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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 Amidst Financial Challenges

Chegg reported a total revenue of $78 million for the third quarter, a significant decrease of 42% year-over-year, primarily due to reduced traffic impacting both subscription revenue and advertising revenue. Despite the decline in revenue, the company's non-GAAP operating expenses were reduced by 46% year-over-year to $49 million, driven by restructuring efforts. This resulted in an adjusted EBITDA of $13 million, representing a margin of 17%. The actual EPS came out at -$0.05, beating estimates of -$0.14. The company's financial performance indicates a challenging environment, but cost-cutting measures have helped maintain profitability.

Publication Date: Nov -25

📋 Highlights
  • Revenue Split and Growth:: Chegg Skilling (combined unit) expects $70M revenue in 2025, 14% YoY growth, while total Q3 revenue fell 42% to $78M due to traffic decline.
  • Cost Structure & Profitability:: Q3 adjusted EBITDA rose to $13M (17% margin) as non-GAAP operating expenses dropped 46% to $49M post-restructuring.
  • Skilling Market Position:: Focus on $40B+ skilling market with Busuu (language learning) and Chegg Skills (AI/workforce skills), targeting double-digit growth via B2B expansion and AI integration.
  • Channel Diversification:: Reducing Guild dependency by building direct sales, B2B partnerships (e.g., universities), and new markets like Latin America for Busuu.
  • Legacy Business Shift:: Academic services repositioned to B2B model with no headwinds, prioritizing cash flow generation alongside Skilling’s growth investments.

Segment Performance and Strategic Priorities

The company has split its business into two units: Chegg Skilling and legacy academic services. Chegg Skilling, which includes language learning with Busuu and skills with Chegg Skills, is expected to drive growth, with a projected 14% year-over-year growth in 2025, reaching $70 million in revenue. The company plans to focus on frontline workers, language learning, and job-related skills, particularly around AI. As the CEO mentioned, "We're now in the right categories with the right business model and are beginning to see momentum from our efforts."

Growth Prospects and Investment Strategy

Chegg Skilling is expected to continue growing at a double-digit pace, driven by investments in the skilling business. The company is evaluating various channels, including direct sales and partnerships, to expand its reach. The Busuu business is performing well, with initiatives planned for Latin America expansion and leveraging AI for conversational learning experiences. The company's goal is to achieve sustainable growth and profitability in the skilling business.

Valuation and Outlook

With a P/S Ratio of 0.2 and an EV/EBITDA of -0.82, the market appears to have priced in the challenges faced by the company. However, the Free Cash Flow Yield of 31.27% suggests that the company has a strong cash generation capability. As Chegg continues to invest in its growth businesses, particularly Chegg Skilling, the expected double-digit growth could potentially lead to a revaluation of the stock. Analysts estimate next year's revenue growth at -30.0%, indicating a continued challenging environment, but the company's strategic shift and cost-cutting measures are expected to drive future growth.

3. NewsRoom

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Chegg, Inc. (NYSE:CHGG) Given Consensus Rating of “Reduce” by Brokerages

Dec -04

Source: defenseworld.net

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Connor Clark & Lunn Investment Management Ltd. Sells 185,772 Shares of Chegg, Inc. $CHGG

Nov -17

Source: defenseworld.net

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Acadian Asset Management LLC Sells 115,503 Shares of Chegg, Inc. $CHGG

Nov -14

Source: defenseworld.net

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Chegg Reports Breakeven Q3 Earnings, Revenues Down Y/Y, Stock Up

Nov -11

Source: zacks.com

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Chegg, Inc. (CHGG) Q3 2025 Earnings Call Transcript

Nov -10

Source: seekingalpha.com

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Chegg (CHGG) Reports Break-Even Earnings for Q3

Nov -10

Source: zacks.com

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Chegg Reports Third Quarter 2025 Earnings

Nov -10

Source: businesswire.com

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Chegg to Report Q3 Earnings: Should You Buy the Stock or Wait?

Nov -06

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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Chegg

A-Score: 3.7/10

Value: 9.6

Growth: 2.9

Quality: 3.4

Yield: 0.0

Momentum: 5.5

Volatility: 0.7

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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

0.89$

Current Price

0.89$

Potential

-0.00%

Expected Cash-Flows