Chegg(US:CHGG)2025-05-12 20:02Financial 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].