Chegg(US:CHGG)2023-04-30 16:00Financial Performance - Net revenues for the three months ended March 31, 2023, were $187.6 million, a decrease of 7.3% from $202.2 million in the same period of 2022[113]. - Subscription Services revenues accounted for 90% of net revenues in Q1 2023, up from 86% in Q1 2022[110]. - Gross profit for Q1 2023 was $138.5 million, representing a gross margin of 74%, compared to $147.2 million and a 73% margin in Q1 2022[113]. - Total operating expenses for Q1 2023 were $142.9 million, slightly up from $141.8 million in Q1 2022, resulting in an operating loss of $4.4 million compared to an income of $5.4 million in the prior year[113]. - Net income for Q1 2023 was $2.2 million, a significant decrease from $5.7 million in Q1 2022, reflecting a net margin of 1% compared to 3%[113]. Cash Flow and Liquidity - Net cash provided by operating activities for the three months ended March 31, 2023, was $73.2 million, down from $80.0 million in the same period of 2022, reflecting a decrease of approximately 8.5%[59][60]. - Net cash used in investing activities during the three months ended March 31, 2023, was $106.8 million, compared to $363.1 million in the same period of 2022, indicating a significant reduction of approximately 70.7%[61][62]. - Net cash used in financing activities for the three months ended March 31, 2023, was $158.9 million, primarily due to common stock repurchases of $151.3 million[63]. - As of March 31, 2023, the company's principal sources of liquidity included cash, cash equivalents, and investments totaling $1.2 billion[149]. - The company anticipates that existing sources of liquidity will be sufficient to fund operations and debt service obligations for at least the next 12 months[146]. Debt and Interest Expenses - The estimated fair value of the 2026 notes as of March 31, 2023, was $393.1 million, an increase from $385.0 million as of December 31, 2022[52]. - The estimated fair value of the 2025 notes as of March 31, 2023, was $617.7 million, down from $640.5 million as of December 31, 2022[52]. - The company issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 and $700 million in 0.125% convertible senior notes due in 2025[53]. - The total interest expense recognized related to the 2026 notes for the three months ended March 31, 2023, was $325, compared to $650 in the same period of 2022[69]. - The total interest expense recognized related to the 2025 notes for the three months ended March 31, 2023, was $948, slightly up from $947 in the same period of 2022[69]. Operating Expenses - Research and development expenses for Q1 2023 were $46.9 million, down from $52.4 million in Q1 2022, representing 25% of total revenues[113]. - Sales and marketing expenses decreased by $5.5 million, or 13%, to $37.0 million, accounting for 20% of net revenues[138]. - General and administrative expenses increased by $12.1 million, or 26%, to $59.0 million, representing 31% of net revenues[139]. - Share-based compensation expense totaled $33.7 million in Q1 2023, compared to $33.1 million in Q1 2022[113]. Share Repurchase and Investments - The company entered into an accelerated share repurchase agreement for $150.0 million, resulting in the immediate retirement of approximately 7.6 million shares[102]. - As of March 31, 2023, the company had $492.6 million remaining under its $2.0 billion share repurchase program[104]. - The company has committed $15.0 million to invest in Sound Ventures AI Fund, L.P., focusing on artificial intelligence companies[117]. Other Income and Changes - Other income, net increased by $5.9 million, or 95%, primarily due to an increase in interest income of $9.8 million[140]. - The company experienced an adverse impact on subscriber acquisitions due to increased student interest in artificial intelligence technologies[118]. - The company experienced cumulative losses of $68.4 million from operations as of March 31, 2023[144]. - No material changes in contractual obligations were reported aside from operating lease obligations[145].