Chegg(US:CHGG)2025-05-12 11:35Financial Performance - Total net revenues for Q1 2025 were $121.4 million, a decrease of 30% year-over-year[6]. - Chegg reported a significant decline in revenue, with total revenue for Q1 2025 at $100 million, down 20% year-over-year[49]. - Net revenues for the three months ended March 31, 2025, were $121,387, a decrease of 30.4% compared to $174,350 in the same period of 2024[54]. - Gross profit for the same period was $67,414, down 47.4% from $127,853 year-over-year[54]. - The net loss for the three months ended March 31, 2025, was $17,484, compared to a net loss of $1,420 in the same period of 2024[54]. - Adjusted EBITDA for Q1 was $19.3 million, representing a margin of 16%[6][21]. - Adjusted EBITDA for the three months ended March 31, 2025, was $19,269, down 58.8% from $46,740 in the prior year[59]. - The company expects an adjusted EBITDA of $16,500 thousand for the three months ending June 30, 2025, which represents the midpoint of the guidance range of $16 million to $17 million[64]. Subscription Services - Subscription Services revenues were $107.6 million, also a decrease of 30% year-over-year, with 3.2 million subscribers, down 31% year-over-year[6][19]. - The company experienced a decrease in subscription services revenue, which accounted for $85 million, representing a 25% decline compared to the previous year[49]. - Chegg's outlook for Q2 2025 includes total revenue guidance of $95 million, with expectations for subscription services revenue to remain under pressure[49]. Cost Management and Restructuring - The company is implementing a restructuring plan that will result in non-GAAP expense savings of $45-$55 million in 2025 and $100-$110 million in 2026[26]. - The company is implementing a restructuring plan that will impact approximately 10% of its workforce, aimed at reducing operational costs[49]. - The company incurred restructuring charges of $2,920 thousand in the three months ended March 31, 2025, with no such charges reported in 2024[62]. Cash Flow and Investments - Chegg's cash and investments at the end of Q1 totaled $126 million, with a net cash balance of $64 million[25]. - Chegg's free cash flow for the quarter was reported at $5 million, down from $10 million in the previous year, indicating tighter liquidity[48]. - Free cash flow for the three months ended March 31, 2025, was $15,861 thousand, down from $25,301 thousand in 2024[63]. Market Position and Strategy - The company anticipates a challenging competitive landscape, particularly with the rise of generative AI technologies affecting the education sector[49]. - Chegg is exploring strategic alternatives to diversify revenue streams, including new enterprise offerings and question-and-answer pair licensing[49]. Other Financial Metrics - Gross margin for Q1 was 56%, impacted by a one-time charge of $16.2 million, which negatively affected gross margin by 13 percentage points[20]. - Chegg's non-GAAP gross margin was 60%, down from 65% year-over-year, indicating increased costs impacting profitability[49]. - The company reported a significant increase in depreciation and amortization expense to $32,094, up from $19,687 in the previous year[56]. - Research and development expenses were $29,428, down 33.8% from $44,435 in the same period of 2024[54]. - Total current liabilities decreased to $171,032 from $528,341 year-over-year, reflecting a reduction of 67.6%[54]. - The company repurchased $65 million of its 2026 convertible notes at a discount, while repaying the full principal amount of $358.9 million for its 2025 convertible notes[18][23].