Revenue and Financial Performance - Revenue has declined, with global non-subscriber traffic to Chegg decreasing year-over-year by 8% in Q2 2024, 19% in Q3 2024, and 39% in Q4 2024, leading to a 49% year-over-year decline in January 2025[88]. - Net revenues for 2024 decreased to $617.574 million, down 13.8% from $716.295 million in 2023[331]. - Gross profit for 2024 was $436.647 million, a decline of 10.9% compared to $490.354 million in 2023[331]. - The net loss for 2024 was $837.068 million, contrasting with a net income of $18.180 million in 2023[331]. - Basic net loss per share for 2024 was $8.10, compared to earnings of $0.16 per share in 2023[331]. - The company reported a total comprehensive loss of $834.562 million for 2024, compared to a comprehensive income of $40.929 million in 2023[334]. - Cash provided by operating activities decreased to $125,205 in 2024 from $246,198 in 2023, reflecting a decline of approximately 49.1%[340]. - The company experienced a 14% decrease in Subscription Services subscribers and a 14% decrease in Subscription Services revenue year-over-year for the year ended December 31, 2024[114]. - Total operating expenses surged to $1.174 billion in 2024, an increase of 110% from $558.079 million in 2023, primarily due to a significant impairment expense of $677.239 million[331]. - Impairment expense significantly increased to $677,239 in 2024 from $3,600 in 2023, highlighting a substantial rise in asset write-downs[340]. Competition and Market Challenges - Competition is increasing in the education technology sector, particularly with companies developing their own AI products and technologies[91]. - The company faces challenges in retaining existing students and attracting new ones, with the student demographic characterized by rapidly changing preferences and price sensitivity[85]. - The company’s ability to attract and retain students is challenged by rapidly changing technological developments and the competitive landscape, particularly from non-education-focused companies like Google and Microsoft[110]. - The company faces increased competition from generative AI products, which are being adopted by students as alternatives to traditional educational services, negatively impacting overall traffic and subscriber growth[93]. - The business model relies heavily on small transactions from a widely dispersed student population, which has a high turnover rate due to graduation[84]. Strategic Initiatives and Investments - The company has pivoted to AI, partnering with OpenAI to utilize GPT-4, but the updated user experience has not attracted as many new students as anticipated[88]. - The company is investing significantly in AI initiatives, but there is no guarantee that these investments will yield successful products or services[90]. - The company is exploring strategic alternatives, including potential acquisition or going private, but has not set a timetable for completion, which may divert management focus and resources from core operations[96]. - The company has made acquisitions, including Busuu, Mathway, and Thinkful, but faces challenges in integrating these companies and may incur significant integration costs[126]. Legal and Regulatory Risks - The company has filed a federal antitrust complaint against Google on February 24, 2025, due to concerns over the competitive impact of Google's AIO search experience, which may lead to costly litigation and resource diversion[92]. - The company is involved in various legal proceedings, which could expose it to monetary damages and limit operational capabilities[132]. - The company is cooperating with the FTC on an investigation regarding compliance with the consent order, which could negatively impact its business[174]. - The company may face significant costs associated with defending against intellectual property claims, which could harm its financial condition and results of operations[163]. Operational and Financial Risks - The company anticipates fluctuations in operational results due to various external factors, making period-to-period comparisons less reliable[105]. - The company faces risks associated with advertising revenues, particularly if brands do not see the value in advertising on its platform or if access to advertising audiences is limited by changes in browser policies[128]. - The company may require additional financing in the future, which may not be available on favorable terms, potentially leading to substantial dilution for stockholders[130]. - The company has a history of losses and may not achieve or sustain profitability in the future[81]. - The company may face challenges in generating sufficient cash flow from operations to service its debt and make necessary capital expenditures[210]. Data Privacy and Security - The company is subject to stringent data privacy and security laws, including the EU GDPR, which imposes fines of up to 20 million Euros or 4% of annual global revenue for non-compliance[184]. - The company has faced claims regarding misleading statements about its security measures and internal controls[173]. - The company may face challenges in transferring personal data from the EEA and UK to the United States due to strict localization laws[185]. - The use of AI/ML technologies presents privacy and security risks, with potential regulatory fines impacting business operations[190]. - The company is subject to potential liability for user-uploaded content, which could adversely affect its results of operations if claims related to intellectual property rights arise[159]. Financial Position and Capital Structure - As of December 31, 2024, the company had cash and cash equivalents totaling $161.5 million and investments of $366.9 million[304]. - The company issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 and $800 million in aggregate principal amount of 0.125% convertible senior notes due in 2025[209]. - As of December 31, 2024, the outstanding principal amount of the 2026 notes was $128 million and the 2025 notes was $359 million[209]. - The company has a securities repurchase program with a remaining authorization of $207.5 million as of December 31, 2024[207]. - Stockholders' equity fell to $192.981 million in 2024, a significant drop from $944.618 million in 2023[329]. Operational Efficiency and Workforce Management - The company announced restructuring plans in November 2024 and June 2024, resulting in a reduction of approximately 760 employees, or about 22% of its workforce, to align its cost structure with industry challenges[117]. - The company has diverted capital and resources to the strategic review process, which could lead to increased expenses and potential loss of key employees[97]. - The company’s technologies may not withstand all third-party claims, and litigation costs could divert resources and negatively impact operations[165]. Seasonal and Market Trends - The company's revenues are seasonal, with the highest revenues typically occurring in the fourth quarter, making results difficult to predict[134]. - Approximately 13% of the company's net revenues were generated from customers outside the United States, indicating a growth strategy focused on global market expansion[148]. - The total undergraduate college enrollment in the U.S. has decreased by approximately 2.8 million since 2010, which could materially negatively impact the company’s revenue derived from U.S. college students[99].

Financial Performance - Total Net Revenues for Q4 2024 were $143.5 million, a decrease of 24% year-over-year, while full-year revenues were $617.6 million, down 14% year-over-year[6]. - Subscription Services Revenues in Q4 2024 were $128.5 million, a decrease of 23% year-over-year, and for the full year, they totaled $549.2 million, also down 14% year-over-year[6]. - The number of Subscription Services subscribers decreased to 3.6 million in Q4 2024, down 21% year-over-year, and 6.6 million for the full year, a decrease of 14% year-over-year[6]. - The company reported a net loss of $6.1 million for Q4 2024 and a net loss of $837.1 million for the full year[6]. - Total revenue for Q4 was $143.5 million, a decrease of 24% year-over-year, with Subscription Services revenue at $128.5 million, down 23% year-over-year[30]. - Net loss for Q4 2024 was $6.1 million, compared to a net income of $9.7 million in Q4 2023, reflecting a significant decline in profitability[64]. - Total net revenues for the year ended December 31, 2024, were $174,350 thousand, a decrease from $187,601 thousand in 2023, reflecting a decline of approximately 7%[75]. - Non-GAAP net income for the year ended December 31, 2024, was $84,956 thousand, down from $141,755 thousand in 2023, representing a decline of approximately 40%[72]. - The gross profit for the year ended December 31, 2024, was $127,853 thousand, a decrease from $138,451 thousand in 2023, reflecting a decline of approximately 8%[75]. - The company reported a loss from operations of $(27,320) thousand for the fourth quarter of 2024, compared to a profit of $13,287 thousand in the same quarter of 2023[75]. Strategic Initiatives - Chegg initiated a strategic review process to explore alternatives, including potential acquisition or going private, and filed a complaint against Google for unfair competition[2][9]. - In 2024, Chegg integrated AI and machine learning into its product stack, reducing content creation costs by over 70% while maintaining quality[12]. - The company launched a new product, Solution Scout, allowing students to compare answers from multiple LLMs alongside Chegg's solutions, aimed at saving time and increasing trust in the platform[28]. - Chegg's enterprise strategy aims to diversify revenue streams, with plans to expand business-to-institution pilot programs to approximately 35 additional institutions by the end of 2025[23]. - Chegg plans to diversify revenue streams with business-to-institution programs and other enterprise offerings to stabilize the business[60]. - The company is exploring strategic alternatives, which may include potential mergers or acquisitions to enhance growth opportunities[60]. - Chegg's future outlook includes a commitment to developing individualized learning solutions and expanding into new media channels to engage students[60]. Financial Guidance and Projections - The company expects Q1 2025 Total Net Revenues to be in the range of $114 million to $116 million, with Subscription Services Revenues between $104 million and $106 million[11]. - Q1 guidance projects total revenue between $114 and $116 million, with Subscription Services revenue between $104 and $106 million[38]. - Gross margin is expected to be in the range of 66 to 67 percent, with adjusted EBITDA between $13 and $14 million for Q1[38]. - The adjusted EBITDA guidance for the three months ending March 31, 2025, is projected to be between $13 million and $14 million, with a midpoint of $13,500 thousand[76]. Cash Flow and Expenses - Free cash flow for Q4 was $4.8 million, despite $25 million in cash outlays related to employee severance from restructurings[32]. - Capital expenditures for Q4 were $13 million, down 52% year-over-year, with content costs decreasing by 56% year-over-year[32]. - The company ended the quarter with cash and investments of $528 million and a net cash balance of $42 million[33]. - Operating cash flows decreased to $125,205 in 2024 from $246,198 in 2023, reflecting a decline of approximately 49.1%[66]. - Total cash, cash equivalents, and restricted cash at the end of 2024 was $164,359, down from $475,854 in 2022[67]. - The company incurred restructuring charges of $24,603 in 2024, compared to $5,704 in 2023[68]. Asset and Liability Management - Total assets decreased to $868.9 million in 2024 from $1.7 billion in 2023, indicating a substantial reduction in the company's asset base[62]. - Current liabilities increased slightly to $528.3 million in 2024 from $518.5 million in 2023, while total liabilities decreased to $676.0 million from $782.6 million[62]. - The company reported a significant impairment expense of $677.2 million for the year ended December 31, 2024, compared to $3.6 million in 2023[64]. - The company reported an impairment expense of $677,239 for the year ended December 31, 2024[68]. Research and Development - Research and development expenses for Q4 2024 were $41.0 million, down from $45.7 million in Q4 2023, indicating a focus on cost management[64].

The upcoming report from Chegg (CHGG) is expected to reveal quarterly earnings of $0.17 per share, indicating a decline of 52.8% compared to the year-ago period. Analysts forecast revenues of $142.03 million, representing a decrease of 24.5% year over year.The current level reflects no revision in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections over this period.Before a company ann ...

Some stocks occasionally experience significant price drops due to shortsighted reasons. When that happens, it presents an excellent opportunity for careful and patient investors to buy the dip.Other times, shares of companies move in the wrong direction for good reasons. In those cases, it is generally best to stay away unless there are good reasons to think the corporation in question can overcome whatever headwinds it is facing.That brings leads to fuboTV (FUBO) and Chegg (CHGG -5.60%), which have signif ...

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Chegg (CHGG) reported $136.59 million in revenue for the quarter ended September 2024, representing a year-over-year decline of 13.5%. EPS of $0.09 for the same period compares to $0.18 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $133.78 million, representing a surprise of +2.10%. The company delivered an EPS surprise of +28.57%, with the consensus EPS estimate being $0.07.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall St ...

Financial Data and Key Metrics Changes - In Q3 2024, the company reported revenue of $137 million, a decrease of 13% year-over-year, with subscription services revenue at $120 million, down 14% year-over-year [25] - Adjusted EBITDA was $22 million, representing a margin of 16% [25] - The company recorded a noncash impairment charge of $196 million against goodwill due to industry pressures [26] - Free cash flow for the quarter was $24 million, with capital expenditures of $15.8 million, down 32% year-over-year [28] Business Line Data and Key Metrics Changes - The company had 3.8 million subscribers in Q3, reflecting a decline of 13% year-over-year [25] - Subscription services ARPU decreased by 2% year-over-year, although this was a 1-point improvement from Q2 2024 [25] - Engagement metrics showed a 79% year-over-year increase in the number of questions asked [7][28] Market Data and Key Metrics Changes - Global nonsubscriber traffic to Chegg declined year-over-year by 19% in Q3, with a further decline of 37% year-over-year in October [12] - The company noted that the adoption of generative AI products by students has negatively impacted traffic and revenue outlook [11][12] Company Strategy and Development Direction - The company is undergoing a strategic restructuring, reducing headcount by 21% to align costs with market conditions, expecting annualized non-GAAP cost savings of $60 million to $70 million in 2025 [13][30] - Chegg aims to differentiate itself by focusing on high-quality educational content and personalized learning experiences, despite the challenges posed by generative AI [15][22] - The company launched a brand marketing campaign and introduced a content quality guarantee to build trust and loyalty among subscribers [18][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant headwinds from advancements in AI and the competitive landscape, particularly the impact of Google's AI search experience [8][10] - The company does not expect to meet its 2025 goals of a 30% adjusted EBITDA margin and $100 million in free cash flow due to current challenges [12] - Despite the difficulties, management remains optimistic about the market for high-quality educational tools, citing a study indicating that over 75% of students are willing to pay for tools that improve academic performance [15] Other Important Information - The company announced a $300 million increase in its securities repurchase program [29] - The restructuring plan is expected to incur charges of $22 million to $26 million, primarily related to severance payments [30] Q&A Session Summary Question: Key investments versus cost structure reduction - Management emphasized the importance of maintaining investments in differentiation and product development while managing costs [34][35] Question: Impact of Google AIO on traffic - Management clarified that while SEO traffic has been affected, they are exploring new channels like TikTok and Discord to reach students [39][41] Question: Subscriber base traction and brand awareness - Management noted that they are targeting students who need deeper learning and are focusing on brand campaigns to enhance awareness [42][43] Question: Engagement versus subscriber decline - Management acknowledged the increase in questions asked but highlighted the need to convert engagement into subscriptions [45] Question: Softening in nonsubscriber traffic trends - Management attributed the decline to the Google AIO experience and discussed efforts to diversify marketing channels [51]

Chegg (CHGG) came out with quarterly earnings of $0.09 per share, beating the Zacks Consensus Estimate of $0.07 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 28.57%. A quarter ago, it was expected that this an online learning platform would post earnings of $0.21 per share when it actually produced earnings of $0.24, delivering a surprise of 14.29%.Over the last four quarters, th ...

