Chegg shares plunge 20% on disappointing Q4 results, guidance; Strategic review announced

Published 24/02/2025, 22:26
Chegg shares plunge 20% on disappointing Q4 results, guidance; Strategic review announced

NEW YORK - Chegg Inc . (NYSE:CHGG) shares tumbled 20% in after-hours trading Monday after the education technology company reported fourth-quarter earnings that missed estimates and announced it is exploring strategic alternatives, including a potential sale of the company.

Additionally, Chegg revealed it has filed a complaint against Google LLC and Alphabet (NASDAQ:GOOGL) Inc., alleging unfair competition practices related to Google’s AI-powered search results.

The Santa Clara, California-based company posted adjusted earnings of $0.17 per share for Q4, falling short of analyst expectations of $0.19 per share. Revenue came in at $143.5 million, slightly below the consensus estimate of $143.97 million and down 24% YoY.

Chegg also provided disappointing guidance, forecasting Q1 2025 revenue between $114-116 million, well below analyst projections of $138.63 million.

In a surprise move, Chegg announced it has initiated a strategic review process to explore alternatives, including potentially being acquired or going private. The company said it has retained Goldman Sachs as a financial advisor for the review.

"We made two important and connected decisions to maximize the future of our business and shareholder value," said Nathan Schultz, CEO of Chegg. "We are launching a strategic review process and filed a complaint against Google, which has unjustly retained traffic that has historically come to Chegg, impacting our acquisitions, revenue and employees."

The company reported 3.6 million subscribers for Q4, down 21% YoY. Chegg attributed the decline in part to the rapid evolution of the content landscape, particularly the rise of Google’s AI Overviews.

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