2023-08-07 16:26:27 ET
Chegg ( NYSE: CHGG ) rose 27% after the close as the company said it is harnessing AI capabilities and quarterly revenue beat estimates.
Second quarter EPS of $0.28 compared to the estimate of $0.29. Revenue of $182.9M compared to the average analyst estimate of $176.51M.
For the third quarter, the company estimates net revenue between $151M and $153M versus the estimate of $151.95M.
“Chegg outperformed guidance for both revenue and adjusted EBITDA in Q2 and saw year-over-year customer acquisition and retention rates improve during the quarter,” Chief Executive Officer Dan Rosensweig said in a statement.
“We launched the beta version of our initial generative AI experience in May and feedback has been very positive. We believe we are in an unrivaled position to deliver a unique, personalized learning experience for students because we have the assets, the vision, and the balance sheet that no one else has.”
Subscription services revenue decreased 5% year-over-year to $165.9M, or 91% of total net revenues, compared to 90% in Q2 2022. The education company said it had 4.8 million subscription services subscribers, a decrease of 9% year-over-year.
CHGG did a recent survey that showed students see ChatGPT and the company as complementary with very different use cases.
While “GenZ students are using AI to improve their education… they are not comfortable with the exact information ChatGPT puts out.”
“It’s become clear to us that a simple, high quality, accurate, personal learning assistant, is needed and we feel we are uniquely positioned to deliver a world class personal learning assistant,” Rosensweig said.
“In order to further enhance our competitive moat and lower our costs, we are building our own large language models which gives us the ability to train them specifically for education,” Rosensweig said.
“We intend to build the largest connected community of learners around the world with a truly scalable, affordable, adaptive learning assistant, by combining the tools, pathways, and the accuracy that students depend on.”
Shares closed down 5.5% on Monday.
CHGG is down 60% so far this year and 54% over the past 12 months.
More on Chegg:
- Chegg Q2 2023 Earnings Preview
- Chegg, Coursera among online education companies trading lower
- Chegg announces workforce reduction amid AI-driven strategy shift
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Chegg surges after the close as the company attempts to harness AI capabilities