Chegg shares tanked 30% in extended trading: here’s why


Chegg shares tanked 30% in extended trading: here’s why

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Wajeeh Khan

May 2, 2022

Chegg Inc reports better-than-expected profit for its fiscal first quarter.

The education tech company lowered its guidance for full-year revenue.

Chegg shares tanked roughly 30% in after-hours trading on Monday.

Chegg Inc shares (NYSE: CHGG) tanked nearly 30% in extended trading on Monday after the education technology cited enrolment issues, economy, and inflationary pressures as it lowered its guidance for full-year revenue.

Chegg Q1 financial highlights

Chegg, however, reported marketing-beating profit for its fiscal Q1.Earned $5.7 million versus the year-ago figure of $65.2 million loss.Per-share earnings of 4 cents were much better than last year’s 49 cents loss.On an adjusted basis, Chegg made a profit of 32 cents per share in Q1.Revenue jumped 2.0% YoY to $202.2 million, as per the earnings press release.FactSet consensus was for $24 cents of adjusted EPS on $203 million in revenue.Services revenue was up 14% and made up 91% of the total quarterly revenue.Chegg services subscribers grew 12% year-over-year to 5.4 million.

The stock is now down 45% for the year.

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Chegg fiscal 2022 outlook

For fiscal 2022, Chegg now forecasts $740 million to $770 million in revenue, including up to $192 million it expects in the current fiscal quarter.

In comparison, analysts had forecast $210.6 million revenue for Q2 and $843.3 million for the full financial year. In the earnings press release, CEO Dan Rosensweig said:

We had a solid Q1. Chegg is executing well against our strategic objectives, despite industry headwinds. We expect these challenges to be temporary and when they subside, our operating mode, balance sheet, and leading brand, put us in a strong position accelerate our growth.

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