Chegg (NYSE:CHGG) fell 9.5% at the market open Tuesday after the company posted disappointing guidance for the March quarter.
For Q4, the education technology firm reported Q4 earnings per share (EPS) of $0.36, in line with consensus estimates. Revenue came in at $187.99 million, surpassing the expected $185.93 million.
Revenue from subscription services reached $166.3 million, marking a 6% decrease from the previous year, yet it marginally exceeded the company's projections, which were between $164 million and $166 million.
Similarly, the adjusted EBITDA stood at $66.2 million, surpassing the company’s own forecast range of $62 million to $64 million.
For FQ1 2024, Chegg expects revenue in the range of $173 million to $175 million, missing the consensus projection of $180.1 million.
It said adjusted EBITDA will range between $43 million and $45 million, also below the estimated $54.2 million.
Citing “sustained revenue headwinds,” Piper Sandler analysts downgraded CHGG to Underweight from Neutral, and lowered the price target to $8.5 from $9.
“In our view, margins are under pressure as the company needs to invest in enhancing its AI/tech powered offerings, and we are thereby modeling 160bps of adjusted EBITDA decline in FY24,” analysts said in the note.