Why Chegg Inc (NYSE: CHGG) stock is under pressure

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Chegg Inc (NYSE: CHGG) stock lost over 5.8% on 11th Feb, 2020 (as of 10:10 am GMT-5; Source: Google finance) on lower than expected fourth quarter of FY 19 update. The company delivered 31% year-over-year increase in the Chegg Services Revenues to $107.3 million, or 86% of total net revenues, compared to 85% in Q4 2018. The company has reported the Non-GAAP Net Income of $44.8 million and adjusted EBITDA was $47.0 million for the quarter. The company has posted 2.5 million number of Chegg Services subscribers, which reflects an increase of 32% year-over-year and total Chegg Study content views of 271 million.

CHGG in the fourth quarter of FY 19 has reported the adjusted earnings per share of 35 cents, while adjusted revenue growth of 31 percent to $125.5 million in the fourth quarter of FY 19

Moreover, for FY 19, the company has reported the total Net Revenues of $410.9 million, which is an increase of 28% year-over-year. Chegg Services Revenues has increased 31% year-over-year to $332.2 million, or 81% of total net revenues in FY 19, compared to 79% in 2018. The company has reported the net loss of $9.6 million, Non-GAAP Net Income was $118.0 million and Adjusted EBITDA of $125 million. The company has posted 3.9 million number of Chegg Services subscribers, which is an increase of 29% year-over-year. The total Chegg Study content views in FY 19 was 810 million.

For the first quarter ending in April 2020, Chegg expects revenue to be in the range of $122 million to $125 million, Chegg Services Revenues is expected to be in the range of $99 million to $100 million, Gross Margin to be between 67% and 68% and Adjusted EBITDA is expected to be in the range of $27.5 million to $28.5 million.

The company expects full-year 2020 revenue to be in the range of $522 million to $527 million, Chegg Services Revenues is expected to be in the range of $435 million to $437 million, Gross Margin to be between 71% and 72%, Adjusted EBITDA is expected to be in the range of $162 million to $164 million and Capital Expenditures is expected to be in the range of $105 million to $115 million which includes approximately $50 million of net textbook purchases

 

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