Chegg to Report Q2 Earnings: Here's What to Expect This Season

CHGG’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 133.6%.

How are Estimates Placed for CHGG Stock?

The Zacks Consensus Estimate for CHGG’s second-quarter bottom line reflects a loss per share of five cents, which has remained unchanged over the past 60 days. The estimated figure indicates a whopping 150% year-over-year decline from adjusted earnings per share of 10 cents.

The consensus estimate for net revenues is pegged at $49.8 million, indicating a 52.7% downturn from $105.1 million reported in the year-ago quarter.

Factors Likely to Determine Chegg’s Q2 Results

Revenues

Chegg’s second-quarter performance is expected to have declined due to reduced contributions from its legacy academic business, as it continues to shrink much faster than its newer skilling business’ growth. The decline in subscription revenues and advertising services revenues, because of lower student traffic, is likely to have pressured top-line growth. Increased AI-driven alternatives and reduced Google search traffic are expected to have weighed heavily on subscriber growth and engagement for Chegg. 

For the to-be-reported quarter, Chegg expects net revenues between $49 million and $50 million.

For the second quarter, the Zacks Consensus Estimate for revenues from the Academic Services (which accounted for 72.2% of first-quarter 2026 net revenues) and Chegg Skilling (which accounted for 27.8% of first-quarter 2026 net revenues) product lines is pegged at $31.7 million and $17.9 million, respectively.

Nonetheless, strong demand for workforce upskilling, AI training, language learning and professional development is expected to have boosted its Skilling segment. Also, strategic partnerships with organizations like Cornerstone and Woolf are likely to have broadened distribution and created new revenue opportunities.

Margins

The bottom line of Chegg is likely to have tumbled year over year mainly due to reduced leverage from the top line because of lower subscribers. The decline in revenues is expected to have pressured the margins as the fixed-cost base of the company remains in place.

For the quarter to be reported, the company expects gross margin between 51% and 52%, down from 66% reported in the previous-year quarter. Moreover, adjusted EBITDA is anticipated in the range of $5-$6 million, notably down from $23.1 million reported in the year-ago quarter.

Nonetheless, CHGG’s focus on the effective execution of its disciplined cost management is expected to have somewhat offset the near-term headwinds.

What the Zacks Model Says About Chegg

Our 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.

CHGG’s Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

CHGG’s Zacks Rank: The stock currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With the Favorable Combination

Here are some stocks from the Zacks Computer and Technology sector, which per our model, have the right combination of elements to deliver an earnings beat this time around.

Sandisk Corporation SNDK has an Earnings ESP of +4.13% and a Zacks Rank of 1 at present. 

Sandisk’s earnings beat estimates in each of the last four quarters, the average surprise being 380.9%. The company’s earnings for the fourth quarter of fiscal 2026 are expected to surge 11,706.9% year over year.

Western Digital Corporation WDC currently has an Earnings ESP of +3.22% and a Zacks Rank of 1.

Western Digital’s earnings beat estimates in each of the last four quarters, the average surprise being 11.6%. The company’s earnings for the fourth quarter of fiscal 2026 are expected to increase 101.8% year over year.

Shopify Inc. SHOP has an Earnings ESP of +6.85% and a Zacks Rank of 2.

Shopify’s earnings beat estimates in two of the last four quarters, missed on one occasion and met on the remaining occasion, the average surprise being 7.4%. The company’s earnings for the second quarter of 2026 are expected to improve 11.4% year over year.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want 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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research