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 558,079 $ 560,544 $
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
147,660
126,591
216,247
239,783
(4,932)
(3) %
(21,069)
(14)
23,536
(2,465)
11
0
(1) Includes share-based compensation expense of:
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
44,103
$
41,335
$
2,768
7 %
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,524
77,619
13,857
75,780
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
131,246
$
130,972
$
(4,333)
(31)
1,839
274
2
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. 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. 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. 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. 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. The increase was primarily due to higher employee-related expenses, including share-
based compensation expense, of $14.7 million, a loss contingency accrual of $7.0 million, restructuring charges of $2.8 million,
an impairment charge related to our intangible asset of $3.6 million, which was part of the content and related assets charge as
we realign our resources around our AI strategy, partially offset by the absence of the impairment on lease related assets of
$5.2 million. 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.
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
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
(3,773) $
2022
(6,040) $
121,810
101,029
$
2,267
20,781
Total interest expense, net and other income (expense), net . . . . . . . . . . . . $ 118,037 $ 94,989 $ 23,048
44
%
(38) %
21 %
24 %
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 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. 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.
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.
(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):
(Provision for) benefit from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (32,132) $ 162,692 $ (194,824)
n/m
Years Ended December 31,
Change in 2023
2023
2022
$
%
_______________________________________
*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.
Liquidity and Capital Resources
The following table presents our cash, cash equivalents and investments and convertible senior notes as of the periods
shown (in thousands, except percentages):
As of December 31,
Change in 2023
Cash, cash equivalents and short-term and long-term investments . . . . . . . . $ 579,561 $ 1,273,883 $ (694,322)
Convertible senior notes, net(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(588,756)
1,188,593
599,837
2023
2022
$
%
(55) %
(50)
_____________________________________________________
(1) Consists of the current and long-term portion of convertible senior notes, net.
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.
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. Holders of the 2026 notes and 2025 notes may convert their notes at any time
on or after June 1, 2026 and December 15, 2024, respectively, until the close of business on the second scheduled trading day
immediately preceding the respective maturity dates. 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.
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. The substantial majority of our net revenues are from e-commerce
transactions with students, which are settled immediately through payment processors, as opposed to our accounts payable,
which are settled based on contractual payment terms with our suppliers. We believe that our existing sources of liquidity will
be sufficient to fund our operations and debt service obligations for at least the next 12 months. Our future capital requirements
will depend on many factors, including our rate of revenue growth, our investments in research and development activities, our
45
acquisition of new products and services and our sales and marketing activities. 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. As of December 31, 2023, we have incurred cumulative losses of $52.4
million from our operations and we may incur additional losses in the future.
Most of our cash, cash equivalents, and investments are held in the United States. As of December 31, 2023, our foreign
subsidiaries held an insignificant amount of cash in foreign jurisdictions. We plan to repatriate a portion of the earnings from
our subsidiary in India in the future and therefore accrued the tax expense related to such future distributions during the year
ended December 31, 2023. 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.
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. 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. During the year ended December 31, 2023, we
increased our existing securities repurchase program by $200.0 million, repurchased shares of our common stock for
$334.5 million and a portion of our notes for $504.4 million. 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. See Note 8, “Convertible Senior Notes” and Note 13,
“Stockholders' Equity” 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 repurchases.
The following table presents our contractual obligations and other commitments as of December 31, 2023 (in thousands):
Convertible senior notes (1)
Purchase obligations (2)
Operating lease obligations (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Next 12 Months
Beyond 12
Months
604,066 $
449 $
603,617
44,812
28,006
33,837
8,084
10,975
19,922
Total contractual obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
676,884 $
42,370 $
634,514
_____________________________________________________
(1) Consists of the remaining principal amount due upon maturity and semi-annual cash interest payments. Our convertible senior notes are recorded on our
consolidated balance sheets at the carrying amount. As of December 31, 2023, the carrying amount of the 2026 notes and 2025 notes was $242.8 million and
$357.1 million, respectively. 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.
In addition, we are also subject to certain legal proceedings and claims in the ordinary course of business and record a
liability when we believe that a loss is probable and reasonably estimable and during the year ended December 31, 2023, we
recognized an estimated loss contingency accrual of $7.0 million related to one of our legal proceedings. The timing of such
payment is uncertain and we are unable to reliably estimate the timing and therefore have not included in the above table. See
Note 10, “Commitments and Contingencies” 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 legal proceedings.
46
The following table presents our consolidated statements of cash flows data (in thousands, except percentages):
Consolidated Statements of Cash Flows Data:
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . $ 246,198 $ 255,736 $
Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9,538)
268,673
163,782
104,891
(852,770) (744,803) (107,967)
(4) %
156
14
Years Ended December 31,
Change in 2023
2023
2022
$
%
Net cash provided by operating activities decreased $9.5 million, or 4%, during the year ended December 31, 2023,
compared to the same period in 2022 and was primarily driven by lower billings.
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.
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.
Critical Accounting Policies, Significant Judgments and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the
United States (U.S. GAAP). The preparation of these consolidated financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. These
estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily
apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions
that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our
actual results may differ from these estimates under different assumptions or conditions.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions
about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used,
or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that
assumptions and estimates of the following accounting policies involve a greater degree of judgment and complexity.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial
condition and results of operations. For further information on all of our significant accounting policies, 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.
Revenue Recognition and Deferred Revenue
For sales of third-party products, we evaluate whether we are acting as a principal or an agent. Where our role in a
transaction is that of principal, revenues are recognized on a gross basis. This requires revenue to comprise the gross value of
the transaction billed to the customer, after trade discounts, with any related expenditure charged as a cost of revenues. Where
our role in a transaction is that of an agent, revenues are recognized on a net basis with revenues representing the margin
earned. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring
them to the customer. There are significant judgments involved in determining whether we control the specified goods or
services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service
and obtain substantially all of the remaining benefits from the good or service. 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.
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. 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
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. 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. 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. 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. Our estimate of variable consideration is
constrained to only include the amount of variable consideration for which it is probable that a significant reversal in the
amount of cumulative revenue recognized will not occur, as the amounts that we could potentially earn in outer years can
change significantly based on factors that are out of our control. If our forecasts are inaccurate, the estimated amount of variable
consideration could be inaccurate, which could impact our revenue recognition in a given period.
Impairment of Acquired Intangible Assets and Other Long-Lived Assets
We assess the impairment of acquired intangible assets and other long-lived assets at least annually and whenever events
or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Factors that we consider in
determining when to perform an impairment review include significant negative industry or economic trends or significant
changes or planned changes in the use of the assets. When measuring the recoverability of these assets, we will make
assumptions regarding our estimated future cash flows expected to be generated by the assets. 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.
Goodwill and Indefinite Lived Intangible Asset
Goodwill and our indefinite lived intangible asset are tested for impairment at least annually or whenever events or
changes in circumstances indicate that their carrying values may not be recoverable. We first assess qualitative factors to
determine whether it is necessary to perform a quantitative impairment test. In our qualitative assessment, we consider factors
including economic conditions, industry and market conditions and developments, overall financial performance and other
relevant entity-specific events in determining whether it is more likely than not that the fair value of our reporting unit is less
than the carrying amount. Our qualitative assessment requires management to make judgments based on the factors listed above
in our determination of whether events or changes in circumstances indicate that the carrying values may not be recoverable.
If our qualitative assessment concludes that it is more likely than not that the fair value is less than the carrying amount, a
quantitative assessment of impairment is performed. Performing a quantitative impairment test includes the determination of
fair value and involves significant estimates and assumptions including, among others, forecasted revenue growth rates,
operating margins and capital expenditures, and discount rates used to calculate projected future cash flows, as well as the
determination of appropriate market comparable companies, metrics and multiples. If the carrying value exceeds the fair value,
an impairment loss is recognized in an amount equal to the excess. If estimates or related assumptions change, this could have a
significant impact on either the fair value of our reporting unit, the amount of any goodwill impairment charge, or both. We
have not recognized any goodwill impairment charges since our inception. During the year ended December 31, 2023, as part of
the design and build of our new generative AI experience, we streamlined our product experiences and recognized a $3.6
million impairment charge on our indefinite-lived intangible asset. See Note 6, “Property and Equipment, Net” 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.
Share-based Compensation Expense
We measure and recognize share-based compensation expense for all awards made to employees, directors and
consultants, including restricted stock units (RSUs), performance-based RSUs (PSUs) with either a market-based condition or
financial and strategic performance target and our employee stock purchase plan (ESPP) based on estimated fair values.
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. 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
recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated
forfeiture rate, an adjustment is made that will result in a decrease to the share-based compensation expense recognized in the
financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that
will result in an increase to the share-based compensation expense recognized in the financial statements.
Share-based compensation expense for PSUs with a market-based condition is recognized regardless of whether the
market condition is satisfied subject to continuing service over the requisite service period. 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. Subsequent changes to these considerations may have a material impact on the amount of share-
based compensation expense recognized in the period related to PSU awards, which may lead to volatility of share-based
compensation expense period-to-period. If the performance objectives are not met or service is no longer provided, no share-
based compensation expense will be recognized, and any previously recognized share-based compensation expense will be
reversed.
We will continue to use judgment in evaluating the assumptions related to our share-based compensation expense on a
prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates,
which could materially impact our future share-based compensation expense.
Provision for Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have been included in our consolidated financial
statements or tax returns. In estimating future tax consequences, we generally consider all expected future events other than
enactments or changes in the tax law or rates. In assessing the realization of deferred tax assets, we consider whether it is more
likely than not that all or some portion of deferred tax assets will not be realized. The ultimate realization of the deferred tax
assets is dependent upon the generation of future taxable income during the periods in which those temporary differences
become deductible. Valuation allowances are provided to reduce deferred tax assets to the amount that is more likely than not to
be realized. 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. In the event that we change our determination as to the amount of deferred tax
assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income
taxes in the period in which such determination is made.
We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely
than not that the tax positions will be sustained on the basis of technical merits of the position and (2) for those tax positions
that meet the more likely than not recognition threshold, we recognize the tax benefit as the largest amount that is cumulative
more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
The calculation of tax expense and liabilities involves dealing with uncertainties in the application of complex global tax
regulations. We recognize potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our
estimate of whether, and the extent to which, additional taxes will be due. Significant judgment is required in determining our
provision for income taxes and evaluating our uncertain tax positions. To the extent that the final tax outcome of these matters
may differ from the amounts that were initially recorded, such differences will impact the income tax provision in the period in
which such determination is made. As a result, significant changes to these estimates may result in an increase or decrease to
our tax provision in a subsequent period.
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
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk, including changes to foreign currency exchange rates and interest rates.
Foreign Currency Exchange Risk
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates,
particularly changes in the Indian Rupee, Euro, and British Pound Sterling, and changes in the relative value of the U.S. dollar
to these currencies may have an impact. We have experienced and will continue to experience fluctuations in net income (loss)
as a result of transaction gains or losses related to remeasuring certain amounts that 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. Unfavorable
fluctuations in foreign currency exchange rates may have an adverse impact on our total net revenues or total operating
expenses, however, we do not believe a hypothetical 10% strengthening or weakening of the U.S. dollar against foreign
currencies would have a material impact on our results of operations. To date, we have not entered into derivatives or hedging
strategies to mitigate risk related to changes in foreign currency exchange rates and continually monitor our foreign currency
exchange exposure.
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. 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 $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 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.
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. For 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
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
52
56
57
58
59
60
62
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Chegg, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Chegg, Inc. and subsidiaries (the "Company") as of
December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders'
equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the
schedules listed in the Index at Item 15.2 (collectively referred to as the "financial statements"). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and
the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity
with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 20, 2024, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
Goodwill — Refer to Notes 2 and 7 to the financial statements
Critical Audit Matter Description
The Company tests goodwill for impairment at least annually or whenever events or changes in circumstances indicate that their
carrying values may not be recoverable. During the year ended December 31, 2023, the Company performed a quantitative
assessment of goodwill of its single reporting unit. This assessment utilized significant estimates and assumptions including but
not limited to, discount rate and forecasts of future revenue and operating margin, used to calculate projected future cash flows,
as well as the determination of appropriate market comparable companies, metrics and multiples. Changes in these assumptions
could have a significant impact on either the fair value of the Company’s single reporting unit, the amount of goodwill
impairment charge, if any, or both. As of the year ended December 31, 2023 the fair value of the reporting unit exceeded the
carrying value, and therefore, no impairment was recorded. The goodwill balance was $632.0 million as of December 31, 2023.
We identified goodwill for the Company’s single reporting unit as a critical audit matter because of the significant judgments
made by management to estimate the fair value of the Company’s single reporting unit. This required a high degree of auditor
52
judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit
procedures to evaluate the reasonableness of management’s estimates and assumptions related to selection of the discount rate
and forecasts of future revenue and operating margin.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the discount rate and forecasts of future revenue and operating margin, used by management to
estimate the fair value of the Company’s single reporting unit, included the following, among others:
• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the
determination of the fair value of the Company’s single reporting unit, such as controls related to management’s
selection of the discount rate and forecasts of future revenue and operating margin.
