What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-02 · 141 added, 64 removed, 475 unchanged (30% of the section changed)

6 unchanged sentences

Short-term investments 981,288 691,781

Accounts receivable, net of allowance of $ 156 and $ 153 at March 31, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowance of $ 234 and $ 153 at June 30, 2022 and December 31, 2021, respectively

16,815 17,850

27 unchanged sentences

400,000,000 shares authorized;

126,681,972 and 136,951,956 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

126,343,933 and 136,951,956 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,211,506 1,449,305

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net revenues $ 194,721 $ 198,478 $ 396,965 $ 396,856

21 unchanged sentences

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net income (loss) $ 7,476 $ 32,764 $ 13,218 $ ( 32,415 )

Other comprehensive loss

Change in net unrealized loss on investments, net of tax ( 12,917 ) ( 1,894 )

Other comprehensive (loss) income

Change in net unrealized (loss) gain on investments, net of tax ( 2,333 ) 375 ( 15,250 ) ( 1,519 )

Change in foreign currency translation adjustments, net of tax ( 29,613 ) ( 107 ) ( 48,284 ) ( 981 )

Other comprehensive loss ( 31,588 ) ( 2,768 )

Total comprehensive loss $ ( 25,846 ) $ ( 67,947 )

Other comprehensive (loss) income ( 31,946 ) 268 ( 63,534 ) ( 2,500 )

Total comprehensive (loss) income $ ( 24,470 ) $ 33,032 $ ( 50,316 ) $ ( 34,915 )

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

(in thousands)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Value Additional Paid-In

1 unchanged sentence

Deficit Total Stockholders’ Equity

Balances at December 31, 2021

Balances at March 31, 2022

126,682 $ 127 $ 1,176,765 $ ( 36,922 ) $ ( 331,449 ) $ 808,521

Repurchases of common stock ( 837 ) ( 1 ) 1 — — —

Issuance of common stock upon exercise of stock options 54 — 455 — — 455

Issuance of common stock upon exercise of stock options and ESPP 265 — 4,102 — — 4,102

Net share settlement of equity awards 234 — ( 2,754 ) — — ( 2,754 )

2 unchanged sentences

Net income — — — — 7,476 7,476

Balances at June 30, 2022

126,344 $ 126 $ 1,211,506 $ ( 68,868 ) $ ( 323,973 ) $ 818,791

Three Months Ended June 30, 2021

Value Additional Paid-In

Capital Accumulated Other Comprehensive Loss Accumulated

Deficit Total Stockholders’ Equity

Balances at March 31, 2021 141,317 $ 141 $ 1,645,352 $ ( 1,238 ) $ ( 400,912 ) $ 1,243,343

Equity component on conversions of 2023 notes and 2025 notes — — ( 225,615 ) — — ( 225,615 )

Issuance of common stock upon conversions of 2023 notes 2,857 3 224,281 — — 224,284

Net proceeds from capped call related to conversions of 2023 notes and 2025 notes — — 44,192 — — 44,192

Issuance of common stock upon exercise of stock options and ESPP 120 — 4,919 — — 4,919

Net share settlement of equity awards 327 1 ( 15,466 ) — — ( 15,465 )

Share-based compensation expense — — 29,192 — — 29,192

Other comprehensive income — — — 268 — 268

Net income — — — — 32,764 32,764

Balances at June 30, 2021

144,621 $ 145 $ 1,706,855 $ ( 970 ) $ ( 368,148 ) $ 1,337,882

Three Months Ended March 31, 2021

Six Months Ended June 30, 2022

Value Additional Paid-In

3 unchanged sentences

136,952 $ 137 $ 1,449,305 $ ( 5,334 ) $ ( 337,191 ) $ 1,106,917

Repurchases of common stock ( 11,562 ) ( 12 ) ( 300,438 ) — — ( 300,450 )

Issuance of common stock upon exercise of stock options and ESPP 319 — 4,557 — — 4,557

Net share settlement of equity awards 635 1 ( 10,221 ) — — ( 10,220 )

Share-based compensation expense — — 68,303 — — 68,303

Other comprehensive loss — — — ( 63,534 ) — ( 63,534 )

Net income — — — — 13,218 13,218

Balances at June 30, 2022

126,344 $ 126 $ 1,211,506 $ ( 68,868 ) $ ( 323,973 ) $ 818,791

Six Months Ended June 30, 2021

Value Additional Paid-In

Capital Accumulated Other Comprehensive Loss Accumulated

Deficit Total Stockholders’ Equity

Balances at December 31, 2020

129,344 $ 129 $ 1,030,577 $ 1,530 $ ( 422,601 ) $ 609,635

Cumulative-effect adjustment related to adoption of ASU 2020-06 — — ( 465,006 ) — 86,868 ( 378,138 )

