UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices)
(408 ) 855-5700
(Registrant’s telephone number, including area code)
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
•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 | ☐ | Accelerated filer | x | ||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
•If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
•As of May 4, 2026, the Registrant had 111,958,838 outstanding shares of Common Stock.
| TABLE OF CONTENTS | ||||||||||||||
| Page | ||||||||||||||
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, Chegg Study Pack, Chegg Writing, Chegg Math, and the Chegg “C” logo are some of our trademarks used in this Quarterly Report on Form 10-Q. Solely for convenience, our trademarks, trade names and service marks referred to in this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q are the property of their respective holders.
2
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as supplemented by the risks described under "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q, 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.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CHEGG, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for number of shares and par value)
(unaudited)
See Notes to Condensed Consolidated Financial Statements.
| March 31, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
Accounts receivable, net of allowance of $ | |||||||||||
| Prepaid expenses | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Long-term investments | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Right of use assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Deferred revenue | |||||||||||
| Accrued liabilities | |||||||||||
| Current portion of convertible senior notes, net | |||||||||||
| Total current liabilities | |||||||||||
| Long-term liabilities | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 7) | |||||||||||
| Stockholders' equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
4
CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net revenues | $ | $ | |||||||||
| Cost of revenues | |||||||||||
| Gross profit | |||||||||||
| Operating expenses: | |||||||||||
| Research and development | |||||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Impairment expense | |||||||||||
| Total operating expenses | |||||||||||
| Loss from operations | ( | ( | |||||||||
| Interest expense, net and other income, net: | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Other income, net | |||||||||||
| Total interest expense, net and other income, net | |||||||||||
| Income (loss) before benefit from (provision for) income taxes | ( | ||||||||||
| Benefit from (provision for) income taxes | ( | ||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
Net income (loss) per share | |||||||||||
| Basic | $ | $ | ( | ||||||||
| Diluted | $ | $ | ( | ||||||||
Weighted average shares used to compute net income (loss) per share | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
See Notes to Condensed Consolidated Financial Statements.
5
CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Other comprehensive loss | |||||||||||
| Change in net unrealized loss on investments | ( | ( | |||||||||
| Change in foreign currency translation adjustments | ( | ( | |||||||||
| Other comprehensive loss | ( | ( | |||||||||
| Total comprehensive loss | $ | ( | $ | ( | |||||||
See Notes to Condensed Consolidated Financial Statements.
6
CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Common Stock | |||||||||||||||||||||||||||||||||||
| Shares | Par Value | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||
Balances at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Net share settlement of equity awards | ( | — | — | ( | |||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Balances at March 31, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock | |||||||||||||||||||||||||||||||||||
| Shares | Par Value | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||
Balances at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Net share settlement of equity awards | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balances at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
7
CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| 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 | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Deferred tax assets | ( | ||||||||||
| Operating lease expense, net of accretion | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Loss from write-offs of property and equipment | |||||||||||
| Gain on early extinguishment of debt | ( | ( | |||||||||
| Realized gain on sale of investments | ( | ( | |||||||||
| Other non-cash items | ( | ( | |||||||||
| Change in assets and liabilities: | |||||||||||
| 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 investments | ( | ||||||||||
| Maturities of investments | |||||||||||
| Proceeds from sale of investments | |||||||||||
| Net cash provided by investing activities | |||||||||||
| Cash flows from financing activities | |||||||||||
| Payment of taxes related to the net share settlement of equity awards | ( | ( | |||||||||
| Repayment of convertible senior notes | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes | ( | ||||||||||
| Net increase (decrease) 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 | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Supplemental cash flow data: | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest | $ | $ | |||||||||
| Income taxes, net of refunds | $ | $ | |||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
| Right of use assets obtained in exchange for lease obligations: | |||||||||||
| Operating leases | $ | $ | |||||||||
| Non-cash investing and financing activities: | |||||||||||
| Accrued purchases of long-lived assets | $ | $ | |||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| 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 | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements.
8
CHEGG, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Background and Basis of Presentation
Company and Background
Chegg, Inc. (“we,” “us,” “our,” “Company” or “Chegg”), was incorporated as a Delaware corporation in July 2005. Chegg is a learning platform helping businesses bring new skills to their workforce and giving lifelong learners and students the skills and confidence to succeed. Focused on the large and growing skilling market, Chegg offers innovative tools for workplace readiness, professional upskilling, and language learning. Chegg also continues to offer students artificial intelligence (AI)-driven, personalized support. Chegg remains committed to its mission of improving learning outcomes and career opportunities for millions of people around the world.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the results of Chegg, Inc. and its wholly-owned subsidiaries. Significant intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of March 31, 2026 and our results of operations, results of comprehensive loss, stockholders' equity, and cash flows for the three months ended March 31, 2026 and 2025. Our results of operations, results of comprehensive loss, stockholders' equity, and cash flows for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year.
We have a single operating and reportable segment and operating unit structure. The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the Annual Report on Form 10-K) filed with the SEC.
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States (U.S. GAAP) requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent liabilities. Significant estimates, assumptions, and judgments are used for, but not limited to: revenue recognition, share-based compensation expense, accounting for income taxes, useful lives assigned to long-lived assets for depreciation and amortization, impairment of goodwill, intangible assets and long-lived 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. There have been no material changes in our use of estimates during the three months ended March 31, 2026 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, 2025.
