The Chegg Inc (NYSE: CHGG) stock price rallied 20.1% after releasing its earnings results for the second quarter of 2023. The company generated total net revenues of $182.9 million, a decrease of 6% compared to a similar period last year.
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The leading student-first connected learning platform reported that subscription revenues fell 5% to $165.9 million versus last year but still comprised 91% of the total net revenues versus 90% in Q2 2022. The company’s net income was $24.6 million.
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Furthermore, Chegg made a significant step forward by launching its initial generative AI experience in May to rival ChatGPT, threatening the company’s entire business model as students shifted to using ChatGPT instead of its student learning services.
The company also issued its outlook for Q3 2023, which included total revenues of $151 million to $153 million, with subscription services revenues coming in at $135 million to $137 million. The company expects its gross margins to be between 68% and 69%. Lastly, the firm expects its adjusted pretax profits to be $34 million to $36 million.
Chegg’s CEO, Dan Rosenweig, congratulated his employees for doing a great job ensuring that the company outperformed its revenue and adjusted EBITDA guidance. The firm noted that there was an improvement in the
Rosenweig expressed his excitement at what comes next for the company as it enters a period powered by artificial intelligence (AI) where it remains keen to tap into the power of AI to move its projects forward.
Chegg has rapidly pivoted because it believes that category-defining companies with strong brand loyalty, sought-after services, and precious data sets can leverage AI to grow and will create outsized returns.
Dan Rosensweig, CEO & President of Chegg, Inc, said: “Chegg outperformed guidance for both revenue and adjusted EBITDA in Q2 and saw year-over-year customer acquisition and retention rates improve during the quarter. We launched the beta version of our initial generative AI experience in May, and feedback has been very positive. We believe we are in an unrivalled position to deliver a unique, personalized learning experience for students because we have the assets, the vision, and the balance sheet that no one else has.”
Chegg stock price.
The Chegg stock price rallied 20.14% to trade at 12.05, from Monday’s closing price of $10.03.
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