Cover Page - USD ($)	12 Months Ended
Cover Page - USD ($)	Dec. 31, 2019	Jan. 31, 2020	Jun. 30, 2019
Cover page.
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	001-36180
Entity Registrant Name	CHEGG, INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-3237489
Entity Address, Address Line One	3990 Freedom Circle
Entity Address, City or Town	Santa Clara
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95054
City Area Code	408
Local Phone Number	855-5700
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	CHGG
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 4,479,899,092
Entity Common Stock, Shares Outstanding		121,890,028
Entity Central Index Key	0001364954
Current Fiscal Year End Date	--12-31
Document Fiscal Year End	2019
Document Fiscal Period Focus	FY
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 387,520	$ 374,664
Short-term investments	381,074	93,345
Accounts receivable, net of allowance for doubtful accounts of $56 and $229 at December 31, 2019 and December 31, 2018, respectively	11,529	12,733
Prepaid expenses	10,538	4,673
Other current assets	16,606	9,510
Total current assets	807,267	494,925
Long-term investments	310,483	16,052
Property and equipment, net	87,359	59,904
Goodwill	214,513	149,524
Intangible assets, net	34,667	25,915
Right of use assets	15,931
Other assets	18,778	14,618
Total assets	1,488,998	760,938
Current liabilities
Accounts payable	7,362	8,177
Deferred revenue	18,780	17,418
Current operating lease liabilities	5,283
Accrued liabilities	39,964	34,077
Total current liabilities	71,389	59,672
Long-term liabilities
Convertible senior notes, net	900,303	283,668
Long-term operating lease liabilities	14,513
Other long-term liabilities	3,964	6,964
Total long-term liabilities	918,780	290,632
Total liabilities	990,169	350,304
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value – 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2019 and December 31, 2018	0	0
Common stock, $0.001 par value – 400,000,000 shares authorized; 121,583,501 and 115,500,418 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively	122	116
Additional paid-in capital	916,095	818,113
Accumulated other comprehensive loss	(1,096)	(1,019)
Accumulated deficit	(416,292)	(406,576)
Total stockholders' equity	498,829	410,634
Total liabilities and stockholders' equity	$ 1,488,998	$ 760,938

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable, current	$ 56	$ 229
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	400,000,000	400,000,000
Common stock, shares issued (in shares)	121,583,501	115,500,418
Common stock, shares outstanding (in shares)	121,583,501	115,500,418

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net revenues:
Net revenues	$ 410,926	$ 321,084	$ 255,066
Cost of revenues:
Cost of revenues	92,182	79,996	80,175
Gross profit	318,744	241,088	174,891
Operating expenses:
Research and development	139,772	114,291	81,926
Sales and marketing	63,569	54,714	51,240
General and administrative	97,489	77,714	64,411
Restructuring charges	97	589	1,047
Gain on liquidation of textbooks	0	0	(4,766)
Total operating expenses	300,927	247,308	193,858
Income (loss) from operations	17,817	(6,220)	(18,967)
Interest expense, net and other income, net:
Interest expense, net	(44,851)	(11,225)	(74)
Other income, net	20,063	3,987	560
Total interest expense, net and other income, net	(24,788)	(7,238)	486
Loss before provision for income taxes	(6,971)	(13,458)	(18,481)
Provision for income taxes	2,634	1,430	1,802
Net loss	$ (9,605)	$ (14,888)	$ (20,283)
Net loss per share, basic and diluted (in dollars per share)	$ (0.08)	$ (0.13)	$ (0.20)
Weighted average shares used to compute net loss per share, basic and diluted (in shares)	119,204	113,251	100,022

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (9,605)	$ (14,888)	$ (20,283)
Other comprehensive loss:
Change in unrealized gain (loss) on available for sale investments, net of tax	668	76	(187)
Change in foreign currency translation adjustments, net of tax	(745)	(813)	81
Other comprehensive loss	(77)	(737)	(106)
Total comprehensive loss	$ (9,682)	$ (15,625)	$ (20,389)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance, shares at Dec. 31, 2016		91,709,000
Beginning balance at Dec. 31, 2016	$ 221,939	$ 92	$ 593,351	$ (176)	$ (371,328)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with follow-on offering, net of offering costs, shares		11,500,000
Issuance of common stock in connection with follow-on offering, net of offering costs	147,609	$ 12	147,597	0	0
Issuance of common stock upon exercise of stock options and ESPP, shares		3,280,000
Issuance of common stock upon exercise of stock options and ESPP	23,656	$ 3	23,653
Net issuance of common stock for settlement of RSUs, shares		3,155,000
Net share settlement of equity awards	(20,112)	$ 3	(20,115)
Warrant exercises, shares		24,000
Warrant exercises	0		0
Share-based compensation expense	38,359		38,359
Other comprehensive loss	(106)			(106)
Net loss	(20,283)				(20,283)
Ending balance at Dec. 31, 2017	391,062	$ 110	782,845	(282)	(391,611)
Ending balance, shares at Dec. 31, 2017		109,668,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity component of convertible senior notes, net of issuance costs	62,444		62,444
Purchase of convertible senior notes capped call	(39,227)		(39,227)
Issuance of common stock upon exercise of stock options and ESPP, shares		3,459,000
Issuance of common stock upon exercise of stock options and ESPP	29,113	$ 4	29,109
Net issuance of common stock for settlement of RSUs, shares		3,322,000
Net share settlement of equity awards	(49,086)	$ 3	(49,089)
Warrant exercises, shares		34,000
Warrant exercises	0		0
Repurchase of common stock, shares		(983,000)
Repurchase of common stock	(20,000)	$ (1)	(19,999)
Share-based compensation expense	52,030		52,030
Other comprehensive loss	(737)			(737)
Net loss	(14,888)				(14,888)
Ending balance at Dec. 31, 2018	$ 410,634	$ 116	818,113	(1,019)	(406,576)
Ending balance, shares at Dec. 31, 2018	115,500,418	115,500,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity component of convertible senior notes, net of issuance costs	$ 206,747		206,747
Purchase of convertible senior notes capped call	(97,200)		(97,200)
Issuance of common stock upon exercise of stock options and ESPP, shares		3,276,000
Issuance of common stock upon exercise of stock options and ESPP	35,097	$ 4	35,093
Net issuance of common stock for settlement of RSUs, shares		3,248,000
Net share settlement of equity awards	(94,568)	$ 3	(94,571)
Issuance of common stock in connection with prior acquisition, shares		64,000
Issuance of common stock in connection with prior acquisition	3,003		3,003
Repurchase of common stock, shares		(504,000)
Repurchase of common stock	(20,000)	$ (1)	(19,999)
Share-based compensation expense	64,909		64,909
Other comprehensive loss	(77)			(77)
Net loss	(9,605)				(9,605)
Ending balance at Dec. 31, 2019	$ 498,829	$ 122	$ 916,095	$ (1,096)	$ (416,292)
Ending balance, shares at Dec. 31, 2019	121,583,501	121,584,000

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Net loss	$ (9,605)	$ (14,888)	$ (20,283)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense	30,247	22,805	19,337
Share-based compensation expense	64,909	52,030	38,359
Gain on liquidation of textbooks	0	0	(4,766)
Loss from write-offs of textbooks	0	0	314
Loss from write-offs of property and equipment	1,009	93	1,368
Interest accretion on deferred consideration	0	0	(626)
Amortization of debt discount and issuance costs	43,202	10,494	0
Deferred income taxes	(39)	(323)	0
Operating lease expense, net of accretion	4,385	0	0
Other, net	(416)	65	68
Change in assets and liabilities net of effect of acquisition of businesses:
Accounts receivable	1,829	(1,538)	(175)
Prepaid expenses and other current assets	(12,930)	(4,921)	13,550
Other assets	(1,494)	48	1,049
Accounts payable	(2,395)	893	2,649
Deferred revenue	(1,682)	3,978	(1,396)
Accrued liabilities	(206)	3,838	2,087
Other liabilities	(3,411)	2,539	15
Net cash provided by operating activities	113,403	75,113	51,550
Cash flows from investing activities
Proceeds from liquidations of textbooks	0	0	6,943
Purchases of investments	(959,911)	(146,856)	(128,247)
Proceeds from sale of investments	53,261	1,800	16,393
Maturities of investments	324,700	138,380	9,750
Purchases of property and equipment	(42,326)	(31,223)	(26,142)
Acquisition of businesses, net of cash acquired	(79,149)	(34,650)	(14,931)
Purchases of strategic equity investment	0	(10,000)	0
Net cash used in investing activities	(703,425)	(82,549)	(136,234)
Cash flows from financing activities
Common stock issued under stock plans, net	35,100	29,116	23,659
Payment of taxes related to the net share settlement of equity awards	(94,571)	(49,089)	(20,115)
Payment of deferred cash consideration related to acquisitions	0	0	(16,939)
Proceeds from follow-on offering, net of offering costs	0	0	147,609
Proceeds from issuance of convertible senior notes, net of issuance costs	780,180	335,618	0
Purchase of convertible senior notes capped call	(97,200)	(39,227)	0
Repurchase of common stock	(20,000)	(20,000)	0
Net cash provided by financing activities	603,509	256,418	134,214
Net increase in cash, cash equivalents and restricted cash	13,487	248,982	49,530
Cash, cash equivalents and restricted cash, beginning of period	375,945	126,963	77,433
Cash, cash equivalents and restricted cash, end of period	389,432	375,945	126,963
Supplemental cash flow data:
Interest	1,332	605	85
Income taxes	2,070	2,097	1,790
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	(5,297)	0	0
Right of use assets obtained in exchange for lease obligations, operating leases	3,364	0	0
Non-cash investing and financing activities:
Accrued purchases of long-lived assets	10,036	1,210	3,573
Issuance of common stock related to prior acquisition	3,003	0	0
Reconciliation of cash, cash equivalents and restricted cash:
Total cash, cash equivalents and restricted cash	$ 389,432	$ 126,963	$ 77,433

Background and Basis of Presentation	12 Months Ended
Background and Basis of Presentation	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Background and Basis of Presentation	Background and Basis of Presentation Company and Background Chegg, Inc. (Chegg, the Company, we, us, or our), headquartered in Santa Clara, California, was incorporated as a Delaware corporation in July 2005. Chegg is a Smarter Way to Student. As the leading direct-to-student learning platform, we strive to improve educational outcomes by putting the student first in all our decisions. We support students on their journey from high school to college and into their career with tools designed to help them pass their test, pass their class, and save money on required materials. Our services are available online, anytime and anywhere, so we can reach students when they need us most. Basis of Presentation Our fiscal year ends on December 31 and in this report we refer to the year ended December 31, 2019, December 31, 2018, and December 31, 2017 as 2019, 2018, and 2017, respectively. We have changed the captions on our consolidated statements of cash flows from “purchases of marketable securities” to “purchases of investments” and from “maturities of marketable securities” to “maturities of investments.” This change does not impact any current or previously reported results.

Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

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 and liabilities; the disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions, and judgments are used for, but not limited to: revenue recognition, recoverability of accounts receivable, restructuring charges, share-based compensation expense including estimated forfeitures, accounting for income taxes, useful lives assigned to long-lived assets for depreciation and amortization, impairment of goodwill and long-lived assets, the valuation of acquired intangible assets, the valuation of our convertible senior notes, internal-use software and website development costs, and operating lease right of use (ROU) assets and operating lease liabilities. We base our estimates on historical experience, knowledge of current business conditions, and various other factors we believe to be reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our financial position and results of operations.

Principles of Consolidation

The consolidated financial statements include the accounts of Chegg and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with U.S. GAAP.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments with an original maturity date of three months or less from the date of purchase to be cash equivalents. Our cash and cash equivalents consist of cash, money market accounts, and commercial paper at financial institutions, and are stated at cost, which approximates fair value. We classify certain restricted cash balances within other current assets and other assets on the accompanying consolidated balance sheets based upon the term of the remaining restrictions.

