Chegg to Report Q3 Earnings: Should You Buy the Stock or Wait?

Chegg, Inc. CHGG is scheduled to report its third-quarter 2025 results on Nov. 10, after market close.In the last reported quarter, the company’s adjusted earnings per share (EPS) and net revenues topped the Zacks Consensus Estimate by 143.5% and 3.7%, respectively. On a year-over-year basis, both metrics tumbled 58.3% and 36%, respectively.Chegg’s earnings topped the consensus mark in two of the trailing four quarters, met on one occasion and missed on the remaining occasion. The average surprise can be observed from the chart below.Image Source: Zacks Investment ResearchTrend in CHGG’s Q3 EstimatesThe Zacks Consensus Estimate for the company’s third-quarter adjusted loss per share has remained unchanged at 14 cents over the past 60 days. The estimated figure indicates a whopping 255.6% year-over-year decline from adjusted EPS of nine cents.Image Source: Zacks Investment ResearchThe consensus estimate for net revenues is pegged at $76.4 million, indicating a 44.1% downturn from $136.6 million reported in the year-ago quarter.Factors Likely to Determine Chegg’s Q3 ResultsRevenuesThe company’s performance in the third quarter is expected to have moved south because of a decline in the number of subscribers (those who pay for accessing Chegg’s services). This decline is likely to have been triggered by the adverse impact of lower traffic, mainly due to Google AI overviews. This market headwind is expected to have reduced the revenue contributions from the Subscription Services product line (which contributed 85.4% to second-quarter 2025 net revenues).Besides, lower enrollments for Chegg Skills, alongside a decrease in advertising services revenues, are expected to have marred the Skills and Other product line’s (which contributed 14.6% to second-quarter 2025 net revenues) contributions in the quarter to be reported.For the third quarter, Chegg expects revenues from the Subscription Services product line to range between $67 million and $69 million, with net revenues projected between $75 million and $77 million.For the quarter to be reported, the Zacks Consensus Estimate for revenues from the Subscription Services and Skills and Other product lines is pegged at $68 million and $8.23 million, respectively, indicating a year-over-year decline from $119.8 million and $16.8 million. The estimate for Chegg Services subscribers is pegged at 2,164, down year over year by 43.5% from 3,830.MarginsThe bottom line of Chegg is likely to have tumbled year over year due to reduced leverage from the top line alongside increased general and administrative expenses. The company is undergoing certain restructuring actions, which are likely to have been resulting in additional expenses, pulling the bottom line down.For the quarter to be reported, the company expects gross margin between 56% and 57%, down from 68% reported in the previous year quarter. Moreover, adjusted EBITDA is anticipated to range from $7 million to $8 million, notably down from $22.3 million reported in the year-ago quarter.Nonetheless, CHGG’s focus on AI incorporation, shifts toward an advanced professional upskilling business model and effective execution of its disciplined cost management are expected to somewhat offset the near-term headwinds.What the Zacks Model Says About CheggOur proven model does not conclusively predict an earnings beat for Chegg this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here, as you will see below.Earnings ESP: Chegg has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: CHGG stock currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Chegg Stock’s Price Performance & Valuation TrendShares of this California-based education technology company have gained 30.3% in the past six months, outperforming the Zacks Internet - Software industry and the S&P 500 Index, while underperforming the Zacks Computer and Technology sector. Notably, during the same time frame, a few of the renowned market peers, including Coursera, Inc. COUR, Duolingo, Inc. DUOL and Stride, Inc. LRN, have been standing below CHGG. In the past six months, Coursera, Duolingo and Stride have declined 7.4%, 58.8% and 54.6%, respectively.Image Source: Zacks Investment ResearchCHGG stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 0.28, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors.Image Source: Zacks Investment ResearchCoursera, Duolingo and Stride are currently trading at a forward 12-month P/S ratio of 1.65, 9.66 and 1.21, respectively.What Should be Your Take on CHGG Stock?This education technology firm has been facing substantial headwinds from declining subscriber counts and reduced traffic due to Google’s AI overviews, which have pressured revenues and the bottom line. However, Chegg’s continued integration of AI tools, focus on upskilling offerings and disciplined cost management could support a gradual turnaround over time.CHGG stock’s loss estimate position signals ongoing pressures from declining revenues amid restructuring and rising administrative costs. This aspect indeed makes the investment decision unlikely in the near term, despite market trends favoring its long-term growth, with a discounted valuation being encouraging.Summing up, per the overall discussion, new investors may prefer to wait for a better entry point or clearer earnings momentum before taking new positions in the stock. On the other hand, it is prudent for existing investors to retain CHGG stock in their portfolios ahead of the upcoming third-quarter financial results.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Stride, Inc. (LRN): Free Stock Analysis Report Chegg, Inc. (CHGG): Free Stock Analysis Report Coursera, Inc. (COUR): Free Stock Analysis Report Duolingo, Inc. (DUOL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks