Core Viewpoint - Chegg, Inc. is set to release its earnings results for the fourth quarter and full fiscal year of 2025 on February 9, 2026, after market close [1] Financial Results Announcement - The earnings results will cover the period ending December 31, 2025 [1] - A conference call to discuss the financial results will take place at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on the same day [1]

Core Insights - Chegg, Inc. (CHGG) is shifting its focus from legacy academic services to its skilling business, with a significant reduction in capital expenditure expected to enhance cash preservation and operational efficiency [1][4][8] Group 1: Business Strategy and Financials - Chegg has split its operations into two divisions: a legacy academic business and Chegg Skilling, with all new growth investments directed towards the skilling sector, which is estimated to exceed $40 billion [2] - The company anticipates a 60% reduction in capital expenditure, projecting total capex for 2025 to be around $27 million, down from $60-65 million in 2024 [1][8] - Chegg Skilling is expected to generate approximately $70 million in revenue by the end of 2025, with a projected 14% year-over-year growth in Q4 2025 [2] Group 2: Earnings Estimates and Performance - The Zacks Consensus Estimate indicates a loss of 14 cents for 2025, while earnings estimates for 2026 have improved to a profit of 18 cents, reflecting a significant projected growth of 228.6% year-over-year [5][6] - Chegg's stock has outperformed other players in the EdTech sector, gaining 4.7% over the past month, contrasting with declines in shares of competitors like Duolingo and Coursera [7][10] Group 3: Competitive Landscape and Valuation - Chegg operates in a competitive environment alongside established companies such as Duolingo and Coursera, which have seen their stock prices decline recently [10] - Currently, Chegg's stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 5.13, significantly lower than Duolingo's 42.37 and Coursera's 15.67, indicating a potential undervaluation [11][12]

Core Insights - Chegg, Inc.'s current valuation appears attractive for investors, trading at a forward 12-month price-to-sales (P/S) ratio of 0.36, significantly lower than the industry average of 4.76 and the sector's 7.42 [1][5] Industry Trends - The U.S. education market is increasingly shifting towards digital and career-focused learning models, with a strong emphasis on flexible, outcome-driven skill development [2] - The rapid adoption of AI is transforming how learners access information, leading to a decline in traditional academic services and a rise in scalable digital platforms [2] Company Strategy - Chegg is restructuring its business to adapt to AI-driven changes and evolving demand, focusing on the skilling segment for workforce training and job-relevant skills while managing legacy academic offerings for cash generation [3][11] - The company is implementing a leaner cost structure and emphasizing B2B partnerships to stabilize performance and support sustainable growth [3][11] Financial Performance - Chegg's stock has declined 30.6% over the past six months, underperforming the industry and broader market, which has seen gains of 6.2% and 14.4%, respectively [10] - Non-GAAP operating expenses are projected to drop below $250 million by 2026, down from $536 million in 2024, indicating a more efficient operating model [12][17] Academic Services - Despite pressures from AI disruption, Chegg's academic services remain a valuable asset, providing cash support during the transition due to an established content base [13][14] Skilling Platform Growth - The consolidation of Busuu and Chegg Skills into a single unit is expected to drive growth, with projected revenue growth of 14% year-over-year for Q4 2025 and sustained double-digit growth beyond [15] - The focus on B2B distribution is expected to provide greater stability, with partnerships enhancing engagement and supporting growth [16] Capital Efficiency - Chegg is prioritizing capital efficiency and free cash flow generation, with capital expenditures declining 63% year-over-year in Q3 2025 and expected to reduce further by 60% in 2026 [17][18] Earnings Outlook - Earnings estimates for 2026 have trended upward to 18 cents per share, indicating a year-over-year growth of 228.6% [19] - In contrast, competitors like Coursera and Udemy are expected to see more modest earnings growth, with Coursera at 18.3% and Udemy flat [20] Investment Consideration - Chegg's discounted valuation and improving earnings outlook present a compelling opportunity for investors, despite ongoing challenges in legacy academic traffic [21]

Core Insights - Chegg, Inc.'s core academic business has faced significant challenges due to the rapid adoption of generative AI and a decline in Google-driven traffic, leading to over a 40% year-over-year revenue drop in Q3 2025 [1][9] - The company is investing heavily in AI to enhance efficiency and user experience, allowing it to utilize its database of over 130 million questions to automate content delivery and reduce costs [2][9] - Chegg's AI strategy aims to stabilize cash flows from its legacy business while transitioning towards Chegg Skilling, focusing on B2B skilling and workforce education [3][4] Company Strategy - Chegg acknowledges that it cannot compete directly with free AI answers from search engines, positioning its AI enhancements as a means to prolong the legacy business while funding new initiatives [3][4] - The company is shifting its long-term growth focus towards B2B skilling, language learning, and workforce AI education, indicating a strategic pivot in response to market trends [4][7] Competitive Landscape - Chegg operates in a competitive ed-tech market alongside Duolingo and Udemy, each employing different strategies to capture market share [5][7] - Duolingo leads in language learning with a gamified app, while Udemy leverages a vast marketplace model to meet professional learning needs [6][7] - Chegg's challenge lies in demonstrating that its pivot to B2B skilling can yield sustainable growth amidst competition from established players [7] Financial Performance - Chegg's stock has seen a 2.4% increase over the past month, outperforming the Zacks Internet - Software industry and the S&P 500 Index [8] - The stock is currently trading at a forward 12-month price-to-sales ratio of 0.27, indicating a discount compared to industry peers [11] - Earnings estimates for 2025 have widened to a loss of 14 cents, while estimates for 2026 have improved to a profit of 18 cents, suggesting potential recovery [13][14]

Core Insights - Chegg, Inc. has officially split its business into two segments: a growth-oriented Chegg Skilling and a legacy academic services unit, aiming to leverage its language-learning platform, Busuu [2][4] Business Strategy - Chegg is focusing on expanding Busuu into Latin America (LATAM), targeting B2B skilling opportunities while moving away from its struggling academic services [3][4] - Busuu's unique approach to language learning emphasizes conversational fluency, aligning with enterprise demand for practical communication skills [3][4] Financial Performance - Chegg Skilling is projected to generate approximately $70 million in revenue by the end of 2025, with a year-over-year growth rate in the mid-teens [5][8] - The company has implemented aggressive cost restructuring, allowing for selective investments in expansion without straining cash flow [5][8] Market Position - Chegg's stock has increased by 13.5% over the past month, outperforming the Zacks Internet - Software industry and the S&P 500 Index [6][8] - The company is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 5.57, significantly lower than competitors like Duolingo and Coursera, which have P/E ratios of 43.67 and 15.88, respectively [10][11] Earnings Estimates - The Zacks Consensus Estimate for Chegg's 2025 loss has widened to 14 cents, while estimates for 2026 earnings have improved to 18 cents [12][13] - The 2025 estimate indicates a year-over-year decline of 118.7%, while the 2026 estimate suggests a growth of 228.6% [13]

Core Viewpoint - Chegg, Inc. has announced a repurchase agreement for approximately $8.9 million of its outstanding 0% Convertible Senior Notes due 2026, with a cash repurchase price of about $8.3 million, as part of its securities repurchase program [1] Group 1: Repurchase Transactions - The notes repurchase transactions are expected to close on December 30, 2025, pending customary closing conditions [1] - After the completion of the repurchase, approximately $53.9 million of the Notes will remain outstanding [1] - Chegg will have approximately $141.8 million available under its securities repurchase program following the transactions [1] Group 2: Company Overview - Chegg is a learning platform focused on the skilling market, which is valued at $40 billion and is growing [3] - The company provides tools for workplace readiness, professional upskilling, and language learning, along with AI-driven personalized support for students [3] - Chegg is publicly traded on the NYSE under the symbol CHGG and is based in Santa Clara, California [3]

