CHGG 10-K & 10-Q changes, risk factors and insider trading
Chegg, Inc. · NYSE · Services-Educational Services · CIK 1364954 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Failure to successfully execute our skilling-focused business-to-business strategy and realize the anticipated benefits of our business transformation and related restructuring plan could have a material adverse effect on our business financial results.”
New heading “Our failure to regain compliance with the continued listing requirements of the NYSE, or any future failure to remain in compliance with such standards, could result in the delisting of our common stock, which would have an adverse impact on the trading, liquidity and market price of our common stock.”
Removed heading “Summary of Risk Factors”
Removed heading “Risks Related to Our Industry”
Removed heading “Risks Related to Taxes and Accounting Matters”
Removed heading “Risks Related to Intellectual Property”
Removed heading “Risks Related to Data Privacy”
Removed heading “Risks Related to Ownership of Our Common Stock”
Removed heading “Risks Related to Our Business and Growth”
Removed heading “Our exploration of strategic alternatives may not be successful and may disrupt our ongoing business, result in increased expenses and present certain other risks.”
Removed heading “Our international operations, and the expansion thereof, subject us to increased challenges, risks, and costs, which could adversely affect our business, financial condition, and results of operations.”
Removed heading “Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict.”
Removed heading “Risks Related to Our Convertible Senior Notes”
Largest changes
“Our failure to regain compliance with the continued listing requirements of the NYSE, or any future failure to remain in compliance with such standards, could result in the delisting of our common stock, which would have an adverse impact on the trading, liquidity and market price of our common stock.”see in full comparison
“On December 12, 2025, we were notified by the New York Stock Exchange (NYSE) that we are not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our common stock as of December 11, 2025 was less than $1.00 over a consecutive 30 trading-day period. On, or around, December 24, 2025 we notified the NYSE that we intend to cure the stock price deficiency and to return to compliance with the NYSE continued listing standard. …”see in full comparison
Similarly, the adoption of any laws or regulations affecting the ability of service providers to periodically charge consumers for, among other things, recurring subscription payments, such as the Restore Online Shoppers’ Confidencesee in full comparisonAct,Act (ROSCA), may materially adversely affect our business, financial condition and results of operations. ROSCA bans online negative options, such as pre-checked online subscriptions or automatic sign-ups at checkout, unless the company: 1) clearly discloses all material terms of the deal before obtaining a consumer’s billing information; 2) gets the consumer’s express informed consent before making the charge; and 3) provides simple mechanisms for stopping recurring charges. Failure to comply could result in a violation of the FTC Act, subjecting us to penalties, including monetary fines and injunctive relief, including from State Attorney Generals. Legislation or regulation regarding the foregoing, or changes to existing legislation or regulation governing subscription payments, are being considered in many U.S.States.States, and have been recently passed or updated in states such as California and New York. We are and have been in the past, and may be in the future, the subject of investigations, inquiries, and claims under such laws or regulations, including from the Federal Trade Commission (FTC).
Noncompliance with certain privacy and data security laws we may be subject to could subject us to particularly significant penalties. For example,see in full comparisonTCPAviolationsviolationsof federal and state calling/texting/marketing laws can result in civil penaltiesor criminal finesimposed by the Federal CommunicationsCommissionCommission, the Federal Trade Commission, or states attorneys general, or private civil litigation that can seek statutory damages awards ofupthousandstoof$1,500dollars per violationimposed(i.e.,throughperprivate litigationcall orfinestext),bywhich,statewhenauthorities.aggregated in a class action, can create significant exposure for large volume outreach program. Additionally, the CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages. Furthermore, under the EU GDPR, companies may face temporary or definitive bans on data processing, fines of up to 20 million Euros or 4% of annual global revenue (whichever is greater), audits and inspections, private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests, among other penalties.
“Failure to successfully execute our skilling-focused business-to-business strategy and realize the anticipated benefits of our business transformation and related restructuring plan could have a material adverse effect on our business financial results.”see in full comparison
In October 2022, without any admission of liability, we entered into an agreement with the FTC containing a proposed consent order that will significantly impact our data security and privacy practices. The FTC consent order was finalized in January 2023. The FTC consent order requires us to establish, implement and maintain a comprehensive information security program, provide multi-factor authentication methods as an option or requirement for consumers, document and adhere to a detailed information retention schedule and provide consumers with online tools they can use to request access to or the deletion of their personal information. The consent order also requires us to obtain initial and biennial assessments of our Information Security and Governance Program ("ISP") from an independent third-party assessor and comply with detailed reporting requirements for the 20 year-duration of the order.see in full comparisonWeAlthough we have completed ourfirstsecond such independent assessment of our ISP with no materialfindings. In addition, we are currently cooperating with the FTC on an investigation as to whether we have violated certain terms of the consent order. Whilefindings, we are unable topredictguarantee that there will not be future issues, and any such issues and theoutcomestepsof,requiredortodevelopmentsremediatefollowing, this investigation, the development and resolution of this matterthem could negatively impact our business, results of operations, and financial condition.
Full comparison: every changed paragraph (164)
Summary of Risk Factors
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.
Failure to successfully execute our skilling-focused business-to-business strategy and realize the anticipated benefits of our business transformation and related restructuring plan could have a material adverse effect on our business financial results.
We are evolving our learning platform into a skilling-focused business-to-business organization, building on our existing businesses in professional language learning, workplace readiness and AI-related skills courses. This transformation involves a number of risks, including organizational, operational, financial, and technological challenges, such as the risks that we may not be able to develop novel or useful products, that we may not be able to attract or retain customers to these products, or that we may not have or hire the right talent to execute our business strategy in a competitive job market. Further, market acceptance of new product and service offerings will be dependent in part on our ability to include functionality and usability that address customer needs, and to optimally price our offerings and services to meet customer demand and cover our costs. Our go-to-market strategy also must adjust to customers' changing preferences, and there can be no assurance that our go-to-market approach will adequately and completely address such preferences. New product and services offerings may also increase our risk of liability and cause us to incur significant technical, legal or other costs. Additionally, our transformed organization will compete with numerous other organizations, many of which have greater resources and offer their products at a lower price than we do.
We may not be able to implement and realize the anticipated benefits from our strategy or business evolution plan. Events and circumstances, such as financial or unforeseen difficulties, delays and unexpected costs, may occur that could result in our not realizing desired outcomes. Even if the anticipated benefits and savings of our strategy and business evolution plan are substantially realized, there may be consequences, internal control issues, or business impacts that were not expected. Additionally, because of our restructuring efforts in connection with our strategy and business evolution plan, we may experience a loss of continuity, loss of accumulated knowledge or loss of efficiency during transitional periods. Reorganization and restructuring can require a significant amount of management and other employees' time and focus, which may divert attention from operating activities and growing our business.
