Here's What Investors Must Know Ahead of Chegg's Q4 Earnings Release

Chegg, Inc. CHGG is scheduled to report its fourth-quarter 2025 results on Feb. 9, 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 100% and 1.8%, respectively. On a year-over-year basis, the top line tumbled 43%, while the bottom line compared with nine cents.

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 negative surprise being 64.1%.

Trend in CHGG’s Q4 Estimates

The Zacks Consensus Estimate for the company’s fourth-quarter adjusted loss per share has remained unchanged at 11 cents over the past 60 days. The estimated figure indicates a whopping 164.7% year-over-year decline from adjusted EPS of 17 cents.

The consensus estimate for net revenues is pegged at $71.3 million, indicating a 50.3% downturn from $143.5 million reported in the year-ago quarter.

Chegg, Inc. Price and EPS Surprise

Chegg, Inc. price-eps-surprise | Chegg, Inc. Quote

Factors Likely to Determine Chegg’s Q4 Results

Revenues

The company’s performance in the fourth quarter is expected to have moved south because of reduced contributions from its Subscription Services (which contributed 88.9% to third-quarter 2025 net revenues) and Skills and Other (which contributed 11.1% to third-quarter 2025 net revenues) segments.

Increased AI-driven alternatives and reduced Google search traffic are expected to have been weighing heavily on subscriber growth and engagement for Chegg. 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 contributions in the quarter to be reported.

For the fourth quarter, Chegg expects net revenues between $70 million and $72 million, down from $143.5 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 $64 million and $7.47 million, respectively, indicating a year-over-year decline from $129 million and $14.94 million. The estimate for Chegg Services subscribers is pegged at 1,855, down year over year by 48.5% from 3,600.

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 result in additional expenses, pulling the bottom line down.

For the quarter to be reported, the company expects gross margin between 57% and 58%, down from 68% reported in the previous year quarter. Moreover, adjusted EBITDA is anticipated to range from $10 million to $11 million, notably down from $36.6 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 have 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.

Stocks With the Favorable Combination

Here are some stocks from the Zacks Computer and Technology sector, which per our model, have the right combination of elements to deliver an earnings beat this time around.

NVIDIA Corporation NVDA has an Earnings ESP of +2.18% and a Zacks Rank of 2 at present. 

NVIDIA’s earnings beat estimates in three of the last four quarters and missed on the remaining one occasion, the average surprise being 2.8%. The company’s earnings for the fourth quarter of fiscal 2026 are expected to increase 70.8% year over year.

SoundHound AI, Inc. SOUN has an Earnings ESP of +42.86% and a Zacks Rank of 3.

SoundHound’s earnings beat estimates in three of the last four quarters and missed on the remaining one occasion, the average negative surprise being 109.5%. The company’s earnings for the fourth quarter of 2025 are expected to decline 97.1% year over year.

Spotify Technology S.A. SPOT currently has an Earnings ESP of +12.83% and a Zacks Rank of 3.

Spotify’s earnings beat estimates in one of the last four quarters and missed on the other three occasions, the average negative surprise being 17.6%. The company’s earnings for the fourth quarter of 2025 are expected to increase 56.9% year over year.

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

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