• We evaluated management’s ability to accurately forecast future revenues and operating margins by comparing actual
results to management’s historical forecasts.
• We evaluated the reasonableness of management's revenue and operating margin forecasts by comparing the forecasts
to:
◦
◦
◦
historical results,
internal communications to management and the Board of Directors, and
forecasted information included in Company press releases as well as in analyst and industry reports for the
Company and certain of its peer companies.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and
(2) discount rate by:
◦
◦
Testing the source information underlying the determination of the discount rate and the mathematical
accuracy of the calculation.
Developing a range of independent estimates and comparing those to the discount rate selected by
management.
Convertible Senior Notes - Refer to Notes 2 and 8 to the financial statements
Critical Audit Matter Description
In May 2023, the Company extinguished $85.8 million and $341.1 million principal amount of the 2026 and 2025 Notes,
respectively, which had an aggregate carrying value of $423.5 million for a total reacquisition price of $369.8 million
(including $1.2 million in fees). Further, in August 2023, the Company extinguished an additional $169.7 million principal
amount of the 2026 Notes, which had a carrying value of $168.3 million for a total reacquisition price of $136.2 million
(including $0.4 million in fees). The Company elected to reacquire and not cancel the extinguished 2026 notes and left the
associated capped call transactions outstanding. This resulted in a total gain on extinguishment of $85.9 million during the year
ended December 31, 2023.
Auditing the following elements involved a higher degree of auditor judgment and an increased extent of effort due to the
nature and extent of specialized skill and knowledge required of the Company’s accounting assessment of the settlement
including the conclusion that the settlement should be accounted for as an extinguishment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to evaluating the extinguishment of the convertible senior notes included the following, among
others:
• We tested the operating effectiveness of the controls over the Company’s accounting for the extinguishment of the
•
2026 and 2025 convertible senior notes.
Our testing included reading the underlying agreements and evaluating the Company’s accounting analysis underlying
the accounting of the convertible senior notes, including the determination of the balance sheet classification of each
transaction, identification of any derivatives included in the arrangements, and determination that the 2026 and 2025
convertible senior notes was a debt extinguishment.
• We utilized more experienced professionals on our team when evaluating management’s assessment of the accounting
for the extinguishment.
53
/s/ DELOITTE & TOUCHE LLP
San Jose, California
February 20, 2024
We have served as the Company’s auditor since 2018.
54
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Chegg, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Chegg, Inc. and subsidiaries (the “Company”) as of December
31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our
report dated February 20, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
February 20, 2024
55
December 31,
2023
2022
135,757 $
194,257
473,677
583,973
CHEGG, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for number of shares and par value)
Assets
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net of allowance of $376 and $394 at December 31, 2023 and
December 31, 2022, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,515
28,481
34,754
1,144,400
216,233
204,383
615,093
78,333
18,838
167,524
20,612
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,727,235 $ 2,465,416
31,404
20,980
32,437
414,835
249,547
183,073
631,995
52,430
25,130
141,843
28,382
Liabilities and stockholders’ equity
Current liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of convertible senior notes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,184 $
55,336
77,863
357,079
518,462
12,367
56,273
70,234
—
138,874
Long-term liabilities
Convertible senior notes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
242,758
18,063
3,334
264,155
782,617
1,188,593
13,375
7,985
1,209,953
1,348,827
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value – 10,000,000 shares authorized, no shares issued and
outstanding at December 31, 2023 and December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Common stock, $0.001 par value – 400,000,000 shares authorized; 102,823,700 and
126,473,827 shares issued and outstanding at December 31, 2023 and December 31, 2022,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126
1,244,504
(57,488)
(70,553)
1,116,589
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,727,235 $ 2,465,416
(34,739)
(52,373)
944,618
103
1,031,627
See Notes to Consolidated Financial Statements.
56
CHEGG, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net and other income (expense), net
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total interest expense, net and other income (expense), net . . . . . . . . . . . . .
Income before (provision for) benefit from income taxes . . . . . . . . . . . . . . . . . .
(Provision for) benefit from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income (loss) per share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted average shares used to compute net income (loss) per share
Years Ended December 31,
2023
716,295 $
225,941
490,354
2022
766,897 $
197,396
569,501
2021
776,265
254,904
521,361
191,705
126,591
239,783
558,079
(67,725)
196,637
147,660
216,247
560,544
8,957
(3,773)
(6,040)
121,810
118,037
50,312
(32,132)
18,180 $
101,029
94,989
103,946
162,692
266,638 $
178,821
105,414
159,019
443,254
78,107
(6,896)
(65,472)
(72,368)
5,739
(7,197)
(1,458)
0.16 $
(0.34) $
2.09 $
1.34 $
(0.01)
(0.01)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116,504
128,569
127,557
149,859
141,262
141,262
See Notes to Consolidated Financial Statements.
57
CHEGG, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss)
Years Ended December 31,
2023
18,180 $
2022
266,638 $
2021
(1,458)
Change in net unrealized gain (loss) on investments, net of tax . . . . . . . . . . .
5,534
(1,348)
Change in foreign currency translation adjustments, net of tax . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
17,215
22,749
40,929 $
(50,806)
(52,154)
214,484 $
(5,729)
(1,135)
(6,864)
(8,322)
See Notes to Consolidated Financial Statements.
58
CHEGG, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
Common Stock
Shares
Par
Value
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
(422,601) $
Total
Stockholders’
Equity
609,635
1,530 $
86,868
(378,138)
Balances at December 31, 2020 . . . . . . . . . . . . . . . . . . . .
Cumulative-effect adjustment related to adoption of
ASU 2020-06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock in connection with equity
offering, net of offering costs . . . . . . . . . . . . . . . . . . . . .
Equity component on conversions of 2023 notes and
2025 notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock upon conversion of 2023
notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from capped call related to conversions
and extinguishments of 2023 notes and 2025 notes . . . .
Issuance of common stock upon exercise of stock
options and ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net share settlement of equity awards . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balances at December 31, 2021 . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . .
Issuance of common stock upon exercise of stock
options and ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net share settlement of equity awards . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balances at December 31, 2022 . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . .
Issuance of common stock upon exercise of stock
options and ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net share settlement of equity awards . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . .
Net proceeds from capped call related to
extinguishments of 2025 notes . . . . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129,344 $ 129 $ 1,030,577 $
—
—
(465,006)
10,975
11
1,091,455
—
—
(236,921)
2,983
3
235,518
—
—
67,770
413
1,640
(8,403)
—
—
—
136,952
(12,709)
—
2
(8)
—
—
—
137
(13)
437
1,794
—
—
—
126,474
(26,506)
—
2
—
—
—
126
(26)
512
1
2,344
—
2
—
—
—
—
—
—
—
8,885
(94,423)
(299,992)
111,442
—
—
1,449,305
(323,515)
6,475
(26,549)
138,788
—
—
1,244,504
(337,683)
4,162
(16,440)
136,787
297
—
—
—
—
—
—
—
—
—
—
—
(6,864)
—
(5,334)
—
—
—
—
(52,154)
—
(57,488)
—
—
—
—
—
22,749
—
—
—
—
—
—
—
—
—
(1,458)
(337,191)
—
—
—
—
—
266,638
(70,553)
—
—
—
—
—
—
1,091,466
(236,921)
235,521
67,770
8,885
(94,421)
(300,000)
111,442
(6,864)
(1,458)
1,106,917
(323,528)
6,475
(26,547)
138,788
(52,154)
266,638
1,116,589
(337,709)
4,163
(16,438)
136,787
297
22,749
18,180
—
18,180
Balances at December 31, 2023
102,824 $ 103 $ 1,031,627 $
(34,739) $
(52,373) $
944,618
See Notes to Consolidated Financial Statements.
59
CHEGG, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain)/loss on early extinguishments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss contingency accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of intangible asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from write-offs of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease expense, net of accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized loss on sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain)/loss on textbook library, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Print textbook depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on foreign currency remeasurement of purchase consideration . . . . . . . . . .
Impairment on lease related assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of strategic equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on change in fair value of derivative instruments, net . . . . . . . . . . . . . . . . .
Other non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in assets and liabilities, net of effect of acquisition of businesses:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of textbooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from disposition of textbooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturities of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of strategic equity investments . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of strategic equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2022
2021
2023
18,180 $
266,638 $
(1,458)
133,502
129,718
26,575
(85,926)
7,000
3,600
4,137
3,156
6,079
2,106
—
—
—
—
—
—
(1,228)
(7,799)
3,476
10,829
13,057
(1,585)
(7,342)
(11,337)
246,198
(83,052)
—
9,787
(637,939)
394,533
597,197
—
—
(11,853)
268,673
133,456
89,997
(168,679)
(93,519)
—
—
3,549
5,166
6,327
9,675
(4,976)
1,610
(4,628)
5,225
—
—
378
(3,752)
17,191
14,563
(4,144)
7,538
(20,111)
(5,768)
255,736
108,846
63,274
(1,104)
78,152
—
—
2,115
5,922
5,994
178
10,956
10,859
—
—
(12,496)
7,148
(47)
(5,004)
(21,854)
16,387
3,241
2,523
5,199
(5,607)
273,224
(103,092)
(3,815)
6,003
(730,509)
458,489
884,940
—
(401,125)
(6,000)
104,891
(94,180)
(10,931)
8,714
(1,688,384)
206,041
1,204,787
16,076
(7,891)
—
(365,768)
Cash flows from financing activities
Proceeds from common stock issued under stock plans, net . . . . . . . . . . . . . . . . .
Payment of taxes related to the net share settlement of equity awards . . . . . . . . .
Proceeds from equity offering, net of offering costs . . . . . . . . . . . . . . . . . . . . . . .
Repayment of convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of convertible senior notes capped call . . . . . . . . . . . . . .
Payment of escrow related to acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase in cash, cash equivalents and restricted cash . . . . . . . . . . . . . . .
Cash, cash equivalents and restricted cash, beginning of period . . . . . . . . . . . . . . . . . . .
Cash, cash equivalents and restricted cash, end of period . . . . . . . . . . . . . . . . . . . . . . . . $
4,165
(16,440)
—
6,477
(26,549)
—
(505,986)
(401,203)
297
—
—
—
(334,806)
(852,770)
21
(337,878)
475,854
137,976 $
(323,528)
(744,803)
4,137
(380,039)
855,893
475,854 $
8,887
(94,423)
1,091,466
(300,762)
69,005
(7,451)
(300,000)
466,722
—
374,178
481,715
855,893
See Notes to Consolidated Financial Statements.
60
Years Ended December 31,
2023
2022
2021
Supplemental cash flow data:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income taxes, net of refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
741 $
11,074 $
875 $
6,841 $
1,053
7,388
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9,042 $
8,863 $
7,772
Right of use assets obtained in exchange for lease obligations:
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
12,407 $
10,232 $
—
Non-cash investing and financing activities:
Accrued purchases of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Issuance of common stock related to repayment of convertible senior notes . . . . . . $
9,650 $
— $
4,927 $
— $
2,982
235,521
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Restricted cash included in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash included in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
135,757 $
—
2,219
137,976 $
473,677 $
63
2,114
475,854 $
854,078
—
1,815
855,893
See Notes to Consolidated Financial Statements.
December 31,
2023
2022
2021
61
CHEGG, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Background and Basis of Presentation
Company and Background
Chegg, Inc. (“we,” “us,” “our,” “Company” or “Chegg”), headquartered in Santa Clara, California, was incorporated as a
Delaware corporation in July 2005. Millions of people all around the world learn with Chegg. No matter the goal, level, or
style, Chegg helps learners learn with confidence. 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. 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.
Basis of Presentation
Our fiscal year ends on December 31 and in this report, we refer to the year ended December 31, 2023, December 31,
2022, and December 31, 2021 as 2023, 2022, and 2021, respectively.
Note 2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States
requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities;
the disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenues and expenses
during the reporting periods. Significant estimates, assumptions, and judgments are used for, but not limited to: revenue
recognition, share-based compensation expense including grant-date fair value of PSUs with a market-based condition and
estimated forfeitures, accounting for income taxes, useful lives assigned to long-lived assets for depreciation and amortization,
impairment of goodwill and long-lived assets, the valuation of acquired intangible assets, and internal-use software and website
development costs. We base our estimates on historical experience, knowledge of current business conditions, and various other
factors we believe to be reasonable under the circumstances. These estimates are based on management’s knowledge about
current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates,
and such differences could be material to our financial position and results of operations.
Principles of Consolidation
The consolidated financial statements include the accounts of Chegg and our wholly owned subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been
prepared in accordance with U.S. GAAP.
Cash and Cash Equivalents and Restricted Cash
We consider all highly liquid investments with an original maturity date of three months or less from the date of
purchase to be cash equivalents. Our cash and cash equivalents consist of cash and money market funds at financial institutions,
and are stated at cost, which approximates fair value. We classify certain restricted cash balances within other current assets and
other assets on the accompanying consolidated balance sheets based upon the term of the remaining restrictions.
Fair Value Measurements
We account for certain assets and liabilities at fair value. We have established a fair value hierarchy used to determine
the fair value of our financial instruments as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the
assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial
instruments.
