Latest news with #CheggInc
Yahoo
13-05-2025
- Business
- Yahoo
Chegg Inc (CHGG) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic Moves
Total Revenue: $121 million, a decrease of 30% year-over-year. Subscription Services Revenue: $108 million. Skills and Other Revenue: $14 million, including $4 million from content licensing deals. Subscribers: 3.2 million, a decline of 31% year-over-year. Gross Margin: 56%, impacted by a one-time charge of $16.2 million. Non-GAAP Operating Expenses: $80.5 million, reduced by 20% year-over-year. Adjusted EBITDA: $19 million, with a margin of 16%. Free Cash Flow: $15.8 million. Capital Expenditures: $9 million, down 69% year-over-year. Cash and Investments: $126 million, with a net cash balance of $64 million. Restructuring Savings: Expected $45 million to $55 million in 2025, and $100 million to $110 million in 2026. Q2 Revenue Guidance: $100 million to $102 million. Q2 Subscription Services Revenue Guidance: $85 million to $87 million. Q2 Gross Margin Guidance: 64% to 65%. Q2 Adjusted EBITDA Guidance: $16 million to $17 million. Warning! GuruFocus has detected 3 Warning Signs with CHGG. Release Date: May 12, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Chegg Inc (NYSE:CHGG) surpassed its revenue and adjusted EBITDA guidance for Q1 2025. The company generated approximately $16 million in free cash flow during the quarter. Chegg Inc (NYSE:CHGG) expanded its business institution effort from 5 to 15 pilots, aiming for 40 by year-end. The company signed two licensing agreements for its question and answer pairs with language model companies. Busuu, Chegg's language learning service, achieved a 7% year-over-year revenue increase in Q1. Total revenue for Q1 2025 decreased by 30% year-over-year to $121 million. Subscriber numbers declined by 31% year-over-year, with 3.2 million subscribers in Q1. Chegg Inc (NYSE:CHGG) announced further cost reduction plans, including closing physical offices in the US and Canada. The company is laying off approximately 22% of its workforce, impacting 248 employees. Ongoing industry challenges, including competition from AI and language model companies, continue to pressure Chegg's business. Q: Nathan, can you provide more details on the licensing deals signed during the quarter? Specifically, what are the terms and potential size of this opportunity? A: Nathan Schultz, Chief Operating Officer: We are licensing our question and answer pairs, which are highly valuable to language model companies for training purposes. We've only licensed a small portion of our content so far to some of the largest tech companies. This is just the beginning, and we see a significant business model opportunity here. Q: Can you discuss the feedback from university partners regarding the pilot programs and their willingness to purchase access to your content library? A: Nathan Schultz, Chief Operating Officer: We are encouraged by the growth from 5 to 15 pilots and expect to reach 40 by year-end. Universities are interested in our seat-based license model as it helps them focus on student success, which is crucial given that nearly 40% of students don't graduate. The feedback has been positive, and we anticipate converting pilots into full contracts. Q: What are the financial implications of the restructuring announced today? A: David Longo, Chief Financial Officer: The restructuring will result in non-GAAP expense savings of $45 million to $55 million in 2025 and $100 million to $110 million in 2026. This includes employee departures, cost rationalizations, and real estate savings. We expect to incur charges of approximately $34 million to $38 million related to this restructuring. Q: How did Chegg perform financially in Q1 2025, and what is the outlook for Q2? A: David Longo, Chief Financial Officer: In Q1, we surpassed our guidance with $121 million in total revenue and $19 million in adjusted EBITDA. For Q2, we expect total revenue between $100 million and $102 million, with adjusted EBITDA between $16 million and $17 million. Q: Can you elaborate on the strategic alternatives process and its progress? A: Nathan Schultz, Chief Operating Officer: We are exploring various strategic alternatives to maximize shareholder value, including potential acquisition or going private. We've had positive discussions with interested parties, including tech and education companies and private equity firms, and are encouraged by the interest in our business. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
13-05-2025
- Business
- Yahoo
Q1 2025 Chegg Inc Earnings Call
Tracey Ford; Vice President, Investor Relations; Chegg Inc Nathan Schultz; Chief Operating Officer; Chegg Inc David Longo; Chief Financial Officer, Principal Financial Officer, and Treasurer; Chegg Inc Ryan MacDonald; Analyst; Needham & Company Operator Greetings, and welcome to the Chegg first-quarter 2025 earnings call. (Operator instructions) As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Tracey Ford, Vice President, Investor Relations for Chegg. Thank you. You may begin. Tracey Ford Good morning. Thank you for joining Chegg's first-quarter 2025 conference call. On today's call are Nathan Schultz, President and CEO; and David Longo, Chief Financial Officer. A copy of our earnings release, along with our investor presentation is available on our Investor Relations website, A replay of this call will also be available on our website. We routinely post information on our website and intend to make important announcements on our media center website at We encourage you to make use of these resources. Before we begin, I