Chegg (NYSE: CHGG) returns to profit as Q1 2026 revenue falls 48%
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Chegg reported first-quarter 2026 results showing a much smaller business but a return to profitability. Total net revenues were $63.3 million, down 48% year-over-year, while Chegg Skilling revenues grew 9% to $17.6 million. GAAP net income was $0.2 million and non-GAAP net income was $3.5 million.
Cost cuts drove margins higher: gross margin reached 60% and non-GAAP gross margin 62%. Adjusted EBITDA was $15.5 million, or a 24% margin, and free cash flow was $3.1 million despite $12.9 million of restructuring-related severance. Chegg ended the quarter with $67.9 million in cash and investments and a net cash position of $34.1 million.
Positive
- Return to profitability and strong margins: Q1 2026 GAAP net income was $0.2 million, non-GAAP net income was $3.5 million, and adjusted EBITDA reached $15.5 million with a 24% margin, supported by non-GAAP gross margin of 62%.
- Material cost and capital improvements: Non-GAAP operating expenses fell 55% year-over-year to $36.4 million, capex declined 88%, and Chegg ended the quarter with $67.9 million in cash and investments and a $34.1 million net cash position after repaying convertible notes.
Negative
- Sharp revenue contraction: Total net revenues fell 48% year-over-year to $63.3 million in Q1 2026, with Academic Services revenue at $45.7 million and ongoing traffic pressure mentioned for the legacy Study business.
Insights
Revenue shrank sharply but Chegg returned to profit with strong cost cuts.
Chegg is clearly much smaller than a year ago, with Q1 2026 net revenues of $63.3M, down 48% year-over-year. The legacy Academic Services segment delivered $45.7M, while Chegg Skilling grew 9% to $17.6M, highlighting the mix shift.
Management aggressively reduced expenses: non-GAAP operating expenses fell 55% to $36.4M, helping produce GAAP net income of $0.2M and non-GAAP net income of $3.5M, plus adjusted EBITDA of $15.5M with a 24% margin. First-quarter free cash flow was $3.1M.
The balance sheet improved, with $67.9M in cash and investments and net cash of $34.1M as convertible notes were repaid. For Q2 2026, guidance calls for total revenue of $49–$50M, Chegg Skilling revenue of $17.5–$18M, gross margin of 51–52%, and adjusted EBITDA of $5–$6M.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Total net revenues: $63.3M
Chegg Skilling revenues: $17.6M
GAAP net income: $0.2M
+5 more
8 metrics
Total net revenues
$63.3M
Q1 2026, 48% year-over-year decrease
Chegg Skilling revenues
$17.6M
Q1 2026, 9% year-over-year increase
GAAP net income
$0.2M
Q1 2026, first positive quarter in two years
Adjusted EBITDA
$15.5M
Q1 2026, 24% adjusted EBITDA margin
Free cash flow
$3.1M
Q1 2026, after $12.9M restructuring severance
Cash and investments
$67.9M
As of March 31, 2026
Net cash position
$34.1M
As of March 31, 2026
Q2 2026 revenue guidance
$49–$50M
Total revenue range for quarter ending June 30, 2026
Key Terms
adjusted EBITDA, free cash flow, convertible senior notes, non-GAAP gross margin, +1 more
5 terms
adjusted EBITDA financial
"Adjusted EBITDA was $15.5 million"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
free cash flow financial
"Free cash flow in the quarter was $3.1 million"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
convertible senior notes financial
"Current portion of convertible senior notes, net 33,822"
Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.
non-GAAP gross margin financial
"Non-GAAP Gross Margin of 62%"
Non-GAAP gross margin is a measure of a company's profitability that shows how much money it makes from sales after subtracting the direct costs of producing its products or services, but without applying certain accounting adjustments required by standard rules. It helps investors understand the company's core earning ability by excluding items like one-time expenses or accounting changes. This metric provides a clearer picture of ongoing business performance beyond official financial reports.