Investments

We hold investments in commercial paper, corporate securities, U.S. treasury securities, and agency bonds. We classify our investments as available-for-sale that are either short or long-term based on the nature of each security based on the contractual maturity of the investment when purchased. Our available-for-sale investments are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in other comprehensive loss on our consolidated statements of stockholders’ equity. Unrealized losses are charged against other income, net when a decline in fair value is determined to be other-than-temporary. We did not record any such impairment charges in the periods presented. We determined realized gains or losses on the sale of investments on a specific identification method, and recorded such gains or losses as other income, net. For the years ended December 31, 2019, 2018 and 2017, the Company's gross realized gains and losses on investments were not significant.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We generally grant uncollateralized credit terms to our customers, which include textbook wholesalers and marketing services customers, and maintain an allowance for doubtful accounts to account for potentially uncollectible receivables.

Allowance for Doubtful Accounts

We assess the creditworthiness of our customers based on multiple sources of information, and analyze such factors as our historical bad debt experience, industry and geographic concentrations of credit risk, economic trends, and customer payment history. This assessment requires significant judgment. Because of this assessment, we maintain an allowance for doubtful accounts for estimated losses resulting from the inability of certain customers to make all of their required payments. In making this estimate, we analyze historical payment performance and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Accounts receivable are written off as a decrease to the allowance for doubtful accounts when all collection efforts have been exhausted and an account is deemed uncollectible.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and investments in highly liquid instruments in accordance with our investment policy. We place the majority of our cash and cash equivalents and restricted cash with financial institutions in the United States that we believe to be of high credit quality, and accordingly minimal credit risk exists with respect to these instruments. Certain of our cash balances held with a financial institution are in excess of Federal Deposit Insurance Corporation limits. Our investment portfolio consists of investments diversified among security types, industries and issuers. Our investments were held and managed by recognized financial institutions that followed our investment policy with the main objective of preserving capital and maintaining liquidity.

Concentrations of credit risk with respect to accounts receivables exist to the full extent of amounts presented in the financial statements. We had one customer, in each year, that represented 11% of our net accounts receivable balance as of December 31, 2019 and 2018. No customers represented over 10% of net revenues during the years ended December 31, 2019, 2018 or 2017.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and content amortization. Depreciation and content amortization are computed using the straight-line method over the following estimated useful lives of the assets:



Classification		Useful Life
Computers and equipment		3 years
Internal-use software and website development		3 years
Furniture and fixtures		5 years
Leasehold improvements		Shorter of the remaining lease term or the estimated useful life of 5 years
Content		Shorter of the licensed content term or the estimated useful life of 5 years

Depreciation and content amortization expense are generally classified within the corresponding cost of revenues and operating expenses categories in our consolidated statements of operations. Depreciation and content amortization expense during the years ended December 31, 2019, 2018, and 2017 were approximately $24.2 million, $16.8 million, and $13.8 million, respectively.

The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in income (loss) from operations.

Internal-Use Software and Website Development Costs

We capitalize certain costs associated with software developed or obtained for internal use and website and application development. We capitalize costs when preliminary development efforts are successfully completed, management has authorized and committed project funding and it is probable that the project will be completed and the software will be used as intended. Such costs are amortized on a straight-line basis over a three year estimated useful life of the related asset. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized and amortized over the estimated useful life of the upgrades.

Business Combinations

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired through a business combination based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets acquired and liabilities assumed is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill and Indefinite-Lived Intangible Asset

Goodwill represents the excess of the fair value of purchase consideration paid over the estimated fair value of assets acquired and liabilities assumed in a business combination. Our indefinite-lived intangible asset represents the internships.com trade name. Goodwill and our indefinite-lived intangible asset are not amortized but rather tested for impairment at least annually on October 1, or more frequently if certain events or indicators of impairment occur between annual impairment tests. We first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. In our qualitative assessment, we consider factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of our reporting unit is less than the carrying amount. We completed our annual impairment test on October 1st of 2019 and 2018, each of which did not result in any impairment as our qualitative assessment did not indicate that it is more likely than not that the fair value of our reporting unit is less than the carrying amount. As of December 31, 2019 and 2018, we had goodwill of $214.5 million and $149.5 million, respectively, and an indefinite lived intangible asset related to the internships.com trade name of $3.6 million.

Acquired Intangible Assets and Other Long-Lived Assets

Acquired intangible assets with finite useful lives, which include developed technology, content library, customer lists, trade names and non-compete agreements, are amortized over their estimated useful lives. We assess the impairment of acquired intangible assets and other long-lived assets when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and operating lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Our leases do not provide an implicit rate and therefore we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future minimum lease payments. Our incremental borrowing rate is estimated based on the estimated rate incurred to borrow, on a collateralized basis over a similar term as our leases, an amount equal to the lease payments in a similar economic environment. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. We do not record leases on our consolidated balance sheet with a term of one year or less. We do not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Some of our leases include payments that are dependent on an index, such as the Consumer Price Index (CPI), and our minimum lease payments include payments based on the index at inception with any future changes in such indices recognized as an expense in the period of change. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line operating lease cost over the lease term.

Strategic Investments

We have entered into strategic investments that are accounted for under the cost method and included in other assets on our consolidated balance sheets. We assess our strategic investments for impairment whenever events or changes in circumstances indicate that the strategic investments may be impaired. The factors we consider in our evaluation include, but are not limited to, a significant deterioration in the earnings performance or business prospects of the investee or factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations or working capital deficiencies. Additionally, starting in 2018 as a result of our adoption of Accounting Standards Update (ASU) 2016-01, we consider whether there have been any observable price changes in orderly transactions for identical or similar investments. During the years ended December 31, 2019, 2018, and 2017, we did not record any impairment charges in our strategic investments. There is a potential for charges in future periods if we determine that our strategic investments are impaired. During the years ended December 31, 2019 and 2018, there were no observable price changes in orderly transactions for the identical or similar investments of the same issuers.

Convertible Senior Notes, net

In March 2019, we issued $700 million in aggregate principal amount of 0.125% convertible senior notes due in 2025 (2025 notes) and in April 2019, the initial purchasers fully exercised their option to purchase $100 million of additional 2025 notes for aggregate total gross proceeds of $800 million. In April 2018, we issued $345 million in aggregate principal amount

of 0.25% convertible senior notes due in 2023 (2023 notes). Collectively, the 2025 notes and the 2023 notes are referred to as the “notes.” In accounting for their issuance, we separated the notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar liabilities that do not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the carrying amount of the liability component from the par value of the notes. The difference represents the debt discount, recorded as a reduction of the convertible senior notes on our consolidated balance sheet, and is amortized to interest expense over the term of the notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the notes, we allocated the total amount of issuance costs incurred to liability and equity components based on their relative values. Issuance costs attributable to the liability component are being amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the notes. The issuance costs attributable to the equity component are recorded as a reduction of the equity component within additional paid-in capital.

Revenue Recognition and Deferred Revenue

We recognize revenues from our Chegg Services and Required Materials offerings when control of the goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

•Identification of the contract, or contracts, with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, we satisfy a performance obligation

We generate revenues from our Chegg Services product line primarily through Chegg Study, Chegg Writing, Chegg Tutors, Chegg Math Solver, and Thinkful. Chegg Services are offered to students primarily through weekly or monthly subscriptions, and we recognize revenues ratably over the respective subscription period. Revenues from Thinkful, our skills-based learning platform, are recognized either ratably over the term of the course, generally six months, or upon completion of the lessons, depending on the instruction type of the course. Revenues from our Required Materials product line includes a revenue share, upon fulfillment, on the total transactional amount of a rental and sale transaction for print textbooks. The revenue share on the rental and sale of print textbooks is recognized immediately when a book ships to the student. Shipping and handling activities are performed after we recognize revenues and we have elected to account for them as activities to fulfill a print textbook rental or sale order. Revenues from the rental of eTextbooks is recognized ratably over the contractual period, generally two to five months. Revenues from the sale of eTextbooks is recognized immediately when the eTextbook sale occurs. Revenues are presented net of sales tax collected from customers to be remitted to governmental authorities and net of allowances for estimated cancellations and customer returns, which are based on historical data. Customer refunds from cancellations and returns are recorded as a reduction to revenues.

Some of our customer arrangements include multiple performance obligations. We have determined these performance obligations qualify as distinct performance obligations, as the customer can benefit from the service on its own or together with other resources that are readily available to the customer and our promise to transfer the service is separately identifiable from other promises in the contract. For these arrangements that contain multiple performance obligations, we allocate the transaction price based on the relative standalone selling price method by comparing the standalone selling price (SSP) of each distinct performance obligation to the total value of the contract. We determine the SSP based on our historical pricing and discounting practices for the distinct performance obligation when sold separately. If the SSP is not directly observable, we estimate the SSP by considering information such as market conditions, and information about the customer. Additionally, we limit the amount of revenues recognized for delivered promises to the amount that is not contingent on future delivery of services or other future performance obligations.

Our agreements with print textbook partners may include an amount of variable consideration in addition to a fixed revenue share that we earn. This variable consideration can either increase or decrease the total transaction price depending on the nature of the variable consideration. We estimate the amount of variable consideration that we will earn at the inception of the contract, adjusted during each period, and include an estimated amount each period.

For sales of third-party products, we evaluate whether we are acting as a principal or an agent, and therefore would record the gross sales amount as revenues and related costs or the net amount earned as a revenue share from the sale of third-

party products. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer. In relation to print textbook rental and sale agreements with our partners, we recognize revenues on a net basis based on our role in the transaction as an agent as we have concluded that we do not control the use of the print textbooks, and therefore record only the revenue share we earn upon the shipment of a print textbook to a student. For the rental or sale of eTextbooks, we have concluded that we control the service, therefore we recognize revenues and cost of revenues on a gross basis ratably over the term the student has access to the eTextbook.

Contract assets are contained within other current assets and other assets on our consolidated balance sheets. Contract assets represent the goods or services that we have transferred to a customer before invoicing the customer. Contract receivables are contained within accounts receivable, net on our consolidated balance sheets and represent unconditional consideration that will be received solely due to the passage of time. Contract liabilities are contained within deferred revenue on our consolidated balance sheets. Deferred revenue primarily consists of advanced payments from students related to rental and subscription performance obligations that have not been satisfied and estimated variable consideration. Deferred revenue related to rental and subscription performance obligations is recognized as revenues ratably over the term for subscriptions or when the services are provided and all other revenue recognition criteria have been met. Deferred revenue related to variable consideration is recognized as revenues during each reporting period based on the estimated amount we believe we will earn over the life of the contract.

We have elected a practical expedient to record incremental costs to obtain or fulfill a contract when the amortization period would have been one year or less as incurred. These incremental costs primarily relate to sales commissions costs and are recorded in sales and marketing expense on our consolidated statements of operations.

Cost of Revenues

Our cost of revenues consists primarily of expenses associated with the delivery and distribution of our products and services. Cost of revenues primarily consists of publisher content fees for eTextbooks, content amortization expense related to content that we develop, license from publishers for which we pay one-time license fees, or acquire through acquisitions, payment processing costs, the payments made to tutors through our Chegg Tutors service, personnel costs and other direct costs related to providing content or services. In addition, cost of revenues includes allocated information technology and facilities costs.

Research and Development Costs

Our research and development expenses consist of salaries, benefits, and share-based compensation expense for employees on our product, engineering, and technical teams who are responsible for maintaining our website, developing new products, and improving existing products. Research and development costs also include amortization of acquired intangible assets, depreciation expense, technology costs to support our research and development, outside services, and allocated information technology and facilities expenses. We expense substantially all of our research and development expenses as they are incurred.

Advertising Costs

Advertising costs are expensed as incurred and consist primarily of online advertising and marketing promotional expenditures. During the years ended December 31, 2019, 2018, and 2017, advertising costs were approximately $24.4 million, $17.9 million, and $16.5 million, respectively.

