Chegg Reports 2025 First Quarter Earnings
Makes progress on strategic alternatives process and initiates additional restructuring of the business
“In Q1, we exceeded our revenue and adjusted EBITDA expectations, delivered
First Quarter 2025 Highlights
-
Total Net Revenues of
$121.4 million 30% year-over-year -
Subscription Services Revenues of
$107.6 million 30% year-over-year -
Gross Margin of
56% -
Non-GAAP Gross Margin of
57% -
Net Loss was
$17.5 million -
Non-GAAP Net Loss was
$6.7 million -
Adjusted EBITDA was
$19.3 million -
3.2 million Subscription Services subscribers, a decrease of
31% year-over-year
Total net revenues include revenues from Subscription Services and Skills and Other. Subscription Services includes revenues from our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings. Skills and Other includes revenues from Chegg Skills, advertising services, content licensing, print textbooks and eTextbooks.
For more information about non-GAAP net (loss) income, non-GAAP gross margin and adjusted EBITDA, and a reconciliation of non-GAAP net (loss) income to net loss, gross margin to non-GAAP gross margin and adjusted EBITDA to net loss, see the sections of this press release titled, “Use of Non-GAAP Measures,” “Reconciliation of Net Loss to EBITDA and Adjusted EBITDA,” and “Reconciliation of GAAP to Non-GAAP Financial Measures.”
Business Outlook
Second Quarter 2025
-
Total Net Revenues in the range of
$100 million $102 million -
Subscription Services Revenues in the range of
$85 million $87 million -
Gross Margin between
64% and65% -
Adjusted EBITDA in the range of
$16 million $17 million
For more information about the use of forward-looking non-GAAP measures, a reconciliation of forward-looking net loss to EBITDA and adjusted EBITDA for the second quarter 2025, see the below sections of the press release titled “Use of Non-GAAP Measures,” and “Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA.”
An updated investor presentation and an investor data sheet can be found on Chegg’s Investor Relations website https://investor.chegg.com.
Prepared Remarks - Nathan Schultz, CEO & President Chegg, Inc.
Thank you, Tracey. Hello everyone and thank you for joining Chegg’s first-quarter 2025 earnings call.
Q1 was a good quarter for Chegg. We surpassed our revenue and adjusted EBITDA guidance, generated approximately
- First, the expansion of our business to institution effort, which has expanded from 5 pilots to 15 pilots from Q4 to Q1 and is well on track to reach our goal of 40 by the end of the year.
- Second, licensing our Question-and-Answer pairs to language model companies. We’ve signed two agreements and believe that this just the tip of the iceberg for this program. David will address the financial details of these deals.
Concerning our strategic review process, we’ve made significant progress. As a reminder, we undertook this effort last quarter with Goldman Sachs, to explore a range of outcomes to maximize shareholder value, including being acquired, undertaking a go-private transaction, or remaining as a public standalone company, and continue to believe this is the right step to maximize shareholder value. To date, we’ve had dozens of meetings with interested parties, ranging from strategic tech and education companies to private equity firms. Early indications are positive, and we are encouraged by the conversations and the value these organizations see in our business.
Here’s what’s capturing potential acquirers' attention:
- First is our core product, Chegg Study, a verticalized and personalized student support platform. As you may have seen, we keep innovating on behalf of students with the recently released Solution Scout which allows students to compare multiple language models against Chegg’s proprietary content, and our Practice service now has a new AI-powered feature called Create that empowers students to generate customized content directly from their own class materials – delivering a highly customized and personalized study experience.
