Chegg 2025 Q3 Earnings Beats Expectations, Narrows Net Loss by 91.8%

Chegg (CHGG) reported fiscal 2025 Q3 earnings on Nov 11, 2025, with results that exceeded revenue expectations and showed significant improvement in net losses. The company’s shares, however, have continued a downward trend, down 38.61% month-to-date. Management highlighted strategic shifts amid challenges in student enrollment growth and competition.

Revenue

Chegg’s total revenue declined by 43.1% year-over-year to $77.74 million, driven by a 43.1% year-over-year drop in Subscription Services to $69.10 million. The Skills and Other segment contributed $8.64 million, though this segment’s performance remains a minor portion of the revenue mix. The decline reflects broader market pressures, including reduced traffic from AI adoption and algorithmic changes affecting online visibility.

Earnings/Net Income

Chegg narrowed its net loss to $17.47 million in Q3 2025, a 91.8% reduction from $212.64 million in the prior-year period. On a per-share basis, losses improved to $0.16 from $2.05, marking a 92.2% improvement. These results reflect disciplined cost management and restructuring efforts, though the company remains unprofitable. The EPS beat of $0.08 against estimates of -$0.08 underscores operational efficiency gains.

Price Action

Chegg’s stock price has underperformed, tumbling 8.07% on the latest trading day and 38.61% month-to-date. The post-earnings volatility remains a concern, with a 20.14% standard deviation in 30-day returns over three years.

Post-Earnings Price Action Review

A strategy of buying Chegg shares on earnings release dates and holding for 30 days has historically underperformed, yielding an average annual return of -10.44% versus the S&P 500’s 15.25%. The high volatility post-earnings—evidenced by a 20.14% standard deviation—suggests significant price swings, making such strategies unprofitable. Investors appear to punish the stock despite improved financial metrics, reflecting skepticism about long-term sustainability.

CEO Commentary

CEO Dan Rosensweig acknowledged Q3 challenges, including weaker student enrollment growth and intensified competition. Strategic investments in AI-driven tutoring and content personalization aim to differentiate Chegg’s platform. Cost-cutting in marketing and R&D aligns with financial constraints, while expansion into international markets and K-12 partnerships signals long-term optimism.

Guidance

Chegg provided no explicit revenue guidance for future periods due to macroeconomic uncertainties but reiterated a 2026 breakeven net income target. Management emphasized product innovation, customer retention, and AI integration as key drivers for growth.

Additional News

Chegg announced a strategic pivot to B2B skilling services, with a $70 million revenue target for FY 2025. The company also disclosed a restructuring plan to streamline operations and strengthen its balance sheet. Meanwhile, Zacks Rank assigned the stock a #3 (Hold) rating, citing mixed earnings estimate revisions and a neutral near-term outlook. No dividend or buyback announcements were made, focusing instead on operational efficiency.

Additional News

Chegg’s management highlighted a 50% drop in Google traffic, attributed to AI-driven changes and algorithm updates, impacting subscriber growth. The company also outlined plans to allocate all growth resources to its Chegg Skilling unit, targeting double-digit expansion in skilling services. Analysts noted that while the Q3 results exceeded revenue and EBITDA estimates, Q4 guidance fell short of expectations, signaling ongoing challenges in reversing the revenue decline.

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