Restructuring Charges

Restructuring charges are primarily comprised of severance costs, contract and program termination costs, asset impairments, and costs of facility consolidation and closure. Restructuring charges are recorded upon approval of a formal management plan and are included in the results of operations of the period in which such plan is approved and the expense becomes estimable. To estimate restructuring charges, management utilizes assumptions of the number of employees that would be involuntarily terminated and of future costs to operate and eventually vacate duplicate facilities. Severance and other employee separation costs are accrued when it is probable that benefits will be paid and the amount is reasonably estimable. The rates used in determining severance accruals are based on our policies and practices and negotiated settlements. Restructuring charges for employee workforce reductions are recorded upon employee notification for employees whose required continuing service period is 60 days or less and ratably over the employee’s continuing service period for employees whose required continuing service period is greater than 60 days.

Share-based Compensation Expense

Share-based compensation expense for stock options, restricted stock units (RSUs), performance-based restricted stock units (PSUs), and employee stock purchase plan (ESPP) are accounted for under the fair value method, which requires us to measure the cost of share-based compensation awards based on the grant-date fair value of the award. Share-based compensation expense for our ESPP is estimated at the date of grant using the Black-Scholes-Merton option pricing model while RSUs and PSUs are measured based on the closing fair market value of the Company’s common stock on the date of grant. We recognize share-based compensation expense over the requisite service period, which is generally the vesting period, on a straight-line basis for ESPP and RSUs and on a graded basis for PSUs, contingent on the achievement of performance conditions. These amounts are reduced by estimated forfeitures, which are estimated at the time of the grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Income Taxes

We account for income taxes under an asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to an amount that is more likely than not to be realized. We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, we recognize the tax benefit as the largest amount that is cumulative more than 50% likely to be realized upon ultimate settlement with the related tax authority. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, RSUs, PSUs, and shares related to convertible senior notes, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential common shares outstanding would have been anti-dilutive.

The following table sets forth the computation of historical basic and diluted net loss per share (in thousands, except per share amounts):



	Years Ended December 31,
	2019			2018			2017
Numerator:
Net loss	$	(9,605	)	$	(14,888	)	$	(20,283	)
Denominator:
Weighted average shares used to compute net loss per share, basic and diluted	119,204			113,251			100,022

Net loss per share, basic and diluted	$	(0.08	)	$	(0.13	)	$	(0.20	)

The following potential weighted-average shares of common stock outstanding were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive (in thousands):



	Years Ended December 31,
	2019	2018	2017
Options to purchase common stock	2,395	4,045	3,045
RSUs and PSUs	4,699	7,946	153
Shares related to convertible senior notes	3,526	—	—
Employee stock purchase plan	—	—	5
Total common stock equivalents	10,620	11,991	3,203

Shares related to convertible senior notes represent the anti-dilutive impact of our issuance of $345 million in aggregate principal amount of our 2023 notes as the average price of our common stock during the year ended December 31, 2019 was higher than the conversion price of $26.95. While these shares were anti-dilutive during the year ended December 31, 2019, they may be dilutive in periods we report net income. However, as a result of the capped call transactions, there will be no economic dilution from the 2023 notes up to $40.68, as exercise of the capped call instruments will reduce dilution from the 2023 notes that would have otherwise occurred when the average price of our common stock exceeds the conversion price. None of the shares related to our issuance of $800 million in aggregate principal amount of our 2025 notes were anti-dilutive during the year ended December 31, 2019. The average price of our common stock during the year ended December 31, 2019 was lower than the conversion price of our 2025 notes of $51.56. See Note 10, “Convertible Senior Notes”, for more information about our convertible senior notes.

Foreign Currency Translation

The functional currency of our foreign subsidiaries is the local currency. Adjustments resulting from the translation of foreign currencies into U.S. dollars for balance sheet amounts are based on the exchange rates as of the consolidated balance sheet date. Revenues and expenses are translated at average exchange rates during the period. Foreign currency translation gains or losses are included in accumulated other comprehensive loss as a component of stockholders’ equity on the consolidated balance sheets. Gains or losses resulting from foreign currency transactions, which are denominated in currencies other than the entity’s functional currency, are included in other income, net in the consolidated statements of operations and were not material during the years ended December 31, 2019, 2018 or 2017.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 key changes include hybrid tax regimes, intraperiod tax allocation exception, and interim-period accounting for enacted changes in tax law. Early adoption is permitted, including adoption in any interim period or annual reports for which financial statements have not yet been made available for issuance. The guidance is effective for annual periods beginning after December 15, 2020, and we are currently in the process of evaluating the impact of this guidance.

The FASB issued four ASUs related to Accounting Standards Codification (ASC) 326. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. ASU 2019-11 provides codification updates to ASU 2016-13. In May 2019, the FASB issued ASU 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. ASU 2019-05 provides entities with an option to irrevocably elect the fair value option for eligible instruments. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. ASU 2019-04 provides codification updates to ASU 2016-01 and ASU 2016-13. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the existing incurred loss impairment model for trade receivables with an expected loss model which requires the use of forward-looking information to calculate expected credit loss estimates. Additionally, the concept of other-than-temporary impairment for available-for-sale investments is eliminated and instead ASU 2016-13 requires an entity to focus on determining whether any impairment is a result of a credit loss or other factors. It also requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction to the amortized cost basis. These changes may result in earlier recognition of credit losses. These guidance updates require for a modified retrospective adoption, though a prospective method of adoption is required for available-for-sale debt securities for which an other-than-temporary impairment had been recognized before the effective date. We will adopt the guidance on January 1, 2020. We expect to record an immaterial cumulative-effect adjustment for trade receivables to the opening balance of accumulated deficit and we do not expect our adoption to have an ongoing material impact to our consolidated statements of operations. Beginning January 1, 2020, we will assess our available-for-sale debt securities for credit losses and recognize an allowance for credit losses with any improvements in estimated credit losses recognized immediately in earnings. These are preliminary estimates that are subject to change as we finalize our adoption.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with existing guidance contained within subtopic 350-40 to develop or obtain internal-use software. We will adopt ASU 2018-15 on January 1, 2020 under the prospective method of adoption. We do not expect our adoption to have a material impact to our consolidated statements of operations and consolidated balance sheets.

Recently Adopted Accounting Pronouncements

The FASB issued four ASUs related to ASC 842. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements and ASU 2018-10, Codification Improvements to Topic 842, Leases. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASC 842 requires an entity to recognize a right of use (ROU) asset and lease liability for all leases with terms of more than 12 months. We adopted the guidance on January 1, 2019 under the optional transition method whereby we initially applied the new standard at the adoption date and recognized a cumulative-effect adjustment to the opening balance sheet of accumulated deficit in the period of adoption without restating prior periods. We recorded ROU assets of $17.2 million and lease liabilities of $21.1 million on our consolidated balance sheet. ASC 842 did not have a material impact to our consolidated statements of operations. Adoption of the new standard resulted in changes to our accounting policy for leases. See Note 11, “Leases”, for more information.

Cash and Cash Equivalents, and Investments

12 Months Ended

Dec. 31, 2019

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents, and Investments

The following table shows our cash and cash equivalents, and investments’ adjusted cost, unrealized gain, unrealized loss and fair value as of December 31, 2019 and 2018 (in thousands):



	December 31, 2019
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Cash and cash equivalents:
Cash	$	241,355	$	—	$	—		$	241,355
Money market funds	146,165		—		—			146,165
Total cash and cash equivalents	$	387,520	$	—	$	—		$	387,520
Short-term investments:
Commercial paper	$	7,489	$	—	$	—		$	7,489
Corporate securities	318,946		425		(78		)	319,293
U.S. treasury securities	44,251		39		(4		)	44,286
Agency bond	10,000		6		—			10,006
Total short-term investments	$	380,686	$	470	$	(82	)	$	381,074
Long-term investments
Corporate securities	$	295,103	$	533	$	(158	)	$	295,478
Agency bond	14,999		6		—			15,005
Total long-term investments	$	310,102	$	539	$	(158	)	$	310,483



	December 31, 2018
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Cash and cash equivalents:
Cash	$	351,345	$	—	$	—		$	351,345
Money market funds	5,052		—		—			5,052
Commercial paper	18,267		—		—			18,267
Total cash and cash equivalents	$	374,664	$	—	$	—		$	374,664
Short-term investments:
Commercial paper	$	40,500	$	—	$	(12	)	$	40,488
Corporate securities	38,616		—		(87		)	38,529
U.S. treasury securities	14,333		—		(5		)	14,328
Total short-term investments	$	93,449	$	—	$	(104	)	$	93,345
Long-term investments
Corporate securities	$	14,429	$	9	$	(14	)	$	14,424
U.S. treasury securities	1,630		—		(2		)	1,628
Total long-term investments	$	16,059	$	9	$	(16	)	$	16,052

The adjusted cost and fair value of investments as of December 31, 2019 by contractual maturity were as follows (in thousands):



	December 31, 2019
	Cost		Fair Value
Due in 1 year or less	$	380,686	$	381,074
Due in 1-2 years	310,102		310,483
Investments not due at a single maturity date	146,165		146,165
Total	$	836,953	$	837,722

Investments not due at a single maturity date in the preceding table consist of money market fund deposits.

As of December 31, 2019, we considered the declines in market value of our investment portfolio to be temporary in nature and did not consider any of our investments to be other-than-temporarily impaired. We typically invest in highly-rated securities with a minimum credit rating of A- and a weighted average maturity of nine months, and our investment policy generally limits the amount of credit exposure to any one issuer or industry sector. The policy requires investments generally to be investment grade, with the primary objective of preserving capital and maintaining liquidity. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and our intent to sell, or whether it is more likely than not we will be required to sell, the investment before recovery of the investment’s cost basis. During the years ended December 31, 2019, 2018, and 2017 we did not recognize any other-than-impairment charges.

Restricted Cash

As of December 31, 2019 and 2018, we had approximately $1.9 million and $1.3 million, respectively, of restricted cash that primarily consists of security deposits for our corporate offices. As of December 31, 2019 and 2018, $0.1 million of restricted cash is classified in other current assets in our consolidated balance sheets. As of December 31, 2019 and 2018, $1.8 million and $1.2 million, respectively, of restricted cash is classified in other assets in our consolidated balance sheets. These amounts are classified based upon the term of the remaining restrictions.

Strategic Investments

In October 2018, we completed an investment of $10.0 million in WayUp, Inc., a U.S.-based job site and mobile application for college students and recent graduates. Additionally, we previously invested $3.0 million in a foreign entity to explore expanding our reach internationally. We did not record any impairment charges on our strategic investments during the

years ended December 31, 2019, 2018, and 2017, as there were no significant identified events or changes in circumstances that would be considered an indicator for impairment. There were no observable price changes in orderly transactions for the identical or similar investments of the same issuers during the years ended December 31, 2019 and 2018.

Revenues

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenues

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenues are recognized over time as services are performed, with certain revenues, most significantly the revenue share we earn from our print textbook partners, being recognized at the point in time when print textbooks are shipped to students.

The following table sets forth our total net revenues for the periods shown disaggregated for our Chegg Services and Required Materials product lines (in thousands, except percentages):



	Years Ended December 31,						Change in 2019				Change in 2018
	2019		2018		2017		$		%		$			%
Chegg Services	$	332,221	$	253,985	$	185,683	$	78,236	31	%	$	68,302		37	%
Required Materials	78,705		67,099		69,383		11,606		17		(2,284		)	(3	)
Total net revenues	$	410,926	$	321,084	$	255,066	$	89,842	28		$	66,018		26

During the year ended December 31, 2019, we recognized $17.0 million of revenues that were included in our deferred revenue balance as of December 31, 2018. During the year ended December 31, 2018, we recognized $11.7 million of revenues that were included in our deferred revenue balance as of December 31, 2017. During the year ended December 31, 2019, we recognized $3.4 million of previously deferred revenues recognized from performance obligations satisfied in previous periods related to variable consideration recognized from our agreement with our Required Materials print textbook partner. During the year ended December 31, 2018, we recognized an immaterial amount of previously deferred revenues recognized from performance obligations satisfied in previous periods. The aggregate amount of unsatisfied performance obligations is approximately $18.8 million as of December 31, 2019, which are expected to be recognized into revenues over the next year.

