Chegg’s first quarter was marked by a sharp decline in year-over-year revenue and subscribers, but the company surpassed analyst expectations for revenue and adjusted EBITDA. Management attributed performance to early traction in revenue diversification efforts, such as content licensing to large technology companies and the expansion of institutional partnerships. CEO Nathan Schultz highlighted that the company’s content licensing agreements generated incremental revenue and emphasized, “We are really early days in this. We've licensed a very, very, very small set of our content at the moment.” Chegg also made significant progress on its strategic review process and implemented further cost reductions in response to ongoing industry headwinds.

Is now the time to buy CHGG? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Chegg’s Q1 Earnings Call

• Ryan MacDonald (Needham & Company) asked about the terms and long-term potential of content licensing deals. CEO Nathan Schultz explained these are early-stage pilots with a small fraction of the library licensed, indicating long-term expansion opportunities.
• Ryan MacDonald (Needham & Company) followed up on institutional pilot feedback and willingness to pay. Schultz shared that universities are responding positively to seat-based licensing, motivated by the need to improve student persistence and reduce dropout rates, with pilots potentially converting to full contracts.
• No analyst questions on restructuring specifics or cost-saving measures were asked on the call.
• No analyst questions on competitive threats from major tech companies or the impact of free AI offerings were raised.
• No analyst questions on the strategic alternatives process or timing were asked during the Q&A session.

Catalysts in Upcoming Quarters

Over the coming quarters, the StockStory team will be monitoring (1) the pace of expansion and monetization of Chegg’s content licensing program, (2) conversion rates from institutional pilot agreements to longer-term contracts, and (3) progress toward Busuu and Chegg Skills reaching positive adjusted EBITDA. Additionally, execution on cost reduction targets and updates around the strategic review process will be important to gauge future direction.

Chegg currently trades at $1.32, up from $0.68 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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