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Chegg (CHGG) Q4 Earnings & Revenues Beat Estimates, Rise Y/Y

Chegg CHGG posted impressive fourth-quarter fiscal 2020 results. The bottom line surpassed the Zacks Consensus Estimate, mainly backed by favorable market conditions which boosted demand for online education and affordable services.

Following the announcement, shares of the company gained 0.3% during market trading session on Feb 9.

Quarter in Detail

Chegg reported fourth-quarter earnings of 55 cents per share, which topped the consensus mark of 51 cents by 7.8%. In the year-ago period, it recorded earnings of 35 cents a share.

Net revenues of $205.7 million surpassed the consensus mark of $190 million by 8.3% and grew 63.9% on a year-over-year basis on solid performance by Chegg Services.

During the quarter, Chegg Services revenues grew 64% year over year to $176 million. Notably, it contributed 86% to total net revenues.

Meanwhile, Chegg Services subscribers pegged in at $4.4 million, indicating an improvement of 74% year over year.

Chegg, Inc. Price, Consensus and EPS Surprise

 

Chegg, Inc. price-consensus-eps-surprise-chart | Chegg, Inc. Quote

Operating Highlights

During the fourth quarter, adjusted EBITDA came in at $87.9 million and improved 87% basis on a year-over-year basis. Notably, the improvement was backed by solid subscription services growth.

During the quarter, operating expenses (as a percentage of net revenue) contracted to 48.3% from 65.5% reported a year ago.

Cash Position

At the end of fourth-quarter 2020, Chegg had cash and cash equivalents of $481.7 million, down from $389.4 million at the end of fourth-quarter 2020.
Net cash provided by operating activities was $236.4 million for the fourth quarter compared with $113.4 million in the year-ago period.

2020 Highlights

Net revenues in 2020 came in at $644.3 million compared with $410.9 million in 2019.

Total operating expenses in 2020 came in at $382.1 million compared with $300.9 million in 2019.

In 2020, loss per share came in at 5 cents compared with 8 cents in the previous year.

Q1 Guidance

For the first quarter of 2021, the company expects total net revenues in the range of $182-$185 million. Also, it expects Chegg Services revenues in the band of $152-$155 million. Adjusted EBITDA is projected in the range of $48-$50 million, while gross margin is estimated between 65% and 66%.

2021 Outlook

For 2021, the company expects total net revenues in the range of $780-$790 million.

The company anticipates Chegg Services revenues in the range of $665-$675 million. Adjusted EBITDA is expected in the band of $265-$270 million, while gross margin is estimated between 68% and 69%.

Meanwhile, capital expenditures for 2021 are likely to be in the range of $90-$100 million.

Zacks Rank

Chegg — which shares space with Zoom Video Communications, Inc. ZM, CrowdStrike Holdings, Inc. CRWD and Atlassian Corporation Plc TEAM in the Zacks Internet - Software — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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