restructuring (credits) charges financial
"Restructuring (credits) charges (165) 2,920"
Earnings Snapshot
Total net revenues: $63.3M · Guidance included
Q1 2026
Total net revenues
$63.3M
-48% YoY
Chegg Skilling revenues
$17.6M
+9% YoY
Gross margin
60%
Non-GAAP gross margin
62%
GAAP net income
$0.2M
Non-GAAP net income
$3.5M
Adjusted EBITDA
$15.5M
Guidance
For Q2 2026, Chegg guides to total revenue of $49–$50M, Chegg Skilling revenue of $17.5–$18M, gross margin of 51–52%, and adjusted EBITDA of $5–$6M.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 6, 2026
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| | |||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(408 ) 855-5700
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 6, 2026, Chegg, Inc. (“we,” “us,” “our,” “Company” or “Chegg”) issued a press release announcing its financial results for the quarter ended March 31, 2026. A copy of the press release is attached as Exhibit 99.01 to this Current Report on Form 8-K.
The information contained in this Item 2.02, including the press release attached as Exhibit 99.01 to this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the accompanying Exhibit 99.01 shall not be incorporated by reference into any registration statement or other document filed by Chegg with the Securities and Exchange Commission (“SEC”), whether made before or after the date of this Current Report on Form 8-K, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
99.01 | Press release issued by Chegg, Inc., dated May 6, 2026 | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CHEGG, INC. | |||||
By: /S/ DAVID LONGO | |||||
| David Longo | |||||
| Chief Financial Officer and Corporate Secretary | |||||
Date: May 6, 2026
EXHIBIT 99.01
Chegg Reports First Quarter 2026 Earnings
Achieved GAAP Net Income for the Quarter
SAN FRANCISCO, Calif., May 6, 2026 /BUSINESS WIRE/ -- Chegg, Inc. (NYSE:CHGG), a global learning company, today reported financial results for the quarter ended March 31, 2026.
“Q1 was a strong quarter. We exceeded expectations for revenue, adjusted EBITDA, free cash flow, and delivered positive net income for the first time in two years,” said Dan Rosensweig, CEO and Executive Chairman of Chegg. “The foundation for future growth is now in place, and we are focused on expanding our skilling business where we continue to expect double-digit revenue growth for full-year 2026 and the market opportunity has never been clearer.”
First Quarter 2026 Highlights
•Total Net Revenues of $63.3 million, a decrease of 48% year-over-year
•Chegg Skilling Revenues of $17.6 million, an increase of 9% year-over-year
•Gross Margin of 60%
•Non-GAAP Gross Margin of 62%
•Net Income was $0.2 million
•Non-GAAP Net Income was $3.5 million
•Adjusted EBITDA was $15.5 million
For more information about non-GAAP gross margin, non-GAAP net income, and adjusted EBITDA, as well as a reconciliation of gross margin to non-GAAP gross margin, net income (loss) to non-GAAP net income (loss), and net income (loss) to adjusted EBITDA, see the sections of this press release titled, “Use of Non-GAAP Measures,” “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA,” and “Reconciliation of GAAP to Non-GAAP Financial Measures.”
Business Outlook
Second Quarter 2026
•Chegg Skilling Revenues in the range of $17.5 million to $18 million
•Total Net Revenues in the range of $49 million to $50 million
•Gross Margin between 51% and 52%
•Adjusted EBITDA in the range of $5 million to $6 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 2026, 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 (such items are not incorporated into any filings Chegg may make with the Securities and Exchange Commission, unless otherwise noted).
Prepared Remarks - Dan Rosensweig, CEO & Executive Chairman Chegg, Inc.
Thank you, Tracey, and thanks everyone for joining Chegg’s first quarter 2026 earnings call. Q1 was a strong quarter. We exceeded our expectations for revenue, profitability, and free cash flow, while significantly reducing our debt, and we continue to optimize our cost base and capital expenditure. These results reflect the deliberate work we have done to rearchitect Chegg - our financials, our corporate structure, our product experience - optimized around AI, and the results are showing. The business is leaner and better positioned for future growth with high margins.
