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Chegg (CHGG) Reports Break-Even Results in Q4 Earnings

Chegg, Inc.CHGG , a student-first connected learning platform, reported break-even adjusted earnings in fourth-quarter 2016, comparing favorably with the Zacks Consensus Estimate of a loss of a penny.

Net revenue of $63.1 million surpassed the Zacks Consensus Estimate of $59.05 million by 6.9% but declined 7% year over year. However, non-GAAP total net revenue of $56.4 million increased 38% year over year driven by 54% growth at Chegg Services.

Chegg Services revenues of $44.3 million increased 54% year over year. Required Materials revenues of $18.8 million deteriorated 52.4% from $39.5 million in the prior-year quarter.

Chegg Service subscriber base was over 0.9 million in the quarter.

Non-GAAP gross profit of $42.5 million increased 1.7% during the quarter.

Non-GAAP gross margin of 67.5% improved 600 basis points from 61.5% in the prior-year quarter on the back of strong top-line growth and increased synergies from Chegg Services.

Notably, the company completed its transformation to an all-digital business.

2016 Results

For the year, the company reported that its loss narrowed to $42.2 million from $59.2 million in the prior-year quarter.

Total net revenue of $254.1 million declined 16% year over year. However, non-GAAP total net revenue of $199.4 million increased 20% year over year driven by 37% growth at Chegg Services.

Financials

Chegg had cash and cash equivalents of $77.3 million as of Dec 31, 2016, compared with $67.0 million as of Dec 31, 2015.

1Q17 Guidance

Total revenue is projected in the $57-$59 million band. Chegg Service revenues are expected in the range of $38 million to $44 million.

Gross margin is estimated between 62% and 64% while adjusted EBITDA will likely be between $5 million and $7 million.

2017 Guidance

Total net revenue is projected at $230 million while Chegg Service revenues are estimated at around $172 million. Adjusted EBITDA is estimated at around $35 million.

Chegg, Inc. Price, Consensus and EPS Surprise

Chegg, Inc. Price, Consensus and EPS Surprise | Chegg, Inc. Quote

Zacks Rank

Chegg has a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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