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Sep 30
Chegg Q3 2025 Earnings Report
Estimated Revenue:$76.4M
-43.7% YoY
Estimated EPS:-$0.13
281.2% YoY
Key Takeaways
Chegg reported total net revenues of $77.7 million for Q3 2025, a 43% decrease year-over-year, but surpassed revenue expectations and outperformed adjusted EBITDA guidance. The company is undergoing a significant restructuring to focus on its Chegg Skilling business, which is experiencing tailwinds from AI and is expected to drive future growth and profitability.
Total Net Revenues for Q3 2025 were $77.7 million, a 43% decrease year-over-year.
The company reported a Net Loss of $17.5 million and Non-GAAP Net Income of $0.4 million for the quarter.
Adjusted EBITDA for Q3 2025 was $13.3 million, exceeding guidance by $5 million due to cost-cutting and restructurings.
Chegg is strategically shifting its focus to the B2B skilling market, combining Busuu and Chegg Skills into 'Chegg Skilling' and expecting double-digit growth.
Chegg
Chegg
Forward Guidance
For Q4 2025, Chegg expects Chegg Skilling revenues of $18 million, total net revenues between $70 million and $72 million, gross margin between 57% and 58%, and adjusted EBITDA between $10 million and $11 million. The company anticipates full-year 2025 Chegg Skilling revenues of approximately $70 million and capital expenditures of approximately $27 million.
Positive Outlook
- Chegg Skilling revenues are expected to grow 14% year-over-year in Q4 2025.
- The company is targeting a significant reduction in total non-GAAP expenses to under $250 million by 2026.
- Capital expenditures are projected to decrease by approximately 60% in 2026, indicating increased efficiency.
- The strategic shift to the B2B skilling market is expected to drive sustainable double-digit growth for the Chegg Skilling business.
- The company is confident in generating meaningful free cash flow in 2026.
Challenges Ahead
- Total Net Revenues for Q4 2025 are projected to be between $70 million and $72 million, indicating continued overall revenue decline.
- Gross Margin for Q4 2025 is expected to be between 57% and 58%, a slight decrease from Q3 2025 GAAP gross margin.
- Adjusted EBITDA for Q4 2025 is projected to be between $10 million and $11 million, lower than Q3 2025.
- Free cash flow will be temporarily affected by $15 million to $19 million in cash expenditures for employee transition and severance costs in Q4 2025 and Q1 2026.
- The company acknowledges that the path has been difficult, indicating ongoing challenges despite the positive outlook.
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Key Statistics
Market Cap
$96.2M
P/E Ratio
-0.49
Sector
Commercial Services
Industry
Miscellaneous Commercial Services
52-Week High
$2.16
52-Week Low
$0.442
Gross Margin
59%
Non-GAAP Gross Margin
62%
Adjusted EBITDA
$13.3M