Chegg (CHGG) investor relations material

Executive summary

• Q2 2025 revenue was $105M, down 36% year-over-year, but exceeded guidance; adjusted EBITDA reached $23M with disciplined expense management and $17M in additional cost savings identified for 2026.

• Strategic review ongoing, considering acquisition, go-private, or remaining public; focus on maximizing shareholder value and AI transformation.

• Transformation centers on language learning (Busuu) and workplace upskilling (Skills), with Chegg Study as a cash-generating core product.

• Multiple restructuring plans implemented, resulting in significant cost reductions and workforce reductions, with further charges expected.

• Company faces ongoing headwinds from generative AI adoption and changes in Google search impacting traffic.

Financial highlights

• Q2 2025 revenue was $105M, down 36% year-over-year; Subscription Services revenue at $89.7M, down 39%; Skills and Other revenue at $16M, including $7M from content licensing.

• Adjusted EBITDA reached $23M (22% margin); net loss for Q2 was $35.7M; non-GAAP net income was $10.8M.

• Free cash flow for Q2 was negative $12M, impacted by $12.5M in severance payments and annual hosting prepayment.

• Ended Q2 with $114.1M in cash and investments; net cash balance of $52M after repaying $416.5M in convertible notes.

• Non-GAAP operating expenses reduced by 33% year-over-year to $64M; CapEx for Q2 was $7M, down 60% year-over-year.

Outlook and guidance

• Q3 2025 revenue expected between $75M and $77M; Subscription Services revenue $67M–$69M.

• Gross margin guidance for Q3 is 56–57%; adjusted EBITDA expected at $7M–$8M.

• Full-year 2025 CapEx projected at $30M, with a targeted 50% reduction in 2026.

• Non-GAAP expense savings targeted at $165M–$175M in 2025 and $100M–$120M in 2026, with an additional $17M identified for 2026.

• Management expects continued headwinds from generative AI and Google’s AI Overviews, likely resulting in further declines in traffic and new subscribers.