Yahoo Finance

• Total Revenue: $143.5 million, a decrease of 24% year over year.

• Subscription Services Revenue: $128.5 million, down 23% year over year.

• Subscribers: 3.6 million, representing a decline of 21%.

• Subscription Services ARPU: Decreased by 3% year over year.

• Skills and Other Revenue: $14.9 million, down 31% year over year.

• Adjusted EBITDA: $37 million, representing a margin of 25%.

• Free Cash Flow: $4.8 million.

• Capital Expenditures: $13 million, down 52% year over year.

• Cash and Investments: $528 million.

• Net Cash Balance: $42 million.

• Q1 2025 Revenue Guidance: $114 million to $116 million.

• Q1 2025 Subscription Services Revenue Guidance: $104 million to $106 million.

• Q1 2025 Gross Margin Guidance: 66% to 67%.

• Q1 2025 Adjusted EBITDA Guidance: $13 million to $14 million.

• Warning! GuruFocus has detected 6 Warning Signs with CHGG.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Chegg Inc (NYSE:CHGG) surpassed its Q4 guidance for both revenue and adjusted EBITDA, demonstrating strong financial performance despite industry challenges.

• The company has integrated AI and machine learning into its product stack, reducing content creation costs by over 70% while maintaining high quality.

• Chegg Inc (NYSE:CHGG) launched a successful brand marketing campaign, resulting in improved click-through and conversion rates, and increased awareness among underclassmen by 16%.

• The Busuu language learning service transitioned to a premium business model, increasing the first 30-day conversion rate by 31% and achieving 9% year-over-year revenue growth.

• Chegg Inc (NYSE:CHGG) is expanding its enterprise business, with revenue up 46% in 2024, and plans to continue this growth with additional partnerships and reseller relationships.

Negative Points

• Chegg Inc (NYSE:CHGG) is facing significant challenges due to Google's AIO, which has impacted its traffic, revenue, and workforce, leading to a strategic review process.

• Total revenue for Q4 2024 decreased by 24% year over year, with subscription services revenue down 23% and a 21% decline in subscribers.

• The company experienced a temporary dip in monthly retention rates in November and December, affecting subscription services ARPU.

• Skills and other revenue decreased by 31% year over year due to a market shift away from traditional boot camps and a decline in advertising revenue.

• Chegg Inc (NYSE:CHGG) is filing a complaint against Google LLC and Alphabet Inc, alleging unfair competition and unjust enrichment, which could lead to prolonged legal proceedings.