would like to point out that during the course of this call, we will make forward-looking statements regarding future events, including the future financial and operating performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements. In particular, we refer you to the cautionary language included in today's earnings release and the risk factors described in Chegg's annual report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 24, 2025, as well as our other filings with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release on the investor slide deck found on our IR website, We also recommend you review the investor data sheet, which is also posted on our IR website. Now I will turn the call over to Nathan. Nathan Schultz Thank you, Tracey. Hello, everyone, and thank you for joining Chegg's first-quarter 2025 earnings call. Q1 was a good quarter for Chegg. We surpassed our revenue and adjusted EBITDA guidance, generated approximately $16 million in free cash flow and diversified our revenue in two key ways. First, the expansion of our business institution effort, which has expanded from 5 pilots to 15 pilots from Q4 to Q1 and is well on track to reach our goal of 40 by the end of the year. Second, licensing our question and answer pairs to language model companies. We've signed two agreements and believe that this is just the tip of the iceberg for this program. David will address the financial details of these deals. Concerning our strategic review process, we've made significant progress. As a reminder, we undertook this effort last quarter with Goldman Sachs, to explore the range of outcomes to maximize shareholder value, including being acquired, undertaking a go-private transaction, or remaining a public stand-alone company and continue to believe this is the right step to maximize shareholder value. To date, we've had dozens of meetings with interested parties ranging from strategic tech and education companies to private equity firms. Early indications are positive, and we are encouraged by the conversations and the value these organizations see in our business. Here's what's capturing potential acquirers retention. First is our core product, Chegg Study, a verticalized and personalized student support platform. As you may have seen, we keep innovating on the behalf of students with the recently released Solution Scout, which allows students to compare multiple language models against Chegg's proprietary content, and our Practice service now has a new AI-powered feature called Create, that empowers students to generate customized content directly from their own class materials, delivering a highly customized and personalized study experience. Next is Busuu, our language learning service, which continues to perform very well. Q1 revenue increased 7% year-over-year, driven by growth in both the B2C and B2B businesses. The B2C business is seeing the benefits of AI-driven product enhancements such as Speaking Practice, which is driving deep engagement and strong performance in customer acquisition and retention. The B2B business maintained strong double-digit growth in Q1, achieving 29% year-over-year revenue increase, driven by a strategic focus on retaining and growing large enterprise clients. We expect Busuu to achieve approximately $48 million in revenue in 2025 and to be adjusted EBITDA positive by the first quarter of 2026. Our reinvented skills product is set up for what I believe will be a breakout year in 2025. Chegg Skills provides skill building for the modern workforce, including foundational digital skilling and broad-based AI training and is trending toward the highest outcomes we've seen to date. In Q1, we entered into a pilot program with EdifyOnline and Noodle to provide AI programs that support a higher education initiative in India. In Q2 and Q3, we expect to further expand our Guild business and add additional partners. We believe Skills is on a path to profitability and positive revenue growth in 2026. And finally, there is significant value in our library of proprietary and high-quality questions and answer pairs and our network of subject matter experts. We've continued to make improvements in our content operations with a new quality control rubric, as we prepare for the content licensing opportunity I mentioned earlier. As we have said many times, Content is the heart and soul of our Chegg Study business, and these improvements in our QC rubric will serve both students and our new content licensing initiative. While we exceeded expectations in Q1 and see great value in the areas of the business I just went through, we believe the macroeconomic trends will continue to put pressure on our company and business trends will worsen before they get better. Google and their expansion of AI Overviews continues to keep traffic captive in the Google search experience and migrate search to Gemini. Additionally, language model companies are turning to academia for validation with OpenAI recently giving college students free access to GPT Plus, and Anthropic launching a free education offering. As a result, we are once again taking proactive measures to align costs with our business outlook. We executed two restructurings in 2024, and today, we are announcing further cost reduction plans. This restructuring will include expense reductions across our business, including closing physical offices in the US and Canada by the end of the year, limiting our upper funnel marketing, reducing new product development efforts, and finally cutting our general and administrative expenses. Chegg Skills and Busuu