Chegg (CHGG) Q2 2025 Earnings Call August 05, 2025 04:30 PM ET Speaker0Greetings, and welcome to Chegg Inc. Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.It is now my pleasure to introduce your host, Tracy Ford. Thank you. You may begin.Speaker1Good afternoon. Thank you for joining Chegg's second quarter twenty twent ...

Financial Performance - Total revenue for Q2 2025 was $105 million, a 36% year-over-year decrease[54] - Subscription Services revenue for Q2 2025 was $90 million, a 39% year-over-year decrease[65] - Chegg Study/Pack revenue decreased 44% year-over-year[14] - Adjusted EBITDA for Q2 2025 was $23 million[56] - Free cash flow for Q2 2025 was negative $12 million, impacted by severance payments[57] - Capital expenditures for Q2 2025 were $7 million, a 60% year-over-year decrease[61] Subscribers and Retention - Global Chegg Study/Pack subscribers decreased by 48% year-over-year[14] - Global Subscription Services subscribers decreased by 40% year-over-year[14] - Chegg Study/Pack monthly retention rate globally was 79.7%[14] Strategic Initiatives - The company is exploring strategic alternatives, including being acquired, undertaking a go-private transaction, or remaining as a public standalone company[12] - The company identified an additional $17 million in cost savings for 2026[11] - The company expects total non-GAAP expense savings in 2026 to be $110-120 million[11]

EXHIBIT 99.01 Chegg Reports 2025 Second Quarter Earnings SANTA CLARA, Calif., August 5, 2025 /BUSINESS WIRE/ -- Chegg, Inc. (NYSE:CHGG), the leading student-first connected learning platform, today reported financial results for the three months ended June 30, 2025. "We had a good Q2, exceeding our guidance and actively engaging on the strategic review process and the transformation of Chegg. We remain focused on implementing AI to transform Chegg Study, making it a more efficient business to run, while sti ...

Financial Data and Key Metrics Changes - The stockholders have approved the non-binding advisory compensation of the company's named executive officers for the year ended December 31, 2024 [12] - The appointment of Deloitte and Touche LLP as the independent registered public accounting firm for the 2025 fiscal year has been ratified by the stockholders [13] Business Line Data and Key Metrics Changes - No specific data or metrics regarding individual business lines were provided in the meeting [14] Market Data and Key Metrics Changes - No specific market data or metrics were discussed during the meeting [14] Company Strategy and Development Direction and Industry Competition - The meeting included the election of a Class III Director, indicating ongoing governance and strategic oversight [8] - The amendment of the 2023 equity incentive plan to increase the number of shares available suggests a focus on employee retention and motivation [9] Management's Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during this meeting [14] Other Important Information - The meeting was conducted in accordance with the company's bylaws and Delaware law, ensuring compliance and proper governance [4] - The results of the voting will be reported in a Form 8-K to be filed with the SEC within four business days following the meeting [13] Q&A Session Summary Question: Are there any questions on the proposals? - There were no further questions from the attendees during the Q&A session [15]

美国线上教育公司Chegg表示，由于越来越多的学生转向ChatGPT等人工智能工具而非传统教育科技平 台，公司将裁员约22%，涉及约248名员工，以削减成本并精简营运。Chegg又指，将在今年年底前关闭 其美国和加拿大办事处，并力求减少其行销、产品开发工作以及一般和行政费用。通过重组，公司今年 将节省4500万至5500万美元的成本，明年将节省1亿至1.1亿美元的成本。 ...

Financial Performance - Net revenues for the three months ended March 31, 2025, were $121.4 million, a decrease of $52.9 million or 30% compared to $174.4 million in the same period in 2024[99]. - Subscription Services revenues decreased by $46.5 million, or 30%, primarily due to a 31% decrease in the number of subscribers during the same period[99]. - Skills and Other revenues decreased by $6.5 million, or 32%, mainly due to lower enrollments in Chegg Skills and a decline in advertising services revenues[100]. - Gross margins decreased to 56% for the three months ended March 31, 2025, down from 73% in the same period in 2024[101]. Expenses - Cost of revenues increased by $7.5 million, or 16%, primarily due to higher depreciation expenses of $13.8 million, offset by lower payment processing fees[101]. - Total operating expenses decreased by $33.9 million, or 26%, primarily due to lower employee-related expenses and contractor spend from prior restructuring actions[103]. - Research and development expenses decreased by $15.0 million, or 34%, due to lower employee-related expenses and contractor spend[104]. - Sales and marketing expenses decreased by $4.8 million, or 16%, to 21% of net revenues during Q1 2025 compared to 17% in Q1 2024[105]. - General and administrative expenses decreased by $16.2 million, or 29%, to 33% of net revenues in Q1 2025 compared to 32% in Q1 2024[107]. - Impairment expense was $2.0 million in Q1 2025, related to property and equipment[108]. - Interest expense decreased by $0.2 million, or 28%, to $467,000 in Q1 2025, primarily due to early extinguishments of convertible senior notes[109]. - Other income, net increased by $2.2 million, or 21%, to $12.997 million in Q1 2025, driven by a gain on early extinguishment of debt[110]. - Provision for income taxes decreased by $8.0 million, or 89%, to $1.012 million in Q1 2025 due to lower forecasted income[111]. Cash Flow - Cash, cash equivalents, and investments decreased by $402.0 million, or 76%, to $126.4 million as of March 31, 2025[112]. - Net cash flows from operating activities decreased by $28.8 million, or 54%, to $24.526 million in Q1 2025[116]. - Net cash flows from investing activities increased by $315.7 million in Q1 2025, primarily due to higher proceeds from the sale of investments[119]. - Net cash flows from financing activities decreased by $412.7 million in Q1 2025, mainly due to the repayment of convertible debt[120]. Strategic Initiatives - The company announced a strategic review process on February 24, 2025, exploring alternatives to maximize shareholder value, including potential acquisition or going private[90]. - The company is integrating artificial intelligence into its platform to enhance student engagement and support, aiming for a return to revenue growth over time[89]. - The company expects continued negative impacts on growth and subscriber numbers due to increased competition from generative AI products[92].

