Chegg's (CHGG) Q2 Earnings Top Estimates, Rise Y/Y, Stock Up

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Chegg, Inc. CHGG posted impressive second-quarter 2021 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Also, the top and bottom line increased on a year-over-year basis.

Following the announcement, shares of the company grew 3.6% during the after-hour trading session on Aug 9.

Quarter in Detail

Chegg reported second-quarter earnings of 43 cents per share, which topped the consensus mark of 38 cents by 13.2% and grew 16.2% from 37 cents reported a year ago.

Net revenues of $198.5 million surpassed the consensus mark of $190 million by 4.4% and grew 30% on a year-over-year basis. The company’s robust top-line performance was driven by more-than-double growth in Chegg Services subscriber count. Also, the company benefitted from investments in content, product, technology and global penetration.

During the quarter, Chegg Services revenues grew 38% year over year to $173.5 million. Notably, it contributed 87% to total net revenues.

Meanwhile, Chegg Services subscribers increased to $4.9 million, reflecting an improvement of 31% year over year.

Chegg, Inc. Price, Consensus and EPS Surprise

Chegg, Inc. Price, Consensus and EPS Surprise
Chegg, Inc. Price, Consensus and EPS Surprise

Chegg, Inc. price-consensus-eps-surprise-chart | Chegg, Inc. Quote

Operating Highlights

During the second quarter, adjusted EBITDA came in at $84.4 million and improved 52.1% on a year-over-year basis. Notably, the improvement was backed by the solid business model that supports operating leverage.

During the quarter, operating expenses (as a percentage of net revenue) contracted to 51.9% from 57.1% reported a year ago.

Cash Position

At the end of second-quarter 2021, Chegg had cash and cash equivalents of $840.1 million, significantly up from $481.7 million reported as of Dec 31, 2020.

In the first six months of 2021, net cash provided by operating acti Total Net Revenues in the range of $805 million to $815 millionvities came in at $144.5 million compared with $122.2 million in the year-ago period.

Q3 & 2021 Outlook

For the third quarter of 2021, the company expects total net revenues in the range of $170-$175 million. Also, it expects Chegg Services revenues in the band of $142-$147 million. Adjusted EBITDA is projected in the range of $43-$45 million, while gross margin is estimated between 60% and 61%.

Backed by the robust quarterly performance, the company raised its guidance for 2021. The company now expects total net revenues in the range of $805-$815 million, up from the previously-projected range of $790-$800 million.

The company now anticipates Chegg Services revenues in the range of $690-$700 million, up from the previous-anticipated range of $675-$685 million. Adjusted EBITDA is now expected in the band of $295-$300 million compared with the previous guideline of $275-$280 million, while gross margin is estimated between 68% and 69%, in line with the last projected range.

Zacks Rank

Chegg — which shares space with F5 Networks, Inc. FFIV, Pinterest, Inc. PINS and Paycom Software, Inc. PAYC in the Zacks Internet - Software — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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