-
Next is Busuu, our language learning service, which continues to perform very well. Q1 revenue increased
7% year over year, driven by growth in both the B2C and B2B businesses. The B2C business is seeing the benefits of AI-driven product enhancements such as Speaking Practice, which is driving deep engagement and strong performance in customer acquisition and retention. The B2B business maintained strong double-digit growth in Q1, achieving a29% year-over-year revenue increase, driven by a strategic focus on retaining and growing large enterprise clients. We expect Busuu to achieve approximately$48 million -
Our reinvented Skills product is set up for what I believe will be a breakout year in 2025. Chegg Skills provides skill-building for the modern workforce, including foundational digital skilling and broad-based AI training, and is trending toward the highest outcomes we’ve seen to date. In Q1, we entered into a pilot program with EdifyOnline and Noodle to provide AI programs that support a higher education initiative in
India . In Q2 and Q3, we expect to further expand our Guild business and to add additional partners. We believe Skills is on a path to profitability and positive revenue growth in 2026. - And finally, there is significant value in our library of proprietary and high-quality question and answer pairs and our network of subject matter experts. We’ve continued to make improvements in our content operations, with a new quality control rubric, as we prepare for the content licensing opportunity I mentioned earlier. As we have said many times, content is the heart and soul of our Chegg Study business, and these improvements in our QC rubric will serve both students and our new content licensing initiative.
While we exceeded expectations in Q1 and see great value in the areas of the business I just went through, we believe the macroeconomic trends will continue to put pressure on our company and business trends will worsen before they get better. Google and their expansion of AI Overviews continues to keep web traffic captive in the Google search experience and migrate search to Gemini. Additionally, language model companies are turning to academia for validation, with OpenAI recently giving college students free access to Chat GPT Plus, and Anthropic launching a free education offering.
As a result, we are once again taking proactive measures to align costs with our business outlook. We executed two restructurings in 2024, and today we are announcing further cost reduction plans. This restructuring will include expense reductions across our business, including closing physical offices in the US and
To conclude, I want to reinforce the key points from what I shared today.
- Our strategic alternatives process is going well and is the best way to maximize shareholder value and keep Chegg’s student-first mission thriving.
- We believe the strategy for Chegg Study, providing true learning outcomes for students, is enduring, and while our direct to student penetration normalizes, we are diversifying our revenue through two key opportunities in question-and-answer pair licensing and institutional direct contracts.
- We’re continuing to make the hard decisions to align our revenue decline in Chegg Study with our operating expenses, as challenging as they are, and
- Finally, we’re excited about the performance of Busuu and the opportunity for Skills, both of which are primed for a breakout year and expected to be adjusted EBITDA positive in 2026.
With that, I’ll turn it over to David.
Prepared Remarks - David Longo, CFO Chegg, Inc.
Thank you, Nathan and good afternoon.
Today, I will be presenting our financial performance for the first quarter of 2025, along with the company’s outlook for the second quarter.
We delivered a good first quarter, surpassing our guidance on both revenue and adjusted EBITDA, and generated
In the first quarter, total revenue was
In the first quarter gross margin was
Non GAAP operating expenses were
Free cash flow for the first quarter was
As mentioned earlier, in the first quarter we opportunistically repurchased
Looking at the balance sheet, we concluded the quarter with cash and investments of
As Nathan outlined earlier, we are executing an additional restructuring plan to continue to align our cost structure with our revenue as we navigate the continued industry challenges and the negative impact on our business. This restructuring will impact 248 employees, or approximately
Looking ahead, industry challenges continue to cause a notable decline in traffic and subscriber acquisitions. These conditions are a source of continued pressure on our business and are impacting our financial outlook.
For Q2 guidance, we expect:
-
Total revenue between
$100 $102 million $85 $87 million - Gross margin to be in the range of 64 to 65 percent;
-
And adjusted EBITDA between
$16 $17 million
In closing, while ongoing industry challenges impacting Chegg Study continue to affect our financial performance, the opportunity to support and serve students remains. We are taking the right steps to align the cost structure. At the same time, we continue to evaluate a range of strategic alternatives to ensure we are maximizing value for our shareholders and are encouraged by the interest we have received.
With that, I will turn the call over to the operator for your questions.
Conference Call and Webcast Information
To access the call, please dial 1-877-407-4018, or outside the
Use of Investor Relations Website for Regulation FD Purposes
Chegg also uses its investor relations website, https://investor.chegg.com, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor https://investor.chegg.com, in addition to following press releases, Securities and Exchange Commission filings and public conference calls and webcasts.