Leveraging artificial intelligence, we provide a differentiated experience as we personalize learning paths, identify where learners are struggling, and trigger targeted interventions from coaches or systems before a learner falls behind. AI also allows us to create and update curriculum fast enough to keep pace with how quickly skills, especially AI skills, are evolving. All of this allows us to deliver better outcomes without increasing costs.
We continue to expect double-digit revenue growth in skilling for the full-year 2026, with acceleration as the year progresses. We are seeing positive traction broadly across skilling, including the addition of new enterprise partners and channel partners and momentum in global category leaders across manufacturing, consulting & professional services and technology. Notably, we recently signed a partnership with Cornerstone, a leading learning and talent management platform. This is expected to open a meaningful enterprise distribution channel for Chegg Skills and connect us with customers at scale.
And, for the first time, we are expanding our skilling platform through accredited offerings. With Woolf, a partnership we announced last quarter, we are launching our first AI master’s program, combining applied learning with recognized credentials.
We take the same AI-first approach in our language learning offering, as we are moving beyond structured lessons toward real-time, in-workflow coaching - helping learners apply skills in the moments that matter most. What differentiates our offering is that AI enables us to surface skills performance data that HR and L&D leaders can act on, shifting the conversation from reporting on learning activity to demonstrating measurable language capability in the workflow. Skilling is a large and growing market, and we believe we are building the most credible, outcomes-driven platform in our space.
In our 2026 Chegg Skills for Business Impact Report, more than two-thirds of graduates surveyed report applying their new skills immediately. 43% say they are working more efficiently, and 41% report improved quality of work. On AI specifically, 75% of graduates report increased confidence, and 43% are actively applying those skills on the job.
The impact extends to employers as well. 80% of the graduates we surveyed report a positive career impact, and 92% remain with their employer six to twelve months after completing their program, with 62% citing employer-sponsored education as a key reason for staying.
Our investments in skilling are funded by the strong free cash flow being generated by Chegg Study, which outperformed our expectations in Q1. While search headwinds continue to impact traffic for Chegg Study, retention remains strong—an indicator that students continue to find real value in our product.
The financial foundation we have built is what makes everything we are building possible, and it reflects the kind of focus and discipline this team has. Six months ago, I returned to Chegg because I saw a company with all of the ingredients to win - a trusted brand, a proven curriculum, outcomes data that demonstrated a real return on investment for our customers, and an expanding global network of enterprise and institutional partners. What we needed was focus and clarity to lean into the opportunities ahead of us. In the last six months, this team removed approximately 40% of our costs, put us on a path to zero debt, increased our free cash flow, and retooled the business to be AI-first, giving us a strong foundation to grow from. As a result, I am confident about the category we are in, the momentum in our skilling business, and the strength of our balance sheet. I feel confident about the opportunity in front of us and our ability to drive value for our shareholders and our customers and I look forward to updating you on the next call.
With that, I’ll turn it over to David.
Prepared Remarks - David Longo, CFO and Corporate Secretary Chegg, Inc.
Thank you, Dan and good afternoon.
Today, I will review our financial performance for the first quarter of 2026, along with the company’s outlook for the second quarter.
Building on the progress outlined on our last earnings call, we delivered a strong first quarter, which exceeded expectations. Our results reflect continued execution on our priorities and increasing momentum in our businesses. Our strategic focus on the large and growing skilling market positions us for long-term, sustainable growth with strong margins, while we leverage AI across the organization to improve efficiency and drive meaningful improvements in profitability and cash generation.
In the quarter, Chegg Skilling generated $17.6 million in revenue, representing 9% growth, as we continued to invest in the business. We also signed exciting new distribution deals, which we expect to contribute in the second half and help drive
double-digit Skilling revenue growth for the full year. Academic Services revenue was $45.7 million. We continue to manage this business with a focus on maximizing cash generation, which exceeded our expectations this quarter. While traffic remained under pressure, monthly retention rates were very strong in the quarter, further extending the operational runway of the business.