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-12, Codification Improvements. ASU 2025-12 makes incremental improvements to the Accounting Standards Codification (ASC) and U.S. GAAP. Early adoption is permitted and the guidance may be applied either prospectively or retrospectively to the beginning of the earliest comparative period presented. The guidance is effective for annual reporting
9
periods beginning after December 15, 2026 and interim reporting periods within those annual periods. We did not early adopt ASU 2025-12 and we are currently in the process of evaluating the impact of this guidance.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting - Narrow Scope Improvements. ASU 2025-11 improves the guidance in ASC 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. Early adoption is permitted and the guidance may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We did not early adopt ASU 2025-11 and we are currently in the process of evaluating the impact of this guidance.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software. ASU 2025-06 modernizes the accounting for software costs that are accounted for under ASC 350-40 and 350-50 by removing references to prescriptive and sequential software development stages and requiring capitalization of software costs to begin when management has authorized and committed to funding the project and it is probable that the project will be completed and used as intended. Early adoption is permitted and the guidance may be applied on either a prospective, retrospective or modified basis. The guidance is effective for annual periods beginning after December 15, 2027 and interim periods within those annual periods. We did not early adopt ASU 2025-06 and we are currently in the process of evaluating the impact of this guidance.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. ASU 2024-03 requires disclosure of specified information about certain costs and expenses in the notes to financial statements. Early adoption is permitted, and the guidance will be applied prospectively with the option to apply retrospectively. The guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. We did not early adopt ASU 2024-03 and we are currently in the process of evaluating the impact of this guidance.
Recently Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses. ASU 2025-05 introduces a practical expedient for estimating expected credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606. Early adoption is permitted, and the guidance will be applied on a prospective basis. The guidance is effective for annual periods beginning after December 15, 2025 and interim periods within those annual periods. We adopted ASU 2025-05 on January 1, 2026 and elected the practical expedient, which did not significantly impact our financial statements.
In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options. ASU 2024-04 improves the relevance and consistency in application of the induced conversion guidance requirements in ASC 470-20 for convertible debt instruments with cash conversion features and debt instruments that are not currently convertible, when the face value of the debt is settled in cash. Early adoption is permitted, and the guidance can be applied on either a prospective or retrospective basis. The guidance is effective for annual periods beginning after December 15, 2025 and interim periods within those annual periods. We adopted ASU 2024-04 on January 1, 2026 on a prospective basis and applied the guidance to applicable transactions occurring after the adoption date including the partial repurchase of our convertible senior notes in February 2026. The adoption of this guidance did not have an effect on our financial position, results of operations or cash flows as the partial repurchase of the convertible senior notes should not be accounted for as an induced conversion as they did not contain a substantive conversion option as of the date of the repurchase.
Note 2. Revenues
Revenue Recognition
The following table presents our total net revenues for the periods shown disaggregated for our Chegg Skilling and Academic Services product lines (in thousands, except percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Chegg Skilling | $ | $ | $ | % | |||||||||||||||||||
| Academic Services | ( | ( | |||||||||||||||||||||
| Total net revenues | $ | $ | $ | ( | ( | ||||||||||||||||||
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During the three months ended March 31, 2026 and 2025, we recognized revenues of $18.0 million and $27.2 million, respectively, that were included in our deferred revenue balance at the beginning of each respective reporting period.
Contract Balances
The following table presents our accounts receivable, net, contract assets and deferred revenue balances (in thousands, except percentages):
| Change | |||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | $ | % | ||||||||||||||||||||
| Accounts receivable, net | $ | $ | $ | % | |||||||||||||||||||
| Contract assets | |||||||||||||||||||||||
| Deferred revenue | ( | ( | |||||||||||||||||||||
During the three months ended March 31, 2026 our accounts receivable, net balance increased by $2.2 million, or 14 %, primarily due to amounts receivable from content licensing partially offset by higher cash collections. During the three months ended March 31, 2026, our contract assets and deferred revenue balances remained relatively flat.
Note 3. 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):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Basic | |||||||||||
| Numerator: | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
| Denominator: | |||||||||||
Weighted average shares used to compute net income (loss) per share, basic | |||||||||||
Net income (loss) per share, basic | $ | $ | ( | ||||||||
| Diluted | |||||||||||
| Numerator: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
Convertible senior notes activity, net of tax | ( | ||||||||||
Net loss, diluted | $ | ( | $ | ( | |||||||
| Denominator: | |||||||||||
Weighted average shares used to compute net income (loss) per share, basic | |||||||||||
| Shares related to convertible senior notes | |||||||||||
Weighted average shares used to compute net income (loss) per share, diluted | |||||||||||
Net income (loss) per share, diluted | $ | $ | ( | ||||||||
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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):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Shares related to stock plan activity | |||||||||||
| Shares related to convertible senior notes | |||||||||||
| Total common stock equivalents | |||||||||||
Note 4. Cash and Cash Equivalents, 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 (in thousands):
| March 31, 2026 | |||||||||||||||||||||||||||||
| Fair Value Level | Adjusted Cost | Unrealized Gain | Unrealized Loss | Fair Value | |||||||||||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||||||||||||||
| Cash | $ | $ | — | $ | — | $ | |||||||||||||||||||||||
| Money market funds | Level 1 | — | — | ||||||||||||||||||||||||||
| Total cash and cash equivalents | $ | $ | — | $ | — | $ | |||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||
| Corporate debt securities | Level 2 | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||
| Corporate debt securities | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Fair Value Level | Adjusted Cost | Unrealized Gain | Unrealized Loss | Fair Value | |||||||||||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||||||||||||||
| Cash | $ | $ | — | $ | — | $ | |||||||||||||||||||||||
| Money market funds | Level 1 | — | — | ||||||||||||||||||||||||||
| Total cash and cash equivalents | $ | $ | — | $ | — | $ | |||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||
| Corporate debt securities | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||
| Corporate debt securities | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
During the three months ended March 31, 2026 and 2025, we did not recognize any losses on our investments due to credit related factors and our realized gains and losses on investments were not significant.