Contract Balances

The following table presents our accounts receivable, net, deferred revenue, and contract asset balances (in thousands, except percentages):



	December 31,				Change
	2019		2018		$			%
Accounts receivable, net	$	11,529	$	12,733	$	(1,204	)	(9	)%
Deferred revenue	18,780		17,418		1,362			8
Contract assets	3,531		337		3,194			n/m

_______________________________________

n/m - not meaningful

During the year ended December 31, 2019, our accounts receivable, net balance decreased by $1.2 million, or 9%, primarily due to timing of billings partially offset by an improvement in cash collections. During the year ended December 31, 2019, our deferred revenue balance increased by $1.4 million, or 8%, primarily due to increased bookings for our Chegg Study service and eTextbook rentals driven by the seasonality of our business. During the year ended December 31, 2019, our contract assets balance increased by $3.2 million primarily due to variable consideration and payment arrangements for Thinkful.

Fair Value Measurement

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurement

We have established a fair value hierarchy used to determine the fair value of our financial instruments as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value; the inputs require significant management judgment or estimation.

A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments measured and recorded at fair value on a recurring basis as of December 31, 2019 and 2018 are classified based on the valuation technique level in the tables below (in thousands):



	December 31, 2019
	Total		Level 1		Level 2
Assets:
Cash equivalents:
Money market funds	$	146,165	$	146,165	$	—
Short-term investments:
Commercial paper	7,489		—		7,489
Corporate securities	319,293		—		319,293
U.S. treasury securities	44,286		44,286		—
Agency bonds	10,006		—		10,006
Long-term investments:
Corporate securities	295,478		—		295,478
Agency bonds	15,005		—		15,005
Total assets measured and recorded at fair value	$	837,722	$	190,451	$	647,271



	December 31, 2018
	Total		Level 1		Level 2
Assets:
Cash equivalents:
Money market funds	$	5,052	$	5,052	$	—
Commercial paper	18,267		—		18,267
Short-term investments:
Commercial paper	40,488		—		40,488
Corporate securities	38,529		—		38,529
U.S. treasury securities	14,328		14,328		—
Long-term investments:
Corporate securities	14,424		—		14,424
U.S treasury securities	1,628		1,628		—
Total assets measured and recorded at fair value	$	132,716	$	21,008	$	111,708

We value our financial instruments based on quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. Other than our money market funds and U.S. treasury securities, we classify our financial instruments as having Level 2 inputs. The valuation techniques used to measure the fair value of our financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques. We do not hold any financial instruments valued with a Level 3 input.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

We report our financial instruments at fair value with the exception of the notes. The estimated fair value of the notes was determined based on the trading price of the notes as of the last day of trading for the period. We consider the fair value of the notes to be a Level 2 measurement due to the limited trading activity. For further information on the notes see Note 10, “Convertible Senior Notes”.

The carrying amounts and estimated fair values of the notes as of December 31, 2019 and 2018 are as follows (in thousands):



	December 31, 2019				December 31, 2018
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
2025 notes	$	602,611	$	831,000	$	—	$	—
2023 notes	297,692		523,538		283,668		416,156
Convertible senior notes, net	$	900,303	$	1,354,538	$	283,668	$	416,156

The carrying amount of the 2025 notes and 2023 notes as of December 31, 2019 was net of unamortized debt discount of $184.7 million and $42.3 million, respectively, and unamortized issuance costs of $12.7 million and $5.0 million, respectively. The carrying amount of the 2023 notes as of December 31, 2018 was net of unamortized debt discount of $54.8 million and unamortized issuance costs of $6.5 million.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Long-Lived Assets

12 Months Ended

Dec. 31, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Long-Lived Assets

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):



	December 31,
	2019			2018
Computer and equipment	$	3,355		$	3,140
Internal-use software and website development	7,552			4,043
Furniture and fixtures	3,640			2,912
Leasehold improvements	17,738			14,167
Content	122,670			90,816
Property and equipment	154,955			115,078
Less accumulated depreciation and amortization	(67,596		)	(55,174		)
Property and equipment, net	$	87,359		$	59,904

Acquisitions

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisitions

2019 Acquisition

On October 1, 2019, we completed our acquisition of Thinkful, Inc. (Thinkful), a skills-based learning platform that offers professional courses in software engineering, data science, data analytics, product design, and product management directly to students across the United States to expand our existing offerings by adding affordable and high-quality courses focused on the most in-demand technology skills. The total fair value of the purchase consideration was $79.2 million, which was paid in cash and included an escrow amount of $9.0 million for general representations and warranties and potential post-closing adjustments. Any remaining escrow amount will be released 18 months after the acquisition date.

Included in the purchase agreement for the acquisition of Thinkful are additional payments of up to $20.0 million subject to the achievement of specified milestones and continued employment of key employees. These payments are not included in the fair value of the purchase consideration and are expensed ratably as acquisition related compensation costs classified as research and development, general and administrative, and sales and marketing expenses, based on the key employee's job function, on our consolidated statement of operations. These payments may be settled by us, at our sole discretion, either in cash or shares of our common stock. We have recorded approximately $3.0 million as of December 31, 2019 included within accrued liabilities on our consolidated balance sheet for these payments.

Goodwill is primarily attributable to the potential for expanding our existing offerings and reach by providing educational services for students and helping them through their professional journey. The amounts recorded for intangible assets and goodwill are not deductible for tax purposes.

The following table presents the preliminary total allocation of purchase consideration recorded in our consolidated balance sheet as of the acquisition date (in thousands):



	Thinkful
Cash	$	51
Accounts receivable	547
Other acquired assets	1,710
Acquired intangible assets	16,360
Total identifiable assets acquired	18,668
Deferred revenue	(3,044		)
Liabilities assumed	(1,605		)
Net identifiable assets acquired	14,019
Goodwill	65,181
Total fair value of purchase consideration	$	79,200

The following table presents the details of the allocation of purchase consideration to the acquired intangible assets (in thousands, except weighted-average amortization period):



	Thinkful
	Amount		Weighted-Average Amortization Period (in months)
Trade name	$	4,430	48
Domain names	330		48
Content library	6,940		60
Developed technology	4,660		36
Acquired intangible assets	$	16,360	50

During the year ended December 31, 2019, we incurred $1.0 million of acquisition-related expenses associated with our acquisition of Thinkful, which have been included in general and administrative expenses in our consolidated statement of operations. During the year ended December 31, 2019, $8.6 million of our consolidated net loss was attributed by Thinkful and we have recorded an immaterial amount of revenues since the acquisition date.

The following unaudited supplemental pro forma net loss is for informational purposes only and presents our combined results as if the acquisition of Thinkful had occurred on January 1, 2018. The unaudited supplemental pro forma information includes the historical combined operating results adjusted for acquisition related compensation costs, amortization of intangible assets, share-based compensation expense and transaction expenses and does not necessarily reflect the actual results that would have been achieved, nor is it necessarily indicative of our future consolidated results. During the years ended December 31, 2019 and 2018, our supplemental pro forma net loss would have been $25.0 million and $38.6 million, respectively. Revenues from Thinkful were immaterial during the years ended December 31, 2019 and 2018.

2018 Acquisitions

On July 2, 2018, we acquired StudyBlue, Inc. (StudyBlue), a privately held online learning company that provides a content library that allows students to create flashcards and their own study materials. This acquisition helps strengthen our existing Chegg Services offerings by adding a substantial number of subject categories and a library of content to our learning platform. The total fair value of the purchase consideration was $20.4 million, which included an escrow amount of $3.3 million for general representations and warranties and post-closing adjustments, which was released in January 2020.

On May 15, 2018, we acquired WriteLab, Inc. (WriteLab), an AI-enhanced writing platform that teaches students grammar, sentence structure, writing style, and offers instant feedback to help students revise, edit, and improve their written work. This acquisition helps to strengthen Chegg Writing with the addition of new tools, features, and functionality. The total fair value of the purchase consideration was $14.5 million, which included an escrow amount of $2.6 million for general representations and warranties and potential post-closing adjustments, which was released in January 2020.

Included in the purchase agreement for the acquisition of WriteLab are additional payments of up to $5.0 million subject to continued employment of the sellers. These payments are not included in the fair value of the purchase consideration and are expensed ratably as research and development expenses on our consolidated statement of operations. These payments may be settled by us, at our sole discretion, either in cash or shares of our common stock. We have recorded approximately $1.0 million as of December 31, 2019 and 2018 included within accrued liabilities on our consolidated balance sheet for these payments.

Goodwill is primarily attributable to the potential for future product offerings as well as our expanded student reach. The amounts recorded for intangible assets and goodwill are not deductible for tax purposes.

The following table presents the total allocation of purchase consideration recorded in our consolidated balance sheets as of the acquisition date (in thousands):



	StudyBlue			WriteLab			Total
Cash	$	152		$	82		$	234
Accounts receivable	288			194			482
Other acquired assets	151			—			151
Acquired intangible assets	7,100			4,450			11,550
Total identifiable assets acquired	7,691			4,726			12,417
Liabilities assumed	(1,309		)	(897		)	(2,206		)
Net identifiable assets acquired	6,382			3,829			10,211
Goodwill	13,996			10,677			24,673
Total fair value of purchase consideration	$	20,378		$	14,506		$	34,884

The following table presents the details of the allocation of purchase consideration to the acquired intangible assets (in thousands, except weighted-average amortization period):



	StudyBlue			WriteLab			Total
	Amount		Weighted-Average Amortization Period (in months)	Amount		Weighted-Average Amortization Period (in months)	Amount		Weighted-Average Amortization Period (in months)
Trade name	$	140	12	$	—	0	$	140	12
Domain names	180		12	—		0	180		12
Non-compete agreements	220		36	—		0	220		36
Developed technology	1,340		60	4,450		96	5,790		88
Content library	5,220		60	—		0	5,220		60
Acquired intangible assets	$	7,100	57	$	4,450	96	$	11,550	72

During the year ended December 31, 2018, we incurred $1.0 million of acquisition-related expenses associated with the above 2018 acquisitions which have been included in general and administrative expenses in our consolidated statement of operations.

We have not presented supplemental pro forma financial information as the revenues and earnings of these 2018 acquisitions were immaterial during the year ended December 31, 2018. Further, we have recorded an immaterial amount of revenues and expenses since the acquisition dates during the year ended December 31, 2018.

2017 Acquisition

In October 2017, we acquired all of the outstanding interests of Cogeon GmbH (Cogeon), a provider of adaptive math technology and developer of the math application, Math 42. The total fair value of the purchase consideration was $15.0 million which included an escrow amount of $2.2 million for general representations and warranties and potential post-closing adjustments, which was released in October 2019.

Included in the purchase agreement for the acquisition of Cogeon are additional payments of up to approximately $9.0 million subject to achievement of specified milestones and continued employment of the sellers. These payments are not included in the fair value of the purchase consideration and are expensed ratably as research and development expense on our consolidated statements of operations. These payments may be settled by us, at our sole discretion, either in cash or shares of our common stock. The terms of the purchase agreement were amended in 2019 such that the payments to the sellers were accelerated and we paid out a total of $7.5 million in cash to the sellers during the year ended December 31, 2019. Additionally, included in the purchase agreement are equity grants of up to approximately $3.8 million subject to achievement of the above specified milestones, continued employment of the sellers, and an adverse tax ruling on the additional payments from the German tax authority. In 2018, the sellers received an adverse tax ruling and during the year ended December 31, 2019, we issued $3.0 million of common stock in connection with the accelerated additional payments.

Goodwill is primarily attributable to the potential for future product offerings as well as our expanded student reach. The amounts recorded for goodwill are expected to be deductible for tax purposes.