•Our revenue has declined and our business depends on our ability to continue to attract new learners to, and retain existing learners on, our learning platform.
•If we fail to innovate and offer new products and services in response to rapidly evolving technological and market developments, including AI, our competitive position and business prospects may be harmed.
•We face competition in all aspects of our business, including with respect to AI, and we expect such competition to increase.
•Our exploration of strategic alternatives may not be successful and may disrupt our ongoing business, result in increased expenses and present certain other risks.
•U.S. colleges have faced, and may continue to face, reduced enrollment, which could negatively impact our business and results of operations.
•Our international operations, and the expansion thereof, subject us to increased challenges, risks, and costs, which could adversely affect our business, financial condition, and results of operations.
•We have a limited operating history in international jurisdictions and our expansion efforts into international markets may not be successful.
•The uncertainty surrounding the evolving educational landscape, including the impact of AI on learning and education, the state of the student including the amount and the extent to which AI will impact study habits and how students learn and/or complete their assignments, and the demand for our evolving offerings make it difficult to predict our operational trends and results of operations.
•If our efforts to drive user traffic, including search engine optimization, social media campaigns, and other marketing, are not successful, student discovery of, and engagement with, our learning platform could decline, which may harm our business and results of operations.
•If our efforts to build and maintain strong brands are not successful, we may not be able to grow our student user base, which could adversely affect our results of operations.
•Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets.
•We have a history of losses, and we may not achieve or sustain profitability in the future.
•If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives.
•We have undertaken, and may in the future undertake, internal restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition.
•We depend on mobile app stores and operating systems to grow our student user base and their engagement with our learning platform.
•Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks, including risks associated with credit card fraud.
•We rely on Amazon Web Services (AWS) and other third-party software and service providers to provide systems, storage, and services for our website and any disruption of such services or a material change to our arrangements could adversely affect our business.
•Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully.
•If we fail to convince brands of the benefits of advertising on our learning platform, or if platforms such as Google Chrome, Safari, or Firefox limit our access to advertising and marketing audiences, or the data required to effectively reach those audiences, our business could be harmed.
•We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at all.
•Our core value of putting students first may conflict with the short-term interests of our business.
•Adverse litigation judgments or settlements resulting from legal proceedings in which we are or may be involved could expose us to monetary damages or limit our ability to operate our business.
•If we are not able to manage the growth of our business both in terms of scale and complexity, our business could be adversely affected.
•Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict.
Risks Related to Our Industry
•Government regulation of education and student information is evolving, and unfavorable developments could have an adverse effect on our business, results of operations, and financial condition.
•Colleges and certain governments may restrict online access or access to our website, which could lead to the loss of or slowing of growth in our student user base and their level of engagement with our platform.
•If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be adversely affected.
•We are subject to U.S. trade control laws that may restrict growth prospects and impose liability if we are non-compliant.
Risks Related to Taxes and Accounting Matters
•We may be subject to greater than anticipated liabilities for income, property, sales, and other taxes, and any successful action by federal, state, foreign, or other authorities to collect additional taxes could adversely harm our business.
•Our effective tax rate may fluctuate as a result of new U.S. and worldwide tax laws and our interpretations of those new tax laws, which are subject to significant judgments and estimates. The ongoing effects of the new tax laws and the refinement of provisional estimates could make our results difficult to predict.
•Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve subjective judgments and estimates formulated by our management. Our actual results could differ from the estimates and assumptions used to prepare our consolidated financial statements.
Risks Related to Intellectual Property
•Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations.
•Misuse of our platform and content, including digital piracy and improper sharing and misappropriation of user credentials, may continue to adversely affect our business, financial condition, and results of operation.
•If we become subject to liability for the Internet content that we publish or that is uploaded to our websites by students or other users, our results of operations could be adversely affected.
•Changes in or our failure to comply with the requirements for eligibility for the Digital Millennium Copyright Act (DMCA) safe harbors could harm our business.
•We are, and may in the future be, subject to intellectual property claims, which are costly to defend and could harm our business, financial condition, and results of operations.
•Some aspects of our technology include open-source software, and any failure to comply with the terms of one or more of these open-source licenses could harm our business.
Risks Related to Data Privacy
•The compromise of our information technology systems or data, including through computer malware, viruses, hacking, phishing attacks, spamming and other security incidents, could harm our business and results of operations.
•We collect, process, store and use personal information and other sensitive data, which subjects us to stringent and evolving U.S. and foreign laws, governmental regulation, contractual obligations, policies and other legal obligations.
•Public scrutiny of Internet privacy issues and actual or perceived failure to comply with our obligations with respect to privacy and data security could harm our business, including by damaging our reputation and relationships with students and educators.
•We are subject to privacy and cybersecurity laws across multiple jurisdictions which are highly complex, overlapping, and which create compliance challenges that may expose us to substantial costs, liabilities, or loss of customer trust. Our actual or perceived failure to comply with these laws could harm our business.
•Our business, including our ability to operate internationally, could be adversely affected if new legislation or regulations are adopted or due to changes in interpretations or implementations of current legislation and regulations.
Risks Related to Ownership of Our Common Stock
•Our stock price has been and will likely continue to be volatile.
•We may be subject to short-selling strategies that may drive down the market price of our common stock.
