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Chegg (CHGG)
NYSE:CHGG
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Chegg
(NYSE:CHGG)47Neutral
Positive Factors
Market Expansion
Progress on international localization efforts could expand Chegg's market reach and customer base.
Strategic Initiatives
Chegg is combating challenges with product innovation, new B2B sales initiatives, and a social media-focused marketing campaign to improve brand awareness.
Negative Factors
Competition
The company's AI-fueled struggles continue as Google AIO negatively impacts web traffic.
Financial Guidance
1Q25 guidance for revenue and adjusted EBITDA came in materially below consensus expectations.
Subscriber Trends
Declining negative growth and subscribers missing expectations supported the Underweight thesis for Chegg Inc.
Chegg (CHGG) vs. S&P 500 (SPY)
Market Cap
$91.73M
Dividend YieldN/A
Average Volume (3M)3.88M
Price to Earnings (P/E)―
Beta (1Y)0.90
Revenue Growth-13.78%
EPS Growth-5297.96%
CountryUS
Employees1,979
SectorTechnology
Sector Strength48
IndustryEducation
Share Statistics
EPS (TTM)-8.13
Shares Outstanding105,109,140
10 Day Avg. Volume6,888,152
30 Day Avg. Volume3,883,182
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.15
Price to Cash Flow (P/CF)1.30
P/FCF Ratio1.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$1.30Price Target Upside49.43% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering6
Chegg Business Overview & Revenue Model
Company DescriptionChegg, Inc. is an education technology company based in the United States that provides digital and physical textbook rentals, online tutoring, and other student services. Operating primarily in the education sector, Chegg offers a variety of resources to help students succeed in their academic pursuits, including study help, writing assistance, and learning tools through its online platforms.
How the Company Makes MoneyChegg makes money through a subscription-based model, primarily driven by its Chegg Services, which include Chegg Study, Chegg Writing, and Chegg Tutors. These services offer students access to step-by-step textbook solutions, expert Q&A, plagiarism checks, and personalized tutoring. Additionally, Chegg generates revenue from textbook rentals and sales, both digital and physical. The company also partners with educational content providers and institutions to expand its offerings and reach. Subscription fees and rental transactions are the key revenue streams, with the majority of earnings coming from recurring subscription payments.
Chegg Financial Statement Overview
Summary
Chegg's financial performance is under strain with declining revenues and negative profitability, high leverage, and decreasing equity. Despite strong operating cash flows, the overall financial outlook indicates significant challenges.Income Statement
Chegg's income statement reveals significant challenges. Both Gross Profit Margin and Net Profit Margin have deteriorated, with the latter turning negative in the most recent year. The Revenue Growth Rate has been negative over the last two years, indicating declining revenues. Additionally, EBIT and EBITDA margins have turned negative, reflecting operational inefficiencies and potential cost management issues.45
Neutral
Balance Sheet
The balance sheet shows a decrease in Stockholders' Equity and Total Assets over time. The Debt-to-Equity Ratio remains high, indicating significant leverage. The Return on Equity has turned negative, aligning with recent net losses. The Equity Ratio has decreased, reflecting a reduced proportion of equity in the company's asset base, suggesting higher financial risk.50
Neutral
Cash Flow
Chegg's cash flow presents a mixed outlook. Free Cash Flow has declined, but the company still maintains positive Operating Cash Flow. The Operating Cash Flow to Net Income Ratio is high due to negative net income. Despite the challenges, the company's ability to generate cash from operations remains a positive aspect.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 617.57M | 716.29M | 766.90M | 776.26M | 644.34M | Gross Profit |
| 436.65M | 490.35M | 569.50M | 521.36M | 438.92M | EBIT |
| -737.11M | -67.72M | 109.99M | 12.63M | 56.75M | EBITDA |
| -607.43M | 183.80M | 105.79M | 86.77M | 127.85M | Net Income Common Stockholders |
| -837.07M | 18.18M | 266.64M | -1.46M | -6.22M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 315.72M | 330.01M | 1.06B | 1.55B | 1.15B | Total Assets |
| 868.95M | 1.73B | 2.47B | 2.92B | 2.25B | Total Debt |
| 504.46M | 617.90M | 1.20B | 1.69B | 1.53B | Net Debt |
| 342.98M | 482.14M | 728.29M | 836.52M | 1.05B | Total Liabilities |
| 675.97M | 782.62M | 1.35B | 1.81B | 1.64B | Stockholders Equity |
| 192.98M | 944.62M | 1.12B | 1.11B | 609.63M |
| Cash Flow | Free Cash Flow | |||
| 50.25M | 163.15M | 152.64M | 179.04M | 155.13M | Operating Cash Flow |
| 125.20M | 246.20M | 255.74M | 273.22M | 236.44M | Investing Cash Flow |
| 11.35M | 268.67M | 104.89M | -365.77M | -732.79M | Financing Cash Flow |
| -109.14M | -852.77M | -744.80M | 466.72M | 588.63M |
Chegg Technical Analysis
Negative
0.87
Price Trends
1.44
Negative
1.67
Negative
2.16
Negative
Market Momentum
-0.17
Positive
30.31
Neutral
6.44
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHGG, the sentiment is Negative. The current price of 0.87 is below the 20-day moving average (MA) of 1.24, below the 50-day MA of 1.44, and below the 200-day MA of 2.16, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 30.31 is Neutral, neither overbought nor oversold. The STOCH value of 6.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CHGG.