3 unchanged sentences

Net proceeds from capped call related to conversions of 2023 notes and 2025 notes — — 67,769 — — 67,769

Issuance of common stock upon exercise of stock options 44 — 346 — — 346

Issuance of common stock upon exercise of stock options and ESPP 164 — 5,265 — — 5,265

Net share settlement of equity awards 1,155 2 ( 74,642 ) — — ( 74,640 )

2 unchanged sentences

Net loss — — — — ( 32,415 ) ( 32,415 )

Balances at March 31, 2021

Balances at June 30, 2021

144,621 $ 145 $ 1,706,855 $ ( 970 ) $ ( 368,148 ) $ 1,337,882

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

6 unchanged sentences

Gain on foreign currency remeasurement of purchase consideration ( 4,628 ) —

Impairment on lease related assets 3,411 —

Loss on early extinguishment of debt — 78,152

35 unchanged sentences

Cash, cash equivalents and restricted cash, end of period $ 404,344 $ 841,776

Three Months Ended

Six Months Ended

Supplemental cash flow data:

29 unchanged sentences

Significant intercompany balances and transactions have been eliminated.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of March 31, 2022, our results of operations, results of comprehensive loss, stockholders' equity and cash flows for the three months ended March 31, 2022 and 2021.

Our results of operations, results of comprehensive loss, stockholders' equity, and cash flows for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2022, our results of operations, results of comprehensive (loss) income, and stockholders' equity for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021.

Our results of operations, results of comprehensive (loss) income, stockholders' equity, and cash flows for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

We have a single operating and reportable segment and operating unit structure.

8 unchanged sentences

Actual results could differ from these estimates, and such differences could be material to our financial position and results of operations.

There have been no material changes in our use of estimates during the three months ended March 31, 2022 as compared to the use of estimates disclosed in Part II, Item 8 “Consolidated Financial Statements and Supplementary Data” contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

There have been no material changes in our use of estimates during the six months ended June 30, 2022 as compared to the use of estimates disclosed in Part II, Item 8 “Consolidated Financial Statements and Supplementary Data” contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

Condensed Consolidated Statements of Operations Details

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Loss on early extinguishment of debt $ — $ — $ — $ ( 78,152 )

3 unchanged sentences

Interest income 2,032 1,851 3,509 3,900

Other ( 223 ) 69 ( 148 ) 774

Total other income (expense), net

1 unchanged sentence

(1) For further information, see Note 5, “Acquisition.”

Impairment of Lease Related Assets

Right of use (ROU) assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

During the three months ended June 30, 2022, we announced the closure of our San Francisco office and determined that the carrying amount of the ROU asset was not recoverable.

As a result, we recorded an impairment charge of $ 3.4 million, consisting of a $ 2.0 million impairment of a ROU asset and $ 1.4 million write-off of leasehold improvements, included in general and administrative expense on our condensed consolidated statement of operations.

Our intent and ability to sublease the office as well as the local market conditions were factored in when measuring the amount of impairment.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

There were no accounting pronouncements issued during the three months ended March 31, 2022 that would have an impact on our financial statements.

There were no accounting pronouncements issued during the six months ended June 30, 2022 that would have an impact on our financial statements.

Recently Adopted Accounting Pronouncements

14 unchanged sentences

Three Months Ended

March 31, Change

June 30, Change

2022 2021 $ %

2 unchanged sentences

Total net revenues $ 194,721 $ 198,478 $ ( 3,757 ) ( 2 )

During the three months ended March 31, 2022 and 2021, we recognized $ 30.9 million and $ 29.5 million, respectively, of revenues that were included in our deferred revenue balance at the beginning of each respective reporting period.

During the three months ended March 31, 2022 and 2021, we recognized $ 4.8 million and $ 10.7 million, respectively, of operating lease income from print textbook rentals that we own.

Six Months Ended June 30, Change

2022 2021 $ %

Chegg Services $ 373,888 $ 335,864 $ 38,024 11 %

Required Materials 23,077 60,992 ( 37,915 ) ( 62 )

Total net revenues $ 396,965 $ 396,856 $ 109 0

During the three and six months ended June 30, 2022, we recognized $ 42.2 million and $ 32.9 million, respectively, of revenues that were included in our deferred revenue balance at the beginning of each respective reporting period.