About Chegg
Chegg provides individualized learning support to students as they pursue their educational journeys. Available on demand 24/7 and powered by over a decade of learning insights, the Chegg platform offers students artificial intelligence (AI)-powered academic support thoughtfully designed for education coupled with access to a vast network of subject matter experts who help ensure quality and accuracy. No matter the goal, level, or style, Chegg helps millions of students around the world learn with confidence by helping them build essential academic, life, and job skills to achieve success. Chegg is a publicly held company based in
Use of Non-GAAP Measures
To supplement Chegg’s financial results presented in accordance with generally accepted accounting principles in
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Chegg defines (1) adjusted EBITDA as earnings before interest, taxes, depreciation and amortization or EBITDA, adjusted for share-based compensation expense, other income, net, acquisition-related compensation costs, impairment expense, restructuring charges, content and related assets charge and transitional logistic charges; (2) non-GAAP cost of revenues as cost of revenues excluding amortization of intangible assets, share-based compensation expense, acquisition-related compensation costs, restructuring charges, content and related assets charge, and transitional logistic charges; (3) non-GAAP gross profit as gross profit excluding amortization of intangible assets, share-based compensation expense, acquisition-related compensation costs, restructuring charges, content and related assets charge, and transitional logistic charges; (4) non-GAAP gross margin is defined as non-GAAP gross profit divided by net revenues, (5) non-GAAP operating expenses as operating expenses excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, restructuring charges, impairment expense, impairment of lease related assets, and loss contingency; (6) non-GAAP income from operations as loss from operations excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, restructuring charges, impairment expense, content and related assets charge, impairment of lease related assets, loss contingency, and transitional logistic charges; (7) non-GAAP net (loss) income as net loss excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, amortization of debt issuance costs, the income tax effect of non-GAAP adjustments, restructuring charges, impairment expense, content and related assets charge, impairment of lease related assets, gain on sale of strategic equity investment, gain on early extinguishment of debt, loss contingency and transitional logistic charges; (8) non-GAAP weighted average shares outstanding as weighted average shares outstanding adjusted for the effect of shares for stock plan activity and shares related to our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding; (9) non-GAAP net income per share is defined as non-GAAP net (loss) income divided by non-GAAP weighted average shares outstanding; and (10) free cash flow as net cash provided by operating activities adjusted for purchases of property and equipment. To the extent additional significant non-recurring items arise in the future, Chegg may consider whether to exclude such items in calculating the non-GAAP financial measures it uses.
Chegg believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Chegg’s performance by excluding items that may not be indicative of Chegg’s core business, operating results or future outlook. Chegg management uses these non-GAAP financial measures in assessing Chegg’s operating results, as well as when planning, forecasting and analyzing future periods and believes that such measures enhance investors’ overall understanding of our current financial performance. These non-GAAP financial measures also facilitate comparisons of Chegg’s performance to prior periods.
As presented in the “Reconciliation of Net Loss to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” “Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA,” and “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” tables below, each of the non-GAAP financial measures excludes or includes one or more of the following items:
Share-based compensation expense.
Share-based compensation expense is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Chegg's control. As a result, management excludes this item from Chegg's internal operating forecasts and models. Management believes that non-GAAP measures adjusted for share-based compensation expense provide investors with a basis to measure Chegg's core performance against the performance of other companies without the variability created by share-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used.
Amortization of intangible assets.
Chegg amortizes intangible assets, including those that contribute to generating revenues, that it acquires in conjunction with acquisitions, which results in non‑cash expenses that may not otherwise have been incurred. Chegg believes excluding the expense associated with intangible assets from non-GAAP measures allows for a more accurate assessment of its ongoing operations and provides investors with a better comparison of period-over-period operating results. No corresponding adjustments have been made related to revenues generated from acquired intangible assets.
Acquisition-related compensation costs.
Acquisition-related compensation costs include compensation expense resulting from the employment retention of certain key employees established in accordance with the terms of the acquisitions. In most cases, these acquisition-related compensation costs are not factored into management's evaluation of potential acquisitions or Chegg's performance after completion of acquisitions, because they are not related to Chegg's core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related compensation costs from non-GAAP measures provides investors with a basis to compare Chegg’s results against those of other companies without the variability caused by purchase accounting.
Amortization of debt issuance costs.
The difference between the effective interest expense and the contractual interest expense are excluded from management's assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. Chegg believes that the exclusion of the non-cash interest expense provides investors with a better comparison of period-over-period operating results.