are not affected as we are encouraged by the progress these businesses have made and we are investing in their growth. As a part of this, we regrettably will be parting ways with approximately 22% or 248 of our talented team members, which is a challenging decision and one I'm saddened by. The impact is concentrated in the US and Canada and predominantly affects Chegg Study and corporate services, which will result in a 66% reduction in these areas of our business. The actions today will drive $45 million to $55 million in savings in 2025, with full year savings of $100 million to $110 million in 2026. This is on top of the $120 million of 2025 savings we are on track to fully realize from our two 2024 restructuring initiatives. These decisions continue to be challenging, and we do not make them lightly. I want to personally thank each talented team member for their contributions to Chegg. To conclude, I want to reinforce the key points from what I shared today. Our strategic alternatives process is going well and is the best way to maximize shareholder value and keep Chegg's student-first Mission thriving. We believe the strategy for Chegg Study providing true learning outcomes for students is enduring, and while our direct-to-student penetration normalizes, we're diversifying our revenue through two key opportunities in question-and-answer pair licensing and institutional direct contracts. We're continuing to make the hard decisions to align our revenue decline in Chegg Study with our operating expenses as challenging as they are. And finally, we are excited about the performance of Busuu and the opportunity for Skills, both of which are primed for a breakout year and expected to be adjusted EBITDA positive in 2026. With that, I'll turn it over to David. David Longo Thank you, Nathan, and good afternoon. Today, I will be presenting our financial performance for the first quarter of 2025, along with the company's outlook for the second quarter. We delivered a good first quarter, surpassing our guidance on both revenue and adjusted EBITDA, and generated $16 million in free cash flow. Despite ongoing industry headwinds, we remain committed to our student-first strategy and prudent cost management in line with our business outlook. As part of this commitment, we announced the restructuring today, which I will elaborate on shortly. Additionally, during the quarter, we took further steps to enhance our capital structure by repurchasing $65 million of our 2026 convertible notes at a discount. In the first quarter, total revenue was $121 million, a decrease of 30% year-over-year. This includes Subscription Services revenue of $108 million. We had 3.2 million subscribers during the quarter, representing a year-over-year decline of 31%. Skills and Other revenue was $14 million in the quarter, which includes our new revenue stream from content licensing. So far, we have executed two content licensing deals with two of the top 10 technology companies in the world, generating $4 million of revenue in Q1, and we expect an additional $7 million in Q2. These deals represent less than 5% of our content library and are nonexclusive, allowing us the opportunity to license the content to other companies. We are in discussion with other companies to expand licensing efforts even further. In the first quarter, gross margin was 56%. During the quarter, we streamlined our product offerings and discontinued certain content and internally used software assets, resulting in a onetime charge of $16.2 million of accelerated depreciation recorded in cost of revenues. This negatively impacted gross margin by 13 percentage points. Non-GAAP operating expenses were $80.5 million in the quarter, a reduction of approximately $20 million or 20% year-over-year, driven by the execution of the restructurings we announced last year. We are on track to achieve the full year savings of $120 million from these actions. The complete savings will be realized throughout this year. Our first quarter adjusted EBITDA was $19 million, representing a margin of 16%. Free cash flow for the quarter was $15.8 million despite incurring approximately $8 million in cash outlays related to employee severance from our restructurings. Capital expenditures for the quarter were $9 million, down 69% year-over-year as we are now fully realizing the benefits of our investments in AI. As mentioned earlier, in the first quarter, we opportunistically repurchased $65.2 million in aggregate principal amount of our 2026 convertible notes at a $7.8 million discount to par. Our 2025 convertible notes matured in March, and we repaid the full principal amount of $358.9 million. Looking at the balance sheet. We concluded the quarter with cash and investments of $126 million and a net cash balance of $64 million. As Nathan outlined earlier, we are executing an additional restructuring plan to continue to align our cost structure with our revenue as we navigate the continued industry challenges and a negative impact on our business. This restructuring will impact 248 employees or approximately 22% of the company. This restructuring will result in non-GAAP expense savings of $45 million to $55 million in 2025 and $100 million to $110 million in 2026, stemming from employee departures, cost rationalizations and real estate savings. We have negotiated a penalty-free agreement with our landlord to exit our Santa Clara lease prior to the expiration date, as we seek a smaller office workspace. We expect to incur charges of approximately $34 million to $38 million related to this restructuring, representing