During the three and six months ended June 30, 2021 we recognized $ 44.1 million and $ 32.0 million, respectively, of revenues that were included in our deferred revenue balance at the beginning of each respective reporting period.

During the three and six months ended June 30, 2022, we recognized $ 0.3 million and $ 5.1 million, respectively, of operating lease income from print textbook rentals that we owned.

During the three and six months ended June 30, 2021, we recognized $ 10.0 million and $ 20.7 million, respectively, of operating lease income from print textbook rentals that we owned.

The decreases in operating lease income are primarily due to the transition of our Required Materials product line.

For further information, refer to Note 7, “Required Materials Transition.”

Contract Balances

4 unchanged sentences

Deferred revenue 53,297 35,143 18,154 52

During the three months ended March 31, 2022 our accounts receivable, net balance increased by $ 2.1 million, or 12 %, primarily due to timing of billings and seasonality of our business.

During the three months ended March 31, 2022, our contract assets balance decreased by $ 0.6 million, or 4 %, primarily due to our Thinkful service.

During the three months ended March 31, 2022, our deferred revenue balance increased by $ 25.3 million, or 72 %, primarily due to acquired deferred revenue in conjunction with our acquisition of Busuu and increased bookings and seasonality of our business.

During the six months ended June 30, 2022 our accounts receivable, net balance decreased by $ 1.0 million, or 6 %, primarily due to timing of billings and seasonality of our business.

During the six months ended June 30, 2022, our contract assets balance decreased by $ 1.2 million, or 9 %, primarily due to our Thinkful service.

During the six months ended June 30, 2022, our deferred revenue balance increased by $ 18.2 million, or 52 %, primarily due to acquired deferred revenue in conjunction with our acquisition of Busuu, increased bookings, and seasonality of our business.

Net Income (Loss) Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net income (loss)

5 unchanged sentences

Net income (loss) $ 7,476 $ 32,764 $ 13,218 $ ( 32,415 )

Convertible senior notes interest expense, net of tax 1,212 1,212 — —

Net income (loss), diluted

$ 8,688 $ 33,976 $ 13,218 $ ( 32,415 )

Weighted average shares used to compute net income (loss) per share, basic

1 unchanged sentence

Shares related to stock plan activity 427 2,295 733 —

Shares related to convertible senior notes 22,875 22,875 — —

Weighted average shares used to compute net income (loss) per share, diluted

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Shares related to stock plan activity 8,041 1,142 3,645 2,999

2 unchanged sentences

Cash and Cash Equivalents, and Investments and Fair Value Measurements

The following tables show our cash and cash equivalents, and investments’ fair value level classification, adjusted cost, unrealized gain, unrealized loss and fair value as of March 31, 2022 and December 31, 2021 (in thousands except for fair value levels):

March 31, 2022

The following tables show our cash and cash equivalents, and investments’ fair value level classification, adjusted cost, unrealized gain, unrealized loss and fair value as of June 30, 2022 and December 31, 2021 (in thousands except for fair value levels):

June 30, 2022

Fair Value Level Adjusted Cost Unrealized Gain Unrealized Loss Fair Value

2 unchanged sentences

Money market funds Level 1 199,003 — — 199,003

Commercial paper Level 2 157,234 — ( 33 ) 157,201

Total cash and cash equivalents $ 402,122 $ — $ ( 33 ) $ 402,089

3 unchanged sentences

treasury securities Level 1 79,675 — ( 1,257 ) 78,418

Agency bonds Level 2 15,501 — ( 12 ) 15,489

Total short-term investments $ 992,806 $ 10 $ ( 11,528 ) $ 981,288

18 unchanged sentences

Total long-term investments $ 749,377 $ — $ ( 3,384 ) $ 745,993

As of March 31, 2022, we determined that the declines in the market value of our investment portfolio were not driven by credit related factors.

During the three months ended March 31, 2022 and 2021 we did not recognize any losses on our investments due to credit related factors.

During the three months ended March 31, 2022 and 2021, our gross realized gains and losses on investments were not significant.

The following table shows our cash equivalents and investments' adjusted cost and fair value by contractual maturity as of March 31, 2022 (in thousands):

As of June 30, 2022, we determined that the declines in the market value of our investment portfolio were not driven by credit related factors.

During the three and six months ended June 30, 2022 and 2021 we did not recognize any losses on our investments due to credit related factors.

During the three and six months ended June 30, 2022 and 2021, our gross realized gains and losses on investments were not significant.

The following table shows our cash equivalents and investments' adjusted cost and fair value by contractual maturity as of June 30, 2022 (in thousands):

Adjusted Cost Fair Value

8 unchanged sentences

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 March 31, 2022 and December 31, 2021 was $ 818.8 million and $ 840.0 million, respectively.

The estimated fair value of the 2025 notes as of March 31, 2022 and December 31, 2021 was $ 708.8 million and $ 682.2 million, respectively.

The estimated fair value of the 2026 notes as of June 30, 2022 and December 31, 2021 was $ 725.0 million and $ 840.0 million, respectively.

The estimated fair value of the 2025 notes as of June 30, 2022 and December 31, 2021 was $ 588.3 million and $ 682.2 million, respectively.

For further information on the notes, refer to Note 8, “Convertible Senior Notes.”

12 unchanged sentences

Long term operating lease liabilities ( 2,038 )

Other long-term liabilities (1)

Net identifiable assets acquired 53,413

1 unchanged sentence

Total fair value of purchase consideration $ 421,650

(1) During the three months ended June 30, 2022, we recorded a $ 0.8 million decrease to accrued liabilities and a $ 1.7 million increase to other long-term liabilities as a result of measurement period adjustments to the fair value of the initial liabilities related to taxes.

The estimates and assumptions regarding the fair value of certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income taxes, and goodwill are subject to change as we obtain additional information during the measurement period, which usually lasts for up to one year from the acquisition date.

7 unchanged sentences

Total acquired intangible assets $ 71,600 68

During the three months ended March 31, 2022 and year ended December 31, 2021, we incurred acquisition-related expenses of $ 0.5 million and $ 5.3 million, respectively, associated with our acquisition of Busuu, which have been included in general and administrative expense on our condensed consolidated statement of operations.

During the six months ended June 30, 2022 and year ended December 31, 2021, we incurred acquisition-related expenses of $ 0.6 million and $ 5.3 million, respectively, associated with our acquisition of Busuu, which have been included in general and administrative expense on our condensed consolidated statement of operations.

The purchase consideration was paid in Euros, which is different from our functional currency of United States Dollars.

2 unchanged sentences

These payments are not included in the fair value of the purchase consideration but rather are expensed ratably as acquisition-related compensation costs and classified based on the seller's job function, on our condensed consolidated statement of operations.

As of March 31, 2022, we have recorded approximately $ 1.8 million within accrued liabilities on our condensed consolidated balance sheets for these payments.

As of June 30, 2022, we have recorded approximately $ 3.6 million within accrued liabilities on our condensed consolidated balance sheets for these payments.

Since the acquisition date, we have recorded revenues and net loss from Busuu of $ 19.7 million and $ 19.5 million, respectively.

1 unchanged sentence

The following unaudited supplemental pro forma revenues and earnings is for informational purposes only and presents our combined results as if the acquisition of Busuu had occurred on January 1, 2021.

During the three months ended March 31, 2022 and 2021, our unaudited supplemental pro forma revenues from Busuu would have been $ 202.9 million and $ 208.6 million, respectively.

During the three months ended March 31, 2022 and 2021, our unaudited supplemental pro forma earnings would have been a net income of $ 5.4 million and net loss of $ 74.1 million, respectively.

During the three and six months ended June 30, 2022, our unaudited supplemental pro forma revenues from Busuu would have been $ 194.8 million and $ 397.7 million, respectively.

During the three and six months ended June 30, 2021, our unaudited supplemental pro forma revenues from Busuu would have been $ 208.7 million and $ 417.3 million, respectively.

During the three and six months ended June 30, 2022, our unaudited supplemental pro forma earnings would have been a net income of $ 8.2 million and $ 13.6 million, respectively.

During the three and six months ended June 30, 2021, our unaudited supplemental pro forma earnings would have been a net income of $ 22.4 million and net loss of $ 51.7 million, respectively.

The unaudited supplemental pro forma earnings information includes the historical combined operating results adjusted for acquisition-related compensation costs, amortization of intangible assets, share-based compensation expense and acquisition-related expenses and does not necessarily reflect the actual results that would have been achieved, nor is it necessarily indicative of our future consolidated results.

1 unchanged sentence

Goodwill consists of the following (in thousands):

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Beginning balance $ 289,763

Additions due to acquisitions 367,376

Initial addition due to acquisition 367,376

Foreign currency translation adjustment ( 41,351 )

Measurement period adjustments related to prior acquisition (1)

Ending balance $ 616,649

(1) For further information, see Note 5, “Acquisition.”