Risks Related to Our Business and Growth
Our business depends on our ability to attract new studentscustomers to use our products and services and to increase retentionengage and the level of engagement byretain existing studentscustomers withto our learning platform andwhile maintainmaintaining pricing levels. TheOur substantialAcademic Services business, representing the majority of our revenuesrevenues, depends on small transactions made by a widely dispersed student population with an inherently high rate of turnover primarily as a result of graduation.graduation, and our Skilling business depends on attracting both enterprise customers and engaging with individual learners. The rate at which our student usercustomer base expands or declines, the rate at which we retain existing students,learners, and the engagement with our learning platform may fluctuate because of several factors, including, among others:
•our ability to engage students with our suite of Subscription Services and the content contained therein;
•our ability to introduce new products and services that are favorably received by students, including a new AI-enabled interactive and personalized user experience;
•our ability to locate and attract new customers to use our products and services and convert visitors to paying subscribers given the availability of competing content, including free competitors and content;
•our ability to attract new customers to grow our Skilling business;
Management's Discussion & Analysis (MD&A)
New heading “Academic Services”
New heading “_______________________________________”
New heading “_______________________________________”
Removed heading “Subscription Services”
Removed heading “Skills and Other”
Removed heading “Seasonality of Our Business”
Largest changes
“Operating expenses decreased $832.1 million, or 71% during the year ended December 31, 2025, compared to the same period in 2024, primarily due to the absence of impairment expense of $677.2 million recognized in 2024. The remaining decreases were primarily related to lower employee-related expenses and contractor spend as a result of the restructuring plans. See “Note 7. Goodwill and Intangible Assets” and “Note 15. …”see in full comparison
“In September 2024 and June 2024, in consideration of the sustained decline in our stock price, industry developments, and our financial performance, we determined that impairment tests for our goodwill, intangible assets and property and equipment were necessary. As a result, we recorded $677.2 million of impairment expense during the year ended December 31, 2024. …”see in full comparison
Sales and marketing expenses decreased bysee in full comparison$18.3$39.6 million, or14%,37%, during the year ended December 31,2024,2025, compared to the same period in2023.2024. The decrease was primarilyattributabledue to lower paid marketing expenses of $22.1 million, lower employee-related expenses of $14.3 million including share-based compensation expense, lower indirect marketing expenses of $2.7 million, and lower depreciation and amortization expense of$12.0$1.3 million,whichpartiallyisoffsetprimarilybyduehighertorestructuringpreviously recognized impairment charges, lower employee-related expenses $4.3 million, which is primarily due to share-based compensation expense, and lower paid marketing expensescharges of$1.7$2.2 million. Sales and marketing expenses as a percentage of net revenues were 18% during each of the years ended December 31,20242025 and2023.2024.
Impairment expense was $2.0 million during the year ended December 31, 2025, consisting of impairment of property and equipment. Impairment expense was $677.2 million during the year ended December 31, 2024 consisting of impairments of goodwill, intangible assets, and other related property and equipment. See “Notesee in full comparison6,6.“Property and Equipment, Net” and “Note7,7.“Goodwill and Intangible Assets” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item1,8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
“Impairment expense was $677.2 million during the year ended December 31, 2024, consisting of impairments of goodwill, intangible assets, and other related property and equipment. Impairment expense was $3.6 million during the year ended December 31, 2023 consisting of an impairment of intangible assets.”see in full comparison
Insee in full comparisonJuneMay2024,2025 and October 2025, weundertookannouncedaworkforcestrategicreductions that resulted in management approved restructuringplan based on the environment inplans, whichwe were operating to realign our expenses with the revenue trends at the time. The June 2024 restructuring planalso includeda reduction in workforce,the closure oftwoouroffices, and a changeoffices inour Chegg Skills offering such that we no longer offer Chegg Skills directly to customers. Since then,thefactorsUniteddescribed above have negatively impacted our business and our outlook. As a result, in November 2024, we announced an additional restructuring plan to further manage costs and align with the market. The November 2024 restructuring plan included a reduction in workforce and the closure of one office.States. During the year ended December 31,2024,2025, we recorded$24.6$51.5 million of restructuring charges and for fiscal year2025,2026, we expect to realize cost savings as a result of the restructuring plans. See Part I, Item 1A, “Risk Factors”, “Note6,9.“Property and Equipment, NetLeases”, and “Note15,15.“Restructuring Charges” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
Full comparison: every changed paragraph (73)
You should read the following discussion of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. We have omitted discussion of the earliest of the three years of financial condition and results of operations and this information can be found in Part I,II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023,2024, filed with the SEC on February 20,24, 2024,2025, which is available free of charge on the SEC's website at sec.gov and on our website at investor.chegg.com. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See the section titled “Note about Forward-Looking Statements” in this Annual Report on Form 10-K for additional information. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Part I, Item 1A, “Risk Factors.”
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 I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.
Our service and product offerings fall into two categories: Chegg Skilling and Academic Services, which are described below. We have changed our revenue disaggregation from Subscription Services and Skills and Other to Chegg Skilling and Academic Services to better reflect the nature of revenue and cash flows.
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 also work with leading brands and programmatic partners to deliver advertising across our platforms.
Chegg provides individualized learning support to students as they pursue their educational journeys. Available on demand 24/7 and powered by over a decade of learning insights, the Chegg platform offers students artificial intelligence (“AI”)-powered academic support thoughtfully designed for education coupled with access to a vast network of subject matter experts who help ensure quality and accuracy. No matter the goal, level, or style, Chegg helps millions of students around the world learn with confidence by helping them build essential academic, life, and job skills to achieve success.
Our long-term strategy is centered upon our ability to utilize our Subscription Services to increase student engagement with our learning platform. We continue to invest in the expansion of our offerings and technology platform to provide a more compelling and personalized solution and deepen engagement with students. We continue to integrate artificial intelligence into our platform, and it is now conversational, more instructional, and interactive. We remain focused on providing a holistic and differentiated product offering that supports the whole student with 360 degrees of individualized academic and functional support, including the delivery of high-quality and accurate content. We believe the investments we are making will allow us to return to revenue growth over time. Our ability to achieve these long-term objectives is subject to numerous risks and uncertainties, which are described in greater detail below and in Part II, Item 1A, “Risk Factors.”
ExplorationConclusion of Process to Explore Strategic Alternatives
On February 24, 2025, we announced that we arewere undertaking a strategic review process and exploring a range of alternatives to maximize shareholder value, including being acquired, undertaking a go-private transaction, or remaining as a standalone public company. ThisOn October 27, 2025, we announced that our Board unanimously approved the conclusion of its review willof bestrategic ongoingalternatives in support of the evolution of our business, including into a skilling-focused business-to-business organization, building on existing relationships with ourbusinesses continuedin investment,professional innovation,language learning, workplace readiness and execution.AI-related Weskills havecourses. notIn setconnection awith timetablethis fortransformation, we are restructuring the completionway ofwe thisoperate process,our andacademic therelearning can be no assurance that it will result in any transaction or outcome.products.
Recent technological shifts, notably Google's roll out of AI Overviews (AIO)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 mid-August,August 2024, Google broadly rolled out its AIO search experience, or 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. While we continue to study the changes and adjust our SEO strategy, weWe expect Google to continue its shift from being a search origination point to the destination, which couldwe believe has materially adversely affectaffected our business, operating results and financial condition.
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 Chat GPTChatGPT 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. See Part II,I, Item 1A, “Risk Factors” for additional details.
