What were the key takeaways from Chegg's earnings call?

Did Chegg beat or miss consensus estimates last quarter?

What is the market's earnings forecast for Chegg next quarter?

What guidance did Chegg's management provide for the next earnings period?

What is the revenue and EPS growth rate for Chegg year over year?

What does Chegg do and what are its main business segments?

What were the key takeaways from Chegg’s earnings call?

What factors drove the changes in Chegg's revenue and profit?

- **Restructuring Success**: Chegg Skilling to grow 14% YoY in Q4 2025, with full-year 2025 revenue of $70M.
- **Cost Efficiency**: Non-GAAP expenses reduced 46% YoY to $49M, positioning for 2026 free cash flow generation.
- **Skilling Momentum**: Busuu and Chegg Skills targeting $40B skilling market, with B2B partnerships and AI-driven learning.
- **Legacy Transition**: Academic services shifted to B2B, generating cash with minimal reinvestment.
- **Financial Outlook**: Q4 2025 skilling revenue $18M, total revenue $70-72M, EBITDA $10-11M.


**【CEO Summary Section】**
- Restructured Chegg into two units: **Chegg Skilling** (B2B SaaS focus) and **Legacy Academic Services** (cash-generating). 
- Chegg Skilling to drive double-digit growth, with Q4 2025 revenue expected at $18M (14% YoY growth) and full-year 2025 revenue of $70M.
- Shifted resources to skilling business, with 400+ employees moved to legacy unit to reduce costs.
- Skilling assets include Busuu (language learning) and Chegg Skills (AI-related skills), targeting $40B+ skilling market.
- Legacy academic services to operate as B2B, leveraging 130M+ question database and AI efficiency improvements.

**【CFO Financial Commentary】**
- Q3 2025 total revenue: $78M (-42% YoY) due to reduced traffic and ad revenue.
- Non-GAAP operating expenses: $49M (-46% YoY) from restructuring.
- Adjusted EBITDA: $13M (17% margin), beating guidance by $5M.
- Free cash flow: -$900K (Q3) due to one-time FTC settlement and severance payments.
- 2026 targets: < $250M non-GAAP expenses, 60%+ CapEx reduction, and meaningful free cash flow.
- Q4 2025 outlook: Skilling revenue $18M (14% YoY), total revenue $70-72M, gross margin 57-58%, EBITDA $10-11M.

**【Q&A Highlights】**
- **Skilling Strategy**: 
  - Focused on B2B partnerships (e.g., Guild), expanding to Latin America.
  - AI-driven conversational learning for Busuu, targeting corporate language training.
  - Building B2B salesforce to complement existing channels.
- **Legacy Business**: 
  - Operated as B2B with minimal resource allocation.
  - 90% of questions in database already answered, reducing dependency on traffic.
- **Traffic Impact**: 
  - Reduced Google traffic (-50%) impacted legacy business, but skilling business less reliant on ad revenue.
  - Skilling growth driven by partnerships, not organic traffic.
- **Resource Allocation**: 
  - All growth investments directed to skilling.
  - Legacy unit to generate cash with minimal reinvestment.


CHGG

CHGG fundamentals

You can ask Aime