Chegg, Inc. (NYSE: CHGG), the leading student-first connected learning platform, today reported financial results for the three and twelve months ended December 31, 2021.
This quarterly report represents an earnings surprise of 22.58%. A quarter ago, it was expected that this provider of online textbook rental services would post earnings of $0.20 per share when it produced earnings of $0.20, delivering no surprise.
“During these complicated times, the Chegg team continued to execute extremely 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 for Chegg Services,” commented Rosensweig.
Financial Highlights
Chegg registered net revenues of $207.5 million, topping the Street’s estimate of $195.2 million, and grew 1% from the same quarter last year. Chegg Services revenues rose 6% to $187.2 million.
Also, fourth-quarter adjusted earnings of $0.38 per share surpassed analysts’ expectations of $0.31 per share. The company reported adjusted earnings of $0.55 per share in the same quarter last year.
In the quarter, the number of Chegg Services subscribers increased 5% year-over-year to 4.6 million.
Meanwhile, adjusted EBITDA came in at $78 million, down 11.3% year-over-year.
For 2021, Chegg reported net revenues of $776.3 million, up 20% year-over-year, while Chegg Services revenues came in at $669.9 million, up 29%. However, adjusted earnings of $1.29 per share declined from $1.34 per share recorded in the prior year.
Looking ahead, the Santa Clara, California-based business expects total Q1 net revenues between $200 million to $205 million in the first quarter, with Chegg Services revenues between $183 million to $188 million.
Future Outlook
For the first quarter of 2022, Chegg expects total net revenues between $200 million and $205 million, compared with the consensus estimate of $198.1 million. Additionally, it anticipates Chegg Services revenues to be in the range of $183 million to $188 million.
For 2022, total net revenues are anticipated to range between $830 million and $850 million, above analysts’ expectations of $826.9 million. Further, services revenues are likely to be in the range of $770 million to $790 million.
Financial Report:
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CHEGG, INC. |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except per share amounts) |
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(unaudited) |
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Three Months Ended December 31, |
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Years Ended December 31, |
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2021 |
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2020 |
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2021 |
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2020 |
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Net revenues |
$ |
207,467 |
|
|
$ |
205,721 |
|
|
$ |
776,265 |
|
|
$ |
644,338 |
|
|
|
Cost of revenues(1) |
|
55,710 |
|
|
|
57,133 |
|
|
|
254,904 |
|
|
|
205,417 |
|
|
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Gross profit |
|
151,757 |
|
|
|
148,588 |
|
|
|
521,361 |
|
|
|
438,921 |
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|
|
Operating expenses: |
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|
|
|
|
|
|
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Research and development(1) |
|
47,826 |
|
|
|
46,949 |
|
|
|
178,821 |
|
|
|
170,905 |
|
|
|
Sales and marketing(1) |
|
30,275 |
|
|
|
21,293 |
|
|
|
105,414 |
|
|
|
81,914 |
|
|
|
General and administrative(1) |
|
47,459 |
|
|
|
31,128 |
|
|
|
159,019 |
|
|
|
129,349 |
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|
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Total operating expenses |
|
125,560 |
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|
|
99,370 |
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|
|
443,254 |
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|
|
382,168 |
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|
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Income from operations |
|
26,197 |
|
|
|
49,218 |
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|
|
78,107 |
|
|
|
56,753 |
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|
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Interest expense, net, and other income, net: |
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|
|
|
|
|
|
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Interest expense, net |
|
(1,633 |
) |
|
|
(21,977 |
) |
|
|
(6,896 |
) |
|
|
(66,297 |
) |
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Other (expense) income, net |
|
1,146 |
|
|
|
1,287 |
|
|
|
(65,472 |
) |
|
|
8,683 |
|
|
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Total interest expense, net and other (expense) income, net |
|
(487 |
) |
|
|
(20,690 |
) |
|
|
(72,368 |
) |
|
|
(57,614 |
) |
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Income (loss) before provision for income taxes |
|
25,710 |
|
|
|
28,528 |
|
|
|
5,739 |
|
|
|
(861 |
) |
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Provision for income taxes |
|
1,404 |
|
|
|
2,485 |
|
|
|
7,197 |
|
|
|
5,360 |
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|
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Net income (loss) |
$ |
24,306 |
|
|
$ |
26,043 |
|
|
$ |
(1,458 |
) |
|
$ |
(6,221 |
) |
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Net income (loss) per share |
|
|
|
|
|
|
|
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Basic |
$ |
0.17 |
|
|
$ |
0.20 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
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Diluted |
$ |
0.15 |
|
|
$ |
0.18 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
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Weighted average shares used to compute net income (loss) per share |
|
|
|
|
|
|
|
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Basic |
|
142,710 |
|
|
|
128,955 |
|
|
|
141,262 |
|
|
|
125,367 |
|
|
|
Diluted |
|
166,836 |
|
|
|
141,297 |
|
|
|
141,262 |
|
|
|
125,367 |
|
|
|
|
|
|
|
|
|
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(1) Includes share-based compensation expense as follows: |
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Cost of revenues |
$ |
447 |
|
|
$ |
306 |
|
|
$ |
1,621 |
|
|
$ |
950 |
|
|
|
Research and development |
|
11,155 |
|
|
|
8,544 |
|
|
|
37,131 |
|
|
|
31,588 |
|
|
|
Sales and marketing |
|
4,262 |
|
|
|
2,553 |
|
|
|
13,887 |
|
|
|
9,606 |
|
|
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General and administrative |
|
16,825 |
|
|
|
13,243 |
|
|
|
56,207 |
|
|
|
41,911 |
|
|
|
Total share-based compensation expense |
$ |
32,689 |
|
|
$ |
24,646 |
|
|
$ |
108,846 |
|
|
$ |
84,055 |
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