In JuneMay 2024,2025 and October 2025, we undertookannounced aworkforce strategicreductions that resulted in management approved restructuring plan based on the environment inplans, which we were operating to realign our expenses with the revenue trends at the time. The June 2024 restructuring planalso included a reduction in workforce, the closure of twoour offices, and a changeoffices in our Chegg Skills offering such that we no longer offer Chegg Skills directly to customers. Since then, the factorsUnited described above have negatively impacted our business and our outlook. As a result, in November 2024, we announced an additional restructuring plan to further manage costs and align with the market. The November 2024 restructuring plan included a reduction in workforce and the closure of one office.States. During the year ended December 31, 2024,2025, we recorded $24.6$51.5 million of restructuring charges and for fiscal year 2025,2026, we expect to realize cost savings as a result of the restructuring plans. See Part I, Item 1A, “Risk Factors”, “Note 6,9. “Property and Equipment, NetLeases”, and “Note 15,15. “Restructuring Charges” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
In September 2024 and June 2024, in consideration of the sustained decline in our stock price, industry developments, and our financial performance, we determined that impairment tests for our goodwill, intangible assets and property and equipment were necessary. As a result, we recorded $677.2 million of impairment expense during the year ended December 31, 2024. See Note 6, “Property and Equipment, Net” and Note 7, “Goodwill and Intangible Assets” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 1, “Financial Statements” of this Annual Report on Form 10-K for additional information.
During the years ended December 31, 2024,2025, and 2023,2024, we generated net revenues of $617.6$376.9 million and $716.3$617.6 million, respectively, and in the same periods had a net losslosses of $837.1$103.4 million and a$837.1 netmillion, income of $18.2 million.respectively.
We have presented revenues for our two product lines, Subscription Services and Skills and Other, based on how students view us and the utilization of our products by them. More detail on our two product lines is discussed in the next two sections titled “Subscription Services” and “Skills and Other.”
Subscription Services
Our Subscription Services can be accessed internationally through our websites and on mobile devices and include Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu. Students typically pay to access our Subscription Services on a monthly basis. Revenues from our Subscription Services are primarily recognized ratably over the monthly subscription period whereas the number of subscribers are determined as those who have paid to access our services at any time during the period. Changes in revenues are primarily related to changes in subscribers. Our Chegg Study subscription service provides access to personalized, step-by-step learning support powered by AI, computational engines, and subject matter experts. When students need writing help, including plagiarism detection scans and creating citations for their papers, they can use our Chegg Writing subscription service. Our Chegg Math subscription service helps students understand math by providing a step-by-step math solver and calculator. We also offer our Chegg Study Pack as a premium subscription bundle of our Chegg Study, Chegg Writing, and Chegg Math services. Subscribers to Busuu have access to a premium language learning platform that offers comprehensive support through self-paced lessons, live classes with expert tutors and a huge community of members to practice alongside.
Skills and Other
Our Skills and Other product line includes revenues from Chegg Skills, advertising services, print textbooks and eTextbooks. Our Chegg Skills learning platform offers professional courses focused on the latest technology skills. We work with leading brands and programmatic partners to deliver advertising across our platforms. We also provide a platform for students to rent or buy print textbooks and eTextbooks, which helps students save money compared to the cost of buying new.
Seasonality of Our Business
Revenues from Subscription Services are primarily recognized ratably over the subscription term, which has generally resulted in our highest revenues and profitability in the fourth quarter as it reflects more days of the academic year. Certain variable expenses, such as marketing expenses, remain highest in the first and third quarters such that our profitability may not provide meaningful insight on a sequential basis. As a result of these factors, the most concentrated periods for our revenues and expenses do not necessarily coincide, and comparisons of our historical quarterly results of operations on a sequential basis may not provide meaningful insight into our overall financial performance.
We recognize revenues net of allowances for refunds or charge backs from our payment processors who process payments from credit cards, debit cards, and PayPal. Revenues from Cheggour Studylanguage Pack,learning Chegg Study, Chegg Writing, Chegg Math,platform and BusuuAcademic Services are primarily recognized ratably over the monthly subscription period. Revenues from Cheggour Skillsworkforce skilling programs are recognized over the delivery period, adjusted for an estimate of non-redemption.non-redemption, or upon fulfillment. Revenues from advertising services and content licensing are recognized upon fulfillment. Revenues from print textbooks and eTextbooks are recognized immediately.
Our costCost of revenues consists primarily of expenses associated with the delivery and distribution of our products and services.services Cost of revenues primarily consists ofincluding content amortization expense related to content that we develop, license from publishers, or acquire through acquisitions,expense, web hosting fees, customer support fees, payment processing costs, amortization of acquired intangible assets, employee-related expenses, which includes salaries, benefits and share-based compensation expense, contractor costs, and other direct costs related to providing content or services. In addition, cost of revenues includes allocated information technology and facilities costs.
We classify our operating expenses into three categories: research and development, sales and marketing, and general and administrative. One of the most significant components of our operating expenses is employee-related expenses, which include salaries, benefits, and share-based compensation expense. We allocate certain costs to each expense category, primarily based on the headcount in each group at the end of a period. As our business grows, our operating expenses may increase over time to expand capacity and sustain our workforce.
Research and development expenses consist of employee-related expenses, which includes salaries, benefits, and share-based compensation expense for employees on our product, engineering, and technical teams who are responsible for maintaining our website, developing new products, and improving existing products. Research and development expenses also include technology costs to support our research and development, web hosting fees, contractor costs, and outside services. We expense substantially all of our research and development expenses as they are incurred. Our research and development expenses continue to support new products and services as well as expand our infrastructure capabilities to support back-end processes associated with our revenue transactions and internal systems. We intend to continue making significant investments in developing new products and services and enhancing the functionality of existing products and services.
Sales and marketing expenses consist of user and advertiser-facing marketing and promotional expenditures through a number of targeted online marketing channels, sponsored search, display advertising, social media campaigns, and other initiatives. We incur employee-related expenses, which includes salaries, benefits and share-based compensation expenses for our employees engaged in marketing, business development and sales, and sales support functions, and amortization of acquired intangible assets.functions. Our marketing expenses are largely variable and to the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels'channels shifts, we could see a corresponding change in our sales and marketing expenses.
Interest expense, net consists primarily of interest expense on the amortization of debt issuance costs related to the convertible senior notes. Other income, net consists primarily of interest income, gains on early extinguishment of the convertible senior notes, and realized gains/ and losses on the sale of our investments.
Provision for income taxes consists primarily of federal and state income taxes in the United States and income taxes in certain non-USnon-U.S. jurisdictions.
