CHEGG, INC Q1 FY2026 earnings call

Q1 was a strong quarter with exceeding revenue, profitability, free cash flow expectations and reducing debt. Optimized cost base and capital expenditures. Leveraging AI to personalize learning paths, update curriculum fast, and provide differentiated experience. Expect double-digit revenue growth in skilling for 2026 with acceleration. Signed partnership with Cornerstone, expanding skilling platform with accredited offerings. Chegg Studies outperformed expectations in Q1 with strong retention despite search headwinds. Removed approximately 40% of costs, on path to zero debt, retooled business to be AI first.

Chegg Skilling generated $17.6 million in revenue in Q1, representing 9% growth. Academic services revenue is $45.7 million.

Expect Chegg skilling revenue of $17.5 million to $18 million in Q2, total revenue between $49 and $50 million, gross margins 51 to 52%, adjusted EBITDA between $5 and $6 million. 2026 capital allocation priorities focus on maximizing free cash flow, strengthening balance sheet, fully repaying convertible debt by September, and evaluating capital deployment opportunities.

Forward-looking statements subject to material risks and uncertainties as per earnings release and risk factors in Form 10-K.

Q: On Chegg skilling business trends, unpack B2B language learning vs Chegg skills and visibility on partners.

A: Trend in Q1 strong with AI application in content building and user experience. Renegotiated contracts to sign more distribution partners, expect accounts to build revenue over year with acceleration into 27.

Q: On shifting content to meet learning in flow demand.

A: AI enables real-time intervention in workflow, like pulse on language side prompting in real time, also speed, reduction of friction, and quality are core of what's being built