管理層發言
Greetings, and welcome to Chegg, Inc. Second Quarter 2026 Earnings Conference Call. Operator instructions. I would now like to turn the conference over to your host, Tracey Ford, Vice President of Investor Relations. Thank you. You may begin.
Good afternoon. Thank you for joining Chegg's Second Quarter 2026 Conference Call. On today's call are Dan Rosensweig, President and CEO; and David Longo, Chief Financial Officer. A copy of our earnings press release, along with our investor presentation, is available on our Investor Relations website, investor.chegg.com. A replay of this call will also be available on our website. We routinely post information on our website and intend to make important announcements on our media center website at chegg.com/mediacenter. We encourage you to make use of these resources. Before we begin, I would like to point out that during the course of this call, we will make forward-looking statements regarding future events, including the future financial and operating performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements. In particular, we refer you to the cautionary language included in today's earnings release and the risk factors described in Chegg's annual report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission as well as our other filings with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release and on the investor slide deck found on our IR website, investor.chegg.com. We also recommend you review the investor data sheet, which is also posted on our IR website. Now I will turn the call over to Dan.
Thank you, Tracey, and thanks, everyone, for joining Chegg's Second Quarter 2026 Earnings Call. We outperformed our expectations on revenue, adjusted EBITDA and cash, reflecting our ability to execute against our priorities while investing for future growth. The goals remain the same: return Chegg to growth with high margins and strong free cash flow. Starting last fall, we embarked on our next big chapter, rearchitecting the company to be AI first, building a sustainable cost structure and strengthening our balance sheet so we could accelerate our bigger vision. Chegg's mission to put students first and help them move from learning to earning has never wavered. For almost 20 years, we have evolved to meet students' most important needs from inventing the textbook rental model to make higher education more affordable, then providing 24/7 learning support through Chegg Study and then adding skills-based courses to help learners build the skills needed to advance their careers. Each transition has opened up a new chapter of growth for Chegg. And the foundation we have built across our products, technology and data now positions us to expand our focus on employability. We will help students build the skills, confidence and connections needed to graduate, find internships and transition into the workforce. Higher education continues to evolve, but one thing will never change. After completing whatever path they pursue, students need a job. For the nearly 20 million students entering today's job market over the next few years, that transition is filled with challenges and uncertainty. Beginning in Q3, we are soft launching the next generation of Chegg. By combining our proprietary data, AI and deep insight into how students learn and build careers, we will reduce the friction for students to get internships and then jobs. The new Chegg will help automate job search and matching while adding coaching that will help students pick the right major, the right courses and evaluate the right skills. Our plan is to automate the search, the match and coaching so students can build the right skills, take the right courses and make the right connections. Chegg will handle the hard parts of applying: tailoring resumes, drafting cover letters, auto-filling and submitting applications and even initiating alumni outreach on behalf of the students. We will then add the ability for students to get company-specific interview prep, personalized feedback and targeted skill-building courses to close any gaps standing between them and the job. The result is a platform that takes students from "I need a job" to "I am prepared, applied and connected" all in one place. It's this convergence of everything we have built—our academic platform, our skilling business and our language learning capability—into one service that addresses one of the most pressing needs students face today. We have already had more than 10,000 students use the beta and provide feedback, and we will begin rolling out the new service across both Chegg and our site internships.com starting in the third quarter and all throughout 2027. As we expand our focus on employability, our skilling business remains an important part of the opportunity ahead by helping organizations build workforce capabilities and helping learners develop and apply relevant skills. We are creating a platform that connects learning, skills development and career outcomes. Chegg Skills has been built as a multichannel platform spanning enterprise, institutional, employer and marketplace channels to create a more diversified foundation for growth. We have already signed six new partners this year, including OpenSesame and Dale Carnegie, and those launches will take place over the second half of the year. We will continue to expand into enterprises and schools over the next few years using AI and data to dramatically expand and personalize our catalog while making our courses even more affordable. Our language skills are an important component of employability, helping people expand career opportunities and communicate more effectively in an increasingly global workforce. As a result, we are transforming our language offering from a language learning app into a performance platform, helping people communicate with confidence and impact in any language when it counts. Our new agentic coach, which understands each learner's goals and the context of each interaction, helps you prepare for the moments that matter like a client call, a presentation or an interview. Early next year, we plan to have a seamless integration of our agentic coach into the learner's actual workflow, learning that shows up exactly when and where you need it. We are also expanding our skills offering into Europe, combining language learning with broader workforce capabilities. Underlying all of this has been the restructuring of our workforce to become AI first. AI allows us to personalize learning, improve outcomes and scale more efficiently and affordably, giving us a much leaner operating model, which allows us to return to being a growth business with high margins. When I look at the arc of what we have built and where we are headed, I feel genuinely confident. AI created real headwinds for this company, and we responded by strengthening our balance sheet, rebuilding an AI-first cost structure and expanding our vision towards a much larger opportunity. We are becoming an employability business, one that helps students develop skills, find internships, land jobs and grow throughout their careers. That is a more durable market, and we are uniquely positioned to own it. The financial foundation, which David will walk you through, is what makes that all possible, and we look forward to updating you on our progress next quarter.
Thank you, Dan, and good morning. Today, I will be reviewing our financial performance for the second quarter of 2026, along with the company's outlook for the third quarter. Our second quarter results exceeded our expectations, reflecting continued execution against our priorities. We are excited to take Chegg into its next chapter by expanding our focus on employability, addressing students' evolving needs while helping employers build a more skilled workforce, creating what we believe is a significant opportunity for long-term profitable growth. As we execute on our strategy, AI is improving operational efficiency across the company and driving meaningful gains in profitability and cash generation. We also repurchased shares during the quarter, reflecting our confidence in the company's long-term value while maintaining a disciplined approach to capital allocation. In the quarter, total revenue was $51.8 million, exceeding our expectations. We expanded our distribution partnerships, which we expect to contribute more meaningfully later this year while remaining focused on efficiently managing our academic services products to maximize cash generation. Chegg Study monthly retention continued to be very strong, reinforcing its long-term cash generation potential. Turning to expenses. Q2 non-GAAP operating expenses were $32.3 million, nearly cutting our expenses in half compared to the second quarter of last year. This significant reduction reflects our disciplined approach to expense management and enhanced use of AI to improve productivity and drive efficiencies across the company. We continue to identify opportunities to further optimize our cost structure. Adjusted EBITDA for the quarter was $9.1 million, representing a margin of 17%. Second quarter CapEx was $3.7 million, down by 49% year-over-year. For full year 2026, we are targeting a 60% reduction in CapEx. Free cash flow in the quarter was $6.4 million, which includes approximately $1.5 million of severance payments related to prior restructuring actions. In the first half of the year, we generated $9.5 million in free cash flow despite $14.4 million in severance payments. We expect to continue to generate meaningful free cash flow in the second half of the year. Looking at the balance sheet, we ended the quarter with $72.3 million in cash and investments and a net cash position of $38.5 million, providing us flexibility as we execute on our priorities. We've built a strong foundation for the future and are encouraged by the continued durability of our academic services products driven by strong monthly retention, the progress we are making leveraging AI to meaningfully improve our cost structure, the early traction we are seeing with new skilling distribution partnerships and the significant opportunity we see to expand through employability. Together, these reinforce our confidence in generating meaningful cash flow and creating long-term value. During the second quarter, we repurchased $1.7 million of our common stock and have $120.7 million remaining on our securities repurchase authorization. We believe our shares represent an attractive use of capital. Our strong balance sheet and continued ability to generate meaningful cash flow provide us with flexibility to allocate capital where we believe will create the most long-term value for our shareholders. That includes investing behind our strategic priorities while also evaluating further share repurchases. In addition, we expect to fully repay the convertible debt in the third quarter, further strengthening our balance sheet and increasing our financial flexibility. Moving to guidance. As we execute on our expanded opportunity focused on building an employability platform, our Academic Services and Chegg Skilling businesses are becoming increasingly integrated, and we believe total revenue and adjusted EBITDA are the most meaningful ways to measure progress. Beginning this quarter, we are providing guidance for total revenue rather than separate revenue guidance. Looking ahead to Q3 guidance, we expect total revenue between $43 million and $44 million, gross margin in the range of 48% to 49% and adjusted EBITDA between $1 million and $2 million. In closing, we have strengthened the business for long-term success. The company is leaner, more efficient and well positioned to generate meaningful free cash flow in 2026. We are executing our strategy with focus and discipline while leaning into a large new opportunity, positioning us to drive sustainable growth, improve profitability and create long-term shareholder value. We have a strong balance sheet, which provides additional financial flexibility as we continue executing our strategy. With that, I will turn the call over to the operator for your questions.
分析師問答
Operator instructions. Our first question comes from Ryan MacDonald with Needham & Company.
Dan, great to hear about the new vision for Chegg and the priorities moving forward. Maybe starting with the new experience on helping students connect and find internship and job opportunities: can you talk about what you were seeing in the market that pushed you in this direction? Are there specific gaps in LinkedIn, Indeed or Handshake that you felt Chegg could take advantage of here? And then as we think about growing this, how do you drive awareness among the student population? Will you leverage career services relationships? I'd love to hear more there.
