Chegg, Inc. reported significant financial changes in its 10-Q filing for the three and nine months ended September 30, 2024, compared to the same periods in 2023. The company experienced a decline in net revenues, with total revenues for the third quarter at $136.6 million, down 13% from $157.9 million in 2023. For the nine months, revenues decreased by 10% to $474.1 million from $528.3 million. The decline was primarily attributed to a 14% drop in Subscription Services revenue, which accounted for 88% of total revenues in Q3 2024.

Despite the revenue decline, Chegg reported an increase in gross profit for the third quarter, rising to $93.2 million from $74.3 million in the prior year, resulting in a gross margin improvement from 47% to 68%. This increase was largely due to a significant reduction in the cost of revenues, which fell by 48% in Q3 2024, primarily because of the absence of a $38.2 million content charge recorded in the previous year.

However, the company faced substantial impairment expenses, recording $195.7 million for the third quarter and $677.2 million for the nine months, compared to only $3.6 million for both periods in 2023. This impairment was primarily related to goodwill and intangible assets, reflecting a reassessment of the fair value of its reporting units.

Operating expenses surged to $315.5 million in Q3 2024, up from $132.1 million in the same quarter of 2023, driven by restructuring charges and increased share-based compensation. The company reported a loss from operations of $222.3 million for the third quarter, compared to a loss of $57.9 million in the prior year. The net loss for Q3 2024 was $212.6 million, significantly higher than the $18.3 million loss reported in Q3 2023.

Chegg's total assets decreased to $1.0 billion as of September 30, 2024, from $1.7 billion at the end of 2023, while total liabilities increased to $817.7 million. Stockholders' equity plummeted to $185.0 million from $944.6 million, reflecting the cumulative losses and impairments.

Strategically, Chegg has been adapting to market conditions, including the impact of generative AI on its business. The company has implemented restructuring plans, including workforce reductions and office closures, to enhance operational efficiency and reduce costs. In November 2024, Chegg announced an additional restructuring plan with estimated charges of $22 million to $26 million.