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The following table presents our total net revenues for the periods shown for our SubscriptionChegg ServicesSkilling and SkillsAcademic and OtherServices product lines (in thousands, except percentages):
SubscriptionChegg ServicesSkilling revenues decreased by $91.3$5.3 million, or 14%,7%, during the year ended December 31, 2024,2025 compared to the same period in 2023.2024. The decrease was primarily due to alower 14%revenues decreaseof in$8.9 subscribersmillion who have paidrelated to accessour workforce skilling platform primarily related to reduced direct-to-consumer transactions, partially offset by an increase of revenue of $3.6 million from our services.language Subscriptionlearning Servicesplatform primarily related to business-to-business growth. Chegg Skilling revenues as a percentage of net revenues were 89%18% during each of the yearsyear ended December 31, 20242025 andcompared 2023.to 12% during the same period in 2024.
SkillsAcademic and OtherServices revenues decreased by $7.4$235.4 million, or 10%,43%, during the year ended December 31, 20242025, compared to the same period in 2023.2024. The decrease was primarily due to lowera revenuesdecrease in Cheggsubscription Skillsrevenue of $223.8 million primarily related to reduced traffic which led to fewer enrollments.subscribers, Skillsa decrease in advertising services revenue of $18.0 million due to lower fulfillment, and Othera decrease of print textbook and eTextbook revenue of $4.4 million because we no longer provide this platform, partially offset by content licensing revenue of $10.8 million. Academic Services revenues as a percentage of net revenues were 11%82% during each of the yearsyear ended December 31, 20242025 andcompared 2023.to 88% during the same period in 2024.
Cost of revenues decreased $45.0$28.8 million, or 20%,16%, during the year ended December 31, 2024,2025, compared to the same period in 2023.2024. The decrease was primarily due to the absence of the $38.2 million content and related assets charge, lower contractor spend of $4.4 million, lower depreciation and amortization expense of $4.0 million, and lower payment processing and other order fees of $2.9$16.3 million, which is primarily due to the decrease in subscribers who have paid to access our services, whichlower wasemployee-related expenses of $4.6 million, lower web hosting fees of $4.0 million, lower write-offs of content and internally developed software of $3.1 million, lower contractor spend of $2.4 million, and lower advertising services revenue costs of $1.0 million, partially offset by higher webdepreciation hostingand feesamortization expense of $2.5$3.2 million and thehigher absencerestructuring charges of the gain on disposition of textbooks of $1.2$1.3 million. Gross margins increaseddecreased to 71%60% during the year ended December 31, 2024,2025, from 68%71% during the same period in 2023.2024.
See Note 6, “Property and Equipment, Net” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements” of this Annual Report on Form 10-K for additional information on the content and related assets charge.
Operating expenses decreased $832.1 million, or 71% during the year ended December 31, 2025, compared to the same period in 2024, primarily due to the absence of impairment expense of $677.2 million recognized in 2024. The remaining decreases were primarily related to lower employee-related expenses and contractor spend as a result of the restructuring plans. See “Note 7. Goodwill and Intangible Assets” and “Note 15. Restructuring Charges” included in our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information regarding impairment expense and the restructuring plans, respectively.
Research and development expenses decreased $21.3$77.0 million, or 11%,45%, during the year ended December 31, 20242025 compared to the same period in 2023.2024. The decrease was primarily due to lower employee-related expenses of $28.8$65.4 million, which is primarily due toincluding share-based compensation expense, lower contractor spend of $6.2 million, lower web hosting fees of $4.1 million, lower technology expenses of $3.3 million, and lower depreciation and amortization expense of $1.2 million, partially offset by higher restructuring charges of $9.7$4.0 million. Research and development expenses as a percentage of net revenues were 28%25% during the year ended December 31, 20242025 compared to 27%28% during the same period in 2023.2024.
Sales and marketing expenses decreased by $18.3$39.6 million, or 14%,37%, during the year ended December 31, 2024,2025, compared to the same period in 2023.2024. The decrease was primarily attributabledue to lower paid marketing expenses of $22.1 million, lower employee-related expenses of $14.3 million including share-based compensation expense, lower indirect marketing expenses of $2.7 million, and lower depreciation and amortization expense of $12.0$1.3 million, whichpartially isoffset primarilyby duehigher torestructuring previously recognized impairment charges, lower employee-related expenses $4.3 million, which is primarily due to share-based compensation expense, and lower paid marketing expensescharges of $1.7$2.2 million. Sales and marketing expenses as a percentage of net revenues were 18% during each of the years ended December 31, 20242025 and 2023.2024.
General and administrative expenses decreased $18.4$40.4 million, or 8%,19%, during the year ended December 31, 20242025 compared to the same period in 2023.2024. The decrease was primarily due to lower employee-related expenses of $38.6$50.9 million,million which is primarily due toincluding share-based compensation expense, lower professional fees of $6.0 million, lower loss contingency accruals of $4.5 million, lower contractor spend of $3.0 million, and lower facility expenses of $2.9 million, partially offset by higher restructuring charges of $7.1$19.4 million, an impairment loss on our equity investment of lease$6.0 relatedmillion, and higher impairments of lease-related assets of $5.6 million, and a higher loss contingency of $5.0$1.8 million. General and administrative expenses as a percentage of net revenues were 35%47% during the year ended December 31, 20242025 compared to 33%35% during the same period in 2023.2024.
Impairment expense was $677.2 million during the year ended December 31, 2024, consisting of impairments of goodwill, intangible assets, and other related property and equipment. Impairment expense was $3.6 million during the year ended December 31, 2023 consisting of an impairment of intangible assets.
Impairment expense was $2.0 million during the year ended December 31, 2025, consisting of impairment of property and equipment. Impairment expense was $677.2 million during the year ended December 31, 2024 consisting of impairments of goodwill, intangible assets, and other related property and equipment. See “Note 6,6. “Property and Equipment, Net” and “Note 7,7. “Goodwill and Intangible Assets” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 1,8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
Interest expense, net decreased by $1.2$2.0 million, or 31%,77%, during the year ended December 31, 2024,2025, compared to the same period in 2023.2024. The decrease was primarily due tolower interest expense recognized as a result of the maturity of the 2025 notes and the early extinguishment of a portion of the 2026 notes.
Other income, net decreased $70.5$34.0 million, or 58%,66%, during the year ended December 31, 20242025 compared to the same period in 2023,2024, primarily due to a decrease in interest income of $19.2 million due to lower investment balances, a decrease in gain on early extinguishment of a portion of convertiblethe senior2026 notes of $66.4$11.7 millionmillion, and athe decrease in interest incomeabsence of $9.4 million partially offset by thea gain on the sale of our equity investment of $3.8 million.