Income tax effect of non-GAAP adjustments.
We utilize a non-GAAP effective tax rate for evaluating our operating results, which is based on our current mid-term projections. This non-GAAP tax rate could change for various reasons including, but not limited to, significant changes resulting from tax legislation, changes to our corporate structure and other significant events. Chegg believes that the inclusion of the income tax effect of non-GAAP adjustments provides investors with a better comparison of period-over-period operating results.
Restructuring charges.
Restructuring charges represent expenses incurred in conjunction with a reduction in workforce. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because they are nonrecurring and the result of an event that is not considered a core-operating activity. Chegg believes that it is appropriate to exclude the restructuring charges from non-GAAP financial measures because it provides investors with a better comparison of period-over-period operating results.
Impairment expense.
Impairment expense represents the impairment of goodwill, intangible assets, and property and equipment. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because they are the result of discrete events that are not considered core-operating activities and are not indicative of our ongoing operating performance. Chegg believes that it is appropriate to exclude the impairment expense from non-GAAP financial measures because it provides investors with a better comparison of period-over-period operating results.
Gain on sale of strategic equity investment.
The gain on sale of strategic equity investment represents a one-time event to record the sale of our equity investment in Sound Ventures. We believe that it is appropriate to exclude the gain from non-GAAP financial measure because it is the result of an event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.
Gain on early extinguishment of debt.
The difference between the carrying amount of early extinguished debt and the reacquisition price is excluded from management's assessment of our operating performance because management believes that these non-cash gains are not indicative of ongoing operating performance. Chegg believes that the exclusion of the gain on early extinguishment of debt provides investors with a better comparison of period-over-period operating results.
Effect of shares for stock plan activity.
The effect of shares for stock plan activity represents the dilutive impact of outstanding stock options, RSUs, and PSUs, to the extent such shares are not already included in our weighted average shares outstanding.
Effect of shares related to convertible senior notes.
The effect of shares related to convertible senior notes represents the dilutive impact of our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding.
Free cash flow.
Free cash flow represents net cash provided by operating activities adjusted for purchases of property and equipment. Chegg considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property and equipment, which can then be used to, among other things, invest in Chegg's business and make strategic acquisitions. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in Chegg's cash balance for the period.
Forward-Looking Statements
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which include, without limitation, statements regarding our ongoing process to explore strategic alternatives and the outcome of such process; our newly announced restructuring plan, including the number of employees impacted by the reduction in force, the amount and timing of the charges we will incur in connection with these actions, the impact of the actions on our non-GAAP financial measures, including the amount of cost savings and the timing of those savings; our ability to increase efficiency across the business and to manage our expenses prudently as the competitive landscape evolves; our strategy to diversify our revenue streams with question-and-answer pair licensing, business-to-institution programs and other enterprise offerings; our ability to weather current and future business challenges and to stabilize the business; the impact of generative AI for academic support on the education ecosystem at large, including universities and education technology companies broadly; the speed, scale and potential impact of Google's AIO rollout; our ongoing litigation against Google and its outcome; student adoption of generative AI products; and all statements about our outlook under “Business Outlook,” including our Q2 2025 guidance, including total revenue, Subscription Services revenue, gross margin, and adjusted EBITDA, as well as those included in the investor presentation referenced above and the “Prepared Remarks” sections above. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “endeavor,” “will,” “should,” “future,” “transition,” “outlook” and similar expressions, as they relate to Chegg, are intended to identify forward-looking statements. These statements are not guarantees of future performance, and are based on management’s expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: the effects of AI technology on our business and the economy generally; our ability to stabilize the business by attracting new learners to, and retaining existing learners on, our learning platform in light of declining revenue and user traffic; the impact and effectiveness of our internal restructuring activities; our ability to effectively control operating costs; our ability to innovate and offer new products and services in response to competitive technology and market developments, including generative AI; the outcome and effects of our exploration of strategic alternatives, which may not be successful and may disrupt our ongoing business, result in increased expenses and present other risks; competition in all aspects of our business, including with respect to AI and our expectation that such competition will increase; the outcome of our litigation against Google; our ability to maintain our services and systems without interruption, including as a result of technical issues, cybersecurity threats, or cyber-attacks; third-party payment processing risks; the outcome of any current litigation and investigations; the possibility that the NYSE may delist our common stock; and general economic, political and industry conditions, including escalating international trade tensions, including tariffs and trade restrictions, fluctuating inflation, recession and war. All information provided in this release and in the conference call is as of the date hereof, and Chegg undertakes no duty to update this information except as required by law. These and other important risk factors are described more fully in documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “Commission”) on February 24, 2025, as supplemented by the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2025 to be filed with the Securities and Exchange Commission, and could cause actual results to differ materially from expectations.