Chegg Risk Analysis
Chegg disclosed 46 risk factors in its most recent earnings report. Chegg reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Chegg Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $3.38B | 16.93 | 14.63% | ― | 12.83% | 97.16% | |
75 Outperform | $5.37B | 20.60 | 22.95% | ― | 13.13% | 56.75% | |
71 Outperform | $10.92B | 20.41 | 10.97% | 1.75% | -5.51% | 27.79% | |
68 Neutral | $1.14B | ― | -13.11% | ― | 9.27% | 34.66% | |
66 Neutral | $12.48B | 33.12 | 5.61% | ― | 0.98% | -35.16% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
47 Neutral | $91.73M | ― | -147.16% | ― | -13.78% | -5297.96% |
* Technology Sector Average
Performance Comparison
CHGG
Chegg
0.87
-7.33
-89.39%
UHAL
Amerco
69.80
4.16
6.34%
ATGE
Adtalem Global Education
90.82
40.73
81.31%
LRN
Stride
123.22
61.97
101.18%
PSO
Pearson
16.82
4.26
33.92%
COUR
Coursera
7.14
-7.79
-52.18%
Chegg Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: -44.23% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Negative
The earnings call reflected a mixed sentiment. While Chegg showcased significant advancements in AI integration, enterprise growth, and marketing strategies, these were overshadowed by considerable declines in revenue and subscriber numbers, largely attributed to Google's AI Overview impacting traffic. The company's strategic review process and legal action against Google highlight the seriousness of the challenges faced.Highlights
AI and Machine Learning Integration
Chegg successfully integrated AI and machine learning into its product stack, reducing content creation costs by more than 70% while maintaining high quality.
Busuu Revenue Growth
The language learning service Busuu experienced a 9% year-over-year revenue growth for 2024, with a 46% increase in enterprise revenue.
Satisfaction Guarantee Implementation
Chegg implemented a Satisfaction Guarantee for its content, showing confidence in its quality and maintaining high standards.
Innovative Marketing Campaign
A brand marketing campaign on TikTok resulted in a 16% increase in awareness among underclassmen, improving click-through and conversion rates.
Enterprise Strategy Expansion
The enterprise part of Chegg's business is performing well, with a plan to expand business-to-institution programs and other enterprise offerings.
Lowlights
Revenue and Subscriber Decline
Total revenue for Q4 2024 was $143.5 million, a decrease of 24% year-over-year, with subscription services revenue down 23% and subscribers declining by 21%.
Impact of Google's AI Overview (AIO)
Google's AIO has significantly impacted Chegg's traffic, revenue, and workforce, leading to a 49% drop in non-subscriber traffic in January 2025.
Challenges in Skills and Other Revenue
Skills and other revenue declined by 31% year-over-year due to a market shift away from traditional boot camps and reduced advertising revenue.
Temporary Retention Rate Dip
A temporary dip in retention rate during November and December affected subscription services ARPU, which decreased by 3% year-over-year.
Company Guidance
During Chegg, Inc.'s Fourth Quarter 2024 Earnings Conference Call, the company provided detailed guidance metrics for the upcoming quarter and year. Chegg reported a total revenue of $143.5 million for Q4 2024, a 24% year-over-year decrease, with subscription services contributing $128.5 million, down 23%. The company had 3.6 million subscribers, a decline of 21%, and subscription services ARPU fell by 3% year-over-year. For the first quarter of 2025, Chegg expects total revenue between $114 million and $116 million, with subscription services revenue ranging from $104 million to $106 million. They anticipate a gross margin of 66-67% and an adjusted EBITDA between $13 million and $14 million. Despite challenges such as a drop in nonsubscriber traffic and revenue impact from Google's AI Overviews, Chegg remains focused on stabilizing business trends and achieving 2025 non-GAAP savings of $100 million to $120 million through restructuring activities.Chegg Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Chegg Introduces New Severance Plan for Key Officers
Neutral
Oct 21, 2024
Chegg, Inc. has introduced a new Severance Plan that offers specific benefits to key officers and employees, including its CEO and CFO, upon a Qualifying Termination, either without cause or for good reason. This plan, effective immediately, replaces previous severance arrangements and includes provisions for lump sum payments, bonus payouts, COBRA coverage, and equity award vesting acceleration, varying based on the employee’s role and timing of termination relative to a Change in Control. Enhanced benefits are available for terminations occurring before October 17, 2026.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.