Chegg Jumps Over 7% as Q4 Results Beat Estimates

Shares of Chegg, Inc. (NYSE: CHGG) rose more than 7% in the extended trading session on Monday, after the education technology company posted upbeat fourth-quarter 2021 results. The company has also provided better-than-expected revenue guidance for the first-quarter 2022 and full-year 2022. 

The CEO of Chegg, Dan Rosensweig, said, “When we reported in early November, there was a great deal of uncertainty around the back-to-the-school season and the continuing impact of COVID-19. Fortunately, while enrollments were lower, we saw that schoolwork did eventually pick-up so the need for Chegg increased throughout the quarter, helping us exit the year on a higher note.”   

Results in Detail 

Chegg registered net revenues of $207.5 million, topping the Street’s estimate of $195.2 million, and grew 1% from the same quarter last year. Chegg Services revenues rose 6% to $187.2 million. 

Also, fourth-quarter adjusted earnings of $0.38 per share surpassed analysts’ expectations of $0.31 per share. The company reported adjusted earnings of $0.55 per share in the same quarter last year. 

In the quarter, the number of Chegg Services subscribers increased 5% year-over-year to 4.6 million. 

Meanwhile, adjusted EBITDA came in at $78 million, down 11.3% year-over-year. 

For 2021, Chegg reported net revenues of $776.3 million, up 20% year-over-year, while Chegg Services revenues came in at $669.9 million, up 29%. However, adjusted earnings of $1.29 per share declined from $1.34 per share recorded in the prior year. 

CEO’s Comments 

Encouragingly, CEO Dan Rosensweig, said, “During these complicated times, the Chegg team continued to execute extremely well, with Chegg Study Pack take rates outperforming our expectations and retention rates reaching all-time highs, both of which positively impacts subscriptions, ARPU, and margins for Chegg Services.” 

“Students depend on Chegg as an important part of their learning journey and the momentum we experienced in the fourth quarter of 2021 is continuing into 2022,” Rosensweig added. 

Guidance 

For the first quarter of 2022, Chegg expects total net revenues between $200 million and $205 million, compared with the consensus estimate of $198.1 million. Additionally, it anticipates Chegg Services revenues to be in the range of $183 million to $188 million. 

For 2022, total net revenues are anticipated to range between $830 million and $850 million, above analysts’ expectations of $826.9 million. Further, services revenues are likely to be in the range of $770 million to $790 million. 

Analysts’ Recommendation

The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 5 Buys and 3 Holds. The average Chegg price target of $42.86 implies 57.17% upside potential. Meanwhile, shares have lost almost 72% over the past year. 

Website Traffic 

The earnings results were evident on TipRanks’ new tool that measures visits to Chegg’s website. Pre-earnings, we were able to see insights into Chegg’s performance in the December quarter.     

According to the tool, a website traffic uptrend was visible. In Q4 2021, total estimated visits on chegg.com trended higher, on a global basis, representing a 43.64% jump from the third quarter. This, in turn, indicated that the company might report strong revenues in the to-be-reported upon quarter. 

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