Financial Performance - Net revenues for the three months ended September 30, 2024, were $136.6 million, a decrease of 13.5% compared to $157.9 million for the same period in 2023[114]. - Total net revenues for the nine months ended September 30, 2024, decreased by $54.2 million, or 10%, to $474.1 million compared to $528.3 million in the same period in 2023[125]. - Total operating expenses for Q3 2024 were $315.5 million, a substantial increase from $132.1 million in Q3 2023, primarily due to the impairment expense[123]. - The loss from operations for the three months ended September 30, 2024, was $(222.3) million, compared to a loss of $(57.9) million in the same period last year[123]. - Impairment expense for the nine months ended September 30, 2024, was $677.2 million, significantly higher than $3.6 million in the same period in 2023[131]. - Impairment expense increased significantly to $195.7 million for the three months and $677.2 million for the nine months ended September 30, 2024, compared to $3.6 million for both periods in 2023[140]. Revenue Streams - Subscription Services accounted for 88% of net revenues in Q3 2024, down from 89% in Q3 2023, indicating a slight decline in reliance on this revenue stream[116]. - Skills and Other revenues represented 12% of net revenues in Q3 2024, up from 11% in Q3 2023, indicating a slight growth in this segment[118]. - Subscription Services revenues decreased by $20.1 million, or 14%, during the three months ended September 30, 2024, primarily due to a 13% decrease in subscribers[125]. Expenses and Cost Management - The company recorded an impairment expense of $195.7 million for the three months ended September 30, 2024, significantly impacting operating results[113]. - Total operating expenses increased significantly to $315.5 million for the three months ended September 30, 2024, from $132.1 million in the same period in 2023, primarily due to an impairment expense of $195.7 million[129]. - Research and development expenses decreased by $4.9 million, or 11%, during the three months ended September 30, 2024, compared to the same period in 2023[132]. - Sales and marketing expenses decreased by $2.4 million, or 8%, during the three months ended September 30, 2024, compared to the same period in 2023[134]. - General and administrative expenses decreased by $1.6 million, or 3%, during the three months ended September 30, 2024, compared to the same period in 2023[137]. Cash Flow and Liquidity - Cash, cash equivalents, and investments increased by $51.7 million (9%) to $631.2 million as of September 30, 2024, driven by net cash from operating activities[145]. - Net cash flows from operating activities decreased by $61.6 million (37%) during the nine months ended September 30, 2024, attributed to lower bookings and timing of bill payments[149]. - Net cash flows from investing activities decreased by $238.7 million (154%) during the nine months ended September 30, 2024, primarily due to lower proceeds from investments and higher property and equipment purchases[150]. - Net cash flows from financing activities increased by $696.3 million (99%) during the nine months ended September 30, 2024, due to the absence of repayments of convertible debt and stock repurchases[151]. - The company believes existing liquidity sources and net cash flows will be sufficient to fund operations and debt service obligations for at least the next 12 months[146]. Strategic Initiatives - The company announced a strategic restructuring plan in November 2024, which included workforce reductions and office closures to align costs with revenue trends[112]. - The company expects to realize cost savings in fiscal year 2025 as a result of the restructuring plans implemented in 2024[112]. - The ongoing shift towards generative AI services has negatively impacted traffic to the company's website and subscription growth, posing significant challenges for the business[110]. - The company is focused on integrating artificial intelligence into its platform to enhance student engagement and improve its product offerings[109]. Other Financial Metrics - Interest expense decreased by $0.1 million (10%) for the three months and $1.2 million (37%) for the nine months ended September 30, 2024, primarily due to early extinguishments of convertible senior notes[142]. - Other income, net dropped by $32.9 million (81%) for the three months and $91.2 million (78%) for the nine months ended September 30, 2024, mainly due to the absence of gains from early extinguishments of notes[143]. - The company incurred cumulative losses of $883.3 million from operations as of September 30, 2024, with potential for additional future losses[146]. - The company plans to repatriate earnings from its subsidiary in India, accruing $4.4 million in tax expense related to future distributions[148].

EXHIBIT 99.01 Chegg Reports 2024 Third Quarter Earnings SANTA CLARA, Calif., November 12, 2024 /BUSINESS WIRE/ -- Chegg, Inc. (NYSE:CHGG), the leading student-first connected learning platform, today reported financial results for the three months ended September 30, 2024. "While the global education industry continues to experience tremendous change, in Q3, we showed early progress against our strategic plan and delivered better-than-expected revenue and adjusted EBITDA. However, recent technology shifts a ...