CHEGG, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except for number of shares and par value) (unaudited) |
|||||||
|
March 31,
|
|
December 31,
|
||||
Assets |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
44,105 |
|
|
$ |
161,475 |
|
Short-term investments |
|
44,188 |
|
|
|
154,249 |
|
Accounts receivable, net of allowance of |
|
28,549 |
|
|
|
23,641 |
|
Prepaid expenses |
|
14,514 |
|
|
|
17,100 |
|
Other current assets |
|
78,395 |
|
|
|
81,094 |
|
Total current assets |
|
209,751 |
|
|
|
437,559 |
|
Long-term investments |
|
38,093 |
|
|
|
212,650 |
|
Property and equipment, net |
|
144,971 |
|
|
|
170,648 |
|
Intangible assets, net |
|
9,271 |
|
|
|
10,347 |
|
Right of use assets |
|
21,479 |
|
|
|
22,256 |
|
Other assets |
|
15,204 |
|
|
|
15,491 |
|
Total assets |
$ |
438,769 |
|
|
$ |
868,951 |
|
Liabilities and stockholders' equity |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
16,812 |
|
|
$ |
15,159 |
|
Deferred revenue |
|
45,150 |
|
|
|
39,217 |
|
Accrued liabilities |
|
109,070 |
|
|
|
115,360 |
|
Current portion of convertible senior notes, net |
|
— |
|
|
|
358,605 |
|
Total current liabilities |
|
171,032 |
|
|
|
528,341 |
|
Long-term liabilities |
|
|
|
||||
Convertible senior notes, net |
|
62,475 |
|
|
|
127,344 |
|
Long-term operating lease liabilities |
|
17,797 |
|
|
|
18,509 |
|
Other long-term liabilities |
|
1,794 |
|
|
|
1,776 |
|
Total long-term liabilities |
|
82,066 |
|
|
|
147,629 |
|
Total liabilities |
|
253,098 |
|
|
|
675,970 |
|
Commitments and contingencies (Note 8) |
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
105 |
|
|
|
105 |
|
Additional paid-in capital |
|
1,125,738 |
|
|
|
1,114,550 |
|
Accumulated other comprehensive loss |
|
(33,247 |
) |
|
|
(32,233 |
) |
Accumulated deficit |
|
(906,925 |
) |
|
|
(889,441 |
) |
Total stockholders' equity |
|
185,671 |
|
|
|
192,981 |
|
Total liabilities and stockholders' equity |
$ |
438,769 |
|
|
$ |
868,951 |
|
CHEGG, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2025 |
|
|
|
2024 |
|
Net revenues |
$ |
121,387 |
|
|
$ |
174,350 |
|
Cost of revenues(1) |
|
53,973 |
|
|
|
46,497 |
|
Gross profit |
|
67,414 |
|
|
|
127,853 |
|
Operating expenses: |
|
|
|
||||
Research and development(1) |
|
29,428 |
|
|
|
44,435 |
|
Sales and marketing(1) |
|
25,614 |
|
|
|
30,375 |
|
General and administrative(1) |
|
39,374 |
|
|
|
55,534 |
|
Impairment expense |
|
2,000 |
|
|
|
— |
|
Total operating expenses |
|
96,416 |
|
|
|
130,344 |
|
Loss from operations |
|
(29,002 |
) |
|
|
(2,491 |
) |
Interest expense and other income, net: |
|
|
|
||||
Interest expense |
|
(467 |
) |
|
|
(650 |
) |
Other income, net |
|
12,997 |
|
|
|
10,780 |
|
Total interest expense and other income, net |
|
12,530 |
|
|
|
10,130 |
|
(Loss) income before provision for income taxes |
|
(16,472 |
) |
|
|
7,639 |
|
Provision for income taxes |
|
(1,012 |
) |
|
|
(9,059 |
) |
Net loss |
$ |
(17,484 |
) |
|
$ |
(1,420 |
) |
Net loss per share, basic and diluted |
$ |
(0.17 |
) |
|
$ |
