Shares of the U.S.-based education technology company Chegg (NYSE:CHGG) gained more than 20% higher in the extended trading session on November 1 following the company’s robust third-quarter performance.
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Q3 revenue declined 4.2% year-over-year to $164.8 million but outperformed estimates by $6.4 million. Meanwhile, adjusted EPS of $0.21 beat analysts’ expectations of $0.14.
Importantly, the company reported 8% year-over-year growth in Chegg Services revenues to $159.3 million, driven by 9% growth in subscribers. The segment now accounts for 97% of total net revenues, compared to 85% in the prior-year period.
Based on robust Q3 results, management raised the mid-point of its guidance range for the full year 2022. For FY22, total revenue is expected to range between $762 – $765 million, while consensus is pegged at $760.2 million. The gross margin is projected to be between 73% and 74%.
For Q4, total revenue is expected to range between $200 – $203 million, while the consensus is pegged at $205.07 million. Gross margin is forecasted to range between 74% and 76%.
Is CHGG a Good Stock to Buy?
As per TipRanks, analysts are cautiously optimistic about the stock and have a Moderate Buy consensus rating, which is based on four Buys and six Holds. Chegg’s average price forecast of $24.88 implies 17.86% upside potential.
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