Can Chegg's Restructure Help Drive Better Cost Control for 2026?

Chegg, Inc. CHGG has reshaped its operating structure to improve efficiency and create clearer financial discipline as the business adjusts to a changing environment. The company initiated a broad restructuring program that reorganized its operations into two units. One focuses on the legacy academic business, which is now positioned primarily as a cash-generating segment, while the other centers on the company’s skilling business. This restructuring was described as a complete reorganization rather than a routine workforce reduction, intended to streamline operations and align spending with areas that have stronger long-term potential. 

In the third quarter of 2025, the financial effects of these actions became more visible. Non-GAAP operating expenses declined 46% year over year as a direct outcome of the restructuring initiatives, helping support better operating discipline. Adjusted EBITDA also exceeded the company’s internal expectations, reflecting improvement in cost execution. Alongside this, the company outlined a plan to reduce total non-GAAP expenses from $536 million in 2024 to under $250 million by 2026, signaling a materially leaner expense base going forward. These steps suggest that tighter spending, better operational focus and more controlled investment priorities are central to the company’s near-term strategy. 

At the same time, the restructuring is taking place against ongoing operational headwinds. The company continues to face declining traffic across the legacy academic services, meaningful year-over-year revenue contraction and the ongoing reset tied to its cost actions. Broader industry shifts, including AI-driven disruption and weaker traditional online traffic flows, have also influenced performance trends. 

Overall, the restructuring appears aimed at strengthening cost control and improving financial resilience into 2026. A reduced expense base, a clearer structure and an emphasis on efficiency may support better stability, although the company still needs to navigate traffic pressures and a changing operating landscape.

Chegg vs. Other Market Players

Chegg operates in a highly competitive landscape, with renowned names like Duolingo, Inc. DUOL and Udemy, Inc. UDMY operating beside it in the ed tech market.

Duolingo dominates the language-learning niche with its gamified app and AI-driven engagement. With a strong mobile presence and daily user engagement, Duolingo has built a brand synonymous with accessible, bite-sized learning. On the other hand, Udemy operates across both consumer and enterprise markets, positioning its platform around professional skill development, AI enablement and workforce transformation. This dual exposure allows Udemy to participate in long-term learning trends while steadily improving revenue quality and visibility.

CHGG Stock’s Price Performance & Valuation Trend

Shares of this California-based education technology company have sunk 6.1% in the past month, underperforming the Zacks Internet - Software industry, the Zacks Computer and Technology sector and the S&P 500 Index.

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 0.33, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors.

Earnings Estimate Trend of CHGG

The 2026 earnings per share (EPS) estimate has increased to 18 cents from break-even earnings over the past 60 days. Earnings for 2026 are expected to grow a whopping 228.6%.

Chegg stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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