Core Viewpoint - Chegg is facing significant challenges due to competition from AI tools, leading to a workforce reduction and strategic cost-cutting measures to stabilize the business [1][4][5]. Company Actions - Chegg plans to reduce its workforce by approximately 22%, equating to 248 employees, and will close its physical offices in the US and Canada by the end of the year [1][4]. - The company will also cut back on new product development and reduce administrative costs as part of its restructuring efforts [4]. Financial Impact - The cost-cutting measures are expected to save Chegg between $45 million to $55 million in 2025 and $100 million to $110 million in 2026 [5]. - Chegg anticipates incurring restructuring charges of $34 million to $38 million, primarily from severance payments [5]. Subscriber and Revenue Decline - Chegg reported a 31% decline in its subscriber count, dropping to 3.2 million [5]. - Revenue fell by 30% to $121 million, with subscription service revenue decreasing by nearly a third to $108 million [7]. - The company experienced a net loss of $17.5 million during the same period [7]. Legal Context - Chegg has filed a federal antitrust lawsuit against Google, alleging that Google's AI summaries have negatively impacted its site traffic and revenue [7].

Core Insights - Chegg reported a revenue of $121.39 million for the quarter ended March 2025, reflecting a year-over-year decline of 30.4% [1] - The earnings per share (EPS) was -$0.06, a significant drop from $0.26 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $114.49 million by 6.03%, while the EPS fell short of the consensus estimate of -$0.01 by 500% [1] Financial Performance Metrics - Chegg Services subscribers totaled 3.2 million, slightly below the estimated 3.22 million [4] - Revenue from Skills and Other was reported at $14 million, surpassing the average estimate of $10.10 million, but showing a year-over-year decline of 31% [4] - Subscription Services revenue was $107.60 million, exceeding the average estimate of $104.07 million, with a year-over-year decrease of 30.2% [4] Stock Performance - Chegg's stock has returned +43.7% over the past month, significantly outperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Chegg (CHGG) Q1 2025 Earnings Call May 12, 2025 08:00 AM ET Company Participants Tracey Ford - Vice President-Investor RelationsNathan Schultz - President & CEODavid Longo - CFO Conference Call Participants Ryan Macdonald - Senior Analyst Operator Greetings, and welcome to the Chegg First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I'd n ...

Financial Data and Key Metrics Changes - In Q1 2025, total revenue was $121 million, a decrease of 30% year over year, with subscription services revenue at $108 million, reflecting a 31% decline in subscribers to 3.2 million [19][21] - Adjusted EBITDA for Q1 was $19 million, representing a margin of 16%, while gross margin was 56%, impacted by a one-time charge of $16.2 million due to accelerated depreciation [21][20] - Free cash flow generated in Q1 was approximately $16 million, despite incurring about $8 million in cash outlays related to employee severance from restructurings [21][22] Business Line Data and Key Metrics Changes - The Skills and other revenue segment generated $14 million in Q1, which includes new revenue from content licensing, with two licensing deals executed generating $4 million in Q1 and an expected additional $7 million in Q2 [19][20] - Busuu, the language learning service, saw a 7% year-over-year revenue increase, with the B2B business achieving a 29% year-over-year revenue increase [9] Market Data and Key Metrics Changes - The company is experiencing ongoing industry headwinds, leading to a notable decline in traffic and subscriber acquisitions, which continues to pressure financial performance [24] - The restructuring plan announced is expected to yield non-GAAP expense savings of $45 million to $55 million in 2025 and $100 million to $110 million in 2026 [22][23] Company Strategy and Development Direction - The company is exploring strategic alternatives to maximize shareholder value, including potential acquisition or remaining a standalone public company, with positive early indications from interested parties [7][15] - The focus remains on diversifying revenue through licensing question and answer pairs and expanding institutional contracts, with a goal of reaching 40 institutional pilots by year-end [6][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that macroeconomic trends will continue to exert pressure on the business, with expectations that conditions may worsen before improving [11][12] - The company is taking proactive measures to align costs with business outlook, including further cost reduction plans and restructuring efforts [12][14] Other Important Information - The company repurchased $65 million of its 2026 convertible notes at a discount, enhancing its capital structure [18][22] - The restructuring will impact approximately 22% of the workforce, primarily affecting Chegg Study and Corporate Services, resulting in a 66% reduction in these areas [13][22] Q&A Session Summary Question: Can you provide more details on the licensing deals signed during the quarter? - Management highlighted that they are licensing question and answer pairs from their extensive archive, with current agreements being a small pilot with major tech companies, indicating potential for a larger business model in the future [27][30] Question: What feedback have you received from university partners regarding the pilots? - Management reported positive feedback from universities, with a growing number of pilots and a seat-based license model that aligns with the financial necessity of improving student success rates [31][33]