Chegg Posts $46.5 Million Q3 Revenue, Repays Remaining Debt

Chegg Inc. (NYSE: CHGG) reported third-quarter 2026 net revenue of $46.5 million and adjusted EBITDA of $5.4 million, while fully repaying its remaining convertible debt. The education technology company said revenue, adjusted EBITDA and free cash flow exceeded its internal expectations as cost reductions and AI-enabled efficiencies helped offset the continued decline of its legacy homework-help business.

The company generated a 52% gross margin during the quarter. Adjusted EBITDA represented 12% of revenue, while free cash flow totaled $5.5 million.

Non-GAAP operating expenses fell 36% year over year to $31.2 million. Chegg attributed the reduction to cost-management measures and the use of AI to streamline operations and improve productivity. Capital expenditures declined 71% to $1.7 million, and the company is targeting a reduction of more than 60% for full-year 2026.

Chegg ended the quarter with $43.6 million in cash and investments after repaying its remaining convertible debt. Management described the debt elimination as an important step toward strengthening the balance sheet and increasing financial flexibility. The company said its cash generation and balance-sheet position could support organic investment as well as potential acquisitions of businesses whose technology and customer bases could be integrated with its employability platform.

Focus shifts toward employability and workplace skills

Chegg continued directing investment toward skilling, language learning and a broader employability platform as its legacy homework-help operations declined. During the quarter, it entered new skilling distribution partnerships, enhanced its language offering and continued developing the employability platform, which management expects to contribute more meaningfully in 2027.

The platform is intended to combine Chegg’s academic services, skills programs and language-learning capabilities into a single offering designed to help students develop practical skills, secure internships and transition into the workforce.

Within language learning, Chegg is positioning Busuu around workplace performance. Its product combines personalized learning paths, an AI speaking partner, live tutoring, peer practice and courses covering workplace activities such as presentations, negotiations and meetings. The company is also seeking to provide employers with measures of learning impact beyond course completion.

Chegg Skills offers role-focused programs for students and working adults, including AI, data, cybersecurity, software engineering, business and leadership courses. The company has also introduced college-focused programs designed to help students pursue jobs in a generative-AI environment.

Fourth-quarter outlook

For the fourth quarter of 2026, Chegg expects total net revenue of $38 million to $40 million, a gross margin of 46% to 48%, and adjusted EBITDA of approximately $1 million. The presentation did not provide fourth-quarter free cash flow or capital-expenditure guidance.

Management’s longer-term objective is to return Chegg to growth while maintaining high margins and strong free cash flow. However, the company’s outlook depends partly on customer adoption of its developing products, growth in skilling, new partnerships and distribution channels, and its ability to use AI to differentiate its services and control costs.

Chegg also identified risks including the effect of AI on its business, declining revenue and user traffic, competition, customer acquisition and retention, execution of restructuring initiatives, diversification into institutional and enterprise offerings, and possible disruption from technical problems or cybersecurity threats. Other uncertainties include regulation, litigation, international operations, third-party service providers and the possibility that the New York Stock Exchange could delist its common stock.