Chegg to Report Q3 Earnings: Should You Buy the Stock or Wait?

Chegg, Inc. CHGG is scheduled to report its third-quarter 2025 results on Nov. 10, after market close.

In the last reported quarter, the company’s adjusted earnings per share (EPS) and net revenues topped the Zacks Consensus Estimate by 143.5% and 3.7%, respectively. On a year-over-year basis, both metrics tumbled 58.3% and 36%, respectively.

Chegg’s earnings topped the consensus mark in two of the trailing four quarters, met on one occasion and missed on the remaining occasion. The average surprise can be observed from the chart below.

Trend in CHGG’s Q3 Estimates

The Zacks Consensus Estimate for the company’s third-quarter adjusted loss per share has remained unchanged at 14 cents over the past 60 days. The estimated figure indicates a whopping 255.6% year-over-year decline from adjusted EPS of nine cents.

The consensus estimate for net revenues is pegged at $76.4 million, indicating a 44.1% downturn from $136.6 million reported in the year-ago quarter.

Factors Likely to Determine Chegg’s Q3 Results

Revenues

The company’s performance in the third quarter is expected to have moved south because of a decline in the number of subscribers (those who pay for accessing Chegg’s services). This decline is likely to have been triggered by the adverse impact of lower traffic, mainly due to Google AI overviews. This market headwind is expected to have reduced the revenue contributions from the Subscription Services product line (which contributed 85.4% to second-quarter 2025 net revenues).

Besides, lower enrollments for Chegg Skills, alongside a decrease in advertising services revenues, are expected to have marred the Skills and Other product line’s (which contributed 14.6% to second-quarter 2025 net revenues) contributions in the quarter to be reported.

For the third quarter, Chegg expects revenues from the Subscription Services product line to range between $67 million and $69 million, with net revenues projected between $75 million and $77 million.

For the quarter to be reported, the Zacks Consensus Estimate for revenues from the Subscription Services and Skills and Other product lines is pegged at $68 million and $8.23 million, respectively, indicating a year-over-year decline from $119.8 million and $16.8 million. The estimate for Chegg Services subscribers is pegged at 2,164, down year over year by 43.5% from 3,830.

Margins

The bottom line of Chegg is likely to have tumbled year over year due to reduced leverage from the top line alongside increased general and administrative expenses. The company is undergoing certain restructuring actions, which are likely to have been resulting in additional expenses, pulling the bottom line down.

For the quarter to be reported, the company expects gross margin between 56% and 57%, down from 68% reported in the previous year quarter. Moreover, adjusted EBITDA is anticipated to range from $7 million to $8 million, notably down from $22.3 million reported in the year-ago quarter.

Nonetheless, CHGG’s focus on AI incorporation, shifts toward an advanced professional upskilling business model and effective execution of its disciplined cost management are expected to somewhat offset the near-term headwinds.

What the Zacks Model Says About Chegg

Our proven model does not conclusively predict an earnings beat for Chegg this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here, as you will see below.

Earnings ESP: Chegg has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: CHGG stock currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chegg Stock’s Price Performance & Valuation Trend

Shares of this California-based education technology company have gained 30.3% in the past six months, outperforming the Zacks Internet - Software industry and the S&P 500 Index, while underperforming the Zacks Computer and Technology sector. Notably, during the same time frame, a few of the renowned market peers, including Coursera, Inc. COUR, Duolingo, Inc. DUOL and Stride, Inc. LRN, have been standing below CHGG. In the past six months, Coursera, Duolingo and Stride have declined 7.4%, 58.8% and 54.6%, respectively.

CHGG stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 0.28, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors.

Coursera, Duolingo and Stride are currently trading at a forward 12-month P/S ratio of 1.65, 9.66 and 1.21, respectively.

What Should be Your Take on CHGG Stock?

This education technology firm has been facing substantial headwinds from declining subscriber counts and reduced traffic due to Google’s AI overviews, which have pressured revenues and the bottom line. However, Chegg’s continued integration of AI tools, focus on upskilling offerings and disciplined cost management could support a gradual turnaround over time.

CHGG stock’s loss estimate position signals ongoing pressures from declining revenues amid restructuring and rising administrative costs. This aspect indeed makes the investment decision unlikely in the near term, despite market trends favoring its long-term growth, with a discounted valuation being encouraging.

Summing up, per the overall discussion, new investors may prefer to wait for a better entry point or clearer earnings momentum before taking new positions in the stock. On the other hand, it is prudent for existing investors to retain CHGG stock in their portfolios ahead of the upcoming third-quarter financial results.

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This article originally published on Zacks Investment Research (zacks.com).

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