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1. Company Snapshot

1.a. Company Description

Chegg, Inc.operates direct-to-student learning platform that supports students starting with their academic journey and extending into their careers with products and services to support and help them better understand their academic course materials.The company offers Chegg Services, which include subscription services; and required materials that comprise its print textbooks and eTextbooks.


Its subscription services include Chegg Study, which helps students master challenging concepts on their own; Chegg Writing that provides students with a suite of tools, such as plagiarism detection scans, grammar and writing fluency checking, expert personalized writing feedback, and premium citation generation; Chegg Math, a step-by-step math problem solver and calculator that helps students to solve problems; Chegg Study Pack, a bundle of various Chegg Services product offerings, including Chegg Study, Chegg Writing, and Chegg Math Solver services, which creates an integrated platform of connected academic support services; Busuu, an online language learning solution that offers a comprehensive solution through a combination of self-paced lessons, live classes with expert tutors, and the ability to learn and practice with members of the Busuu language learning community; and Thinkful, a skills-based learning platform that offers professional courses along with networking, interviewing, and career services.The company also provides other services, such as Chegg Life, Chegg Prep, and Chegg Internships; provides personal and professional development skills training; and rents and sells print textbooks and eTextbooks.Chegg, Inc.


was incorporated in 2005 and is headquartered in Santa Clara, California.

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1.b. Last Insights on CHGG

Chegg, Inc.'s recent performance is driven by several positive factors. The company's Q2 earnings beat estimates, with quarterly earnings of $0.1 per share, surpassing the Zacks Consensus Estimate of a loss of $0.23 per share. Additionally, Chegg's strategic review process and transformation efforts, including the integration of AI into its business model, are underway. The company's language learning business, Busuu, has undergone AI integration, offering a distinct edge in the market. Furthermore, Chegg's focus on workplace readiness and upskilling, with the Busuu and Skills businesses, is expected to drive growth. The company's shift from Q&A to AI-based services is also expected to pay off, with increased demand for AI tools across digital learning.

1.c. Company Highlights

2. Chegg's Strategic Shift Drives Growth

Chegg's Q4 2025 earnings report revealed a revenue of $18 million from Chegg Skilling, positioning the company for double-digit growth in 2026. The company's legacy business, Chegg Study, continues to serve over a million students, providing meaningful cash flow. The actual EPS came out at '-0.01', beating estimates at '-0.11'. The revenue growth is expected to be driven by the company's focus on the $40 billion skilling market, with a strong emphasis on high-demand technical, AI, language, and professional skills. Analysts had estimated a revenue growth of -8.4% for the next year, but Chegg's management is confident of achieving double-digit growth.

Publication Date: Feb -22

📋 Highlights
  • Skilling Market Focus:: Chegg targets the $40 billion skilling market, driving double-digit revenue growth with strong margins and cash flow.
  • Chegg Skilling Revenue:: Generated $18 million in Q4 2025, with Q1 2026 guidance at $17.5–18 million and double-digit growth expected.
  • 2026 Strategic Goals:: Aims for 60% reduction in CapEx, meaningful free cash flow, and debt elimination, while expanding curriculum and B2B partnerships.
  • Partnerships & Curriculum Expansion:: New deals with DHL, GI Group, and Wolfe University (accredited degree pathways) and high-demand skills in AI, languages, and technical training.
  • B2B Growth Strategy:: Shift to B2B focus for Chegg Skills and Busuu, leveraging partnerships over competition, with 60%+ retention driven by service quality and AI-driven content.

Business Restructuring and Future Plans

Chegg has reorganized into two business units: Chegg Skilling, the growth engine, and legacy academic learning services, which will generate free cash flow. The company is expanding its course catalog and broadening its global footprint across B2B distribution channels, with new partnerships announced with DHL, GI Group, and Wolfe University. For 2026, Chegg plans to onboard additional employer and institutional partners, expand its curriculum, and target a 60% reduction in CapEx.

Valuation and Growth Prospects

Chegg's current valuation metrics indicate a 'P/S Ratio' of 0.19 and an 'EV/EBITDA' of -100.84. The company's strategic shift into the skilling market positions it for long-term sustainable growth with strong margins. As per the management, "We're seeing real good growth, with double-digit growth expected for the next several years." The company's focus on creating content and serving students is expected to drive higher-margin businesses.

Key Drivers of Skilling Growth

The key drivers of skilling growth for Chegg include expanding distribution partners and curriculum. The company is focused on B2B partnerships, with Skills being exclusively B2B and Busuu expected to be more B2B than B2C by the end of the year. Chegg sees opportunities to work with other companies in the space, such as Coursera and Udemy, rather than competing with them. The impending merger of Coursera and Udemy is seen as an opportunity for Chegg to potentially work with them as partners.