The following table presents our cash equivalents and investments' adjusted cost and fair value by contractual maturity (in thousands):
| Adjusted Cost | Fair Value | ||||||||||
| Due within one year | $ | $ | |||||||||
| Due after one year through three years | |||||||||||
| Investments not due at a single maturity date | |||||||||||
| Total | $ | $ | |||||||||
Investments not due at a single maturity date in the preceding table consisted of money market funds.
12
Financial Instruments Not Recorded at Fair Value on a Recurring Basis
We report our financial instruments at fair value with the exception of the 2026 notes. The estimated fair value was determined based on the trading price as of the last day of trading for the period and we consider it to be a Level 2 measurement due to the limited trading activity. The estimated fair value of the 2026 notes as of March 31, 2026 and December 31, 2025 was $32.3 million and $45.0 million, respectively. For further information on the 2026 notes, refer to Note 6, “Convertible Senior Notes.”
Note 5. Balance Sheet Details
Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Restructuring liability | $ | $ | |||||||||
| Taxes payable | |||||||||||
| Loss contingency | |||||||||||
| Other | |||||||||||
| Accrued liabilities | $ | $ | |||||||||
Note 6. 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). 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. As of March 31, 2026, the total principal amount of 2026 notes outstanding was $33.9 million and 9,297,800 shares remained underlying the 2026 notes.
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. Prior to the close of business on the business day immediately preceding June 1, 2026 for the 2026 notes, the notes are convertible at the option of holders only upon satisfaction of certain circumstances. As of March 31, 2026, the circumstances allowing holders of the 2026 notes to convert were not met. On or after June 1, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity dates, holders may convert their notes at any time, regardless of the 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. As of March 31, 2026, the 2026 notes were classified as a current liability on our condensed consolidated balance sheets as they will be convertible at the option of the holders at any time beginning June 1, 2026 and will mature on September 1, 2026, both of which are within the next twelve months.
In February 2026, in connection with our securities repurchase program, we extinguished $20.0 million aggregate principal amount of the 2026 notes in privately-negotiated transactions for a total consideration of $19.4 million, which was paid to the holders in cash. We also incurred an immaterial amount of fees resulting in a total reacquisition price of $19.5 million. The carrying amount of the extinguished notes was $20.0 million resulting in a $0.5 million gain on early extinguishment of debt. We elected to reacquire and not cancel the extinguished 2026 notes and left the associated capped call transactions outstanding.
The following table presents the net carrying amount of the notes (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Principal | $ | $ | |||||||||
| Unamortized issuance costs | ( | ( | |||||||||
| Net carrying amount | $ | $ | |||||||||
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The following table presents the total interest expense recognized related to the notes (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| 2026 notes: | |||||||||||
| Contractual interest expense | $ | $ | |||||||||
| Amortization of issuance costs | |||||||||||
| Total 2026 notes interest expense | $ | $ | |||||||||
| 2025 notes: | |||||||||||
| Contractual interest expense | $ | $ | |||||||||
| Amortization of issuance costs | |||||||||||
| Total 2025 notes interest expense | $ | $ | |||||||||
Capped Call Transactions
Concurrently with the offering of the 2026 notes, we used $103.4 million 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, 2026, cover 9,297,800 shares of our common stock for the 2026 notes. These are intended to effectively increase the overall conversion price from $107.55 to $156.44 per share for the 2026 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 condensed 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 7. Commitments and Contingencies
We may from time to time be involved in certain legal proceedings and regulatory compliance matters in the ordinary course of business, including claims of alleged infringement of trademarks, patents, copyrights, and other intellectual property rights; employment claims; and contractual and related disputes brought through private actions, class actions, administrative proceedings, regulatory actions or other litigation. We may also, from time to time, be involved in 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 February 24, 2025, we filed a complaint in the U.S. District Court for the District of Columbia against Google, asserting federal antitrust claims and common-law unjust enrichment claims, in connection with Google's expansion of its AIO search experience, and seeking damages, restitution, disgorgement, and injunctive relief. Google moved to dismiss the amended complaint on July 25, 2025. Given the nature of the case, including that the proceedings are in their early stages, we are unable to predict the ultimate outcome of the case.
