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Chegg’s Q4 Results and Disappointing March Quarter Guidance


Chegg, the provider of student homework and study tools, has reported better-than-expected results for the December quarter. However, despite this positive news, the company’s shares are trading lower due to disappointing guidance for the March quarter.

Adjusting to the Threat of Generative AI Chatbots

Chegg has been actively remaking its business to adapt to the widespread availability of generative AI chatbots, which the company acknowledges as a potential threat. CEO Dan Rosensweig has stated that the integration of AI into Chegg’s platform is an ongoing and iterative process, as they strive to create a truly personalized learning assistant.

Q4 Performance Highlights

In the fourth quarter, Chegg recorded a revenue of $188 million, marking an 8% decline compared to the previous year. However, this figure exceeded both the company’s forecast range of $185 million to $187 million and the consensus estimate of $185.9 million among analysts tracked by FactSet.

Subscription services revenue for the quarter totaled $166.3 million, reflecting a 6% decline from a year ago. Despite the decrease, this result was slightly above the company’s forecast range of $164 million to $166 million.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $66.2 million, surpassing the projected range of $62 million to $64 million. On an adjusted basis, Chegg earned 36 cents per share, in line with the Street consensus.

Disappointing Guidance for March Quarter

Looking ahead to the March quarter, Chegg anticipates revenue between $173 million and $175 million, falling short of the Street consensus at $180 million. Moreover, the company expects adjusted EBITDA to be in the range of $43 million to $45 million, below the consensus estimate of $54.2 million.

Leadership Announcement

Chegg has announced that David Longo, formerly the chief accounting officer and controller, will assume the role of CFO, succeeding Andrew Brown, who plans to retire. The transition will take effect on February 21.

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