The following table presents the total allocation of purchase consideration recorded in our consolidated balance sheets as of the acquisition date (in thousands):



Net tangible assets	$	60
Acquired intangible assets:
Trade name	50
Domain names	230
Non-compete agreements	70
Developed technology	5,510
Content Library	70
Total acquired intangible assets	5,930
Total identifiable assets acquired	5,990
Goodwill	9,024
Total fair value of purchase consideration	$	15,014

During the year ended December 31, 2017, we incurred $0.7 million of acquisition-related expenses associated with the above 2017 acquisition which have been included in general and administrative expenses in our consolidated statements of operations.

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill consists of the following (in thousands):



	Years Ended December 31,
	2019			2018
Beginning balance	$	149,524		$	125,272
Additions due to acquisitions	65,181			24,673
Foreign currency translation adjustment	(192		)	(421		)
Ending balance	$	214,513		$	149,524

Intangible assets as of December 31, 2019 and December 31, 2018 consist of the following (in thousands, except weighted-average amortization period):



	December 31, 2019
	Weighted-Average Amortization Period (in months)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Developed technologies and content library	66	$	43,268		$	(18,395	)	$	24,873
Customer lists	47	9,970			(8,210		)	1,760
Trade and domain names	46	10,873			(6,169		)	4,704
Non-compete agreements	31	2,018			(1,890		)	128
Indefinite-lived trade name	—	3,600			—			3,600
Foreign currency translation adjustment	—	(398		)	—			(398		)
Total intangible assets	58	$	69,331		$	(34,664	)	$	34,667



	December 31, 2018
	Weighted-Average Amortization Period (in months)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Developed technologies and content library	71	$	31,667		$	(13,737	)	$	17,930
Customer lists	47	9,970			(6,847		)	3,123
Trade and domain names	44	6,113			(4,863		)	1,250
Non-compete agreements	31	2,018			(1,735		)	283
Indefinite-lived trade name	—	3,600			—			3,600
Foreign currency translation adjustment	—	(271		)	—			(271		)
Total intangible assets	61	$	53,097		$	(27,182	)	$	25,915

During the years ended December 31, 2019, 2018 and 2017, amortization expense related to our acquired intangible assets totaled approximately $7.5 million, $6.5 million and $5.5 million, respectively.

As of December 31, 2019, the estimated future amortization expense related to our finite-lived intangible assets is as follows (in thousands):



2020	$	8,947
2021	7,554
2022	6,686
2023	4,557
2024	2,411
Thereafter	912
Total	$	31,067

Balance Sheet Details

12 Months Ended

Dec. 31, 2019

Balance Sheet Details [Abstract]

Balance Sheet Details

Other Current Assets

Other current assets consist of the following (in thousands):



	December 31,
	2019		2018
Reimbursement from Required Materials partners ⁽¹⁾	$	6,552	$	3,785
Other	10,054		5,725
Other current assets	$	16,606	$	9,510

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	December 31,
	2019		2018
Payable to Required Materials partners ⁽²⁾	$	4,898	$	6,420
Acquisition-related compensation	4,042		8,536
Taxes payable	3,046		3,864
Accrued purchases of long-lived assets	10,036		1,210
Other	17,942		14,047
Accrued liabilities	$	39,964	$	34,077

_______________________________________

⁽¹⁾ Reimbursement from Required Materials partners represents the cost of print textbooks sourced on their behalf.

⁽²⁾ Payable to Required Materials partners represents the amounts owed to our partners for the rental and sale of print textbooks.

Convertible Senior Notes

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Convertible Senior Notes

In March 2019, we issued $700 million in aggregate principal amount of 0.125% convertible senior notes due in 2025 (2025 notes) and in April 2019, the initial purchasers fully exercised their option to purchase $100 million of additional notes for aggregate total principal amount of $800 million. In April 2018, we issued $345 million in aggregate principal amount of 0.25% convertible senior notes due in 2023 (2023 notes). The aggregate principal amount of the 2023 notes includes $45 million from initial purchasers fully exercising their option to purchase additional notes. Collectively, the 2025 notes and 2023 notes are referred to as the “notes.” The notes were issued in private placements to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended.

The total net proceeds from the notes are as follows (in thousands):



	2025 Notes			2023 Notes
Principal amount	$	800,000		$	345,000
Less initial purchasers’ discount	(18,998		)	(8,625		)
Less other issuance costs	(822		)	(757		)
Net proceeds	$	780,180		$	335,618

The notes are our senior, unsecured obligations and are governed by indenture agreements by and between us and Wells Fargo Bank, National Association, as Trustee (the indentures). The 2025 notes bear interest of 0.125% per year which is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2019. The 2025 notes will mature on March 15, 2025 (the 2025 notes maturity date), unless repurchased, redeemed or converted in accordance with their terms prior to such date. The 2023 notes bear interest of 0.25% per year which is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2018. The 2023 notes will mature on May 15, 2023 (the 2023 notes maturity date), unless repurchased, redeemed or converted in accordance with their terms prior to such date.

Each $1,000 principal amount of the 2025 notes will initially be convertible into 19.3956 shares of our common stock. This is equivalent to an initial conversion price of approximately $51.56 per share, which is subject to adjustment in certain circumstances. Each $1,000 principal amount of the 2023 notes will initially be convertible into 37.1051 shares of our common stock. This is equivalent to an initial conversion price of approximately $26.95 per share, which is subject to adjustment in certain circumstances.

Prior to the close of business on the business day immediately preceding December 15, 2024 for the 2025 notes and February 15, 2023 for the 2023 notes, the notes are convertible at the option of holders only upon satisfaction of the following circumstances:

•

during any calendar quarter commencing after the calendar quarter ending on June 30, 2019 for the 2025 notes and June 30, 2018 for the 2023 notes, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the respective conversion price for the notes on each applicable trading day;


•	during the five-business day period after any 10 consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;


•	if we call any or all of the notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or


•	upon the occurrence of certain specified corporate events described in the indentures.

On or after December 15, 2024 for the 2025 notes and February 15, 2023 for the 2023 notes until the close of business on the second scheduled trading day immediately preceding the respective maturity dates, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon conversion, the notes may be settled in shares of our common stock, cash or a combination of cash and shares of our common stock, at our election.

If we undergo a fundamental change, as defined in the indentures, prior to the respective maturity dates, subject to certain conditions, holders of the notes may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if specific corporate events, described in the indentures, occur prior to the respective maturity dates, we will also increase the conversion rate for a holder who elects to convert their notes in connection with such specified corporate events.

During the year ended December 31, 2019, the conditions allowing holders of the 2025 notes to convert had not been met and were therefore not convertible. During the year ended December 31, 2019, the first circumstance allowing holders of the 2023 notes to convert had been met and are therefore convertible. None of the holders of the 2023 notes elected to convert their notes into shares of our common stock during the year ended December 31, 2019. During the year ended December 31, 2018, the conditions allowing holders of the 2023 notes to convert had not been met and were therefore not convertible.

In accounting for the issuance of the notes, we separated the notes into liability and equity components. The carrying amount of the liability components for the 2025 notes and 2023 notes of approximately $588.0 million and $280.8 million, respectively, was calculated by measuring the fair value of similar debt instruments that do not have an associated convertible feature. The carrying amount of the equity components for the 2025 notes and 2023 notes of approximately $212.0 million and $64.2 million, respectively, representing the conversion option, was determined by deducting the carrying amount of the liability components from the principal amount of the notes. This difference between the principal amount of the notes and the liability components represents the debt discount, presented as a reduction to the notes on our consolidated balance sheets, and is amortized to interest expense using the effective interest method over the remaining term of the notes. The equity components of the notes are included in additional paid-in capital on our consolidated balance sheets and are not remeasured as long as they continue to meet the conditions for equity classification.

We incurred issuance costs related to the 2025 notes of approximately $19.8 million, consisting of the initial purchasers' discount of $19.0 million and other issuance costs of approximately $0.8 million. We incurred issuance costs related to the 2023 notes of approximately $9.4 million, consisting of the initial purchasers' discount of $8.6 million and other issuance costs of approximately $0.8 million. In accounting for the issuance costs, we allocated the total amount incurred to the liability and equity components using the same proportions determined above for the notes. Transaction costs attributable to the liability components for the 2025 notes and 2023 notes of approximately $14.6 million and $7.6 million, respectively, were recorded as debt issuance cost, presented as a reduction to the notes on our consolidated balance sheets, and are amortized to interest expense using the effective interest method over the term of the notes. The issuance costs attributable to the equity components

for the 2025 notes and 2023 notes were approximately $5.3 million and $1.7 million, respectively, and were recorded as a reduction to the equity component included in additional paid-in capital.

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



	December 31, 2019						December 31, 2018
	2025 Notes			2023 Notes			2023 Notes
Principal amount	$	800,000		$	345,000		$	345,000
Unamortized debt discount	(184,698		)	(42,280		)	(54,817		)
Unamortized issuance costs	(12,691		)	(5,028		)	(6,515		)
Net carrying amount (liability)	$	602,611		$	297,692		$	283,668

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



	December 31, 2019						December 31, 2018
	2025 Notes			2023 Notes			2023 Notes
Debt discount for conversion option	$	212,000		$	64,193		$	64,193
Issuance costs	(5,253		)	(1,749		)	(1,749		)
Net carrying amount	$	206,747		$	62,444		$	62,444

As of December 31, 2019, the remaining life of the 2025 notes and the 2023 notes are approximately 5.2 years and 3.4 years, respectively, and are classified as long-term debt.

Based on the closing price of our common stock of $37.91 on December 31, 2019, the if-converted value of the 2025 notes was approximately $588.2 million, which is less than the principal amount of $800 million by approximately $211.8 million, and the if-converted value of the 2023 notes was approximately $485.3 million and exceeds the principal amount of $345 million by approximately $140.3 million.

The effective interest rates of the liability components of the 2025 notes and 2023 notes are 5.40% and 4.34%, respectively, and each is based on the interest rate of similar debt instruments, at the time of our offering, that do not have associated convertible features. The following table sets forth the total interest expense recognized related to the notes (in thousands):



	December 31, 2019				December 31, 2018
	2025 Notes		2023 Notes		2023 Notes
Contractual interest expense	$	769	$	862	$	645
Amortization of debt discount	27,302		12,536		9,377
Amortization of issuance costs	1,876		1,488		1,117
Total interest expense	$	29,947	$	14,886	$	11,139

Capped Call Transactions

Concurrently with the offering of the 2025 notes and 2023 notes, we used $97.2 million and $39.2 million, respectively, of the net proceeds to enter into privately negotiated capped call transactions which are expected to generally reduce or offset potential dilution to holders of our common stock upon conversion of the notes and/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 cover 15,516,480 and 12,801,260 shares of our common stock for the 2025 notes and 2023 notes, respectively, and are intended to effectively increase the overall conversion price from $51.56 to $79.32 per share for the 2025 notes and $26.95 to $40.68 per share for the 2023 notes. The effective increase in conversion price as a result of the capped call transactions serves to reduce potential dilution to holders of our common stock and/or offset the cash payments we are required to make in excess of the principal amount of any converted notes. As these transactions meet certain accounting criteria, they are recorded in stockholders’ equity as a reduction of additional paid-in capital on our consolidated balance sheets and are not accounted for as derivatives. The fair value of the capped call instrument is not remeasured each reporting period. The cost of the capped call is not expected to be deductible for tax purposes.

Impact to Earnings per Share

The notes will have no impact to diluted earnings per share until the average price of our common stock exceeds the conversion price for the 2025 notes and 2023 notes of $51.56 and $26.95 per share, respectively, because we intend to settle the principal amount of the notes in cash upon conversion. Under the treasury stock method, in periods we report net income, we are required to include the effect of additional shares that may be issued under the notes when the average price of our common stock exceeds each respective conversion price. However, as a result of the capped call transactions described above, there will be no economic dilution from the 2025 notes and 2023 notes up to $79.32 and $40.68, respectively, as exercise of the capped call instruments will reduce any dilution from the notes that would have otherwise occurred when the average price of our common stock exceeds the conversion price.

Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

On January 1, 2019, we adopted the new leases guidance and recorded an immaterial decrease to our opening balance of accumulated deficit. Results for reporting periods beginning January 1, 2019 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with the previous guidance. We initially recorded ROU assets of $17.2 million and lease liabilities of $21.1 million on our consolidated balance sheet. ASC 842 did not have a material impact to our consolidated statements of operations. We elected a package of transition practical expedients which included not reassessing whether any expired or existing contracts are or contained leases, not reassessing the lease classification of expired or existing leases, and not reassessing initial direct costs for existing leases. We also elected a practical expedient to not separate lease and non-lease components. We did not elect the practical expedient to use hindsight in determining our lease terms or assessing impairment of our ROU assets.

We have operating leases for corporate offices worldwide, which expire at various dates through 2024. Our primary operating lease commitments at December 31, 2019 are related to our corporate headquarters in Santa Clara, California. We have additional offices in California, Oregon, and New York in the United States and internationally in India and Israel. As of December 31, 2019, we had operating lease ROU assets of $15.9 million and operating lease liabilities of $19.8 million. During the year ended December 31, 2019, we obtained $3.4 million of ROU assets in exchange for lease liabilities related to the reassessment of the lease term for two of our leases in India and commencing a lease for an additional office space in India.

As of December 31, 2019, we do not have finance leases recorded on our consolidated balance sheet. As of December 31, 2019, our weighted average remaining lease term was 3.7 years. During the year ended December 31, 2019, our weighted average discount rate was 4.7%. Operating lease expense, net of immaterial sublease income, was approximately $5.0 million during the year ended December 31, 2019. Variable lease cost and short term lease cost were immaterial during the year ended December 31, 2019.

The aggregate future minimum lease payments and reconciliation to lease liabilities as of December 31, 2019, are as follows (in thousands):



	December 31, 2019
2020	$	6,094
2021	5,622
2022	5,404
2023	3,738
2024	780
Total future minimum lease payments	21,638
Less imputed interest	(1,842		)
Total lease liabilities	$	19,796

The aggregate future minimum lease payments as of December 31, 2018, are as follows (in thousands):



	December 31, 2018
2019	$	5,222
2020	5,251
2021	4,775
2022	3,999
2023	3,421
Thereafter	788
Total	$	23,456

During the year ended December 31, 2019, we entered into a seven years lease for a corporate office in New York with future minimum lease payments of approximately $12.4 million. As of December 31, 2019, this lease has not yet commenced and therefore these future minimum lease payments are not included in our future minimum lease payments in the above table.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies From time to time, third parties may assert patent infringement claims against us in the form of letters, litigation, or other forms of communication. In addition, we may from time to time be subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, and other intellectual property rights; employment claims; and general contract or other claims. We may also, from time to time, be subject to various legal or government claims, disputes, or investigations. 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 September 27, 2018 a purported securities class action captioned Shah v. Chegg, Inc. et. al. (Case No. 3:18-cv-05956-CRB) was filed in the U.S. District Court for the Northern District of California against us and our CEO. The complaint was filed by a purported Company shareholder and alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and SEC Rule 10b-5, based on allegedly misleading statements regarding the Company’s security measures to protect users’ data and related internal controls and procedures, as well as our second quarter 2018 financial results. The suit is purportedly brought on behalf of purchasers of our securities between July 30, 2018 and September 25, 2018. The complaint seeks unspecified compensatory damages, as well as interest, costs and attorneys’ fees. On November 15, 2018, a second purported securities class action captioned Kurland v. Chegg, Inc. et al. (Case No. 3:18-cv-06714-CRB) was filed in the U.S. District Court for the Northern District of California against us, our CEO, and our CFO. The Shah and Kurland actions contain similar allegations, assert similar claims, and seek similar relief, and on January 24, 2019, the Court consolidated the two actions. On March 29, 2019, the Plaintiffs filed a Lead Plaintiff's Notice of Voluntary Dismissal Without Prejudice. On November 5, 2018, NetSoc, LLC (NetSoc) filed a complaint against us in the U.S. District Court for the Southern District of New York for patent infringement alleging that the Chegg Tutors service infringes U.S. Patent No. 9,978,107 and seeking unspecified compensatory damages. A responsive pleading was filed on February 19, 2019. On January 13, 2020, the Court issued an order dismissing the case as to Chegg. On January 30, 2020, NetSoc appealed the dismissal and we are currently awaiting their filing of a brief with the court. We are not aware of any other pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on our consolidated financial position, results of operations, or cash flows. However, our determination of whether a claim will proceed to litigation cannot be made with certainty, nor can the results of litigation be predicted with certainty. Nevertheless, defending any of these actions, regardless of the outcome, may be costly, time consuming, distract management personnel, and have a negative effect on our business. An adverse outcome in any of these actions, including a judgment or settlement, may cause a material adverse effect on our future business, results of operations, and financial condition.

Guarantees and Indemnifications	12 Months Ended
Guarantees and Indemnifications	Dec. 31, 2019
Guarantees And Indemnifications [Abstract]
Guarantees and Indemnifications	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 limits 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 minimal. We have not recorded any liabilities for these agreements as of December 31, 2019.

Common Stock

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Common Stock

We are authorized to issue 400 million shares of common stock, with a par value per share of $0.001. As of December 31, 2019, we have reserved the following shares of common stock for future issuance:



	December 31, 2019
Outstanding stock options	1,611,385
Outstanding RSUs and PSUs	6,909,530
Shares available for grant under the 2013 Plan	23,405,023
Shares available for issuance under the 2013 ESPP	7,646,784
Total common shares reserved for future issuance	39,572,722

Stock Plans

2013 Equity Incentive Plan

On June 6, 2013, the Board of Directors adopted our 2013 Equity Incentive Plan (the 2013 Plan), which was subsequently approved by our stockholders on August 29, 2013. The 2013 Plan became effective on November 11, 2013 and replaced the 2005 Plan. On the effective date of the 2013 Plan, 12,000,000 shares of our common stock were reserved for issuance, plus an additional 3,838,985 shares reserved but not issued or subject to outstanding awards under our 2005 Plan on the effective date of the 2013 Plan, plus, on and after the effective date of the 2013 Plan, (i) shares that are subject to outstanding awards under the 2005 Plan which cease to be subject to such awards, (ii) shares issued under the 2005 Plan that are forfeited or repurchased at their original issue price and (iii) shares subject to awards under the 2005 Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award. As of December 31, 2019 there were 23,405,023 shares available for grant under the 2013 Plan. The 2013 Plan permits the granting of incentive stock options, non-qualified stock options, RSUs, stock appreciation rights, restricted shares of common stock and performance share awards. The exercise price of stock options may not be less than the 100% of the fair market value of the common stock on the date of grant. Options granted pursuant to the 2013 Plan generally expire no later than 10 years.

2013 Employee Stock Purchase Plan

On June 6, 2013, our Board of Directors adopted our 2013 Employee Stock Purchase Plan (the 2013 ESPP) and our stockholders subsequently approved the 2013 ESPP Plan on August 29, 2013. The 2013 ESPP permits eligible employees to acquire shares of our common stock by accumulating funds through periodic payroll deductions of up to 15% of base salary. Our 2013 ESPP is intended to qualify as an ESPP under Section 423 of the Code and employees will receive a 15% discount to the lesser of the fair market value of our common stock on (i) the first trading day of the applicable offering period or (ii) the last day of each purchase period in the applicable offering period. Each offering period may run for no more than six months. We have reserved 4,000,000 shares of our common stock under our 2013 ESPP. The aggregate number of shares issued over the term of our 2013 ESPP will not exceed 20,000,000 shares of our common stock. As of December 31, 2019, there were 7,646,784 shares of common stock available for future issuance under the 2013 ESPP.

Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stockholders' Equity

Share-based Compensation Expense

Total share-based compensation expense recorded for employees and non-employees, is as follows (in thousands):



	Years Ended December 31,
	2019		2018		2017
Cost of revenues	$	426	$	420	$	316
Research and development	22,229		17,055		14,333
Sales and marketing	7,380		6,703		5,007
General and administrative	34,874		27,852		18,703
Total share-based compensation expense	$	64,909	$	52,030	$	38,359

Fair Value of 2013 ESPP

Under the 2013 ESPP, rights to purchase shares are generally granted during the second and fourth quarter of each year. We estimate the fair value of each right to purchase shares under our 2013 ESPP using the Black-Scholes-Merton option-pricing model, which utilizes the fair value of our common stock based on active market and requires input on the following subjective assumptions:

Expected Term. The expected term for rights to purchase shares under the 2013 ESPP is half a year.

Expected Volatility. The expected volatility is based on the average volatility of our stock price over the expected term.

Expected Dividends. The dividend assumption is based on our historical experience. To date we have not paid any dividends on our common stock.

Risk-Free Interest Rate. The risk-free interest rate used in the valuation method is the implied yield currently available on the United States treasury zero-coupon issues, with a remaining term equal to the expected term.

The following table summarizes the key assumptions used to determine the fair value of rights granted under the 2013 ESPP:



	Years Ended December 31,
	2019			2018			2017
Expected term (years)	0.50			0.50			0.50
Expected volatility	40.51%-41.81%			42.07%-44.97%			38.15%-45.57%
Dividend yield	—		%	—		%	—		%
Risk-free interest rate	1.59%-2.43%			2.09%-2.50%			1.04%-1.42%
Weighted-average grant-date fair value per share	$	9.88		$	7.14		$	3.55

Fair Value of Restricted Stock Units (RSUs) and of Performance-Based Restricted Stock Units (PSUs)

RSUs and PSUs are converted into shares of our common stock upon vesting on a one-for-one basis. Vesting of RSUs is subject to the employee’s continuing service to us, while vesting of PSUs is subject to our achievement of specified corporate financial performance objectives in addition to the employee's continuing service to us. RSUs are typically fully vested at the end of three or four years while PSUs vest subject to the achievement of performance objectives and if achieved, typically vest over two to three years. We assess the achievement of performance objectives on a quarterly basis and adjust our share-based payment expense as appropriate.

2013 ESPP Activity

There were 201,581 shares purchased under the 2013 ESPP for the year ended December 31, 2019 at an average price per share of $25.55 with cash proceeds from the issuance of shares of $5.1 million.

There were 253,301 shares purchased under the 2013 ESPP for the year ended December 31, 2018 at an average price per share of $15.77 with cash proceeds from the issuance of shares of $4.0 million.

Stock Option Activity



	Options Outstanding
	Number of Options Outstanding		Weighted- Average Exercise Price per Share		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Balance at December 31, 2018	4,776,481		$	9.40	4.25	$	90,848,450
Exercised	(3,165,096	)	9.79
Balance at December 31, 2019	1,611,385		$	8.64	3.60	$	47,171,160

We did not grant any stock option awards during the years ended December 31, 2019, 2018, and 2017.

The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017, was approximately $90.8 million, $57.2 million, and $16.8 million, respectively.

RSU and PSU Activity



	RSUs and PSUs Outstanding
	Number of RSUs and PSUs Outstanding		Weighted Average Grant Date Fair Value
Balance at December 31, 2018	10,804,808		$	11.87
Granted	2,910,400		37.56
Released	(5,628,938	)	10.15
Canceled	(1,176,740	)	12.20
Balance at December 31, 2019	6,909,530		$	24.04

The weighted-average grant-date fair value of RSUs and PSUs granted during the years ended December 31, 2019, 2018, and 2017 was $37.56, $21.67, and $9.10, respectively. The total fair value of RSUs and PSUs vested as of the vesting dates during the years ended December 31, 2019, 2018, and 2017 was $222.3 million, $120.9 million, and $49.4 million, respectively.