Intangible assets consist of the following (in thousands, except weighted-average amortization period):

March 31, 2022

June 30, 2022

Weighted-Average Amortization Period (in months) Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Adjustment Net Carrying Amount

16 unchanged sentences

Total intangible assets, net 65 $ 101,154 $ ( 60,588 ) $ — $ 40,566

During the three months ended March 31, 2022 and 2021, amortization expense related to our finite-lived intangible assets totaled approximately $ 6.4 million and $ 4.4 million, respectively.

As of March 31, 2022, the estimated future amortization expense related to our finite-lived intangible assets is as follows (in thousands):

Remaining nine months of 2022 $ 20,402

During the three and six months ended June 30, 2022, amortization expense related to our finite-lived intangible assets totaled approximately $ 6.8 million and $ 13.2 million, respectively.

During the three and six months ended June 30, 2021, amortization expense related to our finite-lived intangible assets totaled approximately $ 3.2 million and $ 7.6 million, respectively.

As of June 30, 2022, the estimated future amortization expense related to our finite-lived intangible assets is as follows (in thousands):

Remaining six months of 2022 $ 12,893

Thereafter 15,506

Total $ 87,869

Required Materials Transition

In April 2022, we entered into definitive agreements regarding the sale of our print textbook library and partnership with GT Marketplace, LLC (GT) for our Required Materials product line.

We will continue to offer our Required Materials offering on our website and maintain relationships with the students, however, GT has purchased our existing print textbook library for $ 14 million, subject to payment terms and certain adjustments, and will continue to make print textbook investments and provide fulfillment logistics for print textbook transactions.

We expect that we will continue to fulfill eTextbook transactions through the end of 2022, at which point GT will fulfill eTextbook transactions.

Upon board of directors approval in April 2022, our net textbook library and unrecognized deferred revenue related to print textbook transactions met the criteria to be classified as a held for sale asset group which had a carrying amount of $ 7.7 million.

During the three months ended June 30, 2022, we subsequently sold the held for sale asset group to GT at a gain of $ 4.4 million, subject to certain adjustments, included in cost of revenues on our condensed consolidated statement of operations.

Subsequent to April 2022, we no longer recognize operating lease income from print textbooks that we own ratable on a gross basis.

In relation to print textbooks owned by GT, we recognize revenues immediately on a net basis, representing the margin earned, based on our role in the transaction as an agent as we have concluded that we do not control the use of the print textbooks, and therefore record only the net revenue share we earn.

Convertible Senior Notes

9 unchanged sentences

Net proceeds $ 984,096 $ 780,180

The notes are our senior, unsecured obligations and are governed by indenture agreements by and between us and Wells Fargo Bank, National Association, as Trustee (the indentures).

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.

14 unchanged sentences

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.

During the three months ended March 31, 2022, 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 the following quarter.

During the three months ended June 30, 2022, 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 the following quarter.

During the year ended December 31, 2021, we issued 2,983,011 shares of our common stock related to the redemption of our 2023 notes.

The net carrying amount of the notes is as follows (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

2026 Notes 2025 Notes 2026 Notes 2025 Notes

3 unchanged sentences

The following tables set forth the total interest expense recognized related to the notes (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Contractual interest expense $ — $ — $ — $ —

9 unchanged sentences

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 March 31, 2022, cover 9,297,800 and 13,576,513 shares of our common stock for the 2026 notes and 2025 notes, respectively.

The capped call transactions automatically exercise upon conversion of the notes and as of June 30, 2022, cover 9,297,800 and 13,576,513 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.

15 unchanged sentences

On March 1, 2022, the court entered an order deeming the Choi Matter related to the Leventhal Matter (described below).

On March 29, 2022, the plaintiff and defendants in the Choi matter entered into a stipulation and order staying action stipulating that the Choi Matter shall be stayed during the pendency of the Leventhal Matter.

On March 29, 2022, the Court entered an order staying the Choi Matter during the pendency of the Leventhal 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.

7 unchanged sentences

The Company filed its answer to the Pearson Complaint on November 19, 2021.

On June 29, 2022, Pearson filed a Motion for Leave to File Amended Complaint which seeks to add Bedford, Freeman & Worth Publishing Group, LLC d/b/a Macmillan Learning (“Macmillan Learning”) as a plaintiff, add an additional claim for relief on behalf of both Pearson and Macmillan Learning for copyright infringement, and add allegations regarding Pearson’s original complaint.

