Chegg (CHGG) Q4 2025 earnings summary

Executive summary

• Company reorganized into Chegg Skilling (growth engine) and legacy Academic Services (cash generation), targeting the $40 billion skilling market with double-digit growth and strong margins.

• Q4 2025 revenue and adjusted EBITDA exceeded guidance, reflecting positive impact from restructuring and new strategic focus.

• Early signs of success in Skilling, with new partnerships, expanded course offerings, and positive momentum in both business units.

• Streamlined operations and cost structure, aiming for debt-free status and substantial cash by end of 2026.

• 2026 priorities include accelerating skilling growth, increasing free cash flow, and ending the year with zero debt and a strong cash balance.

Financial highlights

• Q4 2025 total net revenue was $73 million; Chegg Skilling revenue reached $18 million, up 11% year-over-year.

• Q4 2025 adjusted EBITDA was $13 million with an 18% margin, surpassing guidance by $2 million.

• Q4 2025 CapEx was $6 million, down 51% year-over-year; targeting a further 60% reduction in 2026, with 90% allocated to Skilling.

• Free cash flow in Q4 2025 was -$15 million, impacted by $12 million in severance payments; FY 2025 free cash flow was -$12.6 million.

• Ended Q4 2025 with $85 million in cash and investments, and a net cash balance of $31 million.

Outlook and guidance

• Q1 2026 guidance: total net revenue $60–$62 million, Chegg Skilling revenue $17.5–$18 million, gross margin 57–58%, adjusted EBITDA $11–$12 million.

• Double-digit Skilling revenue growth expected for 2026, with stronger performance anticipated in the second half due to new investments and partners.

• 2026 free cash flow expected to be positive despite restructuring costs, with $18 million in severance mostly in Q1.

• Targeting adjusted EBITDA margin of at least 20% in coming years.

• 2026 capital allocation focused on optimizing free cash flow, strengthening cash position, and eliminating debt.