As of December 31, 2019, we had a total of approximately $91.2 million of unrecognized compensation costs related to RSUs and PSUs that is expected to be recognized over the remaining weighted average period of 1.6 years.

2019 PSU Grants

In March 2019, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2019. Based on the achievement of the performance conditions for the March 2019 grants, the final settlement met the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs will vest over a three-year period, with the initial vesting occurring in March 2020.

The number of shares underlying the March 2019 PSUs granted during the year ended December 31, 2019 totaled 436,042 shares and had a grant date fair value of $40.42 per share.

2018 PSU Grants

In August 2018, in conjunction with our acquisition of StudyBlue, we granted PSUs under the 2013 Plan to certain employees. The PSUs entitle the employees to receive a certain number of shares of our common stock based on our satisfaction of certain strategic performance targets during 2018 and 2019. Based on the achievement of the performance

conditions for the August 2018 grant, the final settlement exceeded the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs vest over a three-year period, with the initial vesting occurring in September 2019.

The number of shares underlying the August 2018 PSUs granted during the year ended December 31, 2018 totaled 45,756 shares and had a grant date fair value of $28.74 per share.

In March 2018, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2018. Based on the achievement of the performance conditions for the March 2018 grant, the final settlement exceeded the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs vest over a three-year period, with the initial vesting occurring in March 2019.

The number of shares underlying the March 2018 PSUs granted during the year ended December 31, 2018 totaled 845,934 shares and had a grant date fair value of $19.70 per share.

2017 PSU Grants

In March 2017, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2017. Based on the achievement of the performance conditions for the March 2017 grant, the final settlement met the maximum threshold based on a specified objective formula approved by the Compensation Committee. These PSUs vest over a three-year period, with the initial vesting occurring in March 2018.

The number of shares underlying the PSUs granted during the year ended December 31, 2017 totaled 1,822,284 shares and had a grant date fair value of $8.91 per share.

Stock Warrants

As of December 31, 2018, we no longer had exercisable common stock warrants.

During the year ended December 31, 2018, 100,000 common stock warrants were exercised at an exercise price of $12.00. During the year ended December 31, 2017, 100,000 common stock warrants were exercised at an exercise price of $12.00.

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

We recorded an income tax provision of approximately $2.6 million, $1.4 million and $1.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. The income tax provision for the years ended December 31, 2019, 2018 and 2017 was primarily due to state and foreign income tax expense and federal and state tax expense related to tax amortization of acquired indefinite lived intangible assets.

Our income tax provision consisted of the following (in thousands):



	Years Ended December 31,
	2019			2018			2017
Current income taxes:
Federal	$	(185	)	$	(91	)	$	(103	)
State	264			(73		)	100
Foreign	2,594			1,374			1,523
Total current income taxes	2,673			1,210			1,520

Deferred income taxes:
Federal	(17		)	155			(992		)
State	42			76			75
Foreign	(64		)	(11		)	1,199
Total deferred income taxes	(39		)	220			282
Total income tax provision	$	2,634		$	1,430		$	1,802

Loss before provision for income taxes consisted of the following (in thousands):



	Years Ended December 31,
	2019			2018			2017
United States	$	(12,497	)	$	(18,617	)	$	(20,983	)
Foreign	5,526			5,159			2,502
Total	$	(6,971	)	$	(13,458	)	$	(18,481	)

The differences between our income tax provision as presented in the accompanying consolidated statements of operations and the income tax expense computed at the federal statutory rate consists of the items shown in the following table as a percentage of pretax loss (in percentages):



	Years Ended December 31,
	2019		2018		2017
Income tax at U.S. statutory rate	21.0	%	21.0	%	34.0	%
State, net of federal benefit	(76.3	)	14.8		8.3
Foreign rate differential	(19.4	)	(3.0	)	(3.8	)
Share-based compensation	695.4		178.7		38.2
Non-deductible expenses	0.4		(4.4	)	(1.1	)
Tax credits	19.3		26.7		7.8
Tax Cuts and Jobs Act impact	—		—		(220.2	)
Acquisition related	31.8		15.2		—
Convertible senior notes	(412.6	)	(0.3	)	—
Other	27.9		(1.8	)	0.4
Change in valuation allowance	(325.3	)	(257.5	)	126.6
Total	(37.8	)%	(10.6	)%	(9.8	)%

On December 22, 2017, the Tax Cuts and Jobs Act (Tax Act) was signed into law, enacting significant changes to the U.S. Internal Revenue Code. The Tax Act made broad and complex changes to the U.S. tax code.

On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, as of December 31, 2017, we had not yet completed our accounting for the tax effects of the enactment of the Act. Our provision for income

taxes for the year ended December 31, 2017 was based in part on our best estimate of the effects of the transition tax and existing deferred tax balances with our understanding of the Tax Act and guidance available as of the date of filing. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings which was a benefit of $0.1 million. We also provided withholding tax on the deemed repatriation of foreign earnings of $1.2 million. Under guidance in place at December 31, 2019 and December 31, 2018, no adjustments to our provisional effects of the Tax Act recorded at December 31, 2017 were necessary. As of December 22, 2018 we have completed our accounting for the income tax effects of the Tax Act.

The Tax Act also included provisions for the GILTI tax inclusion, wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. This income will effectively be taxed at a 10.5% tax rate in general. Under the U.S. generally accepted accounting principles companies are allowed to make an accounting policy election of either (i) account for GILTI as a component of tax expense in the period in which we are subject to the rules (the “period cost method”), or (ii) account for GILTI in our measurement of deferred taxes (the “deferred method”). We are electing the period-cost method for any tax as a result of the GILTI provisions.

A summary of our deferred tax assets is as follows (in thousands):



	Years Ended December 31,
	2019			2018
Deferred tax assets:
Accrued expenses and reserves	$	3,978		$	1,661
Share-based compensation	12,003			13,083
Accrued compensation	997			2,075
Net operating loss carryforwards	162,320			106,659
Property and equipment, textbooks and intangibles assets	—			3,745
Other items	3,438			2,951
Gross deferred tax assets	182,736			130,174
Valuation allowance	(148,519		)	(125,844		)
Total deferred tax assets	34,217			4,330

Deferred tax liabilities:
Property and equipment, textbooks and intangibles assets	(4,111		)	—
Convertible senior notes	(27,065		)	(46		)
Other	(4,661		)	(5,943		)
Total deferred tax liabilities	(35,837		)	(5,989		)

Net deferred tax liability	$	(1,620	)	$	(1,659	)

At December 31, 2019 and 2018 the deferred tax liability is created by the tax amortization of acquired indefinite lived intangible assets. Under the accounting guidance this deferred tax liability can be used as a source of income for recognition of deferred tax assets when determining the amount of valuation allowance to be recorded.

Realization of the deferred tax assets is dependent upon future taxable income, the amount and timing of which are uncertain. Accordingly, the federal and state gross deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $22.7 million during the year ended December 31, 2019 and increased by $34.7 million during the year ended December 31, 2018.

As of December 31, 2019, we had net operating loss carryforwards for federal and state income tax purposes of approximately $591 million and $440 million, respectively, which will begin to expire in years beginning 2028 and 2020, respectively.

As of December 31, 2019, we had tax credit carryforwards for federal and state income tax purposes of approximately $14.8 million and $11.9 million, respectively. The federal credits expire in various years beginning in 2030. The state credits do not expire.

Utilization of our net operating losses and tax credit carryforwards may be subject to substantial annual limitations due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended (IRC), and similar state provisions. Such annual limitations could result in the expiration of the net operating losses and tax credit carryforwards before utilization.

As described above, the Tax Act included a transition tax in 2017 that taxed any previously deferred foreign earnings and profits in 2017 at a reduced tax rate. As a result of this tax and the accrual of associated distribution tax, we have no unrecorded tax liabilities associated with unremitted foreign retained earnings as of December 31, 2017. As of December 31, 2019, we intend to permanently reinvest all 2018 and 2019 earnings from our international subsidiaries. As such we have not provided for any remaining tax effect, if any, of limited outside basis difference of our foreign subsidiaries based upon plans of future reinvestment. As a result of the Tax Act this amount is anticipated to be insignificant. The determination of the future tax consequences of the remittance of these earnings is not practicable.

We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. During the years ended December 31, 2019, 2018 and 2017, we recognized an increase of $45 thousand, a decrease of $0.7 million and an increase of $0.2 million of interest and penalties, respectively. Accrued interest and penalties as of December 31, 2019 and 2018 were approximately $0.1 million and $73 thousand, respectively.

We file tax returns in U.S. federal, state, and certain foreign jurisdictions with varying statutes of limitations. Due to net operating loss and credit carryforwards, all of the tax years since inception through the 2019 tax year remain subject to examination by the U.S. federal and some state authorities. Foreign jurisdictions remain subject to examination up to approximately seven years from the filing date, depending on the jurisdiction.

A reconciliation of the beginning and ending balances of the total amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands):



	Years Ended December 31,
	2019			2018			2017
Beginning balance	$	8,771		$	5,772		$	4,882
Increase in tax positions for prior years	221			758			280
Decrease in tax positions for prior years	(1,550		)	(569		)	(101		)
Decrease in tax positions for prior year settlement	—			(149		)	(172		)
Decrease in tax positions for prior years due to statutes lapsing	(164		)	(103		)	(169		)
Increase in tax positions for current year	3,722			3,112			978
Change due to translation of foreign currencies	(7		)	(50		)	74
Ending balance	$	10,993		$	8,771		$	5,772

The amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate is $1.9 million for the year ended December 31, 2019. One or more of these unrecognized tax benefits could be subject to a valuation allowance if, and when recognized in a future period, which could impact the timing of any related effective tax rate benefit.

The actual amount of any taxes due could vary significantly depending on the ultimate timing and nature of any settlement. We believe that the amount by which the unrecognized tax benefits may increase or decrease within the next 12 months is not estimable.

Restructuring Charges

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring Charges

2017 Restructuring Plan

In January 2017, we entered into a strategic partnership with the NRCCUA where they assumed responsibility for managing, renewing, and maintaining our existing university contracts and become the exclusive reseller of our digital marketing services for colleges and universities. As a result of this strategic partnership, approximately 55 employees in China and the United States supporting the sales and account support functions of our marketing services offerings were terminated. During the year ended December 31, 2019, we recorded workforce reduction costs of $0.1 million and during the year ended December 31, 2018, we recorded workforce reduction costs of $0.3 million and lease termination and other costs of $19 thousand. We expect remaining costs incurred to date related to this workforce reduction to be fully paid within two months.

2015 Restructuring Plan

We recorded a reduction of $0.3 million to our 2015 Restructuring Plan liability related to our adoption of ASU 2016-02, Leases (Topic 842) during the three months ended March 31, 2019. Our 2015 Restructuring Plan is now complete.