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. On January 20, 2026, the Court entered an Order dismissing this matter without prejudice pursuant to a stipulation of the parties. Effective March 4, 2026, Chegg entered into a Settlement Agreement with Stein and certain other Plaintiffs (including Robinson and Choi, as described below). Pursuant to the Settlement Agreement, Plaintiffs released their claims, and Chegg agreed to certain governance changes and that Chegg or our insurance carrier will pay the fees of Plaintiffs’ counsel. Chegg’s insurance carrier made the payment to Plaintiffs and the matter is now closed.
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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. Although the Company is not alleged to have made or participated in any of the allegedly false or fraudulent statements, it is pursuing resolution with JPMC of JPMC's claims related to the Support Agreement.
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, described in more detail below. Effective March 4, 2026, Chegg entered into a Settlement Agreement with the Plaintiffs (including Stein and Choi). Pursuant to the Settlement Agreement, Plaintiffs released their claims, and Chegg agreed to certain governance changes and that Chegg or our insurance carrier will pay the fees of Plaintiffs’ counsel. Chegg’s insurance carrier made the payment to Plaintiffs and the matter is now closed.
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. Effective March 4, 2026, Chegg entered into a Settlement Agreement with the Plaintiffs (including Robinson and Stein). Pursuant to the Settlement Agreement, Plaintiffs released their claims, and Chegg agreed to certain governance changes and that Chegg or our insurance carrier will pay the fees of Plaintiffs’ counsel. Chegg’s insurance carrier made the payment to Plaintiffs and the matter is now closed.
We record a contingent liability for loss contingencies related to legal matters when a loss is both probable and reasonably estimable. Additionally, we record an insurance loss recovery up to the recognized loss contingency when realization is probable. As of March 31, 2026, the net impact of contingent liabilities less the related insurance loss recovery is $7.0 million for the above matters that met such thresholds for recording a liability. For those matters upon which we have sufficient insurance coverage, we have recorded contingent liabilities within accrued liabilities and the loss recovery from insurance within other current assets on our condensed consolidated balance sheets. 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. 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. In the ordinary course of business and for certain of the above matters, we are actively pursuing all avenues and strategies to resolve these matters, including available legal remedies, remediation and settlement negotiations with the parties. 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 8. 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.
We believe the fair value of these indemnification agreements is immaterial. We have not recorded any liabilities for these agreements as of March 31, 2026.
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Note 9. Stockholders' Equity
Share-based Compensation Expense
The following table presents total share-based compensation expense recorded (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cost of revenues | $ | $ | |||||||||
| Research and development | |||||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Total share-based compensation expense | $ | $ | |||||||||
As of March 31, 2026, total unrecognized share-based compensation expense was approximately $7.2 million, which is expected to be recognized over the remaining weighted-average vesting period of approximately 1.3 years.
The following table presents activity for outstanding RSUs and PSUs:
| RSUs and PSUs Outstanding | |||||||||||
| Shares Outstanding | Weighted Average Grant Date Fair Value | ||||||||||
| Balance at December 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Released | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Balance at March 31, 2026 | $ | ||||||||||
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Note 10. Restructuring Charges
October 2025 Restructuring Plan
In October 2025, we announced a workforce reduction that resulted in a management approved restructuring plan. As of March 31, 2026, we recorded $19.0 million of cumulative restructuring charges , primarily related to one-time employee termination benefits, which were classified primarily within operating expenses on our condensed consolidated statements of operations based on employees' job function, and facility exit costs related to the closure of our Santa Clara office, which were classified as general and administrative operating expenses on our condensed consolidated statements of operations. The restructuring liability is primarily included within accrued liabilities on our condensed consolidated balance sheets. The total amount of restructuring charges has been recorded and we expect the plan to be substantially completed by the end of fiscal year 2028.
The following table presents a reconciliation of the beginning and ending restructuring liability balance (in thousands):
| Three Months Ended March 31, 2026 | |||||||||||||||||
| One-Time Termination Benefits | Facility Exit Costs | Total | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Restructuring charges | |||||||||||||||||
Restructuring payments | ( | ( | ( | ||||||||||||||
Ending balance | $ | $ | $ | ||||||||||||||
May 2025 Restructuring Plan
In May 2025, we announced a workforce reduction that resulted in a management approved restructuring plan. As of March 31, 2026, we recorded $29.3 million of cumulative restructuring charges , primarily related to one-time employee termination benefits, which were classified primarily within operating expenses on our condensed consolidated statement of operations based on employees' job function. The restructuring liability is included within accrued liabilities on our condensed consolidated balance sheets. The total amount of restructuring charges has been recorded and we expect the plan to be substantially completed by the second quarter of the fiscal year 2026.
The following table presents a reconciliation of the beginning and ending restructuring liability balance (in thousands):
| Three Months Ended March 31, 2026 | |||||
Beginning balance | $ | ||||
| Restructuring credits | ( | ||||
Restructuring payments | ( | ||||
Ending balance | $ | ||||
November 2024 Restructuring Plan
In November 2024, we announced a workforce reduction that resulted in a management approved restructuring plan. As of March 31, 2026, we recorded $17.1 million of cumulative restructuring charges , primarily related to one-time employee termination benefits, which were classified primarily within operating expenses on our consolidated statement of operations based on employees' job function. The restructuring liability is included within accrued liabilities on our consolidated balance sheets. The total amount of restructuring charges has been recorded and the plan is complete.
