Online study and academic help platform Chegg (NYSE: CHGG) will be reporting earnings tomorrow after market hours. Here’s what investors should know.
Chegg beat analysts’ revenue expectations by 2% last quarter, reporting revenues of $163.1 million, down 10.8% year on year. It was a weaker quarter for the company, with a decline in its users and slow revenue growth. It reported 4.37 million users, down 9.1% year on year.
Is Chegg a buy or sell going into earnings? Read our full analysis here, it’s free.
This quarter, analysts are expecting Chegg’s revenue to decline 15% year on year to $134.1 million, a further deceleration from the 4.2% decrease it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.07 per share.
The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Chegg has a history of exceeding Wall Street’s expectations, beating revenue estimates every single time over the past two years by 2.2% on average.
Looking at Chegg’s peers in the consumer subscription segment, some have already reported their Q3 results, giving us a hint as to what we can expect. Duolingo delivered year-on-year revenue growth of 39.9%, beating analysts’ expectations by 1.8%, and Netflix reported revenues up 15%, in line with consensus estimates. Duolingo traded down 1.1% following the results while Netflix was up 11.1%.
Read our full analysis of Duolingo’s results here and Netflix’s results here.
There has been positive sentiment among investors in the consumer subscription segment, with share prices up 11% on average over the last month. Chegg is up 15.3% during the same time and is heading into earnings with an average analyst price target of $2.79 (compared to the current share price of $1.73).
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