mostly severance payments. Of this charge, we expect $31 million to $35 million will be incurred in cash with the remaining amount representing noncash charges. We expect that a substantial portion of the cash and noncash charges will be incurred in the second and third quarters. We anticipate completing these activities and substantially all charges by December 31, 2025. The cost savings from the two fully implemented restructurings announced in 2024, coupled with the restructuring announced today will result in a combined non-GAAP savings of $165 million to $175 million in 2025. Looking ahead, industry challenges continue to cause a notable decline in traffic and subscriber acquisitions. These conditions are a source of continued pressure on our business and are impacting our financial outlook. For Q2 guidance, we expect total revenue between $100 million and $102 million with the subscription services revenue between $85 million and $87 million, gross margin to be in the range of 64% to 65%, and adjusted EBITDA between $16 million and $17 million. In closing, while ongoing industry challenges impacting Chegg Study continue to affect our financial performance, the opportunity to support and serve students remains. We are taking the right steps to align the cost structure. At the same time, we continue to evaluate a range of strategic alternatives to ensure we are maximizing value for our shareholders and are encouraged by the interest we have received. With that, I will turn the call over to the operator for your questions. Operator (Operator instructions) Ryan MacDonald, Needham & Company. Ryan MacDonald Hi, thanks for taking my questions. Nathan, maybe to start, I wanted to get a little bit more color on the licensing deals that you were able to sign during the quarter. Obviously, generating some nice incremental revenue in first and second quarter here. But can you give us a sense of sort of the terms in terms of time frame of how long these licensing agreements are typically lasting? And then how are you thinking about the total size of this licensing opportunity when you look at across all of the sort of large model companies out there that you could license this to? Thanks. Nathan Schultz Ryan, thanks very much for the question. I appreciate it. Let's start off by just reminding everyone what we're licensing. So what we're talking about here is the question and answer pairs. The $125 million question and answer pairs within the Chegg archive and obviously constantly growing. These are questions that are being created, obviously, through both our Human and our Agentic systems. They are then verified by humans, which comes back to the question, why this content so interesting. As we've already talked about, we have -- we sit on some of the highest quality created by qualified experts and trusted by millions of students data, that is very valuable to language model companies as they seek to continue to train their models. We're -- as David pointed out, I pointed out in my prepared remarks, we are really early days in this. We've licensed very, very, very small set of our content at the moment as we kind of just pilot, I would call pilot these agreements into some of the biggest tech companies in the world. I do think that there's a nice business model here, and we're really just getting started with this program Ryan MacDonald Got it. And then maybe as a follow-up. Great to see that the pilots with the universities are continuing to grow, and you've got or expected to have 40 by year-end. Can you just talk about sort of what the feedback you're getting from university partners thus far and then sort of the willingness to pay and purchase the content library as a point of access for students? Thanks. Nathan Schultz Yes, absolutely. We're very encouraged. A lot of growth, obviously, from Q4 last year to Q1 this year, getting up to 15 pilots and just having the momentum where we can see 40 for this year. It's good to remind everyone that what this is, is about institutions delivering our experience directly to the student, which we think is really great, obviously, for Chegg, but even better for students. It's done through a seat-based license model. So obviously, the schools are buying a number of seats. Honestly, this is one of those areas where we just -- we see the inevitable, which is schools having to spend more time think about persistence. I think you probably all know this, almost 40% of students don't graduate college. That causes kind of a massive hole in tuition. So we see this as a significant opportunity as colleges simply to zero in on student success as a means of really financial necessity. So very encouraged with what we see so far and getting very positive feedback from the schools looking to take some of those pilots, which will run for the next few months and then turn them into full contracts. Ryan MacDonald Thanks for the color. Operator (Operator instructions) Thank you. We've come to the end of our question and answer session. And this concludes our call today. We'd like to thank you for your interest and participation. You may now disconnect your lines. Tracey Ford Goodbye. 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Washington Post
12-05-2025
- Business
- Washington Post
Chegg: Q1 Earnings Snapshot
SANTA CLARA, Calif. — SANTA CLARA, Calif. — Chegg Inc. (CHGG) on Monday reported a loss of $17.5 million in its first quarter. On a per-share basis, the Santa Clara, California-based company said it had a loss of 17 cents. Losses, adjusted for one-time gains and costs, came to 6 cents per share.