Conclusion on Growth Prospects

Chegg's strategic shift into the skilling market, coupled with its focus on B2B partnerships and expanding curriculum, positions the company for long-term sustainable growth. With a current 'P/E Ratio' of -0.68 and 'ROIC (%)' of -32.09, the market is pricing in the challenges faced by the company. However, the management's confidence in achieving double-digit growth and generating meaningful free cash flow in 2026 is expected to drive the company's stock performance.

3. NewsRoom

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The Great Decoupling: How AI Is Rewriting the Labor Market

Feb -19

Source: investorplace.com

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Is Chegg's $40B Skilling Market Bet a True Turnaround Catalyst?

Feb -18

Source: zacks.com

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Chegg Announces Repurchase of 0% Convertible Senior Notes Due 2026

Feb -17

Source: businesswire.com

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Chegg Q4 Earnings Call Highlights

Feb -11

Source: defenseworld.net

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Chegg Q4 Earnings & Revenues Surpass Estimates, Stock Down

Feb -10

Source: zacks.com

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Stock Futures Muted Amid Disappointing Retail Sales Data

Feb -10

Source: schaeffersresearch.com

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Chegg, Inc. (CHGG) Q4 2025 Earnings Call Transcript

Feb -09

Source: seekingalpha.com

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Chegg (CHGG) Reports Q4 Loss, Beats Revenue Estimates

Feb -09

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (20.34%)

6. Segments

Subscription Services

Expected Growth: 21.57%

Chegg's subscription services growth is driven by increasing demand for online learning, expansion into new markets, and strategic partnerships. The company's focus on providing affordable, personalized, and adaptive learning solutions resonates with students, leading to high retention rates and positive word-of-mouth. Additionally, Chegg's investments in AI-powered tools and content enhancements continue to improve the user experience, fueling growth.

Skills and Other

Expected Growth: 9.95%

Chegg's Skills and Other segment growth of 9.95% is driven by increasing demand for online learning platforms, expansion of Chegg's career services, and growth in its Thinkful coding bootcamp. Additionally, the rise of the gig economy and need for continuous skill development are also contributing to this growth.

7. Detailed Products

Chegg Study

A subscription-based online tutoring service that provides 24/7 access to academic support and homework help.

Chegg Tutoring

A one-on-one online tutoring service that connects students with live tutors in a variety of subjects.

Chegg Math Solver

An online math problem solver that helps students solve math problems step-by-step.

Chegg Writing

An online writing tool that provides grammar and spell checking, as well as suggestions for improvement.

Chegg Career Services

A career development platform that provides resume building, interview prep, and job search resources.

Thinkful

An online coding bootcamp that provides training and mentorship in software development.

CodeMash

An online coding platform that provides interactive coding lessons and exercises.

8. Chegg, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Chegg's services are unique and there are no close substitutes, reducing the threat of substitutes.

Bargaining Power Of Customers

Customers have some bargaining power due to the availability of alternative online learning platforms, but Chegg's strong brand and quality of services mitigate this power.

Bargaining Power Of Suppliers

Chegg has a large pool of tutors and experts, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

While there are barriers to entry, new entrants can still disrupt the market, but Chegg's established brand and network effects provide some protection.

Intensity Of Rivalry

The online learning market is highly competitive, with many players vying for market share, increasing the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 38.84%
Debt Cost 3.95%
Equity Weight 61.16%
Equity Cost 10.70%
WACC 8.08%
Leverage 63.50%

11. Quality Control: Chegg, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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American Public Education

A-Score: 4.9/10

Value: 5.0

Growth: 5.6

Quality: 5.9

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

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Universal Technical Institute

A-Score: 4.7/10

Value: 4.1

Growth: 7.0

Quality: 6.2

Yield: 0.0

Momentum: 7.5

Volatility: 3.7

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Lincoln Educational Services

A-Score: 4.4/10

Value: 4.2

Growth: 5.0

Quality: 4.1

Yield: 0.0

Momentum: 9.0

Volatility: 4.0

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Coursera

A-Score: 4.1/10

Value: 7.5

Growth: 6.0

Quality: 2.9

Yield: 0.0

Momentum: 6.0

Volatility: 2.3

1-Year Total Return ->

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Udemy

A-Score: 3.6/10

Value: 5.0

Growth: 5.7

Quality: 5.6

Yield: 0.0

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

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Chegg

A-Score: 3.0/10

Value: 10.0

Growth: 2.9

Quality: 3.4

Yield: 0.0

Momentum: 1.0

Volatility: 0.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.63$

Current Price

0.63$

Potential

-0.00%

Expected Cash-Flows