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Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair
value; the inputs require significant management judgment or estimation.
A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement. The methods described above may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are
appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the
fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Investments
We hold investments in corporate debt securities, U.S. treasury securities and agency bonds. We classify our investments
as available-for-sale that are either short or long-term based on the remaining contractual maturity of the investment. Our
investments are carried at estimated fair value with any unrealized gains and losses, unrelated to credit loss factors, net of taxes,
included in other comprehensive income (loss) on our consolidated statements of stockholders’ equity. Unrealized losses related
to credit loss factors are recorded through an allowance for credit losses in other income (expense), net on our consolidated
statements of operations, rather than as a reduction to other comprehensive income (loss), when a decline in fair value has
resulted from a credit loss. When evaluating whether an investment's unrealized losses are related to credit factors, we review
factors such as the extent to which fair value is below its cost basis, any changes to the credit rating of the security, adverse
conditions specifically related to the security, changes in market interest rates and our intent to sell, or whether it is more likely
than not we will be required to sell, before recovery of cost basis. We invest in highly rated securities with a weighted average
maturity of eighteen months or less. In addition, our investment policy limits the amount of our credit exposure to any one
issuer or industry sector and requires investments to be investment grade, with the primary objective of preserving capital and
maintaining liquidity. Fair values were determined for each individual security in the investment portfolio. We determine
realized gains or losses on the sale of investments on a specific identification method and record such gains or losses as other
income (expense), net.
The estimated fair value of our investments are based on quoted prices in active markets for identical assets (Level 1
inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair
value. Other than our money market funds and U.S. treasury securities, we classify our fixed income available-for-sale
investments as having Level 2 inputs. The valuation techniques used to measure the fair value of our investments having Level
2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data or quoted
market prices for similar instruments. We do not hold any investments valued with a Level 3 input.
Accounts Receivable, Net of Allowance
Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We generally grant
uncollateralized credit terms to our customers, which include partners and advertising customers.
We maintain an allowance to account for potentially uncollectible receivables. We assess the creditworthiness of our
customers based on multiple sources of information and analyze such factors as our historical bad debt experience, industry and
geographic concentrations of credit risk, economic trends, and customer payment history. This assessment requires significant
judgment. Because of this assessment, we maintain an allowance for estimated losses resulting from the inability of certain
customers to make all of their required payments. In making this estimate, we analyze historical payment performance and
current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Accounts receivable are written
off as a decrease to the allowance when all collection efforts have been exhausted and an account is deemed uncollectible.
Concentration of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash
equivalents, restricted cash, and investments in highly liquid instruments in accordance with our investment policy. We place
the majority of our cash and cash equivalents and restricted cash with financial institutions in the United States that we believe
to be of high credit quality, and accordingly minimal credit risk exists with respect to these instruments. Certain of our cash
balances held with a financial institution are in excess of Federal Deposit Insurance Corporation limits. Our investment
portfolio consists of investments diversified among security types, industries and issuers. Our investments were held and
managed by recognized financial institutions that followed our investment policy with the main objective of preserving capital,
63
generating a competitive return, and maintaining liquidity.
Concentrations of credit risk with respect to accounts receivables exist to the full extent of amounts presented in the
financial statements. We had no customers that represented over 10% of our net accounts receivable balance as of December
31, 2023 and one customer that represented over 10% of our net accounts receivable balance as of December 31, 2022. No
customers represented over 10% of net revenues during the years ended December 31, 2023, 2022 or 2021.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation and content amortization. Depreciation and
content amortization are computed using the straight-line method over the following estimated useful lives of the assets:
Classification
Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Internal-use software and website development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computers and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Useful Life
Shorter of the licensed
content term or 5 years
3 years
Shorter of the remaining
lease term or 5 years
5 years
3 years
We capitalize all costs associated with the development or acquisition of content that is utilized in our products and
services. Content amortization is classified within cost of revenues on our consolidated statements of operations.
We capitalize certain costs associated with software developed or obtained for internal use and website and application
development. We capitalize costs when preliminary development efforts are successfully completed, management has
authorized and committed project funding and it is probable that the project will be completed, and the software will be used as
intended. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed
as incurred. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized and
amortized over the estimated useful life of the upgrades. Depreciation expense is classified within cost of revenues or operating
expenses categories on our consolidated statements of operations.
When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and content amortization
are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in (loss) income from
operations.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible
assets acquired through a business combination based on their estimated fair values. The excess of the fair value of purchase
consideration over the fair values of these identifiable assets acquired and liabilities assumed is recorded as goodwill. Such
valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from
acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates.
Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain
and unpredictable, and, as a result, actual results may differ from estimates. During the measurement period, which is not to
exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the
corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to
earnings.
64
Goodwill and Indefinite-Lived Intangible Asset
Goodwill represents the excess of the fair value of purchase consideration paid over the estimated fair value of assets
acquired and liabilities assumed in a business combination. Our indefinite-lived intangible asset represented the internships.com
trade name. These assets are not amortized but rather tested for impairment at least annually, or more frequently if certain
events or indicators of impairment occur between annual impairment tests. We first assess qualitative factors to determine
whether it is necessary to perform the quantitative impairment test. In our qualitative assessment, we consider factors including
economic conditions, industry and market conditions and developments, overall financial performance and other relevant
entity-specific events. If our qualitative assessment concludes that it is more likely than not that the fair value is less than the
carrying amount, a quantitative assessment of impairment is performed. In the quantitative test, we compare fair value,
estimated utilizing both the income approach, based on present value techniques, and the market approach, based on the
guideline transaction method and guideline public company method, to the carrying value. If the carrying value exceeds the fair
value, an impairment loss is recognized in an amount equal to the excess.
Acquired Intangible Assets and Other Long-Lived Assets
Acquired intangible assets with finite useful lives, which include developed technology, content library, customer lists,
and trade and domain names, are amortized over their estimated useful lives. We assess the impairment of acquired intangible
assets and other long-lived assets at least annually, or when events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right of use
(ROU) assets and operating lease liabilities within current liabilities and long-term liabilities on our consolidated balance
sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future
minimum lease payments over the lease term at commencement date. Our leases do not provide an implicit rate and therefore
we use our incremental borrowing rate based on the information available at commencement date in determining the present
value of future minimum lease payments. Our incremental borrowing rate is estimated based on the estimated rate incurred to
borrow, on a collateralized basis over a similar term as our leases, an amount equal to the lease payments in a similar economic
environment. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will
exercise such options. We do not record leases on our consolidated balance sheet with a term of one year or less. We do not
separate lease and non-lease components but rather account for each separate component as a single lease component for all
underlying classes of assets. Some of our leases include payments that are dependent on an index, such as the Consumer Price
Index (CPI), and our minimum lease payments include payments based on the index at inception with any future changes in
such indices recognized as an expense in the period of change. Where leases contain escalation clauses, rent abatement, or
concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of
straight-line operating lease cost over the lease term. ROU assets are evaluated for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Strategic Investments
Investments in partnerships where we have the ability to exercise significant influence, but not control, over the investee
are accounted for under the equity method of accounting. Equity method investments are initially recorded at cost and adjusted
for our share of the investees' earnings or losses, based on our percentage ownership, recognized on a one-quarter lag basis
within other income (expense), net on our consolidated statements of operations.
Investments in entities where we do not have the ability to exercise significant influence and which do not have readily
determinable fair values are accounted for at cost, plus or minus changes resulting from observable price changes in orderly
transactions for the identical or a similar investment of the same issuer, if any.
Strategic investments are included in other assets on our consolidated balance sheets. We assess our strategic investments
for impairment whenever events or changes in circumstances indicate that they may be impaired. The factors we consider in our
evaluation include, but are not limited to, a significant deterioration in the earnings performance or business prospects of the
investee or factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative
cash flows from operations or working capital deficiencies.
65
Convertible Senior Notes, net
In August 2020, we issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 (2026
notes). In March/April 2019, we issued $800 million in aggregate principal amount of 0.125% convertible senior notes due in
2025 (2025 notes, together with the 2026 notes, the notes). The aggregate principal amounts of both the 2026 notes and 2025
notes include $100 million from the initial purchasers fully exercising their option to purchase additional notes. The notes,
including the embedded conversion features, are accounted for under the traditional convertible debt accounting model entirely
as a liability net of unamortized issuance costs. The carrying amount of the liability is classified as a current liability if we have
committed to settle with current assets or the holders have the option to convert the notes at any time within twelve months after
the reporting date; otherwise, we classify it as a long-term liability as we retain the election to settle conversion requests in
shares of our common stock. The embedded conversion features are not remeasured as long as they do not meet the separation
requirement of a derivative; otherwise, they are classified as derivative instruments and recorded at fair value with changes in
fair value recorded in other income (expense), net on our consolidated statements of operations. The fair value of any derivative
instruments related to the notes are determined utilizing Level 2 inputs. Issuance costs are amortized on a straight-line basis,
which approximates the effective interest rate method, to interest expense over the term of the notes. In accounting for
conversions of the notes, the carrying amount of the converted notes is reduced by the total consideration paid or issued for the
respective converted notes and the difference is recorded to additional paid-in capital on our consolidated balance sheets. In
accounting for extinguishments of the notes, the reacquisition price of the extinguished notes is compared to the carrying
amount of the respective extinguished notes and a gain or loss is recorded in other income (expense), net on our consolidated
statements of operations.
Revenue Recognition and Deferred Revenue
We recognize revenues when the control of goods or services is transferred to our customers, in an amount that reflects
the consideration we expect to be entitled to in exchange for those goods or services. We determine revenue recognition
through the following steps:
• Identification of the contract, or contracts, with a customer
• Identification of the performance obligations in the contract
• Determination of the transaction price
• Allocation of the transaction price to the performance obligations in the contract
• Recognition of revenue when, or as, we satisfy a performance obligation
Revenues are presented net of sales tax collected from customers to be remitted to governmental authorities and net of
allowances for estimated and actual refunds, which are based on historical data. Revenues from our Chegg Study Pack, Chegg
Study, Chegg Writing, Chegg Math, and Busuu offerings are primarily recognized ratably over the monthly subscription period.
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.
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. 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. If the SSP is not directly observable, we estimate the
SSP by considering information such as market conditions, and information about the customer. Additionally, we limit the
amount of revenues recognized for delivered promises to the amount that is not contingent on future delivery of services or
other future performance obligations.
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. 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.
For sales of third-party products, we evaluate whether we are acting as a principal or an agent. Where our role in a
transaction is that of principal, revenues are recognized on a gross basis. This requires revenue to comprise the gross value of
the transaction billed to the customer, after trade discounts, with any related expenditure charged as a cost of revenues. Where
66
our role in a transaction is that of an agent, revenues are recognized on a net basis with revenues representing the margin
earned. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring
them to the customer. When deciding the most appropriate basis for presenting revenues or costs of revenues, both the legal
form and substance of the agreement between us and our business partners are reviewed to determine each party’s respective
role in the transaction. 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.
Contract assets are contained within other current assets and other assets on our consolidated balance sheets. Contract
assets represent the goods or services that we have transferred to a customer before invoicing the customer and primarily
consist of the income sharing payment arrangements we offer to students for our Skills service. Contract receivables are
contained within accounts receivable, net on our consolidated balance sheets and represent unconditional consideration that will
be received solely due to the passage of time. Contract liabilities are contained within deferred revenue on our consolidated
balance sheets. Deferred revenue primarily consists of advanced payments from students related to subscription performance
obligations that have not been satisfied and estimated variable consideration. Deferred revenue related to rental and subscription
performance obligations is recognized as revenues ratably over the term for subscriptions or when the services are provided,
and all other revenue recognition criteria have been met. Deferred revenue related to variable consideration is recognized as
revenues during each reporting period based on the estimated amount we believe we will earn over the life of the contract.
Deferred contract costs are contained within other current assets on our consolidated balance sheets and are recognized if we
expect to receive a future benefit from such costs. Deferred contract cost amortization expense is recognized consistent with the
pattern of revenue recognition as cost of revenues on our consolidated statements of operations.
Cost of Revenues
Our cost of revenues consists primarily of expenses associated with the delivery and distribution of our products and
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. In addition, cost of revenues includes allocated information
technology and facilities costs.
Research and Development Costs
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. We expense substantially all of our
research and development expenses as they are incurred.
Advertising Costs
Advertising costs are expensed as incurred and consist primarily of online advertising and marketing promotional
expenditures. During the years ended December 31, 2023, 2022, and 2021, advertising costs were approximately $57.4 million,
$62.0 million and $45.1 million, respectively.