Yes. Great question. We've been working on this for quite some time. We feel now is the time to start talking about it because step one was make sure the company could pay off its debt, which will be out of debt shortly. Second was to make sure our balance sheet, as David said, is really strong; we're going to have substantial cash, net of debt, that's only going to grow over the rest of this year and into next year. So the value of the company, we think, is understated given the amount of cash we're going to generate. The Skills business continues to grow. But the real opportunity that we have always believed in is asking the Jeff Bezos question: rather than what's changing, what's never going to change. At the end of the day, college students go to college for one reason: to get a better job. The fear over employment and the impact of technology and AI is rampant, and the biggest question students have been asking us to solve is which classes to take, which major to choose and, if they take certain classes, what skills they'll actually have that will make them employable. Then they need help identifying companies, building their network and preparing application materials. LinkedIn doesn't help you build the network; nobody does, but we will. Help me build the network, help me connect to these people, help me write my resume, help me write my cover letter, help me prepare for the interview. Nobody was putting all of this together in one place, and nobody was focused exclusively on the student. Handshake existed, but as you know, Handshake has evolved its business to be more of a data business. We have huge legacy customers that still use Chegg. You can see that in our numbers and in the amount of profits we're generating. We have the ability to reach students in the millions. So awareness won't be difficult for us because we still get massive traffic and have a substantial customer base. About 12 or 13 years ago, we bought the site internships.com. We haven't used it much in recent years because of the difficulties we were facing, but we took it out of mothballs and the organic traffic to that site is quite substantial. We have been testing: Chegg is the front door, internships.com is another front door. We very quickly got over 10,000 beta testers of the original product. We brought in a number of interns who actually helped us design and build the product because it's for them. So anybody who has a student in college or going to college, the number one fear of the student and the parent is, will my child get a job? Where will they work? How are they going to get the skills? We're the company that is going to solve many of those issues for them. We think we have the assets to do it. We think we have the brand to do it. We think we have the data to do it. A couple of years ago, we were severely impacted by AI. Now we're using AI to respond and compete effectively.
I like it. As you think about this all-in-one approach to assist the student from identifying skills to getting the job, how is that informing your content creation strategy with the Skills business in terms of the partners you select? At some point, do you plan to bring more of the content creation in-house or use AI to create some of this content for students?
If you think about it, Chegg's legacy is that we were AI before there was AI. We have a pristine set of over 100 million pairs of Q&A built on our expert network. Many data businesses are now trying to build an expert network to train models, and we already have one. Our ability to answer questions across subject matter has always been available. We focused on academics; now we're going to focus on academics and job-related questions, and that's an advantage others don't have. In terms of content creation, that will be an important area. Our SEO strategy will expand dramatically based on listings and the data we have around students. We start with the schools students attend, the classes they take and the majors they have. We can identify people who took those classes and where they work, and then identify alumni and build relationships between students and alumni. One exciting area, which I mentioned earlier, is that we're taking all the courses we've developed and turning them into about 5,000 artifacts of content that will make them shorter, much more accessible and much more affordable to assess the student's skill level and then train them up affordably. That will come later. It's not just the partners we're picking; it's the content we're creating. That content will constantly evolve, the same way our Q&A evolved for academics, but focused on professional needs. It will be led by the skills companies actually recommend. AI allows us to do this quickly and affordably and to personalize each experience. When we look at the opportunity, at our peak 25% of all students in the country subscribed to Chegg. Unfortunately, another 25% have since unsubscribed. But that still creates a large business. If you ask which TAM is bigger in the college market and even in the high-school market that doesn't go to college, remember half of the high-school market never attends higher education. So we think it's a bigger TAM, and content creation will focus on what you need to be employable, how to interview, and how to navigate AI-driven interviews. You'll be able to rehearse in real time with our coach about likely questions. We'll store content based on the experiences students have with different employers. It's a multiyear effort, but because we're rolling out the first early version later this quarter, now is the time to talk about it. We couldn't be more excited.
Appreciate that. Maybe one for David: can you put a little more color around expectations for free cash flow generation? It sounded like the quarter had good cash generation but there were severance payments outgoing. How much more incremental severance remains? When should we start to see a material ramp in cash generation?
Yes, sure. The severance payments are almost all behind us at this point. We had about $14 million to $15 million in the first half of the year. Q3 is traditionally a slower period for us and then Q4 has always been our strongest cash generation period. I haven't guided to the exact quarterly cadence for the full year, but there is some timing on payments in annual contracts, which we have in Q3, one of our lower revenue quarters. We still believe we'll be free cash flow positive in the back half of the year and even within the quarterization, but there's some timing to consider. If you pro forma out those severance payments and look at the cash generation in the first half, we're pleased with the performance, and we believe we can continue to generate meaningful free cash flow through this year and next.
We have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.