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The following table presents a reconciliation of the beginning and ending restructuring liability balance (in thousands):
| Three Months Ended March 31, 2026 | |||||
Beginning balance | $ | ||||
Restructuring charges | |||||
Restructuring payments | ( | ||||
Ending balance | $ | ||||
June 2024 Restructuring Plan
In June 2024, we announced a workforce reduction that resulted in a management approved restructuring plan. As of March 31, 2026, we recorded $10.5 million of restructuring charges , primarily related to one-time employee termination benefits, which were classified primarily within operating expenses on our consolidated statement of operations based on employees' job function. The restructuring liability is included within accrued liabilities on our consolidated balance sheets. The total amount of restructuring charges has been recorded and the plan is complete.
The following table presents a reconciliation of the beginning and ending restructuring liability balance (in thousands):
| Three Months Ended March 31, 2026 | |||||
Beginning balance | $ | ||||
| Restructuring credits | ( | ||||
Restructuring payments | ( | ||||
Ending balance | $ | ||||
Note 11. 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.
Our chief operating decision maker uses net income (loss) in assessing performance and determining how to allocate resources and is regularly provided with cost of revenues, paid marketing expenses, and consolidated operating expenses when reviewing financial information as part of the annual budgeting and forecasting process as well as the review over quarterly budget to actual variances. Asset information is not regularly provided to our chief operating decision maker.
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The following table presents information about our significant segment expenses and includes a reconciliation to net income (loss) (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net revenues | $ | $ | |||||||||
| Less: | |||||||||||
| Cost of revenues | |||||||||||
| Research and development | |||||||||||
Paid marketing expenses(1) | |||||||||||
Other sales and marketing(2) | |||||||||||
| General and administrative | |||||||||||
| Impairment expense | |||||||||||
| Total segment expenses | |||||||||||
Other segment items(3) | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
_____________________________________________________
(1)Paid marketing expenses consist primarily of online advertising and marketing promotional expenditures.
(2)Other sales and marketing primarily consists of employee-related expenses.
The following table presents our total net revenues for our Chegg Skilling and Academic Services product lines (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Chegg Skilling | $ | $ | |||||||||
| Academic Services | |||||||||||
| Total net revenues | $ | $ | |||||||||
The following table presents our total net revenues by geographic area (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| United States | $ | $ | |||||||||
| International | |||||||||||
| Total net revenues | $ | $ | |||||||||
The following table presents our long-lived assets by geographic area (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| United States | $ | $ | |||||||||
| India | |||||||||||
| Other international | |||||||||||
| Total long-lived assets | $ | $ | |||||||||
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ITEM 2. 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 condensed consolidated financial statements and the related notes included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q.
Overview
Chegg is a learning platform helping businesses bring new skills to their workforce and giving lifelong learners and students the skills and confidence to succeed. Focused on the large and growing skilling market, Chegg offers innovative tools for workplace readiness, professional upskilling, and language learning. Chegg also continues to offer students artificial intelligence (AI)-driven, personalized support. Chegg remains committed to its mission of improving learning outcomes and career opportunities for millions of people around the world.
Our long-term strategy is focused on helping learners achieve better outcomes by combining academic support with practical, career-relevant skills across the learning lifecycle. We are evolving our platform to support learners both in the classroom and beyond, leveraging AI to deliver faster, more personalized, and more effective learning experiences. We continue to invest in expanding our skilling offerings and integrating them with our core academic services to provide a differentiated, end-to-end solution that supports the whole learner. Our use of AI in our platform is designed to enable us to scale personalized support, improve learning outcomes, and increase course completion while maintaining high standards of quality and accuracy. We believe these investments position us to drive deeper engagement, expand our addressable market, and return the business to sustainable 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 below and in Part II, Item 1A, “Risk Factors.”
Business Updates and Developments
Recent technological shifts, notably Google's AI Overviews search experience, or AIO, and continued increase in adoption of free and paid generative AI services by students, have created and are expected to continue to create headwinds for our industry and our business, most notably a reduction in traffic to our website and customers subscribing to our services. In August 2024, Google broadly rolled out AIO, which displays AI-generated content at the top of its search results. This experience, which includes questions and solutions for education, keeps users on Google search results versus leading them onto our site. AIO’s prevalence has grown and will only continue to increase. We expect Google to continue its shift from being a search origination point to the destination, which we believe has materially adversely affected our business, operating results and financial condition by reducing traffic to our platform, and we expect that we will continue to be adversely impacted by this continued shift in the future.
In addition, across our industry, there has been a continued increase in the adoption of free and paid generative AI products for academic support, and students are increasingly turning to generative AI for academic support, such as homework and exams, as well as assistance in other areas of daily life. This issue impacts education technology companies broadly, where students see generative AI products like ChatGPT and others as strong alternatives to vertically specialized solutions for education such as Chegg. These developments have negatively impacted our industry and our business and are expected to continue to impact our overall traffic and accelerate the decline in the number of new subscribers that sign up for our services, resulting in continued negative impacts to our growth, business, operating results and financial condition.
Our service and product offerings fall into two categories: Chegg Skilling and Academic Services, which are described below.
