Chegg Inc (NYSE: CHGG) stock lost over 9.5% on 27th October, 2020 (As of 11:59 am GMT-4; Source: Google finance) after the company posted lower outlook. Chegg expects fourth-quarter revenue to be in the range of $188 million to $190 million, while analysts had forecast revenue of $183.4 million. For the fourth quarter of FY 20, the company expects Chegg Services Revenues to be in the range of $162 million to $164 million, Gross Margin to be between 72% and 73% and Adjusted EBITDA to be in the range of $82 million to $84 million
In Q3, the company posted subscriber growth of 69% year-over-year, reaching 3.7 million students in the quarter. The company saw 252 million content views in the third quarter, which is an increase of 82% year-over-year. CHGG now offer services to students in over 190 countries and in Q3 alone, the company saw 25% of new questions asked and answered from students outside the United States. The company ended the third quarter with approximately $1.8 billion of cash and investments. In the third quarter, the company had completed a very issuer friendly convertible debt offering, along with a concurrent exchange of approximately 50% of the outstanding principal on the 2023 notes that were deep in the money.
CHGG in the third quarter of FY 20 has reported the adjusted earnings per share of 17 cents, beating the analysts’ estimates for the adjusted earnings per share of 10 cents, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 64 percent to $154 million in the third quarter of FY 20, beating the analysts’ estimates for revenue of $143.9 million. Adjusted EBITDA for the quarter was well ahead of what the company had expected at $32 million.
For fiscal 2020, Total Net Revenues is expected to be in the range of $626 million to $628 million, Chegg Services Revenues is expected to be in the range of $507 million to $509 million, Gross Margin to be between 68% and 69% and Adjusted EBITDA is expected to be in the range of $201 million to $203 million.
For 2021, the company expects revenue to be of about $775 million, while analysts had forecast $758.5 million. The company projects fiscal 2021 Chegg Services Revenues to be of approximately $655 million, Gross Margin to be of approximately 70% and Adjusted EBITDA to be of approximately $260 million.