Chegg: Revenue Beat, Subscriber Loss

Core Insights - Chegg reported a challenging Q4 2024 with a revenue decline and subscriber drop, but slightly exceeded expectations due to a focus on AI and technology integration [1][2]. Financial Performance - Q4 2024 diluted Non-GAAP EPS was $0.17, matching analyst forecasts but down 52.8$0.36 in Q4 2023 [3]. - Revenue for Q4 2024 was $143.5 million, surpassing the$142 million expectation but representing a 24% decline from $188 million in Q4 2023 [2][3]. - Non-GAAP Gross Margin was 72$36.6 million, above the guidance range of $32 million to$34 million [6]. - Gross Margin reached 68%, at the upper end of the anticipated range [6]. - Despite a 21% decline in subscribers, there were improvements in engagement metrics, including a 15 basis points increase in retention and a 66% rise in user queries [6]. Competitive Landscape - Chegg faced competitive pressures, particularly from Google's AI Overviews affecting web traffic, leading to a legal complaint against Google [7]. - The Busuu freemium model showed encouraging signs of growth despite subscriber losses [7]. Future Outlook - For Q1 2025, Chegg projects revenue between $114 million and$116 million, with subscription services expected to be between $104 million and$106 million [8]. - Expected EBITDA for Q1 is projected to decrease to $13 million to$14 million, reflecting ongoing competitive challenges [8]. - The company remains committed to enhancing AI technology within its educational platforms and restructuring for efficiency gains [9].