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.
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.
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.
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.
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 has a Zacks Rank #3 (Hold).
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