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Chegg Skilling
Our language learning platform provides subscribers access to a premium language learning platform that offers comprehensive support through self-paced lessons, live classes with expert tutors and a community of members to practice alongside. A team of leading experts have developed our online learning instruction to bring students from novice to advanced speakers in a fast-paced, enjoyable environment and we currently offer comprehensive courses taught by highly qualified teachers in 14 languages.
We also provide workforce skilling programs that help employers develop and retain talent. Our workforce skilling programs align workforce needs with learner outcomes by combining in-demand technical skills such as AI, coding, data analytics, and cybersecurity, with foundational business and human-centered durable skills. We keep our portfolio current by working closely with employers, including Fortune 1000 companies, to understand emerging role requirements and workforce needs. Programs feature engaging, modular online content, practice opportunities, and support. Our platform tracks learner progress in real time, delivering predictive nudges and timely interventions that improve engagement, retention, and completion rates. Our approach is informed by learning science to help skills stick, so learners can apply what they learn with confidence at work.
Academic Services
Our legacy academic learning services are headlined by Chegg Study Pack, a premium subscription bundle that includes all of the benefits of Chegg Study, Chegg Writing and Chegg Math. 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. 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. Our Chegg Math subscription service provides students with a computational engine to help them understand and solve math problems. We opportunistically monetize our content library through licensing and partnerships. We work with leading brands and programmatic partners to deliver advertising across our platforms.
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Results of Operations
The following table presents our historical condensed consolidated statements of operations (in thousands, except percentage of total net revenues):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net revenues | $ | 63,262 | 100 | % | $ | 121,387 | 100 | % | |||||||||||||||
Cost of revenues(1) | 25,374 | 40 | 53,973 | 44 | |||||||||||||||||||
| Gross profit | 37,888 | 60 | 67,414 | 56 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
Research and development(1) | 9,139 | 14 | 29,428 | 24 | |||||||||||||||||||
Sales and marketing(1) | 10,606 | 17 | 25,614 | 21 | |||||||||||||||||||
General and administrative(1) | 19,180 | 31 | 39,374 | 33 | |||||||||||||||||||
| Impairment expense | — | — | 2,000 | 2 | |||||||||||||||||||
| Total operating expenses | 38,925 | 62 | 96,416 | 80 | |||||||||||||||||||
| Loss from operations | (1,037) | (2) | (29,002) | (24) | |||||||||||||||||||
| Total interest expense, net and other income, net | 1,125 | 2 | 12,530 | 10 | |||||||||||||||||||
| Income (loss) before benefit from (provision for) income taxes | 88 | — | (16,472) | (14) | |||||||||||||||||||
| Benefit from (provision for) income taxes | 140 | — | (1,012) | — | |||||||||||||||||||
| Net income (loss) | $ | 228 | — | % | $ | (17,484) | (14) | % | |||||||||||||||
(1) Includes share-based compensation expense as follows: | |||||||||||||||||||||||
| Cost of revenues | $ | 20 | $ | 238 | |||||||||||||||||||
| Research and development | 446 | 3,212 | |||||||||||||||||||||
| Sales and marketing | 152 | 1,061 | |||||||||||||||||||||
| General and administrative | 2,093 | 6,746 | |||||||||||||||||||||
| Total share-based compensation expense | $ | 2,711 | $ | 11,257 | |||||||||||||||||||
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Three Months Ended March 31, 2026 and 2025
Net Revenues
The following tables present our total net revenues for the periods shown for our Chegg Skilling and Academic Services product lines (in thousands, except percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Chegg Skilling | $ | 17,578 | $ | 16,135 | $ | 1,443 | 9 | % | |||||||||||||||
| Academic Services | 45,684 | 105,252 | (59,568) | (57) | |||||||||||||||||||
| Total net revenues | $ | 63,262 | $ | 121,387 | $ | (58,125) | (48) | ||||||||||||||||
Chegg Skilling revenues increased $1.4 million, or 9%, during the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily due to a $0.9 million increase in our workforce skilling programs primarily related to our AI-focused programs and an increase of $0.5 million from our language learning platform. Chegg Skilling revenues as a percentage of net revenues were 28% during the three months ended March 31, 2026 compared to 13% during the same period in 2025.
Academic Services revenues decreased $59.6 million, or 57%, during the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily due to a decrease in subscription revenue of $57.6 million and advertising services revenues of $1.9 million primarily related to reduced traffic which led to fewer subscribers. Academic Services revenues as a percentage of net revenues were 72% during the three months ended March 31, 2026 compared to 87% during the same period in 2025.
Cost of Revenues
The following tables present our cost of revenues for the periods shown (in thousands, except percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
Cost of revenues(1) | $ | 25,374 | $ | 53,973 | $ | (28,599) | (53) | % | |||||||||||||||
(1)Includes share-based compensation expense of: | $ | 20 | $ | 238 | $ | (218) | (92) | % | |||||||||||||||
Cost of revenues decreased $28.6 million, or 53%, during the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily due to lower depreciation expense of $17.9 million, primarily due to the accelerated depreciation recorded in 2025, lower payment processing and other order fees of $6.0 million, primarily due to the decrease in subscribers who have paid to access our services, lower web hosting fees of $2.6 million, and lower employee-related expenses of $1.6 million. Gross margins increased to 60% during the three months ended March 31, 2026, from 56% during the same period in 2025.
