What's Going On With Chegg Stock Tuesday?

Chegg Inc CHGG shares are trading lower Tuesday on the heels of the company's third-quarter financial results. Here's a look at the highlights from the quarter. 

• Q3 Revenue: $157.9 million beat estimates of $152.67 million
• Q3 EPS: 18 cents beat estimates of 17 cents

Revenues were down 4% on a year-over-year basis. Subscription services revenues also decreased 4% year-over-year to $139.9 million. Subscription services subscribers were down 8% year-over-year to 4.4 million.

Gross margin came in at 47%, driven lower by a one-time content and related assets charge. Adjusted gross margin was 74%. 

Chegg noted that it has started rolling out the first phase of its new AI-powered user experience. 

"Chegg is in a great position to build the most impactful, scalable, AI-enabled, personal learning assistant, which will expand our opportunities to serve more students, in more ways, and at a lower cost per customer," said Dan Rosensweig, president and CEO of Chegg.

"We are moving quickly and have already started to roll out our new simple user interface and unified asking experience, delivering faster and more relevant solutions."

Outlook: Chegg said it sees fourth-quarter revenue in the range of $185 million to $187 million versus estimates of $186.34 million. Subscription services revenues are expected to be in the range of $164 million to $166 million. 

Gross margin is expected to be between 73% and 74% in the fourth quarter. The company anticipates fourth-quarter adjusted EBITDA of $62 million to $64 million.

Following the print, Piper Sandler analyst Arvind Ramnani maintained Chegg with a Neutral rating and lowered the price target from $13 to $9.

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CHGG Price Action: Chegg shares were down 4.06% at $8.50 at the time of publication, according to Benzinga Pro.

Photo: Hermann Traub from Pixabay.