(0.01 |
) |
Weighted average shares used to compute net loss per share, basic and diluted |
|
105,159 |
|
|
|
102,343 |
|
|
|
|
|
||||
(1) Includes share-based compensation expense and restructuring charges as follows: |
|
|
|
||||
|
|
|
|
||||
Share-based compensation expense: |
|
|
|
||||
Cost of revenues |
$ |
238 |
|
|
$ |
513 |
|
Research and development |
|
3,212 |
|
|
|
9,209 |
|
Sales and marketing |
|
1,061 |
|
|
|
2,140 |
|
General and administrative |
|
6,746 |
|
|
|
17,427 |
|
Total share-based compensation expense |
$ |
11,257 |
|
|
$ |
29,289 |
|
|
|
|
|
||||
Restructuring charges: |
|
|
|
||||
Cost of revenues |
$ |
— |
|
|
$ |
— |
|
Research and development |
|
959 |
|
|
|
— |
|
Sales and marketing |
|
132 |
|
|
|
— |
|
General and administrative |
|
1,829 |
|
|
|
— |
|
Total restructuring charges |
$ |
2,920 |
|
|
$ |
— |
|
CHEGG, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2025 |
|
|
|
2024 |
|
Cash flows from operating activities |
|
|
|
||||
Net loss |
$ |
(17,484 |
) |
|
$ |
(1,420 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Share-based compensation expense |
|
11,257 |
|
|
|
29,289 |
|
Depreciation and amortization expense |
|
32,094 |
|
|
|
19,687 |
|
Deferred tax assets |
|
15 |
|
|
|
2,877 |
|
Operating lease expense, net of accretion |
|
1,089 |
|
|
|
1,567 |
|
Amortization of debt issuance costs |
|
377 |
|
|
|
541 |
|
Loss from write-offs of property and equipment |
|
2,287 |
|
|
|
478 |
|
Gain on early extinguishment of debt |
|
(7,360 |
) |
|
|
— |
|
Realized gain on sale of investments |
|
(752 |
) |
|
|
— |
|
Other non-cash items |
|
(28 |
) |
|
|
(31 |
) |
Change in assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(4,693 |
) |
|
|
6,705 |
|
Prepaid expenses and other current assets |
|
5,880 |
|
|
|
3,583 |
|
Other assets |
|
518 |
|
|
|
(1,270 |
) |
Accounts payable |
|
1,535 |
|
|
|
(6,589 |
) |
Deferred revenue |
|
5,437 |
|
|
|
(1,159 |
) |
Accrued liabilities |
|
(4,894 |
) |
|
|
640 |
|
Other liabilities |
|
(752 |
) |
|
|
(1,580 |
) |
Net cash provided by operating activities |
|
24,526 |
|
|
|
53,318 |
|
Cash flows from investing activities |
|
|
|
||||
Purchases of property and equipment |
|
(8,665 |
) |
|
|
(28,017 |
) |
Purchases of investments |
|
(793 |
) |
|
|
(79,028 |
) |
Maturities of investments |
|
103,214 |
|
|
|
50,731 |
|
Proceeds from sale of investments |
|
181,158 |
|
|
|
— |
|
Proceeds from sale of strategic equity investment |
|
— |
|
|
|
15,500 |
|
Net cash provided by (used in) investing activities |
|
274,914 |
|
|
|
(40,814 |
) |
Cash flows from financing activities |
|
|
|
||||
Payment of taxes related to the net share settlement of equity awards |
|
(469 |
) |
|
|
(4,294 |
) |
Repayment of convertible senior notes |
|
(416,492 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(416,961 |
) |
|
|
(4,294 |
) |
Effect of exchange rate changes |
|
218 |
|
|
|
(226 |
) |
Net (decrease) increase in cash, cash equivalents and restricted cash |
|
(117,303 |
) |
|
|