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Operating Expenses
The following tables present our total operating expenses for the periods shown (in thousands, except percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
Research and development(1) | $ | 9,139 | $ | 29,428 | $ | (20,289) | (69) | % | |||||||||||||||
Sales and marketing(1) | 10,606 | 25,614 | (15,008) | (59) | |||||||||||||||||||
General and administrative(1) | 19,180 | 39,374 | (20,194) | (51) | |||||||||||||||||||
| Impairment expense | — | 2,000 | (2,000) | (100) | |||||||||||||||||||
| Total operating expenses | $ | 38,925 | $ | 96,416 | $ | (57,491) | (60) | ||||||||||||||||
(1) Includes share-based compensation expense as follows: | |||||||||||||||||||||||
Share-based compensation expense: | |||||||||||||||||||||||
| Research and development | $ | 446 | $ | 3,212 | $ | (2,766) | (86) | % | |||||||||||||||
| Sales and marketing | 152 | 1,061 | (909) | (86) | |||||||||||||||||||
| General and administrative | 2,093 | 6,746 | (4,653) | (69) | |||||||||||||||||||
| Share-based compensation expense | $ | 2,691 | $ | 11,019 | $ | (8,328) | (76) | ||||||||||||||||
Operating expenses decreased $57.5 million, or 60%, during the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower employee-related expenses as a result of prior year restructuring actions. See Note 10, “Restructuring Charges” of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q for additional information regarding the prior year restructuring actions.
Research and Development
Research and development expenses decreased $20.3 million, or 69%, during the three months ended March 31, 2026 compared to the same period in 2025. The decrease was primarily due to lower employee-related expenses of $13.9 million, including share-based compensation expense, lower technology expenses of $3.1 million, and lower web hosting fees of $2.3 million. Research and development expenses as a percentage of net revenues were 14% during the three months ended March 31, 2026 compared to 24% during the same period in 2025.
Sales and Marketing
Sales and marketing expenses decreased by $15.0 million, or 59%, during the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily attributable to lower paid marketing expenses of $11.2 million and lower employee-related expenses of $4.0 million, including share-based compensation expense. Sales and marketing expenses as a percentage of net revenues were 17% during the three months ended March 31, 2026 compared to 21% during the same period in 2025.
General and Administrative
General and administrative expenses decreased $20.2 million, or 51%, during the three months ended March 31, 2026 compared to the same period in 2025. The decrease was due to lower employee-related expenses of $14.6 million, which is primarily due to share-based compensation expense, lower professional fees of $3.4 million, and lower restructuring charges of $2.7 million. General and administrative expenses as a percentage of net revenues were 31% during the three months ended March 31, 2026 compared to 33% during the same period in 2025.
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Impairment Expense
Impairment expense decreased $2.0 million compared to the same period in 2025 as we impaired property and equipment in 2025.
Interest Expense and Other Income, Net
The following tables present our interest expense and other income, net, for the periods shown (in thousands, except percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Interest expense, net | $ | (31) | $ | (467) | $ | 436 | (93) | % | |||||||||||||||
| Other income, net | 1,156 | 12,997 | (11,841) | (91) | |||||||||||||||||||
| Total interest expense, net and other income, net | $ | 1,125 | $ | 12,530 | $ | (11,405) | (91) | ||||||||||||||||
Interest expense decreased $0.4 million, or 93%, during the three months ended March 31, 2026, respectively, compared to the same period in 2025, primarily due to lower interest expense recognized on our convertible senior notes.
Other income, net decreased $11.8 million, or 91%, during the three months ended March 31, 2026 compared to the same period in 2025, primarily due to a decrease in interest income of $4.2 million due to lower investment balances and a decrease in gain on partial early extinguishments of the 2026 notes of $6.8 million.
Benefit from (provision for) income taxes
The following tables present our benefit from (provision for) income taxes for the periods shown (in thousands, except percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Benefit from (provision for) income taxes | $ | 140 | $ | (1,012) | $ | 1,152 | (114) | % | |||||||||||||||
Benefit from (provision for) income taxes decreased $1.2 million, or 114% during the three months ended March 31, 2026 compared to the same period in 2025, primarily due to a decrease in worldwide forecasted income and the valuation allowance against our U.S. federal and state deferred tax assets.
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):
| Change | |||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | $ | % | ||||||||||||||||||||
| Cash, cash equivalents and investments | $ | 67,898 | $ | 85,212 | $ | (17,314) | (20) | % | |||||||||||||||
Convertible senior notes, net(1) | 33,822 | 53,765 | (19,943) | (37) | |||||||||||||||||||
______________________________________
(1) Consists of the current and long-term portion.
Cash, cash equivalents, and investments decreased $17.3 million, or 20% primarily due to the net cash used for the early extinguishment of a portion of the 2026 notes of $19.5 million and purchases of property and equipment of $1.0 million, partially offset by the net cash provided by operating activities of $4.1 million.
