Chegg, Inc. CHGG shares are moving lower on Tuesday after the company reported earnings for the 2024 fiscal-year fourth-quarter and issued guidance below estimates.

What To Know: Chegg expects first-quarter sales of $114.00 million to $116.00 million, versus analysts’ estimate of $138.07 million.

The company also guided subscription services revenue from $104.00 million to $106.00 million, gross margin between 66% and 67% and adjusted EBITDA in the range of $13.00 million to $14.00 million.

Nathan Schultz, CEO and President of Chegg, attributed the lower-than-expected guidance to industry-wide challenges. He said that the rise of Google AIO has significantly impacted Chegg's traffic and revenue, as Google AIO displays AI-generated content from third-party sources like Chegg, keeping traffic on Google's platform.

Schultz stated that Google AIO has caused non-subscriber traffic to drop 49% in January 2025, down significantly from the 8% decrease in the 2024 fiscal-year second-quarter. Notably, Chegg is currently suing Google over the issue.

“While the challenges we outlined will persist, we are focused on the clear goal of stabilizing the business through the course of 2025. We are driven by a core belief that the relevancy and need for comprehensive student success platforms – offering an adaptive, personalized experience to support learning – will only increase over the coming years,” said Schultz.

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CHGG Price Action: At the time of writing, Chegg stock is trading 28.9% lower at $1.10, according to data from Benzinga Pro.

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