7,984 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
164,359 |
|
|
|
137,976 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
47,056 |
|
|
$ |
145,960 |
|
|
Three Months Ended
|
||||||
|
|
2025 |
|
|
|
2024 |
|
Supplemental cash flow data: |
|
|
|
||||
Cash paid during the period for: |
|
|
|
||||
Interest |
$ |
224 |
|
$ |
224 |
||
Income taxes, net of refunds |
$ |
1,227 |
|
|
$ |
641 |
|
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
||||
Operating cash flows from operating leases |
$ |
2,221 |
|
|
$ |
2,216 |
|
Right of use assets obtained in exchange for lease obligations: |
|
|
|
||||
Operating leases |
$ |
258 |
|
|
$ |
— |
|
Non-cash investing and financing activities: |
|
|
|
||||
Accrued purchases of long-lived assets |
$ |
4,265 |
|
|
$ |
6,302 |
|
|
March 31, |
||||||
|
|
2025 |
|
|
|
2024 |
|
Reconciliation of cash, cash equivalents and restricted cash: |
|
|
|
||||
Cash and cash equivalents |
$ |
44,105 |
|
$ |
143,747 |
||
Restricted cash included in other current assets |
|
1,036 |
|
|
|
224 |
|
Restricted cash included in other assets |
|
1,915 |
|
|
|
1,989 |
|
Total cash, cash equivalents and restricted cash |
$ |
47,056 |
|
|
$ |
145,960 |
|
CHEGG, INC. RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) |
|||||||
|
Three Months Ended March 31, |
||||||
|
|
2025 |
|
|
|
2024 |
|
Net loss |
$ |
(17,484 |
) |
|
$ |
(1,420 |
) |
Interest expense |
|
467 |
|
|
|
650 |
|
Provision for income taxes |
|
1,012 |
|
|
|
9,059 |
|
Depreciation and amortization expense |
|
32,094 |
|
|
|
19,687 |
|
EBITDA |
|
16,089 |
|
|
|
27,976 |
|
Share-based compensation expense |
|
11,257 |
|
|
|
29,289 |
|
Other income, net |
|
(12,997 |
) |
|
|
(10,780 |
) |
Restructuring charges |
|
2,920 |
|
|
|
— |
|
Impairment expense |
|
2,000 |
|
|
|
— |
|
Acquisition-related compensation costs |
|
— |
|
|
|
255 |
|
Adjusted EBITDA |
$ |
19,269 |
|
|
$ |
46,740 |
|
CHEGG, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except percentages and per share amounts) (unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2025 |
|
|
|
2024 |
|
Cost of revenues |
$ |
53,973 |
|
|
$ |
46,497 |
|
Amortization of intangible assets |
|
(1,077 |
) |
|
|
(3,142 |
) |
Share-based compensation expense |
|
(238 |
) |
|
|
(513 |
) |
Acquisition-related compensation costs |
|
— |
|
|
|
(6 |
) |
Non-GAAP cost of revenues |
$ |
52,658 |
|
|
$ |
42,836 |
|
|
|
|
|
||||
Gross profit |
$ |
67,414 |
|
|
$ |
127,853 |
|
Amortization of intangible assets |
|
1,077 |
|
|
|
3,142 |
|
Share-based compensation expense |
|
238 |
|
|
|
513 |
|
Acquisition-related compensation costs |
|
— |
|
|
|
6 |
|
Non-GAAP gross profit |
$ |
68,729 |
|
|
$ |
131,514 |
|
|
|
|
|
||||
Gross margin % |
|
56 |
% |
|
|
73 |
% |
Non-GAAP gross margin % |
|
57 |
% |
|
|
75 |
% |
|
|
|
|
||||
Operating expenses |
$ |
96,416 |
|
|
$ |
130,344 |
|
Share-based compensation expense |
|
(11,019 |
) |
|
|
(28,776 |
) |
Restructuring charges |
|
(2,920 |
) |
|
|
— |
|
Impairment expense |
|
(2,000 |
) |
|
|
— |
|