Turning to expenses, non-GAAP operating expenses were $36.4 million, reflecting a reduction of $44.1 million, or 55% year-over-year. These results reflect our disciplined approach to expense management. We will continue to identify additional opportunities, including enhanced use of AI, to drive further efficiencies. Importantly, these actions are generating cash flow that we can invest in our future growth. Adjusted EBITDA for the quarter was $15.5 million, representing a margin of 24%. We also delivered positive net income in the first quarter, for the first time in two years.
First quarter CapEx was $1 million, down 88% year-over-year. For 2026, we are targeting a 60% reduction in CapEx, with approximately 90% dedicated to our growing Skilling business.
Free cash flow in the quarter was $3.1 million, which includes approximately $12.9 million of severance payments related to prior restructuring actions. We expect an additional $2.1 million of severance payments in the second quarter. Despite these items, we expect to generate meaningful free cash flow in 2026.
Looking at the balance sheet, we ended the quarter with $67.9 million in cash and investments and a net cash position of $34.1 million, providing us flexibility as we execute on our priorities.
Looking ahead to Q2 guidance, we expect:
•Chegg Skilling revenue of $17.5 to $18 million;
•Total revenue between $49 and $50 million;
•Gross margin in the range of 51% to 52%;
•And adjusted EBITDA between $5 and $6 million.
In 2026, our capital allocation priorities remain focused on maximizing free cash flow, strengthening our balance sheet, and fully repaying our convertible debt by September. Additionally, we will continue to evaluate opportunities to deploy capital, including through our remaining securities repurchase authorization, with a disciplined approach aligned to long-term shareholder value.
In closing, we have taken deliberate actions to position the company for long-term success. We are leaner, more efficient, and well-positioned for double-digit growth in our Skilling business and meaningful free cash flow in 2026, putting us on a clear path to sustained growth, profitability, and increased shareholder value.
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 U.S. +1-201-689-8471. A live webcast of the call will also be available at https://investor.chegg.com under the Events & Presentations menu. Participants can also access the call using the Call me™ link for instant telephone access to the event, which will be active 15 minutes before the scheduled start time.
An audio replay will be available from 7:30 p.m. Eastern Time on May 6, 2026 until 11:59 p.m. Eastern Time on May 20, 2026 by calling 1-844-512-2921 or outside the U.S. +1-412-317-6671 with Access ID 13760028. An audio archive of the call will also be available at https://investor.chegg.com.
Use of Investor Relations Website for Regulation FD Purposes
Chegg also uses its Investor Relations website, https://www.chegg.com/press, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor https://www.chegg.com/press, in addition to following press releases, Securities and Exchange Commission filings and public conference calls and webcasts.
About Chegg
Chegg is a learning platform helping businesses bring new skills to their workforce and giving lifelong learners and students the skills and confidence to succeed. Focused on the skilling market, which is $40 billion and growing, Chegg offers innovative tools for workplace readiness, professional upskilling, and language learning. Chegg also continues to offer students artificial intelligence (AI)-driven, personalized support. Chegg remains committed to its mission of improving learning outcomes and career opportunities for millions around the world. Chegg is a publicly held company and trades on the NYSE under the symbol CHGG. For more information, visit www.chegg.com.
Media Contact: press@chegg.com
Investor Contact: Tracey Ford, IR@chegg.com
Use of Non-GAAP Measures
To supplement Chegg’s financial results presented in accordance with generally accepted accounting principles in the United States (GAAP), this press release and the accompanying tables and the related earnings conference call contain non-GAAP financial measures, including adjusted EBITDA, non-GAAP cost of revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP weighted average shares, non-GAAP net income (loss) per share, and free cash flow. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” and “Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA.”
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, impairment expense, and restructuring (credits) charges; (2) non-GAAP cost of revenues as cost of revenues excluding amortization of intangible assets, share-based compensation expense, and restructuring credits (charges); (3) non-GAAP gross profit as gross profit excluding amortization of intangible assets, share-based compensation expense, and restructuring credits (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, restructuring (credits) charges, and impairment expense; (6) non-GAAP income (loss) from operations as loss from operations excluding share-based compensation expense, amortization of intangible assets, restructuring (credits) charges, and impairment expense; (7) non-GAAP net income (loss) as net income (loss) excluding share-based compensation expense, amortization of intangible assets, amortization of debt issuance costs, the income tax effect of non-GAAP adjustments, restructuring (credits) charges, impairment expense, and gain on early extinguishment of debt; (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 (loss) per share is defined as non-GAAP net income (loss) 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 Income (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.
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 (credits) charges
Restructuring (credits) 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 property and equipment. Chegg believes that it is appropriate to exclude it from non-GAAP financial measures because it is 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 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 ability to retain customers and generate cash flow from our legacy Study business, that there continues to be a large and growing skilling market, that we will be able to develop product and service offerings that organizations and learners will continue to value, our estimates regarding the growth of our Skilling business and development of new partnerships and distribution channels, our belief in the willingness of businesses to invest in AI readiness and our ability to develop products to meet that need, our ability to manage expenses and maintain profitability, expectations regarding cash flow, repayment of debt, and utilization of our balance sheet, including future repurchases of debt or equity securities under our existing securities repurchase program, our ability to utilize AI tools to enhance and differentiate our product offerings and control costs, all statements about Chegg’s outlook under “Business Outlook”, including our Q2 2026 guidance, including total revenue, Chegg Skilling revenue, gross margin, and adjusted EBITDA, the time it will take to adjust to Chegg's new opportunity and see the benefits in our business results and our ability to transform Chegg's business, as well as those included in the investor presentation referenced above and those included in 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 Chegg’s business and the economy generally; Chegg’s ability to attract new learners and retain existing learners in light of declining revenue and user traffic; Chegg's ability to innovate and offer new products and services in response to competitive technology and market developments, including AI; Chegg’s ability to diversify its revenue streams with business-to-institution programs and other enterprise offerings; the uncertainty surrounding the evolving educational landscape; Chegg’s ability to build and maintain strong brands and reputation; Chegg’s ability to develop new product and service offerings and their adoption by customers; competition in all aspects of Chegg’s business, including with respect to AI and Chegg's expectation that such competition will increase; challenges related to Chegg’s international operations; Chegg’s ability to maintain its services and systems without interruption, including as a result of technical issues, cybersecurity threats, or cyber-attacks; disruptions of services provided to us by third parties, including web hosting and payment processing services; changes in regulation, in