Convertible senior notes, net decreased $19.9 million, or 37%, during the three months ended March 31, 2026 primarily due to the partial early extinguishments of the 2026 notes. The 2026 notes mature on September 1, 2026 unless converted, redeemed, or repurchased in accordance with their terms prior to such date. Holders of the 2026 notes may convert their notes at any time on or after June 1, 2026 until the close of business on the second scheduled trading day immediately preceding the
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respective maturity dates. See Note 6, "Convertible Senior Notes” of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q for additional information on our 2026 notes.
As of March 31, 2026, our principal sources of liquidity were cash, cash equivalents, and investments totaling $67.9 million, which were held for working capital purposes. 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 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 March 31, 2026, we have incurred cumulative losses of $992.6 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 part of our ongoing cash planning, we continue to assess whether to repatriate a portion of earnings from our subsidiary in India. Accordingly, the net cumulative tax expense as of March 31, 2026 is $1.0 million, related to a potential future distribution of such earnings. This reflects our continued assessment of cash needs and the absence of an indefinite reinvestment assertion for our subsidiary in India. 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.
Aside from the changes in convertible senior notes as disclosed in Note 6, “Convertible Senior Notes” of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (Unaudited)” of this Quarterly Report on Form 10-Q, there were no other material changes in our commitments under contractual obligations, as disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
The following table presents our condensed consolidated statements of cash flows data (in thousands):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Net cash flows provided by operating activities | $ | 4,105 | $ | 24,526 | $ | (20,421) | (83) | % | |||||||||||||||
| Net cash provided by investing activities | 18,114 | 274,914 | (256,800) | (93) | % | ||||||||||||||||||
| Net cash flows used in financing activities | (20,047) | (416,961) | 396,914 | (95) | % | ||||||||||||||||||
The substantial majority of our cash inflows from operating activities are from e-commerce transactions with learners, which are settled immediately through payment processors, as opposed to cash outflows from bill payments, which are settled based on contractual payment terms with our suppliers.
Net cash flows provided by operating activities decreased $20.4 million, or 83%, during the three months ended March 31, 2026 compared to the same period in 2025 and was primarily related to the net effect of lower depreciation and amortization of $18.1 million, lower share-based compensation expense of $8.5 million, an increase in the change in accrued liabilities of $13.3 million due to payments from our restructuring actions, partially offset by an increase in net income of $17.7 million.
Net cash flows provided by investing activities decreased $256.8 million, or 93%, during the three months ended March 31, 2026 compared to the same period in 2025 and was primarily related to lower proceeds from the sale of investments of $175.5 million and lower proceeds from the maturities of our investments of $89.7 million, partially offset by lower purchases of property and equipment of $7.6 million.
Net cash flows used in financing activities decreased $396.9 million, or 95%, during the three months ended March 31, 2026 compared to the same period in 2025 and was primarily related to lower repayments of our convertible senior notes of $397.0 million.
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Critical Accounting Policies, Significant Judgments and Estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). The preparation of these condensed 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.
There have been no material changes in our critical accounting policies and estimates during the three months ended March 31, 2026 as compared to the critical accounting policies and estimates disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements
For relevant recent accounting pronouncements, see Note 1, “Background and Basis of Presentation,” of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our market risk during the three months ended March 31, 2026, compared to the disclosures in Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 4. 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, as of March 31, 2026, 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)Changes in Internal Control over Financial Reporting
During the three months ended March 31, 2026, 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 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We may from time to time be involved in certain legal proceedings and regulatory compliance matters in the ordinary course of business, including claims of alleged infringement of trademarks, patents, copyrights, and other intellectual property rights; employment claims; and contractual and related disputes brought through private actions, class actions, administrative proceedings, regulatory actions or other litigation. We may also, from time to time, be involved in 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. See Note 7, “Commitments and Contingencies,” of our accompanying Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q for more information on our legal proceedings.
In addition, we may in the future be subject to additional inquiries, investigations, litigation or other proceedings or actions, regulatory or otherwise. An unfavorable outcome of any such litigation or regulatory proceeding or action could have a material adverse effect on our business, financial condition and results of operations.
ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes in our risk factors from our Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Securities
We had no unregistered sales of our securities during the three months ended March 31, 2026.
Purchases of Securities by the Registrant and Affiliated Purchasers
We did not purchase any of our common stock during the three months ended March 31, 2026.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the three months ended March 31, 2026, none of our Section 16 officers or directors adopted terminated
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ITEM 6. EXHIBITS
| Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
| Exhibit No. | Exhibit | Form | File No | Filing Date | Exhibit No. | Filed Herewith | ||||||||||||||||||||||||||||||||
| 10-K | 001-36180 | 42433 | 3.01 | |||||||||||||||||||||||||||||||||||
| 8-K | 001-36180 | 45006 | 3.1 | |||||||||||||||||||||||||||||||||||
| X | ||||||||||||||||||||||||||||||||||||||
| X | ||||||||||||||||||||||||||||||||||||||
| X | ||||||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document | X | ||||||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | X | ||||||||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation | X | ||||||||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Labels | X | ||||||||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation | X | ||||||||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition | X | ||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | 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. | ||||
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SIGNATURES
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.
| CHEGG, INC. | |||||||||||
| May 11, 2026 | By: | /S/ DAVID LONGO | |||||||||
| David Longo | |||||||||||
| Chief Financial Officer and Corporate Secretary | |||||||||||
| (Principal Financial Officer and Principal Accounting Officer) | |||||||||||
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