10-Q 1 chgg-20220630.htm 10-Q chgg-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________             
Commission file number 001-36180
chgg-20220630_g1.jpg
CHEGG, INC.
(Exact name of registrant as specified in its charter)

Delaware 20-3237489
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
3990 Freedom Circle
Santa Clara, CA, 95054
(Address of principal executive offices)
(408) 855-5700
(Registrant’s telephone number, including area code)

Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.001 par value per shareCHGGThe New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
As of July 28, 2022, the Registrant had 126,398,679 outstanding shares of Common Stock.





TABLE OF CONTENTS
     Page
   
   
    
   
   
  

Unless the context requires otherwise, the words “we,” “us,” “our,” “Company” and “Chegg” refer to Chegg, Inc. and its subsidiaries taken as a whole.

Chegg, Chegg.com, Chegg Study, internships.com, Research Ready, EasyBib, the Chegg “C” logo, Busuu and Thinkful, are some of our trademarks used in this Quarterly Report on Form 10-Q. Solely for convenience, our trademarks, trade names and service marks referred to in this Quarterly Report on Form 10-Q appear without the ®, ™ and SM symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and trade names. Other trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

2


NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, our objectives for future operations, and the impact of the ongoing coronavirus (COVID-19) pandemic on our financial condition and results of operations are forward-looking statements. The words “believe,” “may,” “will,” “would,” “could,” “estimate,” “continue,” “anticipate,” “intend,” “project,” “endeavor,” “expect,” “plans to,” “if,” “future,” “likely,” “potentially,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time, such as the COVID-19 global pandemic. Many of the risks and uncertainties are currently elevated by, and may or will continue to be elevated by, the current COVID-19 pandemic. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Our forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
3

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CHEGG, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for number of shares and par value)
(unaudited)
 June 30,
2022
December 31,
2021
Assets
Current assets  
Cash and cash equivalents$402,089 $854,078 
Short-term investments981,288 691,781 
Accounts receivable, net of allowance of $234 and $153 at June 30, 2022 and December 31, 2021, respectively
16,815 17,850 
Prepaid expenses20,115 35,093 
Other current assets31,559 23,846 
Total current assets1,451,866 1,622,648 
Long-term investments265,729 745,993 
Textbook library, net 11,241 
Property and equipment, net195,370 169,938 
Goodwill616,649 289,763 
Intangible assets, net91,469 40,566 
Right of use assets15,485 18,062 
Other assets17,951 21,035 
Total assets$2,654,519 $2,919,246 
Liabilities and stockholders' equity  
Current liabilities  
Accounts payable$11,910 $11,992 
Deferred revenue53,297 35,143 
Accrued liabilities69,160 67,209 
Total current liabilities134,367 114,344 
Long-term liabilities  
Convertible senior notes, net1,680,931 1,678,155 
Long-term operating lease liabilities11,281 12,447 
Other long-term liabilities9,149 7,383 
Total long-term liabilities1,701,361 1,697,985 
Total liabilities1,835,728 1,812,329 
Commitments and contingencies (Note 9)
Stockholders' equity:  
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding
  
Common stock, $0.001 par value per share: 400,000,000 shares authorized; 126,343,933 and 136,951,956 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
126 137 
Additional paid-in capital1,211,506 1,449,305 
Accumulated other comprehensive loss(68,868)(5,334)
Accumulated deficit(323,973)(337,191)
Total stockholders' equity818,791 1,106,917 
Total liabilities and stockholders' equity$2,654,519 $2,919,246 
See Notes to Condensed Consolidated Financial Statements.
4

CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net revenues$194,721 $198,478 $396,965 $396,856 
Cost of revenues45,684 60,708 100,769 132,092 
Gross profit149,037 137,770 296,196 264,764 
Operating expenses:
Research and development52,480 41,595 104,895 87,726 
Sales and marketing35,279 21,686 77,777 47,900 
General and administrative53,935 39,719 100,805 77,589 
Total operating expenses141,694 103,000 283,477 213,215 
Income from operations7,343 34,770 12,719 51,549 
Interest expense, net and other income (expense), net:
Interest expense, net(1,616)(1,701)(3,213)(3,630)
Other income (expense), net1,809 1,920 7,989 (75,288)
Total interest expense, net and other income (expense), net193 219 4,776 (78,918)
Income (loss) before provision for income taxes7,536 34,989 17,495 (27,369)
Provision for income taxes(60)(2,225)(4,277)(5,046)
Net income (loss)$7,476 $32,764 $13,218 $(32,415)
Net income (loss) per share
Basic$0.06 $0.23 $0.10 $(0.23)
Diluted$0.06 $0.20 $0.10 $(0.23)
Weighted average shares used to compute net income (loss) per share
Basic126,272 143,112 129,201 138,756 
Diluted149,574 168,282 129,934 138,756 
See Notes to Condensed Consolidated Financial Statements.

5

CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net income (loss)$7,476 $32,764 $13,218 $(32,415)
Other comprehensive (loss) income
Change in net unrealized (loss) gain on investments, net of tax(2,333)375 (15,250)(1,519)
Change in foreign currency translation adjustments, net of tax(29,613)(107)(48,284)(981)
Other comprehensive (loss) income(31,946)268 (63,534)(2,500)
Total comprehensive (loss) income$(24,470)$33,032 $(50,316)$(34,915)
See Notes to Condensed Consolidated Financial Statements.

6

CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)

Three Months Ended June 30, 2022
Common Stock 
SharesPar 
Value
Additional Paid-In
Capital
 Accumulated Other Comprehensive Loss Accumulated
Deficit
 Total Stockholders’ Equity
Balances at March 31, 2022
126,682 $127 $1,176,765 $(36,922)$(331,449)$808,521 
Repurchases of common stock(837)(1)1 — —  
Issuance of common stock upon exercise of stock options and ESPP265 — 4,102 — — 4,102 
Net share settlement of equity awards234 — (2,754)— — (2,754)
Share-based compensation expense— — 33,392 — — 33,392 
Other comprehensive loss— — — (31,946)— (31,946)
Net income— — — — 7,476 7,476 
Balances at June 30, 2022
126,344 $126 $1,211,506 $(68,868)$(323,973)$818,791 

Three Months Ended June 30, 2021
Common Stock 
SharesPar 
Value
Additional Paid-In
Capital
 Accumulated Other Comprehensive Loss Accumulated
Deficit
 Total Stockholders’ Equity
Balances at March 31, 2021141,317 $141 $1,645,352 $(1,238)$(400,912)$1,243,343 
Equity component on conversions of 2023 notes and 2025 notes— — (225,615)— — (225,615)
Issuance of common stock upon conversions of 2023 notes2,857 3 224,281 — — 224,284 
Net proceeds from capped call related to conversions of 2023 notes and 2025 notes— — 44,192 — — 44,192 
Issuance of common stock upon exercise of stock options and ESPP120 — 4,919 — — 4,919 
Net share settlement of equity awards327 1 (15,466)— — (15,465)
Share-based compensation expense— — 29,192 — — 29,192 
Other comprehensive income— — — 268 — 268 
Net income— — — — 32,764 32,764 
Balances at June 30, 2021
144,621$145 $1,706,855 $(970)$(368,148)$1,337,882 


7

Six Months Ended June 30, 2022
Common Stock
SharesPar 
Value
Additional Paid-In
Capital
Accumulated Other Comprehensive LossAccumulated
Deficit
Total Stockholders’ Equity
Balances at December 31, 2021
136,952 $137 $1,449,305 $(5,334)$(337,191)$1,106,917 
Repurchases of common stock(11,562)(12)(300,438)— — (300,450)
Issuance of common stock upon exercise of stock options and ESPP319 — 4,557 — — 4,557 
Net share settlement of equity awards635 1 (10,221)— — (10,220)
Share-based compensation expense— — 68,303 — — 68,303 
Other comprehensive loss— — — (63,534)— (63,534)
Net income— — — — 13,218 13,218 
Balances at June 30, 2022
126,344 $126 $1,211,506 $(68,868)$(323,973)$818,791 