particular those concerning privacy, marketing, and education; risks related to our ability to comply with regulations, obligations and policies related to data privacy; the outcome of any current litigation and investigations, including our litigation against Google and litigation against us; misuse of Chegg’s platform and content; the effectiveness of Chegg’s restructuring activities and disruptions related to them; changes in the education market, including as a result of AI technology; the possibility that the NYSE may delist our common stock; and general economic, political and industry conditions, including 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 Chegg's most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission, which 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, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 33,526 | $ | 31,146 | |||||||
| Short-term investments | 32,388 | 41,674 | |||||||||
Accounts receivable, net of allowance of $167 and $156 at March 31, 2026 and December 31, 2025, respectively | 17,795 | 15,604 | |||||||||
| Prepaid expenses | 12,128 | 16,331 | |||||||||
| Other current assets | 14,948 | 16,857 | |||||||||
| Total current assets | 110,785 | 121,612 | |||||||||
| Long-term investments | 1,984 | 12,392 | |||||||||
| Property and equipment, net | 105,127 | 115,168 | |||||||||
| Intangible assets, net | 4,964 | 6,041 | |||||||||
| Right of use assets | 12,113 | 13,188 | |||||||||
| Other assets | 9,129 | 9,613 | |||||||||
| Total assets | $ | 244,102 | $ | 278,014 | |||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 7,081 | $ | 3,258 | |||||||
| Deferred revenue | 28,753 | 29,675 | |||||||||
| Accrued liabilities | 37,285 | 54,249 | |||||||||
| Current portion of convertible senior notes, net | 33,822 | 53,765 | |||||||||
| Total current liabilities | 106,941 | 140,947 | |||||||||
| Long-term liabilities | |||||||||||
| Long-term operating lease liabilities | 13,677 | 15,205 | |||||||||
| Other long-term liabilities | 2,341 | 2,239 | |||||||||
| Total long-term liabilities | 16,018 | 17,444 | |||||||||
| Total liabilities | 122,959 | 158,391 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding | — | — | |||||||||
Common stock, $0.001 par value per share: 400,000,000 shares authorized; 111,841,854 and 110,985,562 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively | 112 | 111 | |||||||||
| Additional paid-in capital | 1,147,586 | 1,145,371 | |||||||||
| Accumulated other comprehensive loss | (33,921) | (32,997) | |||||||||
| Accumulated deficit | (992,634) | (992,862) | |||||||||
| Total stockholders' equity | 121,143 | 119,623 | |||||||||
| Total liabilities and stockholders' equity | $ | 244,102 | $ | 278,014 | |||||||
CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net revenues | $ | 63,262 | $ | 121,387 | |||||||
Cost of revenues(1) | 25,374 | 53,973 | |||||||||
| Gross profit | 37,888 | 67,414 | |||||||||
| Operating expenses: | |||||||||||
Research and development(1) | 9,139 | 29,428 | |||||||||
Sales and marketing(1) | 10,606 | 25,614 | |||||||||
General and administrative(1) | 19,180 | 39,374 | |||||||||
| Impairment expense | — | 2,000 | |||||||||
| Total operating expenses | 38,925 | 96,416 | |||||||||
| Loss from operations | (1,037) | (29,002) | |||||||||
| Interest expense, net and other income, net: | |||||||||||
| Interest expense, net | (31) | (467) | |||||||||
| Other income, net | 1,156 | 12,997 | |||||||||
| Total interest expense, net and other income, net | 1,125 | 12,530 | |||||||||
| Income (loss) before benefit from (provision for) income taxes | 88 | (16,472) | |||||||||
| Benefit from (provision for) income taxes | 140 | (1,012) | |||||||||
| Net income (loss) | $ | 228 | $ | (17,484) | |||||||
Net income (loss) per share | |||||||||||
| Basic | $ | — | $ | (0.17) | |||||||
| Diluted | $ | — | $ | (0.17) | |||||||
Weighted average shares used to compute net income (loss) per share | |||||||||||
| Basic | 111,726 | 105,159 | |||||||||
| Diluted | 112,130 | 105,159 | |||||||||
(1) Includes share-based compensation expense as follows: | |||||||||||
| Cost of revenues | $ | 20 | $ | 238 | |||||||
