SANTA CLARA, Calif. - Chegg Inc . (NYSE:CHGG), the education technology company known for its learning platform, has reached agreements to buy back approximately $116.6 million of its 0% Convertible Senior Notes due in 2026. The repurchase, at an aggregate cash price of about $96.2 million, is part of Chegg's ongoing securities repurchase program and is slated for completion on December 3, 2024, given all customary closing conditions are met.
Following the transaction, it is expected that around $127.9 million of the aggregate principal amount of the Notes will remain outstanding. Additionally, Chegg will have roughly $207.5 million left under its securities repurchase program.
This repurchase transaction aligns with the company's strategic financial management but does not constitute a public offer or solicitation for these securities. The sale of the securities will not take place in any jurisdiction where it would be unlawful before registration or qualification under the securities laws of such jurisdiction.
Chegg has established itself as a significant player in the ed-tech industry, offering personalized academic support to students globally. The platform, which leverages AI and a network of subject matter experts, aims to bolster students' academic and professional skills. The company's stock is publicly traded on the NYSE with the ticker symbol CHGG.
The press release also contained forward-looking statements regarding the specifics of the repurchase and the remaining amount under the repurchase program, which are subject to market conditions and other factors that could impact the completion and final terms of the deal.
The company has cautioned that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including fluctuations in common stock prices and capital market conditions. Chegg has committed to updating the public as required by law and has detailed risk factors in its SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2023, and its Quarterly Report for the period ended September 30, 2024.
The information in this article is based on a press release statement from Chegg.
In other recent news, educational services company, Chegg, Inc. (NYSE:CHGG), has reported mixed results in its third quarter, with revenue reaching $137 million and an adjusted EBITDA of $22 million, surpassing market expectations. However, the company also revealed a significant noncash impairment charge of $195.7 million and a decrease in subscriber numbers, attributed to industry challenges and the development of AI search tools. In response, Chegg has announced a restructuring plan, including a workforce reduction and a focus on marketing and product enhancement strategies.
The company also entered into agreements to repurchase approximately $116.6 million of its 0% Convertible Senior Notes due 2026, a move in line with its financial strategy to manage debt and return value to shareholders. Following the repurchase, Chegg will have about $207.5 million available for further securities repurchases under the current program.
Piper Sandler adjusted its outlook on Chegg by reducing the price target to $1.50 from the previous $2.00, maintaining an Underweight rating. For the fourth quarter, Chegg anticipates total revenue between $141 million and $143 million, and an adjusted EBITDA between $32 million and $34 million. These are among the recent developments at Chegg.
InvestingPro Insights
Chegg's recent move to repurchase a significant portion of its convertible notes aligns with its strategic financial management, as reflected in the latest InvestingPro data. The company's market capitalization stands at $209.66 million, indicating its current valuation in the market.
Despite the challenges faced by Chegg, as evidenced by its revenue decline of 9.74% over the last twelve months, the company maintains an impressive gross profit margin of 78.61%. This suggests that Chegg still retains strong pricing power and efficiency in its core operations, which could be crucial as it navigates through its current financial restructuring.
InvestingPro Tips highlight that Chegg's net income is expected to grow this year, and analysts predict the company will be profitable. This positive outlook aligns with the company's efforts to optimize its financial position through the note repurchase program.
It's worth noting that Chegg has seen a significant return over the last week, with a 16.18% price increase, and a strong return of 25.62% over the last month. This recent market performance could indicate investor confidence in the company's strategic moves, including the debt repurchase plan.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Chegg, providing a deeper understanding of the company's financial health and market position.
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