67
Share-based Compensation Expense
Share-based compensation expense for restricted stock units (RSUs), performance-based restricted stock units (PSUs)
with either a market-based condition or financial and strategic performance targets, and the employee stock purchase plan
(ESPP) is accounted for under the fair value method based on the grant-date fair value of the award. Share-based compensation
expense for RSUs and PSUs with financial and strategic performance targets is measured based on the closing fair market value
of our common stock, PSUs with a market-based condition are estimated using a Monte Carlo simulation model, and ESPP is
estimated using the Black-Scholes-Merton option pricing model. We recognize share-based compensation expense on a
straight-line basis for RSUs and ESPP and on a graded basis for PSUs. Vesting for all awards is subject to continued service
over the requisite service period, which is generally the vesting period. Vesting of PSUs with a market-based condition is also
subject to the achievement of certain per share price of our common stock targets and vesting of PSUs with financial and
strategic performance targets is also subject to our achievement of specified financial and strategic performance targets. RSUs
and PSUs are converted into shares of our common stock upon vesting on a one-for-one basis. RSUs typically vest over three or
four years, while PSUs with a market-based condition typically vest over a four-year period and PSUs with financial and
strategic performance targets typically vest over a three-year period. Share-based compensation expense for PSUs with a
market-based condition is recognized regardless of whether the market condition is satisfied whereas share-based compensation
expense for PSUs with financial performance targets is recognized upon estimated or actual achievement of such targets. We
assess the achievement of financial and strategic performance targets on a quarterly basis and adjust our share-based
compensation expense as appropriate. These amounts are reduced by estimated forfeitures, which are estimated at the time of
the grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Income Taxes
We account for income taxes under an asset and liability method whereby deferred tax asset and liability account
balances are determined based on differences between the financial reporting and the tax basis of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation
allowances are established, when necessary, to reduce deferred tax assets to an amount that is more likely than not to be
realized. We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more
likely than not that the tax positions will be sustained on the basis of technical merits of the position and (2) for those tax
positions that meet the more likely than not recognition threshold, we recognize the tax benefit as the largest amount that is
cumulative more than 50% likely to be realized upon ultimate settlement with the related tax authority. Our policy is to include
interest and penalties related to unrecognized tax benefits as a component of income tax expense.
Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of
common stock outstanding during the period. Diluted net income (loss) per share is computed by adjusting net income (loss) for
all related interest expense and gains and losses recognized during the period, net of tax, and giving effect to all potential shares
of common stock, including stock options, PSUs, RSUs, and shares related to convertible senior notes, to the extent dilutive.
This assumes that all stock options and dilutive convertible shares were exercised or converted and is computed by applying the
treasury stock method for outstanding stock options, PSUs, and RSUs, and the if-converted method for outstanding convertible
senior notes. Under the treasury stock method, options, PSUs, and RSUs are assumed to be exercised or vested at the beginning
of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the
average market price during the period. Under the if-converted method, outstanding convertible senior notes are assumed to be
converted into common stock at the beginning of the period (or at the time of issuance, if later).
Foreign Currency Translation and Remeasurement
The functional currency of our foreign subsidiaries is the local currency, and our reporting currency is the U.S. Dollar.
Adjustments resulting from the translation of foreign currencies into U.S. Dollars for balance sheet amounts are based on the
exchange rates as of the consolidated balance sheet date. Revenues and expenses are translated at average exchange rates during
the period. Foreign currency translation gains or losses are included in accumulated other comprehensive loss as a component
of stockholders’ equity on the consolidated balance sheets. Gains or losses resulting from the remeasurement of foreign
currency transactions, which are denominated in currencies other than the functional currency, are included in general and
administrative expense on the consolidated statements of operations. During the years ended December 31, 2023 and 2021, the
net gains from remeasurement of foreign currency transactions were not material. During the year ended December 31, 2022,
net gains from remeasurement of foreign currency transactions were $3.7 million.
68
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about our effective tax
rate reconciliation as well as information on income taxes paid that meet a quantitative threshold. Early adoption is permitted,
and the guidance will be applied prospectively with the option to apply retrospectively. The guidance is effective for annual
periods beginning after December 15, 2024. We did not early adopt ASU 2023-09 and we are currently in the process of
evaluating the impact of this guidance.
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. ASU 2023-07
enhances current interim and annual reportable segment disclosures and requires additional disclosures about significant
segment expenses. Early adoption is permitted, and we are required to adopt the changes on a retrospective basis. The guidance
is effective for annual periods beginning after December 15, 2023 and for interim periods beginning December 15, 2024. We
did not early adopt ASU 2023-07 and we are currently in the process of evaluating the impact of this guidance.
Recently Adopted Accounting Pronouncements
We did not adopt any accounting pronouncements during the year ended December 31, 2023 that had a material impact
on our financial statements.
Note 3. Revenues
Revenue Recognition
Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount
that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenues
are recognized over time as services are performed, with certain revenues being recognized at a point in time.
The following table presents our total net revenues for the periods shown disaggregated for our Subscription Services
and Skills and Other product lines (in thousands, except percentages):
Years Ended December 31,
Change in 2023
Change in 2022
2023
Subscription Services . . . . . . . . . . . . . $ 640,520 $ 671,968 $ 616,817 $ (31,448)
Skills and Other . . . . . . . . . . . . . . . . .
(19,154)
75,775
Total net revenues . . . . . . . . . . . . . . . $ 716,295 $ 766,897 $ 776,265 $ (50,602)
159,448
94,929
2022
2021
$
$
%
(5) % $ 55,151
(64,519)
(20)
(9,368)
(7)
$
%
9 %
(40)
(1)
During the years ended December 31, 2023, 2022, and 2021, we recognized $54.5 million, $33.9 million and $32.6
million, respectively, of revenues that were included in our deferred revenue balance at the beginning of each respective fiscal
year. During the years ended December 31, 2023, and 2022, we recognized an immaterial amount of revenues from
performance obligations satisfied in previous periods. During the year ended December 31, 2021, we recognized a reduction of
revenues of $4.9 million from performance obligations satisfied in previous periods, primarily related to our Skills offering. As
of December 31, 2023, the closing balance of deferred contract costs was $6.0 million, and we recognized $15.8 million of
deferred contract cost amortization during the year ended December 31, 2023.
69
Contract Balances
The following table presents our accounts receivable, net, contract assets, and deferred revenue balances (in thousands,
except percentages):
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,404 $ 23,515 $
Contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,598
55,336
11,946
56,273
December 31,
2023
2022
Change
$
7,889
(3,348)
(937)
%
34 %
(28)
(2)
During the year ended December 31, 2023, our accounts receivable, net balance increased by $7.9 million, or 34%,
primarily due to timing of billings and seasonality of our business. During the year ended December 31, 2023, our contract
assets balance decreased by $3.3 million or 28%, primarily due to our Skills offering. During the year ended December 31,
2023, our deferred revenue balance decreased by $0.9 million, or 2%, primarily due to timing of bookings and seasonality of
our business.
Note 4. Net Income (Loss) Per Share
The following table presents the computation of basic and diluted net income (loss) per share (in thousands, except per
share amounts):
Basic
Numerator:
Years Ended December 31,
2023
2022
2021
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
18,180 $
266,638 $
(1,458)
Denominator:
Weighted average shares used to compute net income (loss) per share, basic
116,504
127,557
141,262
Net income (loss) per share, basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.16 $
2.09 $
(0.01)
Diluted
Numerator:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Convertible senior notes activity, net of tax(1)
Net income (loss), diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . .
18,180 $
266,638 $
(1,458)
(61,694)
(65,444)
—
(43,514) $
201,194 $
(1,458)
Denominator:
Weighted average shares used to compute net income (loss) per share, basic
116,504
127,557
141,262
Shares related to stock plan activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares related to convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares used to compute net income (loss) per share,
diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
12,065
968
21,334
—
—
128,569
149,859
141,262
Net income (loss) per share, diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(0.34) $
1.34 $
(0.01)
(1) Primarily includes the gain on early extinguishment on our notes, net of tax. For further information, see Note 8, “Convertible Senior
Notes.”
70
The following table presents potential weighted-average shares of common stock outstanding that were excluded from
the computation of diluted net income (loss) per share because including them would have been anti-dilutive (in thousands):
Shares related to stock plan activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares related to convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total common stock equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,442
—
8,442
3,556
—
3,556
2,545
23,300
25,845
Years Ended December 31,
2023
2022
2021
Note 5. Cash and Cash Equivalents, and Investments and Fair Value Measurements
The following tables present our cash and cash equivalents, and investments’ fair value level classification, adjusted cost,
unrealized gain, unrealized loss and fair value as of December 31, 2023 and 2022 (in thousands):
Cash and cash equivalents:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . .
Total cash and cash equivalents . . . . . . . . . . . . .
Short-term investments:
Corporate debt securities . . . . . . . . . . . . . . . .
U.S. treasury securities . . . . . . . . . . . . . . . . .
Agency bonds . . . . . . . . . . . . . . . . . . . . . . . .
Total short-term investments . . . . . . . . . . . . . . .
Long-term investments:
Corporate debt securities . . . . . . . . . . . . . . . .
U.S. treasury securities . . . . . . . . . . . . . . . . .
Total long-term investments . . . . . . . . . . . . . . . .
Cash and cash equivalents:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . .
Total cash and cash equivalents . . . . . . . . . . . . .
Short-term investments:
Commercial paper . . . . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . .
U.S. treasury securities . . . . . . . . . . . . . . . . .
Total short-term investments . . . . . . . . . . . . . . .
Long-term investments:
Corporate debt securities . . . . . . . . . . . . . . . .
U.S. treasury securities . . . . . . . . . . . . . . . . .
Agency bonds . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term investments . . . . . . . . . . . . . . . .
Fair Value
Level
Adjusted Cost
Unrealized
Gain
Unrealized
Loss
Fair Value
December 31, 2023
$
Level 1
$
45,050 $
90,707
135,757 $
Level 2 $
Level 1
Level 2
$
69,548 $
25,734
99,505
194,787 $
— $
—
— $
— $
—
—
— $
— $
—
— $
45,050
90,707
135,757
(170) $
(114)
(246)
(530) $
69,378
25,620
99,259
194,257
Level 2 $
Level 1
$
191,467 $
57,287
248,754 $
898 $
165
1,063 $
(213) $
(57)
(270) $
192,152
57,395
249,547
Fair Value
Level
Adjusted Cost
Unrealized
Gain
Unrealized
Loss
Fair Value
December 31, 2022
$
Level 1
$
33,532 $
440,145
473,677 $
Level 2 $
Level 2
Level 1
$
11,744 $
491,459
85,271
588,474 $
Level 2 $
Level 1 $
Level 2
$
125,735 $
30,633 $
60,635
217,003 $
— $
—
— $
— $
—
—
— $
158 $
122 $
—
280 $
— $
—
— $
33,532
440,145
473,677
(29) $
(4,130)
(342)
(4,501) $
(909) $
— $
(141)
(1,050) $
11,715
487,329
84,929
583,973
124,984
30,755
60,494
216,233
71
As of December 31, 2023, we determined that the declines in the market value of our investment portfolio were not
driven by credit related factors. During the years ended December 31, 2023, 2022 and 2021, we did not recognize any losses on
our investments due to credit related factors.
The following table presents the gross realized gain and loss related to our investments (in thousands):
Realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Realized loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized (loss)/gain on sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Years Ended December 31,
2023
2022
2021
346 $
(2,452)
(2,106) $
64 $
(9,739)
(9,675) $
84
(262)
(178)
The following table presents our cash equivalents and investments' adjusted cost and fair value by contractual maturity as
of December 31, 2023 (in thousands):
December 31, 2023
Cost
Fair Value
Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
194,787 $
194,257
Due after one year through three years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments not due at a single maturity date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
248,754
90,707
249,547
90,707
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
534,248 $
534,511
Investments not due at a single maturity date in the preceding table consisted of money market funds.
Strategic Investments
In May 2023, we entered into a $15.0 million commitment to invest in Sound Ventures AI Fund, L.P. (Sound Ventures),
a limited partnership that invests in AI companies, for an approximate 6% ownership. We accounted for our investment under
the equity method of accounting. During the year ended December 31, 2023, we funded $11.8 million of our investment
commitment. As of December 31, 2023, we had an unfunded investment commitment of $3.2 million. On January 1, 2024, we
sold our partnership interest in Sound Ventures, along with all rights, duties and obligations, including the obligation to fund the
remaining balance of our capital commitment, for $15.5 million. The initial accounting for the sale is in process as of the
issuance date of our financial statements and therefore we are unable to make any additional disclosures.
In July 2022, we completed an investment of $6.0 million in Knack Technologies, Inc. (Knack), a privately held U.S.
based peer-to-peer tutoring platform for higher education institutions. We do not have the ability to exercise significant
influence over Knack's operating and financial policies and have elected to account for our investment at cost as it does not
have a readily determinable fair value.
We did not record any impairment charges on our strategic investments during the years ended December 31, 2023, 2022
and 2021, as there were no significant identified events or changes in circumstances that would be considered an indicator for
impairment. There were no observable price changes in orderly transactions for the identical or similar investments of the same
issuers during the years ended December 31, 2023, 2022 and 2021.
Financial Instruments Not Recorded at Fair Value on a Recurring Basis
We report our financial instruments at fair value with the exception of the notes. The estimated fair value of the notes
was determined based on the trading price of the notes as of the last day of trading for the period. We consider the fair value of
the notes to be a Level 2 measurement due to the limited trading activity. The estimated fair value of the 2026 notes as of
December 31, 2023 and 2022 was $202.9 million and $385.0 million, respectively. The estimated fair value of the 2025 notes
as of December 31, 2023 and 2022 was $329.5 million and $640.5 million, respectively. For further information on the notes
refer to Note 8, “Convertible Senior Notes.”
