Chegg (CHGG) Q4 2023 earnings summary

Executive summary

• Q4 revenue was $188.0M; FY2023 revenue was $716.3M, down 7% YoY. Q4 Adjusted EBITDA and free cash flow exceeded the high end of expectations.

• 2024 priorities: restore global new-account growth, expand AI services and Skills, and maintain margins and cash flow; rebuilding the renewal base will take time.

Financial highlights

• Q4 revenue was $188.0M, down 8% YoY; GAAP net income was $9.7M and non-GAAP net income was $42.7M.

• Q4 Adjusted EBITDA was $66.2M; non-GAAP gross margin was 78% versus GAAP gross margin of 76%.

• FY2023 revenue was $716.3M, down 7% YoY; GAAP net income was $18.2M and non-GAAP net income was $141.8M.

• FY Adjusted EBITDA was $222.4M; free cash flow was $172.9M, up from $154.8M in 2022.

• FY GAAP operating loss was $67.7M, versus operating income of $9.0M in 2022; net income fell to $18.2M from $266.6M.

Outlook and guidance

• Q1 2024 guidance: revenue $173M–$175M, Subscription Services revenue $155M–$157M, gross margin 73%–74%, and Adjusted EBITDA $43M–$45M.

• No timing forecast for revenue or margin growth; engagement, acquisition and retention gains need time to rebuild the renewal base.

• International pricing and packaging are intended to be revenue-neutral in 2024 while substantially expanding new-account growth.

• 2024 priorities include prudent expense management, AI service rollout, subscriber growth and scaling Skills revenue.