Core Insights - Chegg, Inc. (CHGG) has undergone a significant restructuring to enhance operational efficiency and financial discipline in response to a changing market environment [1][4] - The restructuring divides operations into two main units: a legacy academic business focused on cash generation and a skilling business aimed at long-term growth [1][8] - The company aims to reduce total non-GAAP expenses from $536 million in 2024 to under $250 million by 2026, indicating a strategic shift towards tighter spending and improved operational focus [2][4] Financial Performance - In Q3 2025, non-GAAP operating expenses decreased by 46% year-over-year due to restructuring efforts, contributing to better operating discipline [2] - Adjusted EBITDA surpassed internal expectations, reflecting improved cost execution and operational efficiency [2][8] - The earnings per share (EPS) estimate for 2026 has risen to 18 cents from break-even, with an expected growth of 228.6% [12] Market Position - Chegg operates in a competitive ed tech landscape alongside companies like Duolingo, Inc. and Udemy, Inc., which have established strong market positions [5][6] - Duolingo leads in the language-learning niche with a gamified app, while Udemy focuses on professional skill development and AI enablement [6] - Chegg's stock is currently trading at a forward 12-month price-to-sales (P/S) ratio of 0.33, indicating a discounted valuation compared to industry peers, which may present an attractive entry point for investors [10] Operational Challenges - The company continues to face challenges such as declining traffic in legacy academic services and significant year-over-year revenue contraction [3][4] - Broader industry trends, including AI-driven disruptions and reduced traditional online traffic, are impacting performance [3]

Core Viewpoint - Internet stocks are facing challenges entering 2026, having underperformed the broader market in 2025 due to operational missteps, increased competition from generative AI, and inconsistent margins, necessitating companies to demonstrate real AI-driven growth and profitability [1][2]. Market Performance - Internet stocks lagged behind both the S&P 500 and the Russell 2000 in 2025, attributed to operational missteps and competitive threats from generative AI [2]. - Consumer sentiment remains approximately 28% lower year over year, influenced by recent government shutdowns and tariff actions, despite a 5% month-over-month improvement in early December [3][2]. 2026 Outlook - A stable consumer environment alone will not sustain valuations in 2026; companies must show stronger execution and tangible progress in AI monetization and profitability [4]. - In the education sector, deeper integration with AI platforms is expected to diversify traffic sources, alongside scaling AI-enhanced learning products [5]. AI Adoption and Impact - AI-driven traffic is becoming significant, accounting for about 1% of Etsy's total traffic, with industry-wide AI referrals increasing by approximately 1,200% year over year in October [6]. - AI-driven traffic has a conversion rate that is about 16% better than non-AI traffic [6]. Company-Specific Insights - For Duolingo, investor sentiment is negative, but early 2026 bookings and adjusted EBITDA guidance could indicate potential upside; the company needs to achieve over 20% bookings growth and stabilize daily active users [7]. - Etsy shows mixed sentiment, but sustained gross merchandise sales growth could mitigate margin pressures from investments in Depop, supporting stronger share performance in 2026 [8]. - Coursera has been upgraded to Overweight, with expectations that consensus estimates underestimate improving execution across product, go-to-market, and profitability [8]. - The pending merger with Udemy is anticipated to create a more competitive AI-skills platform and accelerate AI product development [9]. Ratings Summary - Duolingo and Coursera are rated Overweight, while Etsy and Udemy are rated Neutral; Nerdy Inc. and Chegg, Inc. are rated Underweight [9].