Six Months Ended June 30, 2021
Common Stock
SharesPar 
Value
Additional Paid-In
Capital
Accumulated Other Comprehensive LossAccumulated
Deficit
Total Stockholders’ Equity
Balances at December 31, 2020
129,344 $129 $1,030,577 $1,530 $(422,601)$609,635 
Cumulative-effect adjustment related to adoption of ASU 2020-06— — (465,006)— 86,868 (378,138)
Issuance of common stock in connection with equity offering, net of offering costs10,975 11 1,091,455 — — 1,091,466 
Equity component on conversions of 2023 notes and 2025 notes— — (236,920)— — (236,920)
Issuance of common stock upon conversions of 2023 notes2,983 3 235,518 — — 235,521 
Net proceeds from capped call related to conversions of 2023 notes and 2025 notes— — 67,769 — — 67,769 
Issuance of common stock upon exercise of stock options and ESPP164 — 5,265 — — 5,265 
Net share settlement of equity awards1,155 2 (74,642)— — (74,640)
Share-based compensation expense— — 52,839 — — 52,839 
Other comprehensive loss— — — (2,500)— (2,500)
Net loss— — — — (32,415)(32,415)
Balances at June 30, 2021
144,621$145 $1,706,855 $(970)$(368,148)$1,337,882 
See Notes to Condensed Consolidated Financial Statements.

8

CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Six Months Ended
June 30,
 20222021
Cash flows from operating activities 
Net income (loss)$13,218 $(32,415)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Print textbook depreciation expense1,610 6,581 
Other depreciation and amortization expense41,921 30,187 
Share-based compensation expense64,171 51,645 
Amortization of debt issuance costs2,779 3,097 
Gain on foreign currency remeasurement of purchase consideration(4,628) 
Impairment on lease related assets3,411  
Loss on early extinguishment of debt 78,152 
Loss on change in fair value of derivative instruments, net 7,148 
Loss from write-off of property and equipment2,767 1,042 
Gain on sale of strategic equity investment (5,338)
(Gain) loss on textbook library, net(4,967)4,230 
Operating lease expense, net of accretion3,242 3,064 
Other non-cash items167 298 
Change in assets and liabilities, net of effect of acquisition of businesses:  
Accounts receivable3,227 3,462 
Prepaid expenses and other current assets28,768 (14,715)
Other assets13,058 7,220 
Accounts payable(5,246)(3,139)
Deferred revenue4,256 2,062 
Accrued liabilities(21,034)4,197 
Other liabilities(2,965)(2,277)
Net cash provided by operating activities143,755 144,501 
Cash flows from investing activities  
Purchases of property and equipment(57,286)(46,595)
Purchases of textbooks(3,815)(5,018)
Proceeds from disposition of textbooks2,494 6,709 
Purchases of investments(356,553)(984,606)
Maturities of investments522,466 455,536 
Proceeds from sale of strategic equity investment 7,081 
Acquisition of businesses, net of cash acquired(401,125)(7,891)
Net cash used in investing activities(293,819)(574,784)
Cash flows from financing activities  
Proceeds from common stock issued under stock plans, net4,558 5,267 
Payment of taxes related to the net share settlement of equity awards(10,221)(74,642)
Proceeds from equity offering, net of offering costs 1,091,466 
Repayment of convertible senior notes (300,751)
Proceeds from exercise of convertible senior notes capped call 69,004 
Repurchases of common stock(300,450) 
Net cash (used in) provided by financing activities(306,113)790,344 
Effect of exchange rate changes4,628  
Net (decrease) increase in cash, cash equivalents and restricted cash(451,549)360,061 
Cash, cash equivalents and restricted cash, beginning of period855,893 481,715 
Cash, cash equivalents and restricted cash, end of period$404,344 $841,776 
    
 Six Months Ended
June 30,
 20222021
Supplemental cash flow data:
Cash paid during the period for:  
Interest$437 $615 
Income taxes, net of refunds$3,915 $4,268 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,869 $4,030 
Right of use assets obtained in exchange for lease obligations:
Operating leases$3,244 $ 
Non-cash investing and financing activities:  
Accrued purchases of long-lived assets$4,057 $2,341 
Issuance of common stock related to repayment of convertible senior notes$ $235,521 

