Financial Data and Key Metrics Changes - In Q1 2025, total revenue was $121 million, a decrease of 30% year over year, with subscription services revenue at $108 million, reflecting a 31% decline in subscribers to 3.2 million [20][21] - Adjusted EBITDA for Q1 was $19 million, representing a margin of 16%, while gross margin was 56%, negatively impacted by a one-time charge of $16.2 million [21][22] - Free cash flow generated in Q1 was approximately $16 million, despite incurring about $8 million in cash outlays related to employee severance from restructurings [22] Business Line Data and Key Metrics Changes - The Chegg Study platform continues to innovate with features like Solution Scout and AI-powered content generation, which are attracting interest from potential acquirers [10][12] - Busuu, the language learning service, saw a 7% year-over-year revenue increase in Q1, with the B2B segment achieving a 29% year-over-year revenue growth [11] - Skills product is expected to achieve profitability and positive revenue growth by 2026, with pilot programs initiated in India [12][13] Market Data and Key Metrics Changes - The company is experiencing ongoing industry headwinds, with a notable decline in traffic and subscriber acquisitions impacting financial performance [26] - The restructuring plan aims to align costs with revenue amidst these challenges, with expected savings of $45 million to $55 million in 2025 and $100 million to $110 million in 2026 [16][24] Company Strategy and Development Direction - The strategic review process is ongoing, exploring options to maximize shareholder value, including potential acquisition or remaining a standalone public company [9][10] - The company is diversifying revenue through content licensing agreements, having signed two deals generating $4 million in Q1, with expectations for further growth [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that macroeconomic trends will continue to exert pressure on the business, with expectations that conditions may worsen before improving [13][14] - The company is taking proactive measures to align costs with business outlook, including further restructuring and expense reductions [14][15] Other Important Information - The company repurchased $65 million of its 2026 convertible notes at a discount, enhancing its capital structure [20] - The restructuring will impact approximately 22% of the workforce, primarily affecting Chegg Study and Corporate Services [15][24] Q&A Session Summary Question: Can you provide more details on the licensing deals signed during the quarter? - Management highlighted that the licensing involves 125 million question and answer pairs, with current agreements being a small pilot phase with major tech companies [30][31] Question: What feedback have you received from university partners regarding the pilot programs? - Positive feedback has been received, with schools showing willingness to invest in seat-based licenses to improve student success rates [34][36]

Financial Data and Key Metrics Changes - In Q4 2024, total revenue was $143.5 million, a decrease of 24% year-over-year, with subscription services revenue at $128.5 million, down 23% year-over-year [40] - The number of subscribers declined by 21% to 3.6 million, and subscription services ARPU decreased by 3% year-over-year [40] - Adjusted EBITDA was $37 million, representing a margin of 25% [41] - Free cash flow for Q4 was $4.8 million, despite $25 million in cash outlays related to employee severance and legal settlements [42] - Capital expenditures were $13 million, down 52% year-over-year, with content costs decreasing by 56% due to AI integration [43] Business Line Data and Key Metrics Changes - Skills and other revenue was $14.9 million, down 31% year-over-year, attributed to a market shift towards lower-cost programs [41] - The enterprise segment saw a revenue increase of 46% in 2024, driven by new enterprise customers [18] Market Data and Key Metrics Changes - Non-subscriber traffic plummeted by 49% in January 2025, a significant decline from an 8% decrease reported in Q2 2024 [21] - The education industry is experiencing a transformation, with a notable impact from Google's AI Overviews affecting Chegg's traffic and revenue [10][19] Company Strategy and Development Direction - Chegg is undertaking a strategic review process to explore alternatives for maximizing shareholder value, including potential acquisition or going private [10] - The company is focusing on integrating AI and machine learning into its product offerings to enhance personalized learning experiences [12][14] - Chegg aims to build brand awareness and improve conversion rates through innovative marketing campaigns and new product launches [15][27] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenges posed by Google's AIO, which has significantly impacted Chegg's traffic and revenue [19][21] - The company believes that the demand for comprehensive student success platforms will increase in the coming years, despite current challenges [23] - Management expressed optimism about stabilizing the business in 2025 through strategic initiatives and product enhancements [46] Other Important Information - Chegg has filed a complaint against Google, alleging unfair competition practices that have harmed its business [10][20] - The company is committed to maintaining high-quality educational content and ensuring that students have access to reliable learning resources [21][24] Q&A Session Summary Question: Can you unpack the incremental operating leverage in the business for Q1 2025 guidance? - Management indicated that the model is efficient, with a significant portion of incremental sales translating to adjusted EBITDA, and emphasized the importance of new product initiatives [51][52] Question: Can you elaborate on the shift into new revenue streams and enterprise offerings? - Management discussed the inbound interest from institutions focusing on student persistence and graduation rates, highlighting a seat-based pricing model for the business-to-institution program [60][61] Question: Can you discuss churn and retention trends during the quarter? - Management noted a temporary dip in retention in November and December, which has since returned to historical levels, attributing fluctuations to various factors including user engagement with generative AI tools [64][66] Question: What is the strategy behind the Solution Scout product? - Management explained that Solution Scout aims to save students time by providing side-by-side comparisons of answers from multiple sources, enhancing the value of Chegg's offerings [70][73] Question: What are the key factors institutions consider when partnering with Chegg? - Management highlighted that institutions are primarily focused on improving student persistence and graduation rates, and they work to align Chegg's services with institutional needs [78][79] Question: What assumptions underlie the Q1 guidance? - Management indicated that the guidance reflects the continuation of trends observed in December, with expectations for traffic and acquisitions to stabilize [82] Question: Can you provide details on the temporary retention impact and promotional pricing strategy? - Management estimated a couple of percentage points impact on retention, translating to approximately $2-3 million in revenue, and discussed ongoing adjustments to promotional pricing strategies in international markets [87][90]