See “Note 8,8. “Convertible Senior Notes,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information on the gain on early extinguishment of a portion of the 2026 notes and the maturity of the 2025 notes.
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The $116.6 million change in provisionProvision for income taxes decreased by $145.4 million during the year ended December 31, 20242025 compared to the same period in 2023, was2024, primarily due to the establishment of a valuation allowance against our U.S. federal and state deferred tax assets.assets in 2024.
(1) Consists of the current and long-term portion of convertible senior notes, net.portion.
Cash, cash equivalents, and investments decreased $51.2$443.2 million, or 9%,84%, during the year ended December 31, 20242025 primarily due to the maturity of the 2025 notes and early extinguishment of a portion of the 2026 notes of $96.5$424.8 million and purchases of property and equipment of $75.0$28.1 million, partially offset by the net cash provided by operating activities of $125.2$15.5 million.
Convertible senior notes, net decreased $113.9$432.2 million, or 19%,89%, during the year ended December 31, 20242025 primarily due to the maturity of the 2025 notes and the early extinguishment of a portion of the 2026 notes.
The 2026 notes and 2025 notes mature on September 1, 2026 and March 15, 2025, respectively, unless converted, redeemed, or repurchased in accordance with their terms prior to such dates.date. Holders of the 2026 notes and 2025 notes may convert their notes at any time on or after June 1, 2026 and December 15, 2024, respectively, until the close of business on the second scheduled trading day immediately preceding the respective maturity dates. See “Note 8,8. “Convertible Senior Notes” of our accompanying Notes to Consolidated Financial Statements included in Part I,II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information on our 2026 notes.
On February 13, 2026, we entered into an individual, privately negotiated repurchase agreement with a holder of our outstanding 2026 notes to repurchase $20.0 million in aggregate principal amount of the 2026 notes for an aggregate cash repurchase price of $19.4 million (the “Notes Repurchase Transaction”). The Notes Repurchase Transaction was entered into in connection with our previously announced securities repurchase program and closed on February 20, 2026. Following the closing, $33.9 million aggregate principal amount of the 2026 notes remain outstanding and $122.4 million remain available under our securities repurchase program.
As of December 31, 2024,2025, our principal sources of liquidity were cash, cash equivalents, and investments totaling $528.4$85.2 million, which were held for working capital purposes. The substantial majority of our net revenues are from e-commerce transactions with students, which are settled within a few days through payment processors, as opposed to our accounts payable, which are settled based on contractual payment terms with our suppliers. We believe that our existing sources of liquidity will be sufficient to fund our operations and debt service obligations for at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, our investments in research and development activities, our acquisition of new products and servicesservices, and our sales and marketing activities. To the extent that existing sources of liquidity are insufficient to fund our future operations, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all. If adequate funds are not available on acceptable terms, or at all, we may be unable to adequately fund our business plans and it could have a negative effect on our business, operating cash flows and financial condition. As of December 31, 2024,2025, we have incurred cumulative losses of $889.4$992.9 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 we planned to repatriate a portion of the earnings from our subsidiary in India, we accrued a total tax liability of $5.2 million. In NovemberDecember 2024,2025, our subsidiary in India distributed $23.0an additional $10.8 million to the United States, resulting in a remittance of $3.5$1.6 million in withholding tax. As of December 31, 2024,2025, the net cumulative tax expense related to future distributionsdistribution amounts tois $1.7$1.1 million. 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.
(1) Consists of the remaining principal amount due upon maturitymaturity. andAs cashof interestDecember payments.31, Our2025, our convertible senior notes are recorded on our consolidated balance sheets at their carrying amounts. As of December 31, 2024, the carrying amountamounts of the$53.8 2026 notes and 2025 notes was $127.3 million and $358.6 million, respectively.million.
In addition, we are also subject to certain legal proceedings and claimsclaims, including in the ordinary course of businessbusiness, and record a liability when we believe that a loss is probable and reasonably estimable. As of December 31, 2024, we've recognized an estimated loss contingency accrual of $7.0 million related to one of our legal proceedings. The timing of such payment is uncertain and we are unable to reliably estimate the timing and therefore have not included in the above table. See “Note 10,10. “Commitments and Contingencies”" of our accompanying Notes to Consolidated Financial Statements included in Part I,II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
What changed in the latest 10-Q
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.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Provision for income taxes”
Removed heading “Benefit from (provision for) income taxes”
Largest changes
“General and administrative expenses decreased $65.6 million, or 66%, during the six months ended June 30, 2026 compared to the same period in 2025. …”see in full comparison
General and administrative expenses decreasedsee in full comparison$20.2$45.4 million, or51%,76%, during the three months endedMarchJune31,30, 2026 compared to the same period in 2025. The decrease was due to lower employee-related expenses of$14.6$12.2million,millionwhich is primarily due toincluding share-based compensation expense, a reduction in litigation settlements of $10.5 million, lower restructuring charges of $9.5 million, the absence of an impairment loss on an equity investment of $6.0 million, lower professional fees of$3.4$3.1 million, the absence of an impairment of lease-related assets of $3.0 million, and lowerrestructuringfacilitychargesexpenses of$2.7$2.1 million, partially offset by higher contractor spend of $1.1 million. General and administrative expenses as a percentage of net revenues were31%29% during the three months endedMarchJune31,30, 2026 compared to33%57% during the same period in 2025.
see in full comparisonIn addition, across our industry, there has been a continued increase in the adoption of free and paid generative AI products for academic support, and studentsStudents are increasingly turning to generative AI for academic support, such as homework and exams, as well as assistance in other areas of dailylife. This issue impacts education technology companies broadly,life, wherestudentsthey see generative AI products like ChatGPT and others as strong alternatives to vertically specialized solutions foreducationeducation.suchThisas Chegg. These developments havehas negatively impacted our industry andour business and areis expected to continue to negatively impact traffic to ouroverall trafficplatform and accelerate the decline in the number of new subscribers that sign up for our services,resultingadverselyin continued negative impacts toaffecting ourgrowth,business, operating results and financial condition.