72
Note 6. Property and Equipment, Net
The following table presents our property and equipment, net balances (in thousands):
December 31,
2023
2022
Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
346,749 $
339,879
Internal-use software and website development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51,855
10,857
4,607
3,496
45,422
10,860
4,952
3,321
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
417,564
404,434
Less accumulated depreciation and content amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(234,491)
(200,051)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
183,073 $
204,383
Depreciation and content amortization expense during the years ended December 31, 2023, 2022, and 2021 was
approximately $105.3 million, which included the $34.2 million accelerated depreciation discussed below, $64.1
million, and $49.6 million, respectively.
As part of the design and build of our new generative AI experience, in August 2023, we streamlined our product
experiences. As a result, we elected to abandon certain content and software assets and accelerated depreciation over shortened
useful lives for completed assets as well as impaired in-progress software assets prior to their completion. We also recognized
other costs associated with abandoning these content and software assets. Additionally, we impaired our internships.com trade
name and adjusted the carrying value to zero. The total content and related assets charge has been recorded during the year
ended December 31, 2023.
The following table presents the consolidated statements of operations classification and total content and related assets
charge (in thousands):
Accelerated depreciation of content and software . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of in-progress software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Classification
Cost of revenues
Cost of revenues
Cost of revenues
Impairment of indefinite-lived trade name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative
Year Ended
December 31,
2023
$
34,195
2,616
1,431
38,242
3,600
Total content and related assets charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
41,842
Note 7. Goodwill and Intangible Assets
The following table presents our goodwill balances (in thousands):
Years Ended December 31,
2023
2022
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
615,093 $
289,763
Additions due to acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,902
Measurement period adjustments related to prior acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
631,995 $
367,376
(42,907)
861
615,093
Based on our evaluation of qualitative factors considered for our goodwill impairment test performed in 2023, we
determined a quantitative assessment was necessary and concluded that the fair value of our single reporting unit exceeded the
carrying value. As a result, we did not recognize a goodwill impairment charge during the year ended December 31, 2023. We
have not recognized any goodwill impairment charges since our inception.
73
The following table presents our intangible assets balances as of December 31, 2023 and December 31, 2022 (in
thousands, except weighted-average amortization period):
December 31, 2023
Weighted-
Average
Amortization
Period
(in months)
Gross
Carrying
Amount
Accumulated
Amortization
Foreign
Currency
Translation
Adjustment
Net Carrying
Amount
Developed technologies . . . . . . . . . . . . . . . . . . . .
Content libraries . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer lists . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and domain names . . . . . . . . . . . . . . . . . . .
Total intangible assets . . . . . . . . . . . . . . . . . . .
80 $
60
35
52
67 $
106,703 $
12,230
34,190
16,213
169,336 $
(55,651) $
(11,189)
(31,836)
(12,817)
(111,493) $
(3,757) $
—
(1,298)
(358)
(5,413) $
47,295
1,041
1,056
3,038
52,430
December 31, 2022
Weighted-
Average
Amortization
Period
(in months)
Gross
Carrying
Amount
Accumulated
Amortization
Foreign
Currency
Translation
Adjustment
Net
Carrying
Amount
Developed technologies . . . . . . . . . . . . . . . . . . .
Content libraries . . . . . . . . . . . . . . . . . . . . . . . . .
Customer lists . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and domain names . . . . . . . . . . . . . . . . . .
Indefinite-lived trade name . . . . . . . . . . . . . . . .
Total intangible assets . . . . . . . . . . . . . . . . . .
80 $
60
35
52
—
67 $
106,703 $
12,230
34,190
16,213
3,600
172,936 $
(44,410) $
(9,279)
(22,074)
(11,225)
—
(86,988) $
(5,751) $
—
(1,318)
(546)
—
(7,615) $
56,542
2,951
10,798
4,442
3,600
78,333
During the years ended December 31, 2023, 2022 and 2021, amortization expense related to our intangible assets totaled
approximately $24.4 million, $25.9 million and $13.7 million, respectively. During the year ended December 31, 2023, we
recognized an impairment charge on our indefinite-lived intangible asset of $3.6 million. For further information, see “Note 6,
Property and Equipment, Net.” We did not recognize any impairment charges on any of our other intangible assets during the
years ended December 31, 2023, 2022 and 2021.
The following table presents the estimated future amortization expense related to our intangible assets as of December
31, 2023 (in thousands):
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,637
11,532
11,185
9,029
6,954
93
52,430
December 31,
2023
Note 8. Convertible Senior Notes
In August 2020, we issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 (2026
notes). In March/April 2019, we issued $800 million in aggregate principal amount of 0.125% convertible senior notes due in
2025 (2025 notes, together with the 2026 notes, the notes). The aggregate principal amounts of both the 2026 notes and 2025
notes include $100 million from the initial purchasers fully exercising their option to purchase additional notes. The notes were
issued in private placements to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended.
74
The following table presents the total net proceeds from the notes (in thousands):
Principal amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000 $
800,000
Less initial purchasers’ discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less other issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(15,000)
(904)
(18,998)
(822)
984,096 $
780,180
2026 Notes
2025 Notes
The notes are our senior, unsecured obligations and are governed by indenture agreements by and between us and
Computershare Trust Company, National Association (as successor to Wells Fargo Bank, National Association), as Trustee (the
indentures). The 2026 notes bear no interest and will mature on September 1, 2026, unless repurchased, redeemed or converted
in accordance with their terms prior to such date. The 2025 notes bear interest of 0.125% per year which is payable semi-
annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2019. The 2025 notes will mature
on March 15, 2025, unless repurchased, redeemed or converted in accordance with their terms prior to such date.
Each $1,000 principal amount of the 2026 notes will initially be convertible into 9.2978 shares of our common stock.
This is equivalent to an initial conversion price of approximately $107.55 per share, which is subject to adjustment in certain
circumstances. Each $1,000 principal amount of the 2025 notes will initially be convertible into 19.3956 shares of our common
stock. This is equivalent to an initial conversion price of approximately $51.56 per share, which is subject to adjustment in
certain circumstances.
Prior to the close of business on the business day immediately preceding June 1, 2026 for the 2026 notes and December
15, 2024 for the 2025 notes, the notes are convertible at the option of holders only upon satisfaction of the following
circumstances:
•
•
•
•
during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 for the 2026 notes and
June 30, 2019 for the 2025 notes, if the last reported sale price of our common stock for at least 20 trading days (whether
or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the
immediately preceding calendar quarter is greater than or equal to 130% of the respective conversion price for the notes
on each applicable trading day;
during the five-business day period after any 10 consecutive trading day period (the measurement period) in which the
trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of
the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
if we call any or all of the notes for redemption, at any time prior to the close of business on the second scheduled trading
day immediately preceding the redemption date; or
upon the occurrence of certain specified corporate events described in the indentures.
On or after June 1, 2026 for the 2026 notes and December 15, 2024 for the 2025 notes until the close of business on the
second scheduled trading day immediately preceding the respective maturity dates, holders may convert their notes at any time,
regardless of the foregoing circumstances. Upon conversion, the notes may be settled in shares of our common stock, cash or a
combination of cash and shares of our common stock, at our election.
If we undergo a fundamental change, as defined in the indentures, prior to the respective maturity dates, subject to
certain conditions, holders of the notes may require us to repurchase for cash all or any portion of their notes at a repurchase
price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding,
the fundamental change repurchase date. In addition, if specific corporate events, described in the indentures, occur prior to the
respective maturity dates, we will also increase the conversion rate for a holder who elects to convert their notes in connection
with such specified corporate events.
In August 2023, in connection with our securities repurchase program, we extinguished $169.7 million aggregate
principal amount of the 2026 notes in privately-negotiated transactions for a total consideration of $135.8 million, which was
paid to the holders in cash. We also incurred approximately $0.4 million in fees resulting in a total reacquisition price of
$136.2 million. The carrying amount of the extinguished notes was $168.3 million resulting in a $32.1 million gain on early
extinguishment of debt. We elected to reacquire and not cancel the extinguished 2026 notes.
In May 2023, in connection with our securities repurchase program, we extinguished $85.8 million and $341.1 million
aggregate principal amount of the 2026 notes and 2025 notes, respectively, in privately-negotiated transactions for a total
consideration of $368.6 million, which was paid to the holders in cash. We also incurred approximately $1.2 million in fees
75
resulting in a total reacquisition price of $369.8 million. The carrying amount of the extinguished notes was $423.5 million
resulting in a $53.8 million gain on early extinguishment of debt. We elected to reacquire and not cancel the extinguished 2026
notes and the 2025 notes were canceled with the trustee. Additionally, we terminated 2025 notes capped call transactions
underlying 6,615,161 shares of our common stock and received aggregate cash proceeds of $0.3 million.
As of December 31, 2023, we had 9,297,800 and 6,961,352 shares remaining underlying the 2026 notes and 2025 notes,
respectively. During the year ended December 31, 2023, the conditions allowing holders of the 2026 notes and 2025 notes to
convert were not met and therefore the 2026 notes and 2025 notes are not convertible. As of December 31, 2023, holders may
convert the 2025 notes at any time within twelve months after the reporting date. As a result, we have classified the remaining
net carrying amount of 2025 notes as a current liability.
The following table presents the net carrying amount of the notes (in thousands):
Principal amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 244,479 $ 358,914 $ 500,000 $ 699,979
Unamortized issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,721)
(1,835)
(4,837)
(6,549)
Net carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 242,758 $ 357,079 $ 495,163 $ 693,430
December 31, 2023
December 31, 2022
2026 Notes
2025 Notes
2026 Notes
2025 Notes
The following table presents the total interest expense recognized related to the notes (in thousands):
Years Ended December 31,
2023
2022
2021
2026 notes:
Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Amortization of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total 2026 notes interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
1,035
1,035 $
— $
2,196
2,196 $
2025 notes:
Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
621 $
874 $
Amortization of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,121
2,970
Total 2025 notes interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,742 $
3,844 $
—
2,635
2,635
896
3,045
3,941
Capped Call Transactions
Concurrently with the offering of the 2026 notes and 2025 notes, we used $103.4 million and $97.2 million, respectively,
of the net proceeds to enter into privately negotiated capped call transactions which are expected to reduce or offset potential
dilution to holders of our common stock upon conversion of the notes or offset the potential cash payments we would be
required to make in excess of the principal amount of any converted notes. The capped call transactions automatically exercise
upon conversion of the notes and as of December 31, 2023, cover 9,297,800 and 6,961,352 shares of our common stock for the
2026 notes and 2025 notes, respectively. These are intended to effectively increase the overall conversion price from $107.55 to
$156.44 per share for the 2026 notes and $51.56 to $79.32 per share for the 2025 notes. The effective increase in conversion
price as a result of the capped call transactions serves to reduce potential dilution to holders of our common stock and/or offset
the cash payments we are required to make in excess of the principal amount of any converted notes. As these transactions meet
certain accounting criteria, they are recorded in stockholders’ equity as a reduction of additional paid-in capital on our
consolidated balance sheets and are not accounted for as derivatives. The fair value of the capped call instrument is not
remeasured each reporting period. The cost of the capped call is not expected to be deductible for tax purposes.
Note 9. Leases
Our primary operating lease commitments at December 31, 2023 are related to our corporate headquarters and offices in
the United States and internationally. As of December 31, 2023 and 2022, we had operating lease ROU assets of $25.1 million
and $18.8 million, respectively, and operating lease liabilities of $24.9 million and $20.9 million, respectively. As of December
31, 2023 and 2022, our weighted average remaining lease term was 3.9 years and 4.0 years, respectively, and our weighted
average discount rate was 5.8% and 5.2%, respectively.
76
During the year ended December 31, 2023, we extended our existing lease agreement related to our corporate
headquarters in Santa Clara and reassessed lease terms related to office spaces internationally in India, resulting in the recording
of $12.4 million of right of use assets in exchange for lease liabilities.
During the years ended December 31, 2023, 2022 and 2021, operating lease expense, net of immaterial sublease income,
was approximately $7.6 million, $7.3 million and $7.1 million, respectively. During the years ended December 31, 2023, 2022
and 2021, variable lease cost and short-term lease cost were immaterial.
The following table presents the aggregate future minimum lease payments and reconciliation to operating lease
liabilities as of December 31, 2023 (in thousands):
December 31,
2023
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,084
6,605
5,922
5,497
1,898
—
28,006
(3,120)
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
24,886
Note 10. Commitments and Contingencies
We may from time to time be subject to certain legal proceedings and claims in the ordinary course of business,
including claims of alleged infringement of trademarks, patents, copyrights, and other intellectual property rights; employment
claims; and general contract or other claims. We may also, from time to time, be subject to various legal or government claims,
demands, disputes, investigations, or requests for information. Such matters may include, but not be limited to, claims, disputes,
or investigations related to warranty, refund, breach of contract, employment, intellectual property, government regulation, or
compliance or other matters.