| Research and development | 446 | 3,212 | |||||||||
| Sales and marketing | 152 | 1,061 | |||||||||
| General and administrative | 2,093 | 6,746 | |||||||||
| Total share-based compensation expense | $ | 2,711 | $ | 11,257 | |||||||
CHEGG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income (loss) | $ | 228 | $ | (17,484) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Share-based compensation expense | 2,711 | 11,257 | |||||||||
| Depreciation and amortization expense | 13,947 | 32,094 | |||||||||
| Deferred tax assets | (95) | 15 | |||||||||
| Operating lease expense, net of accretion | 545 | 1,089 | |||||||||
| Amortization of debt issuance costs | 31 | 377 | |||||||||
| Loss from write-offs of property and equipment | 49 | 2,287 | |||||||||
| Gain on early extinguishment of debt | (523) | (7,360) | |||||||||
| Realized gain on sale of investments | (5) | (752) | |||||||||
| Other non-cash items | (159) | (28) | |||||||||
| Change in assets and liabilities: | |||||||||||
| Accounts receivable | (2,338) | (4,693) | |||||||||
| Prepaid expenses and other current assets | 6,018 | 5,880 | |||||||||
| Other assets | (268) | 518 | |||||||||
| Accounts payable | 3,599 | 1,535 | |||||||||
| Deferred revenue | (608) | 5,437 | |||||||||
| Accrued liabilities | (18,186) | (4,894) | |||||||||
| Other liabilities | (841) | (752) | |||||||||
| Net cash provided by operating activities | 4,105 | 24,526 | |||||||||
| Cash flows from investing activities | |||||||||||
| Purchases of property and equipment | (1,042) | (8,665) | |||||||||
| Purchases of investments | — | (793) | |||||||||
| Maturities of investments | 13,477 | 103,214 | |||||||||
| Proceeds from sale of investments | 5,679 | 181,158 | |||||||||
| Net cash provided by investing activities | 18,114 | 274,914 | |||||||||
| Cash flows from financing activities | |||||||||||
| Payment of taxes related to the net share settlement of equity awards | (597) | (469) | |||||||||
| Repayment of convertible senior notes | (19,450) | (416,492) | |||||||||
| Net cash used in financing activities | (20,047) | (416,961) | |||||||||
| Effect of exchange rate changes | (418) | 218 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 1,754 | (117,303) | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 33,411 | 164,359 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 35,165 | $ | 47,056 | |||||||
CHEGG, INC.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income (loss) | $ | 228 | $ | (17,484) | |||||||
| Depreciation and amortization expense | 13,947 | 32,094 | |||||||||
| (Benefit from) provision for income taxes | (140) | 1,012 | |||||||||
| Interest expense, net | 31 | 467 | |||||||||
| EBITDA | 14,066 | 16,089 | |||||||||
| Share-based compensation expense | 2,711 | 11,257 | |||||||||
| Other income, net | (1,156) | (12,997) | |||||||||
| Restructuring (credits) charges | (165) | 2,920 | |||||||||
| Impairment expense | — | 2,000 | |||||||||
| Adjusted EBITDA | $ | 15,456 | $ | 19,269 | |||||||
CHEGG, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except percentages and per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cost of revenues | $ | 25,374 | $ | 53,973 | |||||||
| Amortization of intangible assets | (1,077) | (1,077) | |||||||||
| Share-based compensation expense | (20) | (238) | |||||||||
| Restructuring credits | 26 | — | |||||||||
Non-GAAP cost of revenues | $ | 24,303 | $ | 52,658 | |||||||
| Gross profit | $ | 37,888 | $ | 67,414 | |||||||
| Amortization of intangible assets | 1,077 | 1,077 | |||||||||
| Share-based compensation expense | 20 | 238 | |||||||||
| Restructuring credits | (26) | — | |||||||||
Non-GAAP gross profit | $ | 38,959 | $ | 68,729 | |||||||
| Gross margin % | 60% | 56% | |||||||||
| Non-GAAP gross margin % | 62% | 57% | |||||||||
| Operating expenses | $ | 38,925 | $ | 96,416 | |||||||
| Share-based compensation expense | (2,691) | (11,019) | |||||||||
| Restructuring credits (charges) | 139 | (2,920) | |||||||||
| Impairment expense | — | (2,000) | |||||||||
| Non-GAAP operating expenses | $ | 36,373 | $ | 80,477 | |||||||
| Loss from operations | $ | (1,037) | $ | (29,002) | |||||||
| Share-based compensation expense | 2,711 | 11,257 | |||||||||
| Restructuring (credits) charges | (165) | 2,920 | |||||||||
| Amortization of intangible assets | 1,077 | 1,077 | |||||||||
| Impairment expense | — | 2,000 | |||||||||
| Non-GAAP income (loss) from operations | $ | 2,586 | $ | (11,748) | |||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income (loss) | $ | 228 | $ | (17,484) | |||||||
| Share-based compensation expense | 2,711 | 11,257 | |||||||||
| Restructuring (credits) charges | (165) | 2,920 | |||||||||
| Amortization of intangible assets | 1,077 | 1,077 | |||||||||
| Gain on early extinguishment of debt | (523) | (7,360) | |||||||||
| Impairment expense | — | 2,000 | |||||||||
| Income tax effect of non-GAAP adjustments | 118 | 528 | |||||||||
| Amortization of debt issuance costs | 31 | 377 | |||||||||
| Non-GAAP net income (loss) | $ | 3,477 | $ | (6,685) | |||||||
| Weighted average shares used to compute net income (loss) per share, diluted | 112,130 | 105,159 | |||||||||
| Effect of shares for stock plan activity | 1,329 | — | |||||||||
| Effect of shares related to convertible senior notes | — | — | |||||||||
| Non-GAAP weighted average shares used to compute non-GAAP net income (loss) per share, diluted | 113,459 | 105,159 | |||||||||
| Net income (loss) per share, diluted | $ | — | $ | (0.17) | |||||||
| Adjustments | 0.03 | 0.11 | |||||||||
| Non-GAAP net income (loss) per share, diluted | $ | 0.03 | $ | (0.06) | |||||||
CHEGG, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 4,105 | $ | 24,526 | |||||||
| Purchases of property and equipment | (1,042) | (8,665) | |||||||||
| Free cash flow | $ | 3,063 | $ | 15,861 | |||||||
CHEGG, INC.
RECONCILIATION OF FORWARD-LOOKING NET LOSS TO EBITDA AND ADJUSTED EBITDA
(in thousands)
(unaudited)
| Three Months Ending June 30, 2026 | |||||
Net loss | $ | (9,300) | |||
Depreciation and amortization expense | 13,000 | ||||
| Provision for income taxes | 600 | ||||
| EBITDA | 4,300 | ||||
| Share-based compensation expense | 2,000 | ||||
| Other income, net | (800) | ||||
Adjusted EBITDA | $ | 5,500 | |||
Adjusted EBITDA guidance for the three months ending June 30, 2026 represent the midpoint of the range of $5 million to $6 million.
FAQ
How did Chegg (CHGG) perform financially in Q1 2026?
Chegg generated $63.3 million in net revenues in Q1 2026, down 48% year-over-year, but achieved GAAP net income of $0.2 million and non-GAAP net income of $3.5 million. Adjusted EBITDA was $15.5 million, representing a 24% margin for the quarter.
How fast is Chegg Skilling growing for Chegg (CHGG)?
Chegg Skilling revenues reached $17.6 million in Q1 2026, growing 9% year-over-year. Management continues to expect double-digit revenue growth for the skilling business for full-year 2026, supported by new enterprise and channel partnerships and AI-focused, outcomes-driven programs.
What margins did Chegg (CHGG) report in Q1 2026?
Chegg reported a Q1 2026 gross margin of 60% and non-GAAP gross margin of 62%. Adjusted EBITDA was $15.5 million, giving a 24% adjusted EBITDA margin, reflecting significant expense reductions and a leaner cost base after restructuring actions.
What is Chegg’s (CHGG) cash and debt position after Q1 2026?
At March 31, 2026, Chegg had $67.9 million in cash and investments and a net cash position of $34.1 million. The company reduced its current portion of convertible senior notes to $33.8 million and continues targeting full repayment of convertible debt by September 2026.
What guidance did Chegg (CHGG) give for Q2 2026?
For Q2 2026, Chegg expects total revenue between $49 million and $50 million and Chegg Skilling revenue of $17.5 million to $18 million. It also guides to gross margin of 51%–52% and adjusted EBITDA between $5 million and $6 million for the quarter.
How much has Chegg (CHGG) reduced its expenses and capex?
Non-GAAP operating expenses were $36.4 million in Q1 2026, a 55% year-over-year reduction. Capital expenditures were $1 million in the quarter, down 88% year-over-year, and Chegg is targeting a 60% reduction in 2026 capex overall versus the prior year.