“Research and development expenses decreased $41.6 million, or 72%, during the six months ended June 30, 2026 compared to the same period in 2025. The decrease was primarily due to lower employee-related expenses of $23.2 million including share-based compensation expense, lower restructuring charges of $7.1 million, lower technology-related expenses of $5.8 million, and lower web hosting fees of $3.5 million. Research and development expenses as a percentage of net revenues were 14% during the six months ended June 30, 2026 compared to 26% during the same period in 2025.”see in full comparison
Full comparison: every changed paragraph (35)
RecentIncreased technologicalavailability shifts,and notablyadoption Google'sof AI Overviews search experience, or AIO,tools and products, including the continued increase in availability and adoption of free and paid generative AI services by students, havehas createdreduced, and areis expected to continue to create headwinds for our industry and our business, most notably a reduction inreduce, traffic to our website and customers subscribing to our services. InFor August 2024, Google broadly rolled out AIO, which displays AI-generated content atexample, the topAI Overview feature of itsGoogle's search results. This experience,results, which includes questions and solutions for education, keeps users on Google search results versusinstead of leading them ontoto our site. AIO’sAs prevalencesites has grown and will only continue to increase. We expectlike Google seek to continue its shift from being a search origination pointtool to thea destination, which we believeexpect hastraffic materiallyto our platform to continue to be reduced, adversely affectedaffecting 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.condition.
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 studentsStudents 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,life, where studentsthey see generative AI products like ChatGPT and others as strong alternatives to vertically specialized solutions for educationeducation. suchThis as Chegg. These developments havehas negatively impacted our industry and our business and areis expected to continue to negatively impact traffic to our overall trafficplatform and accelerate the decline in the number of new subscribers that sign up for our services, resultingadversely in continued negative impacts toaffecting our growth, business, operating results and financial condition.
Three and Six Months Ended MarchJune 31,30, 2026 and 2025
Chegg Skilling revenues increased $1.4$0.3 million, or 9%,2%, and $1.8 million, or 5%, during the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in 2025. The increase was2025, primarily due to a $0.9 millionan 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.programs. Chegg Skilling revenues as a percentage of net revenues were 28%34% and 31% during the three and six months ended MarchJune 31,30, 20262026, respectively, compared to 13%16% and 15% during the same periodperiods in 2025.2025, respectively.
Academic Services revenues decreased $59.6$53.6 million, or 57%,61%, during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. The decrease was primarily due to a decrease in subscription revenue of $57.6$46.7 million and advertising services revenuesrevenue of $1.9$1.1 millionmillion, primarily related to reduced traffic which led to fewer subscribers.subscribers, as well as a decrease in content licensing revenue of $5.6 million. Academic Services revenues as a percentage of net revenues were 72%66% during the three months ended MarchJune 31,30, 2026 compared to 87%84% during the same period in 2025.
Academic Services revenues decreased $113.2 million, or 59%, during the six months ended June 30, 2026, compared to the same period in 2025. The decrease was primarily due to a decrease in subscription revenue of $104.4 million and advertising services revenues of $3.0 million, primarily related to reduced traffic which led to fewer subscribers, as well as a decrease in content licensing revenue of $4.9 million. Academic Services revenues as a percentage of net revenues were 69% during the six months ended June 30, 2026 compared to 85% during the same period in 2025.
Cost of revenues decreased $28.6$11.9 million, or 53%,34%, during the three months ended MarchJune 31,30, 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$4.0 million, primarily due to the decrease in subscribers who have paid to access our services, lower depreciation expense of $2.9 million, lower web hosting fees of $2.6$2.3 million,million and lower employee-related expenses of $1.6$1.1 million. Gross margins increaseddecreased to 60%55% during the three months ended MarchJune 31,30, 2026, from 56%66% during the same period in 2025.
Cost of revenues decreased $40.5 million, or 45%, during the six months ended June 30, 2026, compared to the same period in 2025. The decrease was primarily due to lower depreciation expense of $20.7 million primarily due to the accelerated depreciation recorded in 2025, lower payment processing and other order fees of $10.0 million, which is primarily due to the decrease in subscribers who have paid to access our services, lower web hosting fees of $4.4 million, and lower employee-related expenses of $2.7 million. Gross margins decreased to 57% during the six months ended June 30, 2026, from 61% during the same period in 2025.
Operating expenses decreased $57.5$74.6 million, or 60%,70%, and $132.1 million, or 65%, during the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods 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 expenses decreased $20.3$21.3 million, or 69%,74%, during the three months ended MarchJune 31,30, 20262026, compared to the same period in 2025. The decrease was primarily due to lower employee-related expenses of $13.9$9.3 million,million including share-based compensation expense, lower technologyrestructuring charges of $6.8 million, lower technology-related expenses of $3.1$2.7 million, and lower web hosting fees of $2.3$2.2 million. Research and development expenses as a percentage of net revenues were 14% during the three months ended MarchJune 31,30, 2026 compared to 24%27% during the same period in 2025.
Research and development expenses decreased $41.6 million, or 72%, during the six months ended June 30, 2026 compared to the same period in 2025. The decrease was primarily due to lower employee-related expenses of $23.2 million including share-based compensation expense, lower restructuring charges of $7.1 million, lower technology-related expenses of $5.8 million, and lower web hosting fees of $3.5 million. Research and development expenses as a percentage of net revenues were 14% during the six months ended June 30, 2026 compared to 26% during the same period in 2025.
Sales and marketing expenses decreased by $15.0$7.9 million, or 59%,46%, during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. The decrease was primarily attributable to lower employee-related expenses of $2.9 million including share-based compensation expense, lower paid marketing expenses of $11.2$2.7 millionmillion, and lower employee-relatedrestructuring expensescharges of $4.0$2.0 million, including share-based compensation expense.million. Sales and marketing expenses as a percentage of net revenues were 17%18% during the three months ended MarchJune 31,30, 2026 compared to 21%17% during the same period in 2025.
Sales and marketing expenses decreased by $23.0 million, or 53%, during the six months ended June 30, 2026, compared to the same period in 2025. The decrease was primarily attributable to lower paid marketing expenses of $13.9 million, lower employee-related expenses of $6.9 million including share-based compensation expense, and lower restructuring charges of $2.0 million. Sales and marketing expenses as a percentage of net revenues were 17% during the six months ended June 30, 2026 compared to 19% during the same period in 2025.
General and administrative expenses decreased $20.2$45.4 million, or 51%,76%, during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. The decrease was due to lower employee-related expenses of $14.6$12.2 million,million which is primarily due toincluding share-based compensation expense, a reduction in litigation settlements of $10.5 million, lower restructuring charges of $9.5 million, the absence of an impairment loss on an equity investment of $6.0 million, lower professional fees of $3.4$3.1 million, the absence of an impairment of lease-related assets of $3.0 million, and lower restructuringfacility chargesexpenses of $2.7$2.1 million, partially offset by higher contractor spend of $1.1 million. General and administrative expenses as a percentage of net revenues were 31%29% during the three months ended MarchJune 31,30, 2026 compared to 33%57% during the same period in 2025.
