While
Chegg
posted better-than-expected results for the December quarter, shares of the provider of student homework and study tools are trading lower in response to disappointing guidance for the March quarter.
The stock was off 7.3% to $8.62 in premarket trading Tuesday, the morning after the company’s earnings report.
Chegg has been aggressively remaking its business to adjust to the widespread availability of generative AI chatbots, which the company has conceded pose a threat to its business. CEO Dan Rosensweig said the “process of embedding AI into every facet of Chegg’s platform is ongoing and iterative” as the company builds “a truly personalized learning assistant.”
For the fourth quarter, Chegg posted revenue of $188 million, down 8% from a year ago, but ahead of both the $185 million to $187 million management had forecast and the consensus call for $185.9 million among analysts tracked by FactSet. Subscription services revenue was $166.3 million, down 6% from a year ago, but slightly above the company’s forecast of $164 million to $166 million.
Adjusted earnings before interest, taxes, depreciation and amortization, were $66.2 million, also above the range, which called for $62 million to $64 million. On an adjusted basis, the company earned 36 cents a share in the quarter, hitting the Street consensus.
For the March quarter, Chegg is projecting revenue of between $173 million and $175 million, falling short of the Street consensus at $180 million. It said adjusted Ebitda will be between $43 million and $45 million, below the consensus call for $54.2 million.
Chegg also said it named David Longo, who had been chief accounting officer and controller, as CFO. He will succeed Andrew Brown, who had announced plans to retire. The change is effective Feb. 21.
Write to Eric J. Savitz at eric.savitz@barrons.com
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