The following table summarizes the activity related to the accrual for restructuring charges (in thousands):



	2017 Restructuring Plan						2015 Restructuring Plan
	Workforce Reduction Costs			Lease Termination and Other Costs			Lease Termination and Other Costs			Total
Balance at January 1, 2018	$	44		$	—		$	221		$	265
Restructuring charges	253			19			317			589
Cash payments	(151		)	(19		)	(218		)	(388		)
Write-offs	—			—			(18		)	(18		)
Balance at December 31 2018	146			—			302			448
Cumulative-effect adjustment to accumulated deficit related to adoption of ASU 2016-02	—			—			(302		)	(302		)
Restructuring charges	97			—			—			97
Cash payments	(221		)	—			—			(221		)
Write-offs	—			—			—			—
Balance at December 31, 2019	$	22		$	—		$	—		$	22

Related-Party Transactions	12 Months Ended
Related-Party Transactions	Dec. 31, 2019
Related Party Transactions [Abstract]
Related-Party Transactions	Related-Party Transactions Our Chief Executive Officer is a member of the Board of Directors of Adobe Systems Incorporated (Adobe). During the years ended December 31, 2019, 2018, and 2017, we purchased $2.1 million, $3.3 million and $3.2 million, respectively, of services from Adobe. We had $0.2 million in revenues during the year ended December 31, 2019 and $0.1 million in revenues during the years ended December 31, 2018 and 2017 from Adobe. We had $0.2 million and an immaterial amount in payables as of December 31, 2019 and 2018, respectively, to Adobe. We had no outstanding receivables as of December 31, 2019 and 2018 from Adobe. One of our board members was a member of the Board of Directors of Cengage Learning, Inc. (Cengage) until December 23, 2019. During the years ended December 31, 2019, 2018, and 2017, we purchased $17.2 million, $15.1 million, and $11.5 million, respectively, of goods and services from Cengage. We had $3.0 million, $2.5 million, and $1.9 million in revenues during the years ended December 31, 2019, 2018, and 2017, respectively, from Cengage. We had an immaterial amount and $0.1 million in payables as of December 31, 2019 and 2018, respectively, to Cengage. We had an immaterial amount of outstanding receivables as of December 31, 2019 and 2018, respectively, from Cengage. One of our board members is also a member of the Board of Directors of Synack, Inc. (Synack). During the years ended December 31, 2019, 2018, and 2017, we purchased $0.4 million, $0.1 million, and $0.1 million, respectively, of services from Synack. The immediate family of one of our board members is a member of the Board of Directors of PayPal Holdings, Inc. (PayPal). During the years ended December 31, 2019, 2018, and 2017, we incurred payment processing fees of $1.6 million, $1.3 million, and $1.0 million, respectively, to PayPal. One of our board members is the Chief Executive Officer of the San Francisco 49ers (49ers). During the year ended December 31, 2019, we purchased $0.2 million of advertisements from the 49ers.

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2019
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit Plan We sponsor a 401(k) savings plan for eligible employees and their beneficiaries. Contributions by us are discretionary. Participants may contribute, on a pretax basis, a percentage of their annual compensation, but not to exceed a maximum contribution amount pursuant to Section 401(k) of the IRC. During the years ended December 31, 2019, 2018, and 2017, our matching contributions totaled approximately $1.7 million, $1.4 million, and $1.1 million, respectively.

Segment Information

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment Information

Our chief operating decision-maker is our Chief Executive Officer who makes resource allocation decisions and reviews financial information presented on a consolidated basis. Accordingly, we have determined that we have a single operating and reportable segment and operating unit structure.

Product Information

We derive our revenues from our Chegg Services and Required Materials product lines. Our Chegg Services primarily include Chegg Study, Chegg Writing, Chegg Tutors, Chegg Math Solver, and Thinkful. Required Materials include a revenue share, upon fulfillment, on the total transactional amount of a rental and sale transaction for print textbooks as well as revenues from eTextbooks.

The following table sets forth our total net revenues for the periods shown for our Chegg Services and Required Materials product lines (in thousands):



	December 31,
	2019		2018		2017
Chegg Services	$	332,221	$	253,985	$	185,683
Required Materials	78,705		67,099		69,383
Total net revenues	$	410,926	$	321,084	$	255,066

Geographic Information

Our headquarters and most of our operations are located in the United States. We conduct our sales, marketing and customer service activities primarily in the United States. Geographic revenues information is based on the location of the customer. In 2019, 2018, and 2017, substantially all of our revenues and long-lived assets are located in the United States.

Subsequent Event	12 Months Ended
Subsequent Event	Dec. 31, 2019
Subsequent Events [Abstract]
Subsequent Event	Subsequent Event On January 29, 2020, we purchased $29.4 million of print textbooks to establish our initial print textbook library.

Selected Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data (unaudited)



	Three Months Ended
	March 31, 2019			June 30, 2019			September 30, 2019			December 31, 2019
Total net revenues	$	97,409		$	93,862		$	94,151		$	125,504
Gross profit	74,074			73,344			71,987			99,339
(Loss) income from operations	(1,027		)	6,815			(5,057		)	17,086
Net (loss) income	(4,318		)	(2,029		)	(11,477		)	8,219
Weighted average shares used to compute net (loss) income per share:
Basic	116,730			118,790			120,085			121,151
Diluted	116,730			118,790			120,085			129,150
Net (loss) income per share:
Basic	$	(0.04	)	$	(0.02	)	$	(0.10	)	$	0.07
Diluted	$	(0.04	)	$	(0.02	)	$	(0.10	)	$	0.06



	Three Months Ended
	March 31, 2018			June 30, 2018			September 30, 2018			December 31, 2018
Total net revenues	$	76,949		$	74,222		$	74,237		$	95,676
Gross profit	56,725			56,438			54,319			73,606
(Loss) income from operations	(2,620		)	(711		)	(10,433		)	7,544
Net (loss) income	(2,617		)	(3,909		)	(13,709		)	5,347
Weighted average shares used to compute net (loss) income per share:
Basic	110,904			112,738			114,184			115,123
Diluted	110,904			112,738			114,184			125,610
Net (loss) income per share:
Basic	$	(0.02	)	$	(0.03	)	$	(0.12	)	$	0.05
Diluted	$	(0.02	)	$	(0.03	)	$	(0.12	)	$	0.04

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2019

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

Financial Statement Schedules

Schedule II-Valuation and Qualifying Accounts (in thousands):



	Years Ended December 31, 2019, 2018, and 2017
	Balance at Beginning of Year		(Release) Provision for Bad Debts			Net Write-offs			Balance at End of Year
Allowance for doubtful accounts
2019	$	229	$	(79	)	$	(94	)	$	56
2018	259		142			(172		)	229
2017	436		47			(224		)	259



	Years Ended December 31, 2019, 2018, and 2017
	Balance at Beginning of Year		Provision for Refunds		Refunds Issued			Balance at End of Year
Refund Reserve
2019	$	396	$	24,987	$	(24,829	)	$	554
2018	282		21,240		(21,126		)	396
2017	487		22,446		(22,651		)	282

All other financial statement schedules are omitted because they are not applicable or the information is included in the Registrant’s consolidated financial statements or related notes.

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

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 and liabilities; the disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions, and judgments are used for, but not limited to: revenue recognition, recoverability of accounts receivable, restructuring charges, share-based compensation expense including estimated forfeitures, accounting for income taxes, useful lives assigned to long-lived assets for depreciation and amortization, impairment of goodwill and long-lived assets, the valuation of acquired intangible assets, the valuation of our convertible senior notes, internal-use software and website development costs, and operating lease right of use (ROU) assets and operating lease liabilities. We base our estimates on historical experience, knowledge of current business conditions, and various other factors we believe to be reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our financial position and results of operations.

Principles of Consolidation

The consolidated financial statements include the accounts of Chegg and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with U.S. GAAP.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments with an original maturity date of three months or less from the date of purchase to be cash equivalents. Our cash and cash equivalents consist of cash, money market accounts, and commercial paper at financial institutions, and are stated at cost, which approximates fair value. We classify certain restricted cash balances within other current assets and other assets on the accompanying consolidated balance sheets based upon the term of the remaining restrictions.

Investment, Policy

Investments

We hold investments in commercial paper, corporate securities, U.S. treasury securities, and agency bonds. We classify our investments as available-for-sale that are either short or long-term based on the nature of each security based on the contractual maturity of the investment when purchased. Our available-for-sale investments are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in other comprehensive loss on our consolidated statements of stockholders’ equity. Unrealized losses are charged against other income, net when a decline in fair value is determined to be other-than-temporary. We did not record any such impairment charges in the periods presented. We determined realized gains or losses on the sale of investments on a specific identification method, and recorded such gains or losses as other income, net.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We generally grant uncollateralized credit terms to our customers, which include textbook wholesalers and marketing services customers, and maintain an allowance for doubtful accounts to account for potentially uncollectible receivables.

Allowance for Doubtful Accounts

We assess the creditworthiness of our customers based on multiple sources of information, and analyze such factors as our historical bad debt experience, industry and geographic concentrations of credit risk, economic trends, and customer payment history. This assessment requires significant judgment. Because of this assessment, we maintain an allowance for doubtful accounts for estimated losses resulting from the inability of certain customers to make all of their required payments. In making this estimate, we analyze historical payment performance and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Accounts receivable are written off as a decrease to the allowance for doubtful accounts when all collection efforts have been exhausted and an account is deemed uncollectible.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and investments in highly liquid instruments in accordance with our investment policy. We place the majority of our cash and cash equivalents and restricted cash with financial institutions in the United States that we believe to be of high credit quality, and accordingly minimal credit risk exists with respect to these instruments. Certain of our cash balances held with a financial institution are in excess of Federal Deposit Insurance Corporation limits. Our investment portfolio consists of investments diversified among security types, industries and issuers. Our investments were held and managed by recognized financial institutions that followed our investment policy with the main objective of preserving capital and maintaining liquidity.

C

Property and Equipment

Depreciation and content amortization expense are generally classified within the corresponding cost of revenues and operating expenses categories in our consolidated statements of operations.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and content amortization. Depreciation and content amortization are computed using the straight-line method over the following estimated useful lives of the assets:



Classification		Useful Life
Computers and equipment		3 years
Internal-use software and website development		3 years
Furniture and fixtures		5 years
Leasehold improvements		Shorter of the remaining lease term or the estimated useful life of 5 years
Content		Shorter of the licensed content term or the estimated useful life of 5 years

The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in income (loss) from operations.

Internal-Use Software and Website Development Costs

We capitalize certain costs associated with software developed or obtained for internal use and website and application development. We capitalize costs when preliminary development efforts are successfully completed, management has authorized and committed project funding and it is probable that the project will be completed and the software will be used as intended. Such costs are amortized on a straight-line basis over a three year estimated useful life of the related asset. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized and amortized over the estimated useful life of the upgrades.

Business Combinations

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired through a business combination based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets acquired and liabilities assumed is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill and Indefinite-Lived Intangible Asset

Goodwill represents the excess of the fair value of purchase consideration paid over the estimated fair value of assets acquired and liabilities assumed in a business combination. Our indefinite-lived intangible asset represents the internships.com trade name. Goodwill and our indefinite-lived intangible asset are not amortized but rather tested for impairment at least annually on October 1, or more frequently if certain events or indicators of impairment occur between annual impairment tests. We first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. In our qualitative assessment, we consider factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of our reporting unit is less than the carrying amount. We completed our annual impairment test on October 1st of 2019 and 2018, each of which did not result in any impairment as our qualitative assessment did not indicate that it is more likely than not that the fair value of our reporting unit is less than the carrying amount.

Acquired Intangible Assets, and Other Long-Lived Assets

Acquired Intangible Assets and Other Long-Lived Assets

Acquired intangible assets with finite useful lives, which include developed technology, content library, customer lists, trade names and non-compete agreements, are amortized over their estimated useful lives. We assess the impairment of acquired intangible assets and other long-lived assets when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and operating lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Our leases do not provide an implicit rate and therefore we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future minimum lease payments. Our incremental borrowing rate is estimated based on the estimated rate incurred to borrow, on a collateralized basis over a similar term as our leases, an amount equal to the lease payments in a similar economic environment. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. We do not record leases on our consolidated balance sheet with a term of one year or less. We do not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Some of our leases include payments that are dependent on an index, such as the Consumer Price Index (CPI), and our minimum lease payments include payments based on the index at inception with any future changes in such indices recognized as an expense in the period of change. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line operating lease cost over the lease term.

Strategic Investment

Strategic Investments

We have entered into strategic investments that are accounted for under the cost method and included in other assets on our consolidated balance sheets. We assess our strategic investments for impairment whenever events or changes in circumstances indicate that the strategic investments may be impaired. The factors we consider in our evaluation include, but are not limited to, a significant deterioration in the earnings performance or business prospects of the investee or factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations or working capital deficiencies. Additionally, starting in 2018 as a result of our adoption of Accounting Standards Update (ASU) 2016-01, we consider whether there have been any observable price changes in orderly transactions for identical or similar investments.