- Wednesday, October 16, 2024
Chegg (ticker: CHGG) has made a significant move towards reducing debt and improving its share count with the announcement of an expanded securities repurchase program. The educational software and services company's board has approved a $200 million boost to its program, bringing the total repurchase capacity to $289 million.
As of June 30, Chegg reported an impressive balance sheet, with $385 million in cash and short-term investments, along with $423 million in long-term investments, resulting in a combined cash and investments total of $808 million. However, this is offset by $773 million of convertible debt.
With a market cap of $1.27 billion and an enterprise value exceeding $1.3 billion—including net cash of $35 million at quarter end—the expanded repurchase program represents a significant portion, more than 22%, of Chegg's enterprise value. Additionally, the company has decreased its cash position by over $1.75 billion during this period.
Overall, Chegg's commitment to reducing debt and enhancing shareholder value through its securities repurchase program underscores its dedication to long-term financial stability and growth.
Chegg Embraces AI, Redesigns Software Tools
Chegg, a prominent player in the homework help industry, has been facing challenges due to the rising popularity of generative artificial intelligence chatbots like ChatGPT. Despite these obstacles, the company posted impressive numbers for the June quarter, with revenue reaching $182.9 million. Although this figure reflects a 6% decrease compared to the previous year, it surpassed Chegg's guidance range of $175 million to $178 million. Additionally, subscription revenue stood at $165.9 million, down 5% but still exceeding the company's forecast range of $159 million to $162 million.
Notably, Chegg has fully embraced the potential of AI and is actively revamping its software tools accordingly. CEO Dan Rosensweