Chegg Inc. Earnings Call: Mixed Sentiments and Strategic Focus

Chegg Inc ((CHGG)) has held its Q2 earnings call. Read on for the main highlights of the call.

Chegg Inc.’s recent earnings call presented a mixed sentiment, highlighting both achievements and challenges. On the positive side, the company exceeded its revenue and EBITDA guidance, showcased strong growth in its Busuu platform, and made significant strides in cost reduction. However, these successes were tempered by concerns over a notable decline in revenue and subscribers, negative free cash flow, and a projected decrease in Q3 revenue guidance.

Exceeded Revenue and EBITDA Guidance

Chegg reported a strong financial performance for Q2 2025, surpassing its guidance with $105 million in revenue and $23 million in adjusted EBITDA. This achievement underscores the company’s ability to navigate a challenging market environment and deliver on its financial commitments.

Strong Growth in Busuu

Busuu, Chegg’s language learning platform, demonstrated impressive growth with a 15% year-over-year revenue increase. Notably, B2C revenue grew by 6%, while B2B revenue surged by 39%, highlighting the platform’s expanding reach and appeal across different customer segments.

Skills Business Enrollment Increase

Chegg’s Skills business showed promising signs of growth, with a 16% increase in enrollments quarter-over-quarter and an 11% rise in monthly active users. This growth reflects the increasing demand for skills-based learning solutions and Chegg’s ability to meet this demand.

Cost Reduction Achievements

The company identified an additional $17 million in CapEx and expense savings for 2026, with non-GAAP expense savings projected to be between $110 million and $120 million. These efforts are part of Chegg’s broader strategy to streamline operations and enhance profitability.

Chegg Study Improvements

Chegg Study has been transformed into a personalized learning coach, incorporating new AI-powered features. This transformation has led to a 117 basis points increase in the monthly retention rate, demonstrating the platform’s enhanced value proposition for students.

Regained NYSE Compliance

Chegg successfully addressed its stock price deficiency and regained compliance with the NYSE’s price listing requirements, ensuring its continued presence on the exchange and instilling confidence among investors.

Significant Revenue and Subscriber Decline

Despite these achievements, Chegg faced a significant challenge with a 36% year-over-year decrease in total revenue and a 40% decline in subscribers. Subscription services revenue stood at $90 million, indicating a need for strategic adjustments to reverse this trend.

Free Cash Flow Challenges

The company reported a negative free cash flow of $12 million for Q2, primarily due to $12.5 million in severance payments related to restructuring. This highlights the financial pressures Chegg is facing as it seeks to realign its operations.

Q3 Revenue Guidance Drop

Looking ahead, Chegg’s Q3 revenue guidance is projected between $75 million and $77 million, marking a decrease from the current quarter. This projection reflects ongoing challenges in the market and the need for strategic initiatives to drive future growth.

Forward-Looking Guidance

Chegg provided a comprehensive update on its strategic direction, emphasizing its commitment to reducing non-GAAP expenses by $165 to $175 million in 2025 and $110 to $120 million in 2026. The company also highlighted the continued growth potential of Busuu and its Skills business, along with the evolving capabilities of Chegg Study.

In summary, Chegg Inc.’s earnings call painted a picture of both achievement and challenge. While the company has made significant strides in revenue growth and cost reduction, it faces ongoing hurdles with declining revenue and subscriber numbers. The forward-looking guidance suggests a strategic focus on cost management and growth in key business areas, positioning Chegg for future success.