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Chegg (CHGG) Reports Narrower-than-Estimated Loss in Q2

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Chegg, Inc.CHGG , a student-first connected learning platform, reported adjusted loss of 4 cents in second-quarter 2017, narrower than the Zacks Consensus Estimate of a loss of 5 cents.

Meanwhile, net revenue of $56 million outshined the Zacks Consensus Estimate of $53 million by 5.7% and increased 6.3% year over year. This also surpassed the $52-$54 million range projected by Chegg.

Inside the Headline Numbers

Chegg Service revenues of $44.7 million increased 50% year over year and was slightly above the expected range of $42 million to $44 million. Chegg Service subscriber base totaled 1.2 million in the quarter, higher than 1.1 million in the previous quarter.

Gross profit of $39.3 million increased 24.4% in the quarter. Gross margin of 70% was at the high end of the company's guided range driven by strength in Chegg Study and Writing Tools services.

Adjusted EBITDA of $10.1 million shows substantial improvement from the year-ago level of $7.2 million. The figure is also above the company's expectations of $7-$9 million in adjusted EBITDA.

Chegg had cash and cash equivalents of $66.1 million as of Jun 30, 2017, compared with $49.7 million as of Jun 30, 2016.

Q3 Guidance

Total net revenue in expected in the range of $56 million to $58 million, while Chegg Services Revenues are estimated in the $37 million to $39 million band.

Gross margin is anticipated between 60% and 62%, while adjusted EBITDA is expected at around $3-$4 million.

2017 Guidance

Total net revenue is now projected in the range of $241 million to $243 million, higher than $235 million to $240 million expected earlier. Chegg Service revenues are estimated in the $180-$182 million band, higher than $175-$180 million anticipated earlier.

Gross margin is expected to be greater than 65%, while adjusted EBITDA is likely to come in between $41 million and $42 million, higher than $38-$40 million expected earlier.

Capital expenditures are estimated in the band of $20 million to $25 million. Free cash flow is projected in the $18 million to $20 million range.

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).

Stocks to Consider

Better-ranked stocks in the same industry include Atlassian Corporation Plc TEAM , HubSpot, Inc. HUBS and Twitter, Inc. TWTR . All three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Atlassian surpassed earnings estimates in all of the past four quarters, with an average beat of 70.83%, while HubSpot surpassed earnings estimates in each of the trailing four quarters at an average of 20.7%.

Twitter also beat earnings in the trailing four quarters, with an average beat of 50.37%.

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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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