Associated Press
12-05-2025
- Business
- Associated Press
Chegg Reports 2025 First Quarter Earnings
SANTA CLARA, Calif.--(BUSINESS WIRE)--May 12, 2025-- Chegg, Inc. (NYSE:CHGG), the leading student-first connected learning platform, today reported financial results for the three months ended March 31, 2025. 'In Q1, we exceeded our revenue and adjusted EBITDA expectations, delivered $16 million of free cash flow and continued to diversify our revenue streams. We are encouraged by the conversations in our strategic alternatives process and the value these organizations see in our business,' said Nathan Schultz, Chief Executive Officer & President of Chegg, Inc. 'Despite these promising developments, we believe the trends impacting our business will worsen before they get better. We are taking steps to further align costs with our outlook, including an additional restructuring of our business.' First Quarter 2025 Highlights Total net revenues include revenues from Subscription Services and Skills and Other. Subscription Services includes revenues from our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings. Skills and Other includes revenues from Chegg Skills, advertising services, content licensing, print textbooks and eTextbooks. For more information about non-GAAP net (loss) income, non-GAAP gross margin and adjusted EBITDA, and a reconciliation of non-GAAP net (loss) income to net loss, gross margin to non-GAAP gross margin and adjusted EBITDA to net loss, see the sections of this press release titled, 'Use of Non-GAAP Measures,' 'Reconciliation of Net Loss to EBITDA and Adjusted EBITDA,' and 'Reconciliation of GAAP to Non-GAAP Financial Measures.' Business Outlook Second Quarter 2025 For more information about the use of forward-looking non-GAAP measures, a reconciliation of forward-looking net loss to EBITDA and adjusted EBITDA for the second quarter 2025, see the below sections of the press release titled 'Use of Non-GAAP Measures,' and 'Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA.' An updated investor presentation and an investor data sheet can be found on Chegg's Investor Relations website Prepared Remarks - Nathan Schultz, CEO & President Chegg, Inc. Thank you, Tracey. Hello everyone and thank you for joining Chegg's first-quarter 2025 earnings call. Q1 was a good quarter for Chegg. We surpassed our revenue and adjusted EBITDA guidance, generated approximately $16 million in free cash flow, and diversified our revenue in two key ways. Concerning our strategic review process, we've made significant progress. As a reminder, we undertook this effort last quarter with Goldman Sachs, to explore a range of outcomes to maximize shareholder value, including being acquired, undertaking a go-private transaction, or remaining as a public standalone company, and continue to believe this is the right step to maximize shareholder value. To date, we've had dozens of meetings with interested parties, ranging from strategic tech and education companies to private equity firms. Early indications are positive, and we are encouraged by the conversations and the value these organizations see in our business. Here's what's capturing potential acquirers' attention: While we exceeded expectations in Q1 and see great value in the areas of the business I just went through, we believe the macroeconomic trends will continue to put pressure on our company and business trends will worsen before they get better. Google and their expansion of AI Overviews continues to keep web traffic captive in the Google search experience and migrate search to Gemini. Additionally, language model companies are turning to academia for validation, with OpenAI recently giving college students free access to Chat GPT Plus, and Anthropic launching a free education offering. As a result, we are once again taking proactive measures to align costs with our business outlook. We executed two restructurings in 2024, and today we are announcing further cost reduction plans. This restructuring will include expense reductions across our business, including closing physical offices in the US and Canada by the end of the year, limiting our upper funnel marketing, reducing new product development efforts, and finally cutting our general and administrative expenses. Chegg Skills and Busuu are not affected as we are encouraged by the progress these businesses have made and we are investing in their growth. As part of this, we regrettably will be parting ways with approximately 22% or 248 of our talented team members, which is a challenging decision and one I'm saddened by. The impact is concentrated in the US and Canada, and predominantly affects Chegg Study and corporate services, which will result in a 66% reduction in these areas of our business. The actions taken today will drive $45-$55 million of savings in 2025, with full year savings of $100-$110 million in 2026. This is on top of the $120 million of 2025 savings we are on track to fully realize from our two 2024 restructuring initiatives. These decisions continue to be challenging, and we do not make them lightly. I want to personally thank each talented team member for their contributions to Chegg. To conclude, I want to reinforce the key points from what I shared today. With that, I'll turn it over to David. Prepared Remarks - David Longo, CFO Chegg, Inc. Thank you, Nathan and good afternoon. Today, I will be presenting our financial performance for the first quarter of 2025, along with the company's outlook for the second quarter. We delivered a good first quarter, surpassing our guidance on both revenue and adjusted EBITDA, and generated $16 million in free cash flow. Despite ongoing industry headwinds, we remain committed to our student-first strategy and prudent cost management in line with our business outlook. As part of this commitment, we announced a restructuring today, which I will elaborate on shortly. Additionally, during the quarter, we took further steps to enhance our capital structure by repurchasing $65 million of our 2026 convertible notes at a discount. In the first quarter, total revenue was $121 million, a decrease of 30% year-over-year. This includes Subscription Services revenue of $108 million. We had 3.2 million subscribers during the quarter, representing a year-over-year decline of 31%. Skills and Other revenue was $14 million in the quarter, which includes our new revenue stream from content licensing. So far, we have executed two content licensing deals with two of the top ten technology companies in the world, generating $4 million of revenue in Q1 and we expect an additional $7 million in Q2. These deals represent less than 5 percent of our content library and are non-exclusive, allowing us the opportunity to license the content to other