On March 1, 2023, Plaintiff Shiva Stein, derivatively on behalf of Chegg, filed a stockholder derivative complaint in the
Court of Chancery of the State of Delaware (Case No. 2023-0244-NAC) asserting breach of fiduciary duty, unjust enrichment,
and waste of corporate asset claims against members of Chegg’s Board and certain Chegg officers. The matter is stayed. The
Company disputes these claims and intends to vigorously defend itself in this matter.
On February 14, 2023, Plaintiff Brian Stansell, individually and on behalf of other similarly situated stockholders of
Chegg, filed a putative class action complaint in the Court of Chancery of the State of Delaware (Case No. 2023-0180) on
behalf of all Chegg stockholders who were eligible to vote at Chegg's 2022 Annual Stockholders' Meeting, asserting breach of
fiduciary duty claims against the members of Chegg's Board. The Company has filed a motion to dismiss the case, which is
pending before the Court. The Company disputes these claims and intends to vigorously defend itself in this matter.
On December 22, 2022, JPMorgan Chase Bank, N.A. (JPMC) asserted a demand for repayment by the Company of
certain investment proceeds received by the Company in its capacity as an investor in TAPD, Inc. (more commonly known as
“Frank”). JPMC seeks such repayment pursuant to certain provisions in the existing Support Agreement between JPMC and the
Company that was entered into in connection with JPMC's acquisition of Frank. JPMC has alleged fraud on the part of certain
former Frank executives regarding the quantity and quality of its customer accounts. The Company is not at fault, however is
pursuing a settlement agreement with JPMC. As of December 31, 2023, we believe a loss is probable and reasonably estimable,
and we have recognized an estimated loss contingency accrual of $7.0 million within general and administrative expense on our
consolidated statements of operations during the year ended December 31, 2023.
On November 9, 2022, Plaintiff Joshua Keller, individually and on behalf of all others similarly situated, filed a putative
class action in the United States District Court for the Northern District of California (Case No. 22-cv-06986) on behalf of
individuals whose data was allegedly impacted by past data breaches. On August 15, 2023, the Company received an order
granting its motion to compel arbitration, and the case will be stayed and administratively closed pending the conclusion of
arbitration.
77
On March 30, 2022, Joseph Robinson, derivatively on behalf of Chegg, filed a shareholder derivative complaint against
Chegg and certain of its current and former directors and officers in the United States District Court for the Northern District of
California, alleging violations of securities laws and breaches of fiduciary duties. On February 22, 2023, Plaintiff filed an
Amended Shareholder Derivative Complaint. This matter has been consolidated with Choi, below, and both matters are stayed.
The Company disputes these claims and intends to vigorously defend itself in this matter.
On January 12, 2022, Rak Joon Choi, derivatively on behalf of Chegg, filed a shareholder derivative complaint against
Chegg and certain of its current and former directors and officers in the United States District Court for the Northern District of
California, alleging violations of securities laws, breaches of fiduciary duties, unjust enrichment, abuse of control, gross
mismanagement, and waste of corporate assets. On February 22, 2023, Plaintiff filed an Amended Shareholder Derivative
Complaint. This matter has been consolidated with Robinson, above, and both matters are stayed. The Company disputes these
claims and intends to vigorously defend itself in this matter.
On December 22, 2021, Steven Leventhal, individually and on behalf of all others similarly situated, filed a purported
securities fraud class action on behalf of all purchasers of Chegg common stock between May 5, 2020 and November 1, 2021,
inclusive, against Chegg and certain of its current and former officers in the United States District Court for the Northern
District of California (Case No. 5:21-cv-09953), alleging that Chegg and several of its officers made materially false and
misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On September 7, 2022,
KBC Asset Management and The Pompano Beach Police & Firefighters Retirement System were appointed as lead plaintiff in
the case. On December 8, 2022, Plaintiff filed his Amended Complaint and seeks unspecified compensatory damages, costs,
and expenses, including counsel and expert fees. The Company has filed a motion to dismiss the case, which is pending before
the Court. The Company disputes these claims and intends to vigorously defend itself in this matter.
On September 13, 2021, Pearson Education, Inc. (Pearson) filed a complaint captioned Pearson Education, Inc. v. Chegg,
Inc. (Pearson Complaint) in the United States District Court for the District of New Jersey against the Company (Case 2:21-
cv-16866), alleging infringement of Pearson’s registered copyrights and exclusive rights under copyright in violation of the
United States Copyright Act. Pearson is seeking injunctive relief, monetary damages, costs, and attorneys’ fees. The Company
filed its answer to the Pearson Complaint on November 19, 2021. Pearson’s June 29, 2022 Motion for Leave to File Amended
Complaint seeking to add Bedford, Freeman & Worth Publishing Group, LLC d/b/a Macmillan Learning as a plaintiff was
denied. Pearson filed an Amended Complaint on May 10, 2023, and the Company filed an amended answer on June 7, 2023.
The Company disputes these claims and intends to vigorously defend itself in this matter.
On June 18, 2020, we received a Civil Investigative Demand (CID) from the Federal Trade Commission (FTC) regarding
certain alleged deceptive or unfair acts or practices related to consumer privacy and/or data security. On October 31, 2022, the
FTC published the parties’ agreed-upon consent order regarding Chegg’s privacy and data security practices. On January 27,
2023, the FTC finalized its order ("Final Order") requiring Chegg to implement a comprehensive information security program,
limit the data the Company can collect and retain, offer users multi factor authentication to secure their accounts, and allow
users to request access to and delete their data. No monetary penalties or fines were included in the Final Order.
Aside from the loss contingency accrual recorded related to the Frank matter, we have not recorded any contingent
liabilities related to the above matters as we do not believe that a loss is probable and reasonably estimable in these matters. We
are not aware of any other pending legal matters or claims, individually or in the aggregate, which are expected to have a
material adverse impact on our consolidated financial position, results of operations, or cash flows. However, our analysis of
whether a claim will proceed to litigation cannot be predicted with certainty, nor can the results of litigation be predicted with
certainty. Nevertheless, defending any of these actions, regardless of the outcome, may be costly, time consuming, distract
management personnel and have a negative effect on our business. An adverse outcome in any of these actions, including a
judgment or settlement, may cause a material adverse effect on our future business, operating results or financial condition.
Note 11. Guarantees and Indemnifications
We have agreed to indemnify our directors and officers for certain events or occurrences, subject to certain limits, while
such persons are or were serving at our request in such capacity. We may terminate the indemnification agreements with these
persons upon termination of employment, but termination will not affect claims for indemnification related to events occurring
prior to the effective date of termination. We have a directors’ and officers’ insurance policy that covers our potential exposure
up to the limits of our insurance coverage. In addition, we also have other indemnification agreements with various vendors
against certain claims, liabilities, losses, and damages. The maximum amount of potential future indemnification is unlimited.
78
We believe the fair value of these indemnification agreements is immaterial. We have not recorded any liabilities for
these agreements as of December 31, 2023 and 2022.
Note 12. Common Stock
We are authorized to issue 400 million shares of our common stock, with a par value per share of $0.001. The following
table presents the shares of our common stock we have reserved for future issuance as of December 31, 2023:
Outstanding stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
232,327
Outstanding RSUs and PSUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,065,783
Shares available for grant under the 2023 Equity Inducement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,756,098
Shares available for grant under the 2023 Equity Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,877,920
Shares available for issuance under the Amended and Restated 2013 Employee Stock Purchase Plan . . . . . . . . .
3,866,559
Total common shares reserved for future issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,798,687
December 31,
2023
Stock Plans
2023 Equity Inducement Plan
On October 11, 2023, our Board of Directors approved and adopted our 2023 Equity Inducement Plan (the “2023
EINP”). On the effective date of the 2023 EINP, 2,000,000 shares of our common stock were reserved for issuance and as
of December 31, 2023, there were 1,756,098 shares of common stock available for future issuance. The 2023 EINP permits the
granting of non-qualified stock options and restricted stock unit awards. The 2023 EINP terminates on the later of (i) October
11, 2033 or (ii) ten years from the last date that additional shares are added to the EINP by the Compensation Committee of our
Board of Directors.
2023 Equity Incentive Plan
On April 7, 2023, our Board of Directors adopted our 2023 Equity Incentive Plan (the “2023 EIP”), which was
subsequently approved by our stockholders and became effective on June 7, 2023, replacing our 2013 Equity Incentive Plan
(the “2013 Plan”). On the effective date of the 2023 EIP, 12,000,000 shares of our common stock were reserved for issuance.
On June 6, 2023, the date on which the 2013 Plan expired, all remaining shares available for grant under the 2013 Plan were
cancelled, and we will not make any additional grants under the 2013 Plan. In addition, any shares subject to awards, including
shares subject to awards granted under the 2013 Plan that were outstanding on June 7, 2023, that are cancelled, forfeited,
repurchased, expire by their terms without shares being issued, are used to pay the exercise price of an option or stock
appreciation right or withheld to satisfy the tax withholding obligations related to any award, will be returned to the pool of
shares available for grant and issuance under the 2023 EIP. As of December 31, 2023, there were 11,877,920 shares available
for grant under the 2023 EIP. The 2023 EIP permits the granting of incentive stock options, non-qualified stock options, RSUs,
restricted stock awards, stock bonus awards, stock appreciation rights and performance awards. The 2023 EIP terminates on
April 7, 2033.
Amended and Restated 2013 Employee Stock Purchase Plan
On April 7, 2023, our Board of Directors adopted our Amended and Restated 2013 Employee Stock Purchase Plan (the
“A&R ESPP”), which was subsequently approved by our stockholders and became effective on June 7, 2023. The A&R ESPP
permits eligible employees to purchase shares of our common stock by accumulating funds through periodic payroll deductions.
The A&R ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Code. Under the A&R
ESPP, eligible employees will be granted an option to purchase shares of our common stock at a 15% discount to the lesser of
the fair market value of our common stock on (i) the first trading day of the applicable offering period or (ii) the last day of
each purchase period in the applicable offering period. The Compensation Committee of our Board of Directors shall determine
the duration and commencement date of each offering period, provided that an offering period shall in no event be longer than
twenty-seven (27) months, except as otherwise provided by an applicable sub-plan. Upon approval of the A&R ESPP, the
available share pool under our existing 2013 Employee Stock Purchase Plan was
reduced, and we have
reserved 4,000,000 shares of our common stock under the A&R ESPP. As of December 31, 2023, there were 3,866,559 shares
of common stock available for future issuance under the A&R ESPP.
79
Note 13. Stockholders' Equity
Share Repurchases
In November 2023 and February 2023, we entered into accelerated share repurchase (ASR) agreements with financial
institutions. Upon execution, we paid a fixed amount of $150.0 million for each ASR and received an initial delivery of shares
of our common stock that represented 80 percent of the fixed amount for each ASR. We accounted for each ASR as two
separate transactions, a repurchase of our common stock and an equity-linked contract indexed to our common stock that met
certain accounting criteria for classification in stockholders' equity. Each ASR, along with $3.2 million in associated costs,
primarily consisting of an estimated 1% excise tax, was recorded as a reduction to additional paid in capital on our consolidated
statements of stockholders’ equity. The November 2023 ASR did not settle during 2023. The February 2023 ASR settled, and
we were not required to make any additional cash payments or delivery of common stock to the financial institution upon
settlement. During the year ended December 31, 2023, we received a total of 23,072,822 shares of our common stock under the
ASR transactions, which were retired immediately.
In June 2023, we repurchased 3,433,157 shares of our common stock in open market transactions for $34.5 million.
During the year ended December 31, 2022, we received a total of 12,709,278 shares of our common stock from prior
ASR and open market transactions, which were retired immediately.
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. 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,
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.
Share-based Compensation Expense
The following table presents total share-based compensation expense recorded (in thousands):
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Years Ended December 31,
2023
2022
2021
2,256 $
44,103
9,524
77,619
133,502 $
2,484 $
41,335
13,857
75,780
133,456 $
1,621
37,131
13,887
56,207
108,846
During the years ended December 31, 2023, 2022 and 2021, we capitalized share-based compensation expense of
$3.3 million, $5.3 million, and $2.6 million, respectively. As of December 31, 2023, we had a total of approximately $141.3
million of unrecognized share-based compensation expense, related to unvested RSUs and PSUs, that is expected to be
recognized over the remaining weighted average period of 1.8 years.
PSU Grants with Financial and Strategic Performance Targets
In March 2023, 2022, and 2021, we granted PSUs to certain of our key executives. The PSUs entitle the executives to
receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance
targets during the years ended December 31, 2023, 2022, and 2021, respectively. Based on the achievement of the performance
conditions for the March 2023, 2022 and 2021 PSUs, the final settlement partially met the target threshold, based on a specified
objective formula approved by the Compensation Committee of the Board of Directors. The March 2023 PSUs vest over either
a one-year or three-year period, with initial vesting occurring one year after the grant date. The March 2022 and March 2021
PSUs vest over a three-year period, with the initial vesting occurring one year after the grant date. During the years ended
80
December 31, 2023, 2022, and 2021, the number of shares underlying the March 2023, March 2022, and March 2021 PSUs
totaled 565,341, 614,177, and 278,644, respectively, and each had a grant date fair value per share of $15.89, $35.82, and
$99.05, respectively.
