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Key Takeaways
- Chegg beat sales estimates and promoted its strategy to use artificial intelligence.
- The company said it beta tested its first generative AI experience in May and said it went over well.
- Chegg shares plunged in May when it indicated free AI products were hurting its business.
Chegg (CHGG) shares surged 4.3% on Tuesday after the education technology provider posted better-than-expected sales and laid out its artificial intelligence (AI) strategy.
Chegg reported revenue fell 6% to $182.9 million, above analysts’ forecasts. Earnings per share (EPS) of $0.28 aligned with estimates. Subscription revenue was down 5% but above the company’s guidance.
CEO Dan Rosensweig announced that Chegg had launched a beta version of its initial generative AI experience in May, adding the feedback has been positive. He said because of its move into AI, “we’re entering an exciting new chapter for Chegg.” Rosensweig argued that the company is in an “unrivaled position to deliver a unique, personalized learning experience for students.”
Shares of Chegg had plunged 48% in early May after the company blamed its weak first-quarter performance on competition from free AI products such as ChatGPT.
Despite Tuesday’s gains, shares of Chegg remained deep in negative territory for the year.
YCharts
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