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    CHGG
    Earnings call· Jun 2026(Q2 FY26)

    CHEGG Q2 FY26 earnings call CHGG

    Aug 6, 2026 Source

    Executive summary

    Chegg Q2 FY26 — AI-First Transformation and Employability Focus

    Chegg is undergoing an AI-first transformation, shifting its focus towards an employability platform to help students transition from learning to earning. The company exceeded Q2 expectations for revenue and adjusted EBITDA, driven by operational efficiencies and a strengthened balance sheet, positioning it for long-term profitable growth despite lower Q3 guidance.

    Highlights

    5

    • Total revenue of $51.8 million exceeded expectations.

    • Adjusted EBITDA was $9.1 million, representing a 17% margin.

    • Non-GAAP operating expenses were $32.3 million, nearly 50% lower YoY.

    • Free cash flow in Q2 was $6.4 million, despite $1.5 million in severance payments.

    • Ended the quarter with $72.3 million in cash and investments and a net cash position of $38.5 million.

    Concerns

    3

    • Q3 FY26 total revenue guidance is between $43 million and $44 million, lower than Q2.

    • Q3 FY26 adjusted EBITDA guidance is between $1 million and $2 million, significantly lower than Q2.

    • Free cash flow in H1 FY26 included $14.4 million in severance payments.

    Guidance & targets

    5
    CategoryTargetConfidence
    Total Revenue
    $43 million to $44 million
    high materiality
    High
    Gross Margin
    48% to 49%
    medium materiality
    High
    Adjusted EBITDA
    $1 million to $2 million
    high materiality
    High
    Capital Expenditure Reduction
    60% reduction
    medium materiality
    High
    Free Cash Flow
    meaningful free cash flow
    high materiality
    Medium

    Operational metrics

    4
    Capital expenditure reduction
    49%YoY
    Q2 FY26

    CapEx was $3.7 million in Q2 FY26.

    New skilling partners signed
    6
    YTD FY26

    Number of new partners signed for the skilling business this year.

    Employability service beta testers
    >10,000
    Q2 FY26

    Number of students who have used the beta version of the new employability service.

    Convertible debt repayment
    fully repay
    Q3 FY26

    Expectation to fully repay convertible debt in the third quarter.

    Industry KPIs

    6
    MetricValueDetails
    Revenue$51.8 millionUSD
    Gross margin48% to 49%%
    Sg a OPEX ratio$32.3 millionUSD
    Adjusted EBITDA ebita$9.1 millionUSD
    Cash investments balance$72.3 millionUSD
    Share buyback capital return$1.7 millionUSD

    Product announcements

    2
    ProductTypeDetails
    New Chegg employability servicelaunch
    Agentic Coach (Language Offering)expansion

    Deals & partnerships

    2
    Open SesameNew partner for skilling business

    One of six new partners signed this year for the skilling business, with launches taking place in the second half of the year.

    Dale CarnegieNew partner for skilling business

    One of six new partners signed this year for the skilling business, with launches taking place in the second half of the year.

    Risks & headwinds

    2
    AI-related headwindsPast

    AI created real headwinds for this company

    Mitigation: Responded by strengthening balance sheet, rebuilding AI-first cost structure, and expanding vision.

    Employment market uncertaintyNear-term to long-term

    Fear over employment and unemployment that relates to technology and AI is ramping.

    Mitigation: Developing an employability platform to help students navigate job search and skill development.

    What to watch in Q3 FY26

    5

    Convertible debt repayment

    Q3 FY26
    Targetfully repaid

    Why it matters

    Strengthening the balance sheet and increasing financial flexibility.

    In addition, we expect to fully repay the convertible debt in the third quarter, further strengthening our balance sheet, increasing our financial flexibility.

    Q&A highlights

    3

    What market gaps does Chegg's new employability platform address, especially compared to existing services like LinkedIn or Handshake, and how will Chegg drive awareness among students?

    Dan Rosensweig explained that students primarily go to college for jobs, and no existing platform focuses exclusively on students by integrating all aspects of job search, skill building, and networking. Chegg's legacy customer base and the acquisition of internships.com provide a strong foundation for awareness, and AI will be used to connect students with alumni and tailor job applications.

    “Nobody was putting all of this together in 1 place, and nobody was focused exclusively on the students.”

    asked by Ryan MacDonald · answered by Daniel Rosensweig

    2 min read5 chapters

    Detailed Narrative

    01

    AI-First Transformation & Employability Focus

    Chegg is rearchitecting to be AI-first, building a sustainable cost structure, and strengthening its balance sheet to accelerate its vision of becoming an employability business. This involves helping students build skills, find internships, and land jobs, addressing a critical need for the nearly 20 million students entering the job market. The company aims to reduce friction for students in their career transitions.

    02

    New Chegg Platform Rollout

    Starting in Q3 FY26 and throughout 2027, Chegg will soft launch the next generation of its platform, combining proprietary data, AI, and deep insights to automate job search, matching, and coaching. This includes tailoring resumes, drafting cover letters, auto-filling applications, and initiating alumni outreach. The platform will also offer company-specific interview prep and personalized feedback. Over 10,000 students have already used the beta version.

    03

    Skilling Business Expansion

    The skilling business remains an important part of Chegg's strategy, focusing on helping organizations build workforce capabilities and learners develop relevant skills. Chegg has signed 6 new partners this year, including Open Sesame and Dale Carnegie, with launches scheduled for the second half of the year. The company plans to expand into enterprises and schools, leveraging AI and data to dramatically expand and personalize its course catalog while making offerings more affordable.

    04

    Language Learning Transformation

    Chegg is transforming its language offering from a learning app into a performance platform, aiming to help users communicate with confidence and impact. A new Agentic coach, which understands learner goals and interaction context, will prepare users for critical moments like client calls or interviews. Seamless integration of the Agentic Coach into learners' actual workflows is planned for early next year, and skills offerings are expanding into Europe.

    05

    Financial Strength & Capital Allocation

    The company exceeded Q2 expectations for revenue, adjusted EBITDA, and cash. Non-GAAP operating expenses were nearly halved year-over-year due to disciplined management and enhanced use of AI. Chegg repurchased $1.7 million of common stock in Q2 and has $120.7 million remaining on its authorization. The company expects to fully repay its convertible debt in Q3, further strengthening its balance sheet and increasing financial flexibility.

    AI-generated summary of the company’s earnings call. Not investment advice.