2021 PSU Grants with Market-Based Conditions
In March 2021, we granted PSUs with market-based conditions to certain of our key employees. The number of shares of
our common stock that may be issued to settle these PSUs range from 50% at the threshold level to 150% at the maximum level
of the 100% target level of the award depending on the maximum average market value of the per share price of our common
stock, for a period of 60 consecutive trading days, over a three-year performance period ending on the third anniversary of the
date of grant. No payout will be made for performance below the 50% threshold level. The market value of the per share price
of our common stock must reach $123.81, $148.58, or $173.34 at the threshold, target, or maximum levels, respectively, for
achievement of the award, which could result in issuance of 244,086, 488,173, or 732,260 shares of our common stock at each
respective payout level. These PSUs vest over a four-year period, subject to continued service over the requisite period, with the
initial vesting of 50% of the award occurring in March 2024. The number of PSUs granted totaled 732,260 shares, which
represents the maximum number of shares, and had a grant date fair value of $68.55 per share, determined under the Monte
Carlo simulation approach described further below. As of December 31, 2023, the market-based conditions have not been met.
Fair Value of PSUs with Market-Based Conditions
We estimate the fair value of the PSUs using a Monte Carlo simulation approach, which utilizes the fair value of our
common stock based on an active market and requires input on the following subjective assumptions:
Expected Term. The expected term for the awards is the performance period of three years.
Expected Volatility. The expected volatility is based on the historical average volatility of our stock price over the
expected term.
Expected Dividends. The dividend assumption is based on our historical experience. To date we have not paid any
dividends on our common stock.
Risk-Free Interest Rate. The risk-free interest rate used in the valuation method is the implied yield on the U.S. treasury
zero-coupon issues, with a remaining term equal to the expected term.
The following table presents the key assumptions used to determine the fair value of the awards:
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.00
49.04 %
— %
0.27 %
RSUs and PSUs Activity
RSUs and PSUs Outstanding
Number of
RSUs and PSUs
Outstanding
Weighted
Average Grant
Date Fair Value
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,155,680 $
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,283,841
Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,637,801)
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,735,937)
10,065,783 $
36.03
14.58
35.32
31.79
23.63
The weighted-average grant-date fair value of RSUs and PSUs granted during the years ended December 31, 2023, 2022,
and 2021 was $14.58, $27.68, and $47.95, respectively. The total fair value of RSUs and PSUs vested as of the vesting dates
during the years ended December 31, 2023, 2022, and 2021 was $45.3 million, $74.2 million, and $232.0 million, respectively.
81
Fair Value of ESPP
Under the ESPP, rights to purchase shares are granted during the second and fourth quarter of each year. We estimate the
fair value of each right to purchase shares using the Black-Scholes-Merton option-pricing model, which utilizes the fair value of
our common stock based on active market and requires input on the following subjective assumptions:
Expected Term. The expected term for rights to purchase shares is six months.
Expected Volatility. The expected volatility is based on the average volatility of our stock price over the expected term.
Expected Dividends. The dividend assumption is based on our historical experience. To date we have not paid any
dividends on our common stock.
Risk-Free Interest Rate. The risk-free interest rate used in the valuation method is the implied yield on the United States
treasury zero-coupon issues, with a remaining term equal to the expected term.
The following table presents the key assumptions used to determine the fair value of rights granted under the ESPP:
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.50
0.50
0.50
Years Ended December 31,
2023
2022
2021
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.79%-109.39% 70.37%-78.74% 47.02%-99.96%
0.00 %
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.00 %
0.00%
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.24%-5.41%
1.54%-4.54%
0.04%-0.07%
Weighted-average grant-date fair value per share . . . . . . . . . . . . $
3.62 $
8.71
$
14.70
ESPP Activity
There were 454,533, 382,392 and 167,890 shares purchased during the years ended December 31, 2023, 2022 and 2021,
respectively, at an average price per share of $8.10, $15.61 and $40.35, respectively, with cash proceeds from the issuance of
shares of $3.7 million, $6.0 million and $6.8 million, respectively. Share-based compensation expense related to ESPP was
$2.5 million, $3.1 million, and $3.2 million during the years ended December 31, 2023, 2022 and 2021, respectively.
Stock Option Activity
Stock Options Outstanding
Number of
Stock Options
Outstanding
Weighted-
Average
Exercise Price
per Share
Weighted-
Average
Remaining
Contractual
Term in Years
Aggregate
Intrinsic Value
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . .
326,258 $
7.02
2.15 $ 5,954,714
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(72,049)
(21,882)
Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . .
232,327 $
6.02
1.81 $ 1,240,014
We did not grant any stock options during the years ended December 31, 2023, 2022, and 2021. The total intrinsic value
of stock options exercised during the years ended December 31, 2023, 2022 and 2021, was approximately $0.2 million, $1.3
million and $10.7 million, respectively.
Note 14. Income Taxes
We recorded a provision for income taxes of $32.1 million during the year ended December 31, 2023, a benefit from
income taxes of $162.7 million during the year ended December 31, 2022 and a provision for income taxes of $7.2 million
during the year ended December 31, 2021. The provision for income taxes during the year ended December 31, 2023 was
primarily due to federal and state income taxes in the United States largely driven by a shortfall associated with equity
82
compensation. The benefit from income taxes during the year ended December 31, 2022 was primarily due to the release of the
valuation allowance on certain U.S. and state deferred tax assets. The provision for income taxes during the year ended
December 31, 2021 was primarily due to state and foreign income tax expenses and the withholding taxes related to the sale of
our strategic equity investment.
The following table presents our (provision for) benefit from income taxes (in thousands):
Years Ended December 31,
2023
2022
2021
Current income taxes:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(2,460) $
(113) $
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,064)
(33)
(5,557)
(2,172)
(3,702)
(5,987)
Deferred income taxes:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(26,210)
147,236
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,634)
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,269
19,995
1,448
Total deferred benefit from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
(26,575)
168,679
—
(852)
(7,449)
(8,301)
(250)
(218)
1,572
1,104
Total (provision for) benefit from income taxes . . . . . . . . . . . . . . . . . . . $
(32,132) $
162,692 $
(7,197)
The following table presents our income before (provision for) benefit from income taxes (in thousands):
Years Ended December 31,
2023
2022
2021
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
61,152 $
123,269 $
(6,256)
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,840)
(19,323)
Total income before (provision for) benefit from income taxes . . . . . . . . . . . $
50,312 $
103,946 $
11,995
5,739
The following table presents the differences between our (provision for) benefit from income taxes as presented in the
accompanying consolidated statements of operations and the income tax expense computed at the federal statutory rate as a
percentage of income before (provision for) benefit from income taxes (in percentages):
Years Ended December 31,
2023
2022
2021
Income tax at U.S. statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.0 %
21.0 %
State, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes on foreign earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement of Unrecognized Tax Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign-Derived Intangible Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.6
0.7
39.3
(2.5)
0.8
4.2
(8.0)
(5.2)
2.0
0.0
0.0
63.9 %
83
1.6
(1.1)
15.3
1.6
(0.7)
21.0 %
(232)
35.5
(209.0)
1.5
(28.3)
(210.5)
2,954.3
0.0
0.0
1.3
15.0
0.0
(156.5) %
0.0
0.0
0.5
(2,435.3)
17.2
125.4 %
The following table presents a summary of our deferred tax assets (in thousands):
December 31,
2023
2022
Deferred tax assets:
Accrued expenses and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
10,442 $
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss and credits carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and experimental expenditures capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,200
92,302
5,566
69,362
6,133
7,990
10,078
147,465
16,648
37,719
6,777
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
195,005
226,677
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(40,162)
(36,122)
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
154,843 $
190,555
Deferred tax liabilities:
Property and equipment, textbooks and intangibles assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(2,621) $
(14,766)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,134)
(10,070)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(15,755) $
(24,836)
Net deferred tax asset (liability) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
139,088 $
165,719
As of December 31, 2023, we have determined our earnings in India are not permanently reinvested. As such, a tax
liability of $2.8 million has been accrued for taxes that would be incurred upon repatriation of such earnings. The determination
of the future tax consequences of the remittance of these earnings is not practicable. For our remaining foreign subsidiaries, to
the extent we can repatriate cash with no significant tax cost, we have determined those earnings are not permanently
reinvested. All other earnings have been determined to be permanently reinvested.
Realization of the deferred tax assets is dependent upon future taxable income, the amount and timing of which are
uncertain. The valuation allowance increased by approximately $4.0 million during the year ended December 31, 2023 and
decreased by approximately $202.2 million during the year ended December 31, 2022. Previously, we maintained a valuation
allowance against our deferred tax assets until we expected that it would be more-likely-than not that they would be realized.
The release of the valuation allowance in 2022 is the result of our expectation that our domestic operations will continue to be
profitable and is based on a detailed evaluation of all available evidence. The principal indicator leading to the release is the
recent cumulative earnings of U.S. and certain state jurisdictions and the forecasted earnings in these jurisdictions. We continue
to maintain a valuation allowance against our California deferred tax assets and our anticipated capital loss temporary
differences. We will continue to quarterly assess the need for such valuation allowance.
As of December 31, 2023, we had net operating loss carryforwards for federal and state income tax purposes of
approximately $169 million and $218 million, respectively, which will begin to expire in years beginning 2030 and 2024,
respectively. We also had net operating loss carryforwards for United Kingdom income tax purposes of approximately
$109 million, which do not expire.
As of December 31, 2023, we had tax credit carryforwards for federal and state income tax purposes of
approximately $13.9 million and $17.0 million, respectively. The federal credits expire in various years beginning in 2038. The
state credits do not expire.
Utilization of our net operating losses and tax credit carryforwards may be subject to substantial annual limitations due to
ownership change limitations provided by the Internal Revenue Code of 1986, as amended (IRC), and similar state provisions.
Such annual limitations could result in the expiration of the net operating losses and tax credit carryforwards before utilization.
We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. During the
years ended December 31, 2023, 2022 and 2021, we recognized a decrease of $0.3 million and an increase of $26 thousand and
84
$0.1 million of interest and penalties, respectively. As of December 31, 2023, there are no accrued interest and penalties related
to uncertain tax positions. As of December 31, 2022, accrued interest and penalties were approximately $0.3 million.
We file tax returns in U.S. federal, state, and certain foreign jurisdictions with varying statutes of limitations. Due to net
operating loss and credit carryforwards, all of the tax years since inception through tax year 2023 remain subject to examination
by the U.S. federal and some state authorities. Foreign jurisdictions remain subject to examination up to approximately seven
years from the filing date, depending on the jurisdiction. United Kingdom income tax remains subject to examination by the
HM Revenue & Custom for certain tax years due to net operating loss and credits carryforwards.
The following table presents the reconciliation of the beginning and ending balances of the total amount of unrecognized
tax benefits, excluding accrued interest and penalties (in thousands):
Years Ended December 31,
2023
2022
2021
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
16,953 $
16,805 $
14,654
Increase in tax positions for prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in tax positions for prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in tax positions for prior year settlement . . . . . . . . . . . . . . . . . . . . .
Decrease in tax positions for prior years due to statutes lapsing . . . . . . . . . . .
Increase in tax positions for current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change due to translation of foreign currencies . . . . . . . . . . . . . . . . . . . . . . . .
—
(131)
(4,703)
—
281
—
333
(876)
(386)
—
1,520
(443)
305
(952)
(22)
(426)
3,309
(63)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
12,400 $
16,953 $
16,805
The amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate is $6.8 million for the
year ended December 31, 2023. One or more of these unrecognized tax benefits could be subject to a valuation allowance if,
and when recognized in a future period, which could impact the timing of any related effective tax rate benefit.
The actual amount of any taxes due could vary significantly depending on the ultimate timing and nature of any
settlement. We believe that the amount by which the unrecognized tax benefits may increase or decrease within the next 12
months is not estimable.
Note 15. Restructuring Charges
In June 2023, we announced a reduction in workforce to better position us to execute against our AI strategy and to
create long-term, sustainable value for students and investors. This resulted in a management approved restructuring plan that
impacted approximately 90 employees primarily in the United States. During the year ended December 31, 2023, we recorded
restructuring charges of $5.7 million related to one-time employee termination benefits, classified on our consolidated
statements of operations based on the employees' job function, and made payments of $5.2 million. As of December 31, 2023
the $0.5 million liability is included within accrued liabilities on our consolidated balance sheets. The total cost of the
restructuring plan of $5.7 million has been recorded and we expect it to be substantially completed by the end of the first
quarter 2024. We expect cost savings from the restructuring plan to be reinvested in future growth opportunities.
85
Note 16. Consolidated Statements of Operations Details
The following table presents our other income (expense), net (in thousands):
Gain/(loss) on early extinguishment of debt(1)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized loss on sale of investments(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact on purchase consideration . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Loss on change in fair value of derivative instruments, net . . . . . . . . . . . . . . . . .