Amortization of intangible assets |
|
— |
|
|
|
(856 |
) |
Acquisition-related compensation costs |
|
— |
|
|
|
(249 |
) |
Non-GAAP operating expenses |
$ |
80,477 |
|
|
$ |
100,463 |
|
|
|
|
|
||||
Loss from operations |
$ |
(29,002 |
) |
|
$ |
(2,491 |
) |
Share-based compensation expense |
|
11,257 |
|
|
|
29,289 |
|
Restructuring charges |
|
2,920 |
|
|
|
— |
|
Impairment expense |
|
2,000 |
|
|
|
— |
|
Amortization of intangible assets |
|
1,077 |
|
|
|
3,998 |
|
Acquisition-related compensation costs |
|
— |
|
|
|
255 |
|
Non-GAAP (loss) income from operations |
$ |
(11,748 |
) |
|
$ |
31,051 |
|
|
Three Months Ended
|
||||||
|
|
2025 |
|
|
|
2024 |
|
Net loss |
$ |
(17,484 |
) |
|
$ |
(1,420 |
) |
Share-based compensation expense |
|
11,257 |
|
|
|
29,289 |
|
Restructuring charges |
|
2,920 |
|
|
|
— |
|
Impairment expense |
|
2,000 |
|
|
|
— |
|
Amortization of intangible assets |
|
1,077 |
|
|
|
3,998 |
|
Income tax effect of non-GAAP adjustments |
|
528 |
|
|
|
713 |
|
Amortization of debt issuance costs |
|
377 |
|
|
|
541 |
|
Acquisition-related compensation costs |
|
— |
|
|
|
255 |
|
Gain on early extinguishment of debt |
|
(7,360 |
) |
|
|
— |
|
Gain on sale of strategic equity investment |
|
— |
|
|
|
(3,783 |
) |
Non-GAAP net (loss) income |
$ |
(6,685 |
) |
|
$ |
29,593 |
|
|
|
|
|
||||
Weighted average shares used to compute net loss per share |
|
105,159 |
|
|
|
102,343 |
|
Effect of shares for stock plan activity |
|
— |
|
|
|
792 |
|
Effect of shares related to convertible senior notes |
|
— |
|
|
|
9,234 |
|
Non-GAAP weighted average shares used to compute non-GAAP net income per share |
|
105,159 |
|
|
|
112,369 |
|
|
|
|
|
||||
Net loss per share |
$ |
(0.17 |
) |
|
$ |
(0.01 |
) |
Adjustments |
|
0.11 |
|
|
|
0.27 |
|
Non-GAAP net (loss) income per share |
$ |
(0.06 |
) |
|
$ |
0.26 |
|
CHEGG, INC. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (in thousands) (unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2025 |
|
|
|
2024 |
|
Net cash provided by operating activities |
$ |
24,526 |
|
|
$ |
53,318 |
|
Purchases of property and equipment |
|
(8,665 |
) |
|
|
(28,017 |
) |
Free cash flow |
$ |
15,861 |
|
|
$ |
25,301 |
|
CHEGG, INC. RECONCILIATION OF FORWARD-LOOKING NET LOSS TO EBITDA AND ADJUSTED EBITDA (in thousands) (unaudited) |
|||
|
Three Months
|
||
Net loss |
$ |
(31,700 |
) |
Interest expense, net |
|
100 |
|
Provision for income taxes |
|
600 |
|
Depreciation and amortization expense |
|
15,900 |
|
EBITDA |
|
(15,100 |
) |
Share-based compensation expense |
|
6,700 |
|
Other income, net |
|
(1,100 |
) |
Restructuring charges |
|
23,000 |
|
Impairment of lease related assets |
|
3,000 |
|
Adjusted EBITDA |
$ |
16,500 |
|
* Adjusted EBITDA guidance for the three months ending June 30, 2025 represent the midpoint of the range of
View source version on businesswire.com: https://www.businesswire.com/news/home/20250512174590/en/
Media Contact: Mansi Bandarupalli, press@chegg.com
Investor Contact: Tracey Ford, IR@chegg.com
Source: Chegg