General and administrative expenses decreased $65.6 million, or 66%, during the six months ended June 30, 2026 compared to the same period in 2025. The decrease was due to lower employee-related expenses of $26.8 million including share-based compensation expense, lower restructuring charges of $12.2 million, a reduction in litigation settlements of $10.5 million, lower professional fees of $6.5 million, the absence of an impairment loss on an equity investment of $6.0 million, lower facility expenses of $3.5 million, the absence of an impairment of lease-related assets of $3.0 million, and lower technology-related expenses of $1.2 million, partially offset by higher contractor spend of $2.0 million. General and administrative expenses as a percentage of net revenues were 30% during the six months ended June 30, 2026 compared to 44% during the same period in 2025.
Impairment expense decreased $2.0 million during the six months ended June 30, 2026 compared to the same period in 2025 as we impaired property and equipment in 2025.
Interest ExpenseExpense, net and Other Income, Net
The following tables present our interest expenseexpense, net and other income, net, for the periods shown (in thousands, except percentages):
Interest expenseexpense, net decreased $0.4 million, or 93%, during the three months ended MarchJune 31,30, 2026, respectively,2026 compared to the same period in 2025, primarily2025 due to lowerthe interestearly expenseextinguishment recognizedof ona ourportion convertibleof seniorthe 2026 notes.
OtherInterest income,expense, net decreased $11.8$0.5 million, or 91%,90%, during the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to athe decrease in interest incomematurity of $4.2the million2025 due to lower investment balancesnotes and a decrease in gain on partialthe early extinguishmentsextinguishment of a portion of the 2026 notes of $6.8 million.notes.
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):
BenefitOther fromincome, (provision for) income taxesnet decreased $1.2$1.4 million, or 114%69%, during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to a decrease in worldwide forecastedinterest income anddue theto valuationlower allowanceinvestment against our U.S. federal and state deferred tax assets.balances.
Other income, net decreased $13.3 million, or 88%, during the six months ended June 30, 2026 compared to the same period in 2025, primarily due to a decrease in gain on early extinguishment of a portion of the 2026 notes of $6.8 million and a decrease in interest income of $5.1 million due to lower investment balances.
Provision for income taxes
The following tables present our provision for income taxes for the periods shown (in thousands, except percentages):
Provision for income taxes decreased $0.8 million, or 68%, and $2.0 million, or 89%, during the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to a decrease in foreign income taxes.
Cash, cash equivalents, and investments decreased $17.3$12.9 million, or 20%15%, during the six months ended June 30, 2026 primarily due to the net cash used for the early extinguishment of a portion of the 2026 notes of $19.5 million andmillion, purchases of property and equipment of $1.0$4.7 million, and repurchase of shares of our common stock of $1.7 million, partially offset by the net cash provided by operating activities of $4.1$14.2 million.
Convertible senior notes, net decreased $19.9 million, or 37%, during the threesix months ended MarchJune 31,30, 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 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 MarchJune 31,30, 2026, our principal sources of liquidity were cash, cash equivalents, and investments totaling $67.9$72.3 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 MarchJune 31,30, 2026, we have incurred cumulative losses of $992.6$995.6 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 MarchJune 31,30, 2026 is $1.0$1.1 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.
Net cash flows provided by operating activities decreased $20.4$5.5 million, or 83%,28%, during the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025 and was primarily related to the net effect of lower depreciation and amortization of $18.1$21.3 million, lower share-based compensation expense of $8.5$14.1 million, an increase in the change in accrued liabilities of $13.3$24.7 million primarily due to payments from our restructuring actions,actions partially offset by ana increasedecrease in net incomeloss of $17.7$50.4 million and a decrease in the gain on partial early extinguishments of convertible senior notes of $6.8 million.
Net cash flows provided by investing activities decreased $256.8$251.2 million, or 93%,92%, during the threesix months ended MarchJune 31,30, 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$87.7 million, partially offset by lower purchases of property and equipment of $7.6$11.2 million.
Net cash flows used in financing activities decreased $396.9$395.3 million, or 95%, during the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025 and was primarily related to lower repayments of our convertible senior notes of $397.0 million.notes.
There have been no material changes in our critical accounting policies and estimates during the threesix months ended MarchJune 31,30, 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.
CHGG insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (2 insiders, 2 trade dates, 62,640 shares, about $51.6K; 1 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -62,640 (purchases minus sales); net value about -$51.6K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-12 | Rosensweig Daniel |
Shares withheld for tax | 6,337 | $0.73 | $4.6K |
| 2026-08-13 | Budig Renee Varni |
Open-market sale |
54,347 | $0.78 | $42.4K |
| 2026-07-12 | Longo David |
Shares withheld for tax | 63,601 | $0.85 | $54.1K |
| 2026-06-16 | Budig Renee Varni |
Grant/award | 119,784 | — | — |
| 2026-06-16 | Martin Marcela |
Grant/award | 119,784 | — | — |
| 2026-06-16 | Levine Marne L. |
Grant/award | 119,784 | — | — |
| 2026-06-16 | Schlein Ted |
Grant/award | 119,784 | — | — |
| 2026-06-12 | Rosensweig Daniel |
Shares withheld for tax | 6,337 | $1.11 | $7.0K |
| 2026-06-12 | Rosensweig Daniel |
Shares withheld for tax | 1,956 | $1.11 | $2.2K |
| 2026-06-12 | Schlein Ted |
Grant/award | 55,000 | — | — |
| 2026-06-12 | Rosensweig Daniel |
Open-market sale | 6,337 | $1.11 | $7.0K |
| 2026-06-12 | Rosensweig Daniel |
Open-market sale | 1,956 | $1.11 | $2.2K |
| 2026-06-12 | Budig Renee Varni |
Grant/award | 55,000 | — | — |
| 2026-06-12 | Martin Marcela |
Grant/award | 55,000 | — | — |
| 2026-06-12 | Levine Marne L. |
Grant/award | 55,000 | — | — |
| 2026-04-12 | Longo David |
Shares withheld for tax | 63,600 | $0.80 | $50.9K |
Well-known investors holding CHGG (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 0 | $20.4M | 0.01% | No change |
| Renaissance Technologies | 2026-06-30 | 3,396,900 | $3.4M | 0.0% | Added 1% |
| Two Sigma Investments | 2026-06-30 | 844,859 | $853.3K | 0.0% | Reduced 30% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 719,936 | $727.1K | 0.0% | Added 506% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 112,199 | $113.3K | 0.0% | Added 98% |
| Millennium Management (Israel Englander) | 2026-06-30 | 73,899 | $74.6K | 0.0% | Reduced 73% |