June 30,
20222021
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$402,089 $840,056 
Restricted cash included in other current assets64  
Restricted cash included in other assets2,191 1,720 
Total cash, cash equivalents and restricted cash$404,344 $841,776 
See Notes to Condensed Consolidated Financial Statements.
9

CHEGG, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. 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. Millions of people all around the world Learn with Chegg. Our mission is to improve learning and learning outcomes by putting students first. We support life-long learners starting with their academic journey and extending into their careers. The Chegg platform provides products and services to support learners to help them better understand their academic course materials, and also provides personal and professional development skills training, to help them achieve their learning goals.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the results of Chegg, Inc. and its wholly-owned subsidiaries. Significant intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2022, our results of operations, results of comprehensive (loss) income, and stockholders' equity for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021. Our results of operations, results of comprehensive (loss) income, stockholders' equity, and cash flows for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

We have a single operating and reportable segment and operating unit structure. The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the Annual Report on Form 10-K) filed with the SEC.

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with 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. We base our estimates on historical experience, knowledge of current business conditions, and various other factors we believe to be reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our financial position and results of operations. There have been no material changes in our use of estimates during the six months ended June 30, 2022 as compared to the use of estimates disclosed in Part II, Item 8 “Consolidated Financial Statements and Supplementary Data” contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

10

Condensed Consolidated Statements of Operations Details

Other income (expense), net consists of the following (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Loss on early extinguishment of debt$ $ $ $(78,152)
Loss on change in fair value of derivative instruments, net   (7,148)
Gain on sale of strategic equity investments   5,338 
Gain on foreign currency remeasurement of purchase consideration(1)
  4,628  
Interest income2,032 1,851 3,509 3,900 
Other(223)69 (148)774 
Total other income (expense), net
$1,809 $1,920 $7,989 $(75,288)
(1) For further information, see Note 5, “Acquisition.”

Impairment of Lease Related Assets

Right of use (ROU) assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. During the three months ended June 30, 2022, we announced the closure of our San Francisco office and determined that the carrying amount of the ROU asset was not recoverable. As a result, we recorded an impairment charge of $3.4 million, consisting of a $2.0 million impairment of a ROU asset and $1.4 million write-off of leasehold improvements, included in general and administrative expense on our condensed consolidated statement of operations. Our intent and ability to sublease the office as well as the local market conditions were factored in when measuring the amount of impairment.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

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

Recently Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-08, Business Combinations-Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Accounting Standards Codification (ASC) Topic 606 as if the acquirer had originated the contracts. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted. We early adopted ASU 2021-08 on January 1, 2022 and applied it to our acquisition of Busuu. The most significant impacts were an increase in contract liabilities, contained within deferred revenue, and goodwill.

In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 aims to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange based on the economic substance of the modification or exchange. Early adoption is permitted and the guidance must be applied prospectively to all modifications or exchanges that occur on or after the date of adoption. The guidance is effective for annual periods beginning after December 15, 2021. We adopted ASU 2021-04 on January 1, 2022 under the prospective method of adoption and there was no impact to our results of operations as we did not modify or exchange any freestanding equity-classified written call options.

11

Note 2. Revenues

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenues are recognized over time as services are performed, with certain revenues being recognized at a point in time.

The following tables set forth our total net revenues for the periods shown disaggregated for our Chegg Services and Required Materials product lines (in thousands, except percentages):
 Three Months Ended
June 30,
Change
 20222021$%
Chegg Services$189,076 $173,513 $15,563 9 %
Required Materials5,645 24,965 (19,320)(77)
Total net revenues$194,721 $198,478 $(3,757)(2)

 Six Months Ended June 30,Change
 20222021$%
Chegg Services$373,888 $335,864 $38,024 11 %
Required Materials23,077 60,992 (37,915)(62)
Total net revenues$396,965 $396,856 $109 0 

During the three and six months ended June 30, 2022, we recognized $42.2 million and $32.9 million, respectively, of revenues that were included in our deferred revenue balance at the beginning of each respective reporting period. During the three and six months ended June 30, 2021 we recognized $44.1 million and $32.0 million, respectively, of revenues that were included in our deferred revenue balance at the beginning of each respective reporting period. During the three and six months ended June 30, 2022, we recognized $0.3 million and $5.1 million, respectively, of operating lease income from print textbook rentals that we owned. During the three and six months ended June 30, 2021, we recognized $10.0 million and $20.7 million, respectively, of operating lease income from print textbook rentals that we owned. The decreases in operating lease income are primarily due to the transition of our Required Materials product line. For further information, refer to Note 7, “Required Materials Transition.”

