Chegg jumps 10% on Q4 results: ‘momentum is continuing into 2022’

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Shares of Chegg Inc (NYSE: CHGG) are up 10% in extended trading on Monday after the student services company said it performed better-than-expected in Q4, despite COVID-19 uncertainty.

Fourth-quarter financial performance

Chegg said its net income printed $24 million in the fourth quarter that translates to 15 cents per share. In the same quarter last year, it had posted $26 million in net income or 18 cents per share. Adjusted for nonrecurring items, the education technology company earned 38 cents per share.

At $207.5 million, its revenue noted an annualised growth of 1.0%. According to FactSet, experts had forecast 31 cents of adjusted EPS on $195 million in revenue.

Revenue from services made up 90% of the quarterly total and was up 6.0% YoY. Chegg said it had 4.6 million subscribers at the end of Q4 that represents a 5.0% year-over-year growth. 1.5 million of these were international subscribers – ahead of the company’s target for 2021.

Future guidance and CEO’s remarks

Chegg forecasts up to $850 million in revenue this year, including $200 million to $205 million it expects in the current quarter. Its full-year prediction for free cash flow is $130 million to $162 million.

The California-based company agreed enrollments were lower but said the retention rate was approaching a record high. In the earnings press release, CEO Dan Rosensweig said:

During these complicated times, we continued to execute well, with Chegg Study Pack take rates outperforming our expectations and retention rates reaching all-time highs, both of which positively impacts subscriptions, ARPU, and margins. Q4 momentum is continuing into 2022.

The stock is still down 3.0% year-to-date.  

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