Gain on sale of strategic equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2023
2022
2021
85,926 $
93,519 $
(78,152)
37,411
12,431
(2,106)
(9,675)
—
—
—
579
4,628
—
—
126
6,700
(178)
—
(7,148)
12,496
810
Total other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
121,810 $
101,029 $
(65,472)
_____________________________________________________
(1) For further information, see Note 8, “Convertible Senior Notes.”
(2) For further information, see Note 5, “Cash and Cash Equivalents, and Investments and Fair Value Measurements.”
Note 17. Employee Benefit Plan
We sponsor a 401(k) savings plan for eligible employees and their beneficiaries. Contributions by us are discretionary
and participants may contribute, on a pretax basis, a percentage of their annual compensation, not to exceed a maximum
contribution amount pursuant to Section 401(k) of the IRC. During the years ended December 31, 2023, 2022, and 2021,
matching contributions totaled approximately $4.9 million, $4.4 million and $2.6 million, respectively.
Note 18. Segment Information
Our chief operating decision-maker is our Chief Executive Officer who makes resource allocation decisions and reviews
financial information presented on a consolidated basis. Accordingly, we have determined that we have a single operating and
reportable segment and operating unit structure.
Product Information
We derive our revenues from our Subscription Services and Skills and Other product lines. Our Subscription Services
include Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu. Our Skills and Other product line includes
revenues from Skills, advertising services, print textbooks and eTextbooks.
The following table presents our total net revenues for the periods shown for our Subscription Services and Skills and
Other product lines (in thousands):
Years Ended December 31,
2023
2022
2021
Subscription Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Skills and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
640,520 $
75,775
671,968 $
94,929
616,817
159,448
Total net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
716,295 $
766,897 $
776,265
The following table presents our total net revenues by geographic area (in thousands):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Years Ended December 31,
2023
2022
2021
616,359 $
99,936
716,295 $
651,469 $
115,428
766,897 $
690,013
86,252
776,265
86
The following table presents our long-lived assets by geographic area of December 31, 2023 (in thousands):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
186,142
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,060
Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
208,202
December 31,
2023
As of December 31, 2022, substantially all of our long-lived assets were located in the United States.
87
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period
covered by this report.
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource
constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and
procedures relative to their costs.
Based on management’s evaluation, our principal executive officer and principal financial officer concluded that our
disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level that the
information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosures.
(b) Management's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as
defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended). Our management assessed the effectiveness of
our internal control over financial reporting as of December 31, 2023. In making this assessment, our management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—
Integrated Framework (2013 framework). All control systems are subject to inherent limitations. Our management has
concluded that, as of December 31, 2023, our internal control over financial reporting is effective based on these criteria.
Additionally, our independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on the
Company's internal control over financial reporting, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
(c) Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2023, there were no changes in our internal control over financial reporting
identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred
during our most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the three months ended December 31, 2023, none of our Section 16 officers or directors adopted or terminated a
"Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of Regulation S-K during
the covered period.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
88
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information concerning our directors, compliance with Section 16(a) of the Exchange Act, our Audit Committee and
any changes to the process by which stockholders may recommend nominees to the Board required by this Item are
incorporated herein by reference to information contained in the Proxy Statement, including “Proposal No. 1 Election of
Directors,” “Committees of our Board of Directors,” “Delinquent Section 16(a) Reports” and “Stockholder Proposals to Be
Presented at Next Annual Meeting.” The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended
December 31, 2023.
The information concerning our executive officers required by this Item is incorporated herein by reference to
information contained in the Proxy Statement, including “Our Management.”
We have adopted a code of ethics, our Code of Business Conduct and Ethics, which applies to all employees, including
our principal executive officer, our principal financial officer, and all other executive officers, and our board of directors. The
Code of Business Conduct and Ethics is available on our website at investor.chegg.com under “Corporate Governance.” We
intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision
of our Code of Business Conduct and Ethics by posting such information on our website at the address and location specified
above.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to information contained in the Proxy
Statement, including “Compensation Committee Interlocks and Insider Participation” and “Executive Compensation.”
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated herein by reference to information contained in the Proxy
Statement, including “Equity Compensation Plan Information,” “Transactions with Related Parties, Founders and Control
Persons,” and “Independence of Directors.”
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated herein by reference to information contained in the Proxy
Statement, including “Corporate Governance Standards and Director Independence” “Transactions with Related Parties,
Founders and Control Persons” and “Termination and Change of Control Arrangements.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated herein by reference to information contained in the Proxy
Statement, including “Proposal No. 3 Ratification of Independent Registered Public Accounting Firm.”
89
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
We have filed the following documents as part of this Annual Report on Form 10-K:
1. Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
52
56
57
58
59
60
62
2. Financial Statement Schedules
Schedule II-Valuation and Qualifying Accounts (in thousands):
Years Ended December 31, 2023, 2022, and 2021
Balance at
Beginning of
Year
Provision for
Bad Debts
Net Write-offs
Balance at
End of Year
Accounts receivable allowance
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
394 $
58 $
(76) $
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
153
153
387
57
(146)
(57)
376
394
153
Years Ended December 31, 2023, 2022, and 2021
Balance at
Beginning of
Year
Provision for
Refunds
Refunds Issued
Balance at
End of Year
Refund reserve
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,499 $
9,724 $
(9,685) $
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,392
1,515
21,129
58,553
(21,022)
(58,676)
1,538
1,499
1,392
All other financial statement schedules are omitted because they are not applicable, or the information is included in the
Registrant’s consolidated financial statements or related notes.
3. Exhibits
Exhibit No.
3.01
3.02
4.01
4.02
4.03
Exhibit
Restated Certificate of Incorporation of Chegg,
Inc. effective November 18, 2013
Amended and Restated Bylaws of Chegg, Inc., as
amended on March 15, 2023
Form of Chegg, Inc.’s Common Stock Certificate
Description of Securities Registered Under Section
12 of the Securities Exchange Act of 1934
Indenture dated March 26, 2019 between Chegg,
Inc. and Wells Fargo Bank, National Association.
90
Incorporated by Reference
File No.
Filing Date
Exhibit No.
Filed
Herewith
Form
10-K
001-36180
3/4/16
8-K
001-36180
3/21/23
S-1/A
333-190616
10/01/13
10-K
001-36180
2/20/20
3.01
3.1
4.01
4.04
8-K
001-36180
3/26/19
4.1
8-K
001-36180
08/24/20
4.1
S-1/A
333-190616
10/01/13
10.01
8-K
8-K
S-8
S-1
001-36180
6/7/23
001-36180
6/7/23
10.1
10.2
001-36180
10/11/23
99.1
333-190616
08/14/13
10.06
S-1
333-190616
08/14/13
10.07
10-K
001-36180
3/6/14
10.07
10-K
001-36180
3/6/14
10.08
S-1
333-190616
8/14/13
10.09
10-K
001-36180
2/20/20
10.14
10-K
001-36180
02/22/22
10.10
10-Q
001-36180
7/29/19
10.03
8-K
8-K
8-K
8-K
8-K
001-36180
3/26/19
99.1
001-36180
4/5/19
99.1
001-36180
8/24/20
99.1
001-36180
8/24/20
99.2
001-36180
8/29/22
99.01
4.04
10.01*
10.02*
10.03*
10.04*
10.05*
10.06*
10.07*
10.08*
10.09*
10.10*
10.11*
10.12
10.13
10.14*
10.15
10.16
10.17
10.18
10.19
21.01
23.01
24.01
31.01
31.02
32.01**
Indenture dated August 21, 2020 between Chegg,
Inc. and Wells Fargo Bank, National Association
Form of Indemnification Agreement entered into
between Chegg, Inc. and each of its directors and
executive officers
2023 Equity Incentive Plan, and forms of
agreements thereunder
Amended And Restated Chegg, Inc. 2013
Employee Stock Purchase Plan
2023 Equity Inducement Plan, and forms of
agreements thereunder
Offer Letter between Dan Rosensweig and Chegg,
Inc., dated December 3, 2009
Amendment to Offer Letter between Dan
Rosensweig and Chegg, Inc., dated November 29,
2012
Offer Letter between Andy Brown and Chegg,
Inc., dated September 2, 2011
Amendment to Offer Letter between Andy Brown
and Chegg, Inc., dated November 29, 2012
Offer Letter between Nathan Schultz and Chegg,
Inc., dated February 19, 2008
Offer Letter between John Fillmore and Chegg,
Inc., dated May 10, 2013
Offer Letter between Esther Lem and Chegg, Inc.
dated December 9, 2010
Offer Letter between David Longo and Chegg, Inc.
dated December 1, 2021
Promotion Letter between David Longo and
Chegg, Inc. dated February 16, 2024
Form of Agreement for Change-in-Control
Severance Plan
Form of Base Capped Call Transaction
Confirmation (2025 notes)
Form of Additional Capped Call Transaction
Confirmation (2025 notes)
Form of Base Capped Call Transaction
Confirmation (2026 notes)
Form of Additional Capped Call Transaction
Confirmation (2026 notes)
Form of Exchange Agreement (2026 notes)
List of Subsidiaries
Consent of Independent Registered Public
Accounting Firm
Power of Attorney (included on signature page
hereto)
Certification of Dan Rosensweig, Chief Executive
Officer, pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Certification of Andrew Brown, Chief Financial
Officer, pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
91
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Indicates a management contract or compensatory plan.
This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended
(Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference
into any filing under the Securities Act of 1933, as amended or the Exchange Act.
97.1
Chegg, Inc. Compensation Recovery Policy
101.INS
XBRL Instance - the instance document does not
appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL
document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation
101.LAB XBRL Taxonomy Extension Labels
101.PRE XBRL Taxonomy Extension Presentation
101.DEF XBRL Taxonomy Extension Definition
Cover Page Interactive Data File (embedded
within the Inline XBRL document and contained
in Exhibit)
104
*
**
ITEM 16. FORM 10-K SUMMARY
None.
92
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
February 20, 2024
CHEGG, INC.
By:
/S/ DAN ROSENSWEIG
Dan Rosensweig
President, Chief Executive Officer and Co-Chairperson
93
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes
and appoints Dan Rosensweig, Andrew Brown and Woodie Dixon Jr., and each of them, his or her true and lawful attorneys-in-
fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities,
to sign any amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or his, her or their substitute or substitutes, may lawfully do or cause to
be done or by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated:
Name
Title
Date
/S/ DAN ROSENSWEIG
President, Chief Executive Officer and Co-Chairperson
February 20, 2024
Dan Rosensweig
(Principal Executive Officer)
/S/ ANDREW BROWN
Andrew Brown
Chief Financial Officer
(Principal Financial Officer)
February 20, 2024
/S/ DAVID LONGO
David Longo
/S/ SARAH BOND
Sarah Bond
/S/ RENEE BUDIG
Renee Budig
/S/ PAUL LEBLANC
Paul LeBlanc
/S/ MARNE LEVINE
Marne Levine
/S/ MARCELA MARTIN
Marcela Martin
/S/ RICHARD SARNOFF
Richard Sarnoff
/S/ TED SCHLEIN
Ted Schlein
/S/ MELANIE WHELAN
Melanie Whelan
/S/ JOHN YORK
John York
Vice President, Chief Accounting Officer, Corporate
Controller, and Assistant Treasurer
February 20, 2024
(Principal Accounting Officer)
Director
Director
Director
Director
Director
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
Director and Co-Chairperson
February 20, 2024
Director
Director
Director
94
February 20, 2024
February 20, 2024
February 20, 2024
B OAR D O F D I R EC TO R S
CH EGG LEADERS HIP
CO R P O R ATE H E AD Q UARTE R S
Dan Rosenswe ig
Pres id e nt ,
Ch i ef E xecut i ve Offi ce r,
a n d Co -Chai rpe rson
CH EG G, IN C .
39 9 0 Fre e d o m C ircle
S ant a Clar a, C A 9505 4
ch e g g .co m
David Lo ngo
Ch i ef F ina ncia l Offi cer
a n d Tre asure r
S TO CK LI S TIN G
Tr ad e d: Th e NYSE Sto ck E xchan g e
Sym b o l: CH G G
Deena Bah ri
Ch i ef Marke ti ng Offi ce r
Woodie Dixo n, Jr.
G e n e ra l Counse l and
Corporate Se cret ary
TR AN S FE R AG E NT
Eq uiniti Tr us t Co m p any, LLC
4 8 Wall Stre et, Flo o r 2 3
N ew Yo r k , NY 10 0 05
w w w.e q uiniti.co m
1- 8 0 0 -937-5 4 49
Lauren Glot ze r
Ch i ef Strate gy Offi ce r
IN D E PE N D E NT AU D ITO R
D e loit te & To u ch e LLP
LEGAL CO U N S E L
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Heather Hatlo Po rte r
Ch i ef Comm unicat io ns
O ffice r
Nathan Sch ultz
Ch i ef Ope rati ng Office r
Debra Tho mps on
Ch i ef Peo pl e Officer
Dana Und erwoo d
Ch i ef Prod uct Officer
S a r a h B o n d
Presid e nt of X b ox ,
M icros of t
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an d Chief Finan cial O ffi ce r,
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R ich a rd S a r n off
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an d Co - Chair p e r so n, Ch e g g
Te d S ch le i n
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S an Fr an cisco 49e r s