Chegg(US:CHGG)2024-02-19 16:00Financial Performance - Chegg's international revenues accounted for 14%, 15%, and 11% of total net revenues for the years ended December 31, 2023, 2022, and 2021, respectively[473]. - As of December 31, 2023, Chegg had cash and cash equivalents totaling $135.8 million and investments of $443.8 million[474]. - A hypothetical 100 basis point increase or decrease in interest rates would result in a $5.8 million increase or decline in the fair value of Chegg's investments as of December 31, 2023[474]. - The goodwill balance as of December 31, 2023, was $632.0 million, with no impairment recorded as the fair value exceeded the carrying value[491]. Workforce and Operations - Chegg's workforce consisted of 1,979 employees, with 1,140 located outside the United States[50]. - Chegg's operating expenses include costs incurred outside the U.S. that are denominated in foreign currencies, which may be affected by unfavorable fluctuations in exchange rates[473]. Market Challenges - The total undergraduate college enrollment in the U.S. has decreased by approximately 2.8 million since 2010, which could negatively impact Chegg's business[43]. - Chegg's ability to convert visitors to paying subscribers is challenged by the availability of free competitors and content[38]. - The company faces significant competition from both education-focused companies and broader tech firms developing AI products that may impact education[41]. Regulatory and Compliance - The General Data Protection Regulation (GDPR) imposes strict requirements on Chegg regarding the handling of personal data, with potential fines of up to €20 million or 4% of annual global turnover for infringements[48]. Internal Controls and Auditing - Management concluded that internal control over financial reporting is effective as of December 31, 2023, based on COSO criteria[496]. - There were no changes in internal control over financial reporting during the quarter ended December 31, 2023, that materially affected the controls[497]. - The audits were conducted in accordance with PCAOB standards, ensuring reasonable assurance that the financial statements are free of material misstatement[489]. - The company’s management is responsible for establishing and maintaining adequate internal control over financial reporting[496]. - The critical audit matter regarding goodwill involved significant judgments made by management, requiring a high degree of auditor judgment[492]. - The fair value assessment of the reporting unit involved complex judgments and the need for fair value specialists[493]. - The company’s disclosure controls and procedures are designed to ensure timely and accurate reporting of required disclosures[495]. - The audit report on internal control over financial reporting was issued by Deloitte & Touche LLP, confirming the effectiveness of the controls[496]. Strategic Partnerships - Chegg announced a partnership with OpenAI in April 2023 to utilize GPT-4 in its offerings and began rolling out an AI-powered user experience in September 2023[40].