Core Insights - The online education market is experiencing a structural reset driven by shifts in learner behavior towards flexible, outcome-oriented skill development and the influence of generative AI on knowledge consumption [1] - Chegg, Inc. (CHGG) and Udemy, Inc. (UDMY) represent two distinct approaches to monetizing digital learning platforms, each adapting to similar industry pressures from different starting points [1][2] Chegg (CHGG) Overview - Chegg is undergoing a structural reset, separating its legacy academic services from growth-oriented skilling operations to align resources with long-term demand trends in workforce education [4] - In Q3 2025, Chegg's non-GAAP operating expenses decreased by 46% year-over-year, with adjusted EBITDA exceeding expectations due to aggressive cost actions [5] - Total revenues for Chegg fell by 42% year-over-year in Q3 2025, primarily due to reduced traffic in legacy academic services and advertising revenue pressure [6] - The Chegg Skilling unit is projected to achieve 14% year-over-year revenue growth in Q4 2025, with expectations for sustained double-digit growth beyond 2025 [7] Udemy (UDMY) Overview - Udemy is shifting towards a subscription-led business model, focusing on professional skill development and enterprise learning, which allows for improved revenue quality and visibility [8][9] - In Q3 2025, Udemy's total revenues reached $196 million, slightly up year-over-year, with subscription revenues increasing by 8% and accounting for 74% of total revenues [10] - Despite improvements, Udemy faces challenges with a net dollar retention rate of 93% in its business segment and constrained growth in the consumer segment due to a strategic deemphasis on transactional course sales [11] Stock Performance & Valuation - Chegg's share price performance has lagged behind Udemy's and the broader industry over the past six months [13] - Udemy currently trades at a higher forward 12-month price-to-sales (P/S) ratio compared to Chegg [15] - Chegg's earnings estimates for 2026 have trended upward, indicating a projected year-over-year growth of 228.6% [17] - In contrast, Udemy's 2026 EPS estimates have trended downward, indicating only 0.8% growth [19] Investment Outlook - Chegg is emerging from a significant restructuring with a leaner cost structure and improving earnings visibility, positioning it for potential upside heading into 2026 [21] - Udemy benefits from its transition to a subscription model and expanding enterprise presence, but faces execution risks and a more measured growth outlook [21][22] - Chegg currently holds a Zacks Rank 1 (Strong Buy), while Udemy has a Zacks Rank 3 (Hold), appealing more to investors seeking stability [22]

Core Insights - The U.S. education market is transitioning from traditional methods to digital and career-focused programs, driven by student demand and government initiatives [2][11] - The Zacks Schools industry shows resilience, with median share prices above the S&P 500 composite, indicating promising mid to long-term prospects despite current stock performance [3] - Five education stocks are identified with expected earnings growth of over 10% year-over-year by 2026, including Chegg, Adtalem Global Education, Grand Canyon Education, Nerdy, and Legacy Education [4] Market Trends - The shift towards hybrid and AI-based learning models is gaining traction, with education companies adapting to meet the demand for flexible learning formats [5][8] - Companies like Chegg and Nerdy are benefiting from the rise of online and hybrid learning, leveraging AI-enhanced tools and subscription-based digital offerings [6][8] - The focus on career-oriented programs is increasing, particularly in high-demand fields like healthcare, aligning with workforce needs and supporting enrollment growth [9][10] Government Support - Federal and state initiatives are promoting EdTech adoption and workforce development, enhancing the prospects for education companies [11] - New interagency agreements aim to streamline program delivery and reduce administrative burdens, while a national policy established in April 2025 focuses on advancing AI education [11][12] Stock Performance - Chegg (CHGG) has a Zacks Rank of 1, with a projected earnings growth of 228.6% for 2026 despite a year-to-date drop of 42.9% [16] - Adtalem (ATGE) holds a Zacks Rank of 2, with a fiscal 2026 EPS estimate of $7.85 and expected growth of 17.7% [17] - Grand Canyon Education (LOPE) has a Zacks Rank of 2, with a projected earnings growth of 11.2% for 2026 [18] - Nerdy (NRDY) carries a Zacks Rank of 2, with an expected growth of 35.9% for 2026 despite a year-to-date decline of 16.7% [19] - Legacy Education (LGCY) also holds a Zacks Rank of 2, with a projected earnings growth of 11.9% for 2026 and a year-to-date gain of 23.8% [20]