Contract Balances

The following table presents our accounts receivable, net, contract assets and deferred revenue balances (in thousands, except percentages):
 Change
 June 30,
2022
December 31, 2021$%
Accounts receivable, net$16,815 $17,850 $(1,035)(6)%
Contract assets12,988 14,231 (1,243)(9)
Deferred revenue53,297 35,143 18,154 52 

During the six months ended June 30, 2022 our accounts receivable, net balance decreased by $1.0 million, or 6%, primarily due to timing of billings and seasonality of our business. During the six months ended June 30, 2022, our contract assets balance decreased by $1.2 million, or 9%, primarily due to our Thinkful service. During the six months ended June 30, 2022, our deferred revenue balance increased by $18.2 million, or 52%, primarily due to acquired deferred revenue in conjunction with our acquisition of Busuu, increased bookings, and seasonality of our business.

12

Note 3. Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Basic
Numerator:
Net income (loss)
$7,476 $32,764 $13,218 $(32,415)
Denominator:
Weighted average shares used to compute net income (loss) per share, basic
126,272 143,112 129,201 138,756 
Net income (loss) per share, basic
$0.06 $0.23 $0.10 $(0.23)
Diluted
Numerator:
Net income (loss)$7,476 $32,764 $13,218 $(32,415)
Convertible senior notes interest expense, net of tax1,212 1,212   
Net income (loss), diluted
$8,688 $33,976 $13,218 $(32,415)
Denominator:
Weighted average shares used to compute net income (loss) per share, basic
126,272 143,112 129,201 138,756 
Shares related to stock plan activity427 2,295 733  
Shares related to convertible senior notes22,875 22,875   
Weighted average shares used to compute net income (loss) per share, diluted
149,574 168,282 129,934 138,756 
Net income (loss) per share, diluted
$0.06 $0.20 $0.10 $(0.23)

The following potential weighted-average shares of common stock outstanding were excluded from the computation of diluted net income (loss) per share because including them would have been anti-dilutive (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Shares related to stock plan activity8,041 1,142 3,645 2,999 
Shares related to convertible senior notes 268 22,875 25,901 
Total common stock equivalents8,041 1,410 26,520 28,900 

13

Note 4. Cash and Cash Equivalents, and Investments and Fair Value Measurements

The following tables show our cash and cash equivalents, and investments’ fair value level classification, adjusted cost, unrealized gain, unrealized loss and fair value as of June 30, 2022 and December 31, 2021 (in thousands except for fair value levels):
 June 30, 2022
 Fair Value LevelAdjusted CostUnrealized GainUnrealized LossFair Value
Cash and cash equivalents:   
Cash$45,885 $ $ $45,885 
Money market fundsLevel 1199,003   199,003 
Commercial paperLevel 2157,234  (33)157,201 
Total cash and cash equivalents$402,122 $ $(33)$402,089 
Short-term investments:   
Commercial paperLevel 2$81,649 $ $(382)$81,267 
Corporate debt securitiesLevel 2831,482 10 (9,889)821,603 
U.S. treasury securitiesLevel 179,675  (1,257)78,418 
Total short-term investments$992,806 $10 $(11,528)$981,288 
Long-term investments:   
Corporate debt securitiesLevel 2$198,816 $8 $(5,582)$193,242 
U.S. treasury securitiesLevel 174,535  (2,048)72,487 
Total long-term investments$273,351 $8 $(7,630)$265,729 

 December 31, 2021
 Fair Value LevelAdjusted CostUnrealized GainUnrealized LossFair Value
Cash and cash equivalents:   
Cash$30,324 $ $ $30,324 
Money market fundsLevel 1823,754   823,754 
Total cash and cash equivalents$854,078 $ $ $854,078 
Short-term investments:   
Commercial paperLevel 2$124,211 $2 $(