Chegg(US:CHGG) ZACKS·2026-02-10 18:45Core Insights - Chegg, Inc. (CHGG) reported fourth-quarter 2025 results with earnings and revenues exceeding the Zacks Consensus Estimate, although both metrics declined year-over-year [1][4][9] - Following the results, CHGG shares fell by 2.7% in after-hours trading [1] Financial Performance - The company reported an adjusted loss per share of $0.01, better than the Zacks Consensus Estimate of a loss of $0.11, compared to an EPS of $0.17 in the same quarter last year [4][10] - Net revenues for Q4 were $72.7 million, surpassing the consensus estimate of $71 million by 1.9%, but reflecting a 49.4% decline year-over-year [4][10] - Total net revenues for 2025 were $376.9 million, down from $617.6 million in 2024 [10] Operational Highlights - The Skills and Other product line generated revenues of $17.7 million, indicating double-digit growth, while Academic Services revenues were $54.9 million [5] - Gross profit for Q4 decreased by 57.4% year-over-year to $41.7 million, with gross margin contracting by 1,100 basis points to 57% [6] - Total operating expenses fell by 39.4% year-over-year to $75.9 million [6] Cash Flow and Liquidity - As of December 31, 2025, Chegg had cash and cash equivalents of $31.1 million, down from $161.5 million in 2024 [7] - Net cash provided by operating activities for 2025 was $15.5 million, a significant decrease from $125.2 million in the previous year [7] - Free cash flow at the end of Q4 was negative $12.6 million, down from $50.3 million a year ago [7] Future Outlook - For Q1 2026, Chegg expects net revenues between $60 million and $62 million, compared to $121.4 million in the same quarter last year [11] - Chegg Skilling revenues are projected to be between $17.5 million and $18 million, indicating continued growth in this segment [11] - Management aims for adjusted EBITDA margins of at least 20% over the next couple of years, with non-GAAP expenses expected to fall below $250 million in 2026 [14] - The company anticipates generating meaningful free cash flow in 2026, with capital expenditures projected to decline by about 60% year-over-year [15]