companies. We are in discussions with other companies to expand our licensing efforts even further. In the first quarter gross margin was 56%. During the quarter, we streamlined our product offerings and discontinued certain content and internal-use software assets, resulting in a one-time charge of $16.2 million of accelerated depreciation recorded in cost of revenues. This negatively impacted gross margin by 13 percentage points. Non GAAP operating expenses were $80.5 million in the quarter, a reduction of approximately $20 million or 20% year over year, driven by the execution of the restructurings we announced last year. We are on track to achieve the full-year savings of $120 million from these actions. The complete savings will be realized throughout this year. Our first quarter adjusted EBITDA was $19 million, representing a margin of 16%. Free cash flow for the first quarter was $15.8 million, despite incurring approximately $8 million in cash outlays related to employee severance from our restructurings. Capital expenditures for the quarter were $9 million, down 69% year-over-year, as we are now fully realizing the benefits of our investments in AI. As mentioned earlier, in the first quarter we opportunistically repurchased $65.2 million in aggregate principal amount of our 2026 convertible notes at a $7.8 million discount to par. Our 2025 convertible notes matured in March, and we repaid the full principal amount of $358.9 million. Looking at the balance sheet, we concluded the quarter with cash and investments of $126 million and a net cash balance of $64 million. As Nathan outlined earlier, we are executing an additional restructuring plan to continue to align our cost structure with our revenue as we navigate the continued industry challenges and the negative impact on our business. This restructuring will impact 248 employees, or approximately 22% of the company. This restructuring will result in non-GAAP expense savings of $45-$55 million in 2025 and $100-$110 million in 2026, stemming from employee departures, cost rationalizations, and real estate savings. We have negotiated a penalty-free agreement with our landlord to exit our Santa Clara lease prior to the expiration date, as we seek a smaller office workspace. We expect to incur charges of approximately $34-38 million related to this restructuring, representing mostly severance payments. Of this charge, we expect $31-35 million will be incurred in cash, with the remaining amount representing non-cash charges. We expect that a substantial portion of the cash and non-cash charges will be incurred in the second and third quarters. We anticipate completing these activities and substantially all charges by December 31, 2025. The cost savings from the two fully implemented restructurings announced in 2024, coupled with the restructuring announced today, will result in a combined non-GAAP savings of $165-$175 million in 2025. Looking ahead, industry challenges continue to cause a notable decline in traffic and subscriber acquisitions. These conditions are a source of continued pressure on our business and are impacting our financial outlook. For Q2 guidance, we expect: In closing, while ongoing industry challenges impacting Chegg Study continue to affect our financial performance, the opportunity to support and serve students remains. We are taking the right steps to align the cost structure. At the same time, we continue to evaluate a range of strategic alternatives to ensure we are maximizing value for our shareholders and are encouraged by the interest we have received. With that, I will turn the call over to the operator for your questions. Conference Call and Webcast Information To access the call, please dial 1-877-407-4018, or outside the U.S. +1-201-689-8471, five minutes prior to 5:00 a.m. Pacific Time (or 8:00 a.m. Eastern Time). A live webcast of the call will also be available at under the Events & Presentations menu. An audio replay will be available beginning at 9:00 a.m. Pacific Time (or 12:00 p.m. Eastern Time) on May 12, 2025, until 8:59 p.m. Pacific Time (or 11:59 p.m. Eastern Time) on May 19, 2025, by calling 1-844-512-2921, or outside the U.S. +1-412-317-6671, with Access ID 13753290. An audio archive of the call will also be available at Use of Investor Relations Website for Regulation FD Purposes Chegg also uses its investor relations website, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor in addition to following press releases, Securities and Exchange Commission filings and public conference calls and webcasts. About Chegg Chegg provides individualized learning support to students as they pursue their educational journeys. Available on demand 24/7 and powered by over a decade of learning insights, the Chegg platform offers students artificial intelligence (AI)-powered academic support thoughtfully designed for education coupled with access to a vast network of subject matter experts who help ensure quality and accuracy. No matter the goal, level, or style, Chegg helps millions of students around the world learn with confidence by helping them build essential academic, life, and job skills to achieve success. Chegg is a publicly held company based in Santa Clara, California and trades on the NYSE under the symbol CHGG. For more information, visit Use of Non-GAAP Measures To supplement Chegg's financial results presented in accordance with generally accepted accounting principles in the United States (GAAP), this press release and the accompanying tables and the related earnings conference call contain non-GAAP financial measures, including adjusted EBITDA, non-GAAP cost of revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net (loss) income, non-GAAP weighted average shares, non-GAAP net income per share, and free cash flow. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, 'Reconciliation of Net Loss to EBITDA and Adjusted EBITDA,' 'Reconciliation of GAAP to Non-GAAP Financial Measures,' 'Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,' and 'Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA.' The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Chegg defines (1) adjusted EBITDA as earnings before interest, taxes, depreciation and amortization or EBITDA, adjusted for share-based compensation expense, other income, net, acquisition-related compensation costs, impairment expense, restructuring charges, content and related assets charge and transitional logistic charges; (2) non-GAAP cost of revenues as cost of revenues excluding amortization of intangible assets, share-based compensation expense, acquisition-related compensation costs, restructuring charges, content and related assets charge, and transitional logistic charges; (3) non-GAAP gross profit as gross profit excluding amortization of intangible assets, share-based compensation expense, acquisition-related compensation costs, restructuring charges, content and related assets charge, and transitional logistic charges; (4) non-GAAP gross margin is defined as non-GAAP gross profit divided by net revenues, (5) non-GAAP operating expenses as operating expenses excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, restructuring charges, impairment expense, impairment of lease related assets, and loss contingency; (6) non-GAAP income from operations as loss from operations excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, restructuring charges, impairment expense, content and related assets charge, impairment of lease related assets, loss contingency, and transitional logistic charges; (7) non-GAAP net (loss) income as net loss excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, amortization of debt issuance costs, the income tax effect of non-GAAP adjustments, restructuring charges, impairment expense, content and related assets charge, impairment of lease related assets, gain on sale of strategic equity investment, gain on early extinguishment of debt, loss contingency and transitional logistic charges; (8) non-GAAP weighted average shares outstanding as weighted average shares outstanding adjusted for the effect of shares for stock plan activity and shares related to our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding; (9) non-GAAP net income per share is defined as non-GAAP net (loss) income divided by non-GAAP weighted average shares outstanding; and (10) free cash flow as net cash provided by operating activities adjusted for purchases of property and equipment. To the extent additional significant non-recurring items arise in the future, Chegg may consider whether to exclude such items in calculating the non-GAAP financial measures it uses. Chegg believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Chegg's performance by excluding items that may not be indicative of Chegg's core business, operating results or future outlook. Chegg management uses these non-GAAP financial measures in assessing Chegg's operating results, as well as when planning, forecasting and analyzing future periods and believes that such measures enhance investors' overall understanding of our current financial performance. These non-GAAP financial measures also facilitate comparisons of Chegg's performance to prior periods. As presented in the 'Reconciliation of Net Loss to EBITDA and Adjusted EBITDA,' 'Reconciliation of GAAP to Non-GAAP Financial Measures,' 'Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA,' and 'Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,' tables below, each of the non-GAAP financial measures excludes or includes one or more of the following items: Share-based compensation expense. Share-based compensation expense is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Chegg's control. As a result, management excludes this item from Chegg's internal operating forecasts and models. Management believes that non-GAAP measures adjusted for share-based compensation expense provide investors with a basis to measure Chegg's core performance against the performance of other companies without the variability created by share-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used. Amortization of intangible assets. Chegg amortizes intangible assets, including those that contribute to generating revenues, that it acquires in conjunction with acquisitions, which results in non‑cash expenses that may not otherwise have been incurred. Chegg believes excluding the expense associated with intangible assets from non-GAAP measures allows for a more accurate assessment of its ongoing operations and provides investors with a better comparison of period-over-period operating results. No corresponding adjustments have been made related to revenues generated from acquired intangible assets. Acquisition-related compensation costs. Acquisition-related compensation costs include compensation expense resulting from the employment retention of certain key employees established in accordance with the terms of the acquisitions. In most cases, these acquisition-related compensation costs are not factored into management's evaluation of potential acquisitions or Chegg's performance after completion of acquisitions, because they are not related to Chegg's core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related compensation costs from non-GAAP measures provides investors with a basis to compare Chegg's results against those of other companies without the variability caused by purchase accounting. Amortization of debt issuance costs. The difference between the effective interest expense and the contractual interest expense are excluded from management's assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. Chegg believes that the exclusion of the non-cash interest expense provides investors with a better comparison of period-over-period operating results. Income tax effect of non-GAAP adjustments. We utilize a non-GAAP effective tax rate for evaluating our operating results, which is based on our current mid-term projections. This non-GAAP tax rate could change for various reasons including, but not limited to, significant changes resulting from tax legislation, changes to our corporate structure and other significant events. Chegg believes that the inclusion of the income tax effect of non-GAAP adjustments provides investors with a better comparison of period-over-period operating results. Restructuring charges. Restructuring charges represent expenses incurred in conjunction with a reduction in workforce. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because they are nonrecurring and the result of an event that is not considered a core-operating activity. Chegg believes that it is appropriate to exclude the restructuring charges from non-GAAP financial measures because it provides investors with a better comparison of period-over-period operating results. Impairment expense. Impairment expense represents the impairment of goodwill, intangible assets, and property and equipment. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because they are the result of discrete events that are not considered core-operating activities and are not indicative of our ongoing operating performance. Chegg believes that it is appropriate to exclude the impairment expense from non-GAAP financial measures because it provides investors with a better comparison of period-over-period operating results. Gain on sale of strategic equity investment. The gain on sale of strategic equity investment represents a one-time event to record the sale of our equity investment in Sound Ventures. We believe that it is appropriate to exclude the gain from non-GAAP financial measure because it is the result of an event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results. Gain on early extinguishment of debt. The difference between the carrying amount of early extinguished debt and the reacquisition price is excluded from management's assessment of our operating performance because management believes that these non-cash gains are not indicative of ongoing operating performance. Chegg believes that the exclusion of the gain on early extinguishment of debt provides investors with a better comparison of period-over-period operating results. Effect of shares for stock plan activity. The effect of shares for stock plan activity represents the dilutive impact of outstanding stock options, RSUs, and PSUs, to the extent such shares are not already included in our weighted average shares outstanding. Effect of shares related to convertible senior notes. The effect of shares related to convertible senior notes represents the dilutive impact of our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding. Free cash flow. Free cash flow represents net cash provided by operating activities adjusted for purchases of property and equipment. Chegg considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property and equipment, which can then be used to, among other things, invest in Chegg's business and make strategic acquisitions. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in Chegg's cash balance for the period. Forward-Looking Statements This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which include, without limitation, statements regarding our ongoing process to explore strategic alternatives and the outcome of such process; our newly announced restructuring plan, including the number of employees impacted by the reduction in force, the amount and timing of the charges we will incur in connection with these actions, the impact of the actions on our non-GAAP financial measures, including the amount of cost savings and the timing of those savings; our ability to increase efficiency across the business and to manage our expenses prudently as the competitive landscape evolves; our strategy to diversify our revenue streams with question-and-answer pair licensing, business-to-institution programs and other enterprise offerings; our ability to weather current and future business challenges and to stabilize the business; the impact of generative AI for academic support on the education ecosystem at large, including universities and education technology companies broadly; the speed, scale and potential impact of Google's AIO rollout; our ongoing litigation against Google and its outcome; student adoption of generative AI products; and all statements about our outlook under 'Business Outlook,' including our Q2 2025 guidance, including total revenue, Subscription Services revenue, gross margin, and adjusted EBITDA, as well as those included in the investor presentation referenced above and the 'Prepared Remarks' sections above. The words 'anticipate,' 'believe,' 'estimate,' 'expect,' 'intend,' 'project,' 'endeavor,' 'will,' 'should,' 'future,' 'transition,' 'outlook' and similar expressions, as they relate to Chegg, are intended to identify forward-looking statements. These statements are not guarantees of future performance, and are based on management's expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: the effects of AI technology on our business and the economy generally; our ability to stabilize the business by attracting new learners to, and retaining existing learners on, our learning platform in light of declining revenue and user traffic; the impact and effectiveness of our internal restructuring activities; our ability to effectively control operating costs; our ability to innovate and offer new products and services in response to competitive technology and market developments, including generative AI; the outcome and effects of our exploration of strategic alternatives, which may not be successful and may disrupt our ongoing business, result in increased expenses and present other risks; competition in all aspects of our business, including with respect to AI and our expectation that such competition will increase; the outcome of our litigation against Google; our ability to maintain our services and systems without interruption, including as a result of technical issues, cybersecurity threats, or cyber-attacks; third-party payment processing risks; the outcome of any current litigation and investigations; the possibility that the NYSE may delist our common stock; and general economic, political and industry conditions, including escalating international trade tensions, including tariffs and trade restrictions, fluctuating inflation, recession and war. All information provided in this release and in the conference call is as of the date hereof, and Chegg undertakes no duty to update this information except as required by law. These and other important risk factors are described more fully in documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the 'Commission') on February 24, 2025, as supplemented by the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2025 to be filed with the Securities and Exchange Commission, and could cause actual results to differ materially from expectations. * Adjusted EBITDA guidance for the three months ending June 30, 2025 represent the midpoint of the range of $16 million to $17 million, respectively. View source version on CONTACT: Media Contact: Mansi Bandarupalli,[email protected] Investor Contact: Tracey Ford,[email protected] KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA INDUSTRY KEYWORD: PRIMARY/SECONDARY EDUCATION TECHNOLOGY SOFTWARE ARTIFICIAL INTELLIGENCE INTERNET UNIVERSITY SOURCE: Chegg Copyright Business Wire 2025. PUB: 05/12/2025 07:30 AM/DISC: 05/12/2025 07:29 AM
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12-05-2025
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Chegg: Q1 Earnings Snapshot
SANTA CLARA, Calif. (AP) — SANTA CLARA, Calif. (AP) — Chegg Inc. (CHGG) on Monday reported a loss of $17.5 million in its first quarter. On a per-share basis, the Santa Clara, California-based company said it had a loss of 17 cents. Losses, adjusted for one-time gains and costs, came to 6 cents per share. The an online learning platform posted revenue of $121.4 million in the period, surpassing Street forecasts. Three analysts surveyed by Zacks expected $114.5 million. For the current quarter ending in June, Chegg said it expects revenue in the range of $100 million to $102 million. _____ This story was generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on CHGG at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
