In This Article:
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Total Revenue: $121 million, a decrease of 30% year-over-year.
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Subscription Services Revenue: $108 million.
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Skills and Other Revenue: $14 million, including $4 million from content licensing deals.
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Subscribers: 3.2 million, a decline of 31% year-over-year.
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Gross Margin: 56%, impacted by a one-time charge of $16.2 million.
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Non-GAAP Operating Expenses: $80.5 million, reduced by 20% year-over-year.
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Adjusted EBITDA: $19 million, with a margin of 16%.
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Free Cash Flow: $15.8 million.
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Capital Expenditures: $9 million, down 69% year-over-year.
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Cash and Investments: $126 million, with a net cash balance of $64 million.
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Restructuring Savings: Expected $45 million to $55 million in 2025, and $100 million to $110 million in 2026.
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Q2 Revenue Guidance: $100 million to $102 million.
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Q2 Subscription Services Revenue Guidance: $85 million to $87 million.
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Q2 Gross Margin Guidance: 64% to 65%.
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Q2 Adjusted EBITDA Guidance: $16 million to $17 million.
Release Date: May 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Chegg Inc (NYSE:CHGG) surpassed its revenue and adjusted EBITDA guidance for Q1 2025.
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The company generated approximately $16 million in free cash flow during the quarter.
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Chegg Inc (NYSE:CHGG) expanded its business institution effort from 5 to 15 pilots, aiming for 40 by year-end.
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The company signed two licensing agreements for its question and answer pairs with language model companies.
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Busuu, Chegg's language learning service, achieved a 7% year-over-year revenue increase in Q1.
Negative Points
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Total revenue for Q1 2025 decreased by 30% year-over-year to $121 million.
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Subscriber numbers declined by 31% year-over-year, with 3.2 million subscribers in Q1.
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Chegg Inc (NYSE:CHGG) announced further cost reduction plans, including closing physical offices in the US and Canada.
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The company is laying off approximately 22% of its workforce, impacting 248 employees.
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Ongoing industry challenges, including competition from AI and language model companies, continue to pressure Chegg's business.
Q & A Highlights
Q: Nathan, can you provide more details on the licensing deals signed during the quarter? Specifically, what are the terms and potential size of this opportunity? A: Nathan Schultz, Chief Operating Officer: We are licensing our question and answer pairs, which are highly valuable to language model companies for training purposes. We've only licensed a small portion of our content so far to some of the largest tech companies. This is just the beginning, and we see a significant business model opportunity here.