The Company disputes these claims and intends to vigorously defend itself in this matter.

23 unchanged sentences

We believe the fair value of these indemnification agreements is immaterial.

We have not recorded any liabilities for these agreements as of March 31, 2022.

We have not recorded any liabilities for these agreements as of June 30, 2022.

Stockholders' Equity

Securities Repurchase Program

In June 2022, our board of directors approved a $ 1.0 billion increase to our existing securities repurchase program authorizing the repurchase of up to $ 2.0 billion of our common stock and/or convertible notes, through open market purchases, block trades, and/or privately negotiated transactions or pursuant to Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements.

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.

$ 1.1 billion remains under the repurchase program, which has no expiration date and will continue until otherwise suspended, terminated or modified at any time for any reason by our board of directors.

Accelerated Share Repurchases

4 unchanged sentences

The 2022 ASR was recorded as a reduction to additional paid in capital on our condensed consolidated statements of stockholders’ equity.

The 2022 ASR settled during the second quarter of 2022 and we received an additional delivery of 837,001 shares of our common stock, which were retired immediately.

The 2022 ASR settled during the three months ended June 30, 2022 and we received an additional delivery of 837,001 shares of our common stock, which were retired immediately.

The 2022 ASR resulted in a total repurchase of 9,399,256 shares of our common stock at a volume-weighted-average price, less an agreed upon discount, $ 31.9174 per share.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Cost of revenues $ 669 $ 419 $ 1,292 $ 781

3 unchanged sentences

Total share-based compensation expense $ 31,087 $ 28,545 $ 64,171 $ 51,645

During the three months ended March 31, 2022 and 2021, we capitalized share-based compensation expense of $ 1.8 million and $ 0.5 million, respectively.

During the three and six months ended June 30, 2022, we capitalized share-based compensation expense of $ 2.3 million and $ 4.1 million, respectively.

During the three and six months ended June 30, 2021, we capitalized share-based compensation expense of $ 0.7 million and $ 1.2 million, respectively.

RSU and PSU Activity

6 unchanged sentences

Forfeited ( 1,226,520 ) 41.29

Balance at March 31, 2022 9,403,200 $ 41.51

As of March 31, 2022, our total unrecognized share-based compensation expense related to RSUs and PSUs was approximately $ 296.1 million, which will be recognized over the remaining weighted-average vesting period of approximately 2.5 years.

Balance at June 30, 2022 9,846,912 $ 38.49

As of June 30, 2022, our total unrecognized share-based compensation expense related to RSUs and PSUs was approximately $ 265.3 million, which will be recognized over the remaining weighted-average vesting period of approximately 2.5 years.

Subsequent Event

In April 2022, we entered into definitive agreements regarding the sale of our print textbook library and partnership with GT Marketplace, LLC (doing business as “BBA”) for our Required Materials offering.

We will continue to offer our Required Materials offering on our website and maintain relationships with the students, however, BBA has purchased our existing print textbook library for $ 14 million, subject to payment terms and certain adjustments, and will continue to make print textbook investments and provide fulfillment logistics for print textbook transactions.

We expect that we will continue to fulfill eTextbook transactions through the end of 2022, at which point BBA will fulfill eTextbook transactions.

As a result of the partnership with BBA, revenues from print textbook transactions will consist of a revenue share of the total transactions recognized immediately rather than the total amounts recognized ratably over the rental term, generally a two- to five-month period.

Revenues from eTextbook transactions will continue to be recognized at the gross amount ratably over the contractual period, generally a two- to five-month period, through the expected transition period, at which point they will be recognized as a revenue share immediately.

We will no longer incur significant costs of revenue such as order fulfillment fees primarily related to shipping and fulfillment, publisher content fees for eTextbooks after transition to BBA, and print textbook depreciation and write off expense.

We will continue to incur costs of revenue such as payment processing fees and employee related costs as well as ongoing operating expenses such as platform infrastructure maintenance and transition costs.

Upon board of directors approval in April 2022, our net textbook library and unrecognized deferred revenue related to print textbook transactions became a held for sale asset group which was subsequently sold to BBA at a gain as the consideration exceeds the carrying amount of the held for sale asset group.

The initial accounting for the sale of our print textbook library 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 a $ 6.0 million investment in Knack Technologies, Inc., a privately held U.S.

based peer-to-peer tutoring platform for higher education institutions.

The initial accounting for the investment is in process as of the issuance date of our financial statements and therefore we are unable to make any additional disclosures.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements