Chegg (NYSE:CHGG), a leading US online education platform, reported a decline in the number of subscribers to subscription services in its first-quarter earnings report on Monday, and lowered its second-quarter forecast from analysts’ expectations. The announcement caused the stock to plummet in after-hours trading.
“As artificial intelligence technology continues to advance at a rapid pace, we are actively embracing it and prioritizing our investments to meet this opportunity,” said Dan Rosensweig, CEO and President of Chegg.
Rosensweig added that student interest in ChatGPT has surged since March, which is influencing new customer growth.
Following this first-quarter earnings release, Chegg’s shares fell 37.5% to $11 in after-hours trading on Monday.
First-quarter revenue declined 7% year-over-year to $187.6 million, lower than the consensus of $185.2 million. Non-GAAP earnings-per-share of $0.27 compared to the consensus of $0.26. Subscription service revenue fell 3%. The number of subscribers to the subscription service was 5.1 million, down 5% from the previous year.
Chegg forecast second-quarter revenue of $175 million to $178 million, well below the consensus of $194 million. Adjusted EBITDA for the second quarter ranged from $53 million to $55 million. The company expects first-quarter revenue from subscription services to be between $159 million and $162 million, compared to $168.4 million.
“We continue to be confident in our ability to predict the current quarter, but given recent industry developments, visibility beyond that is less certain. So, as long as these conditions exist, we will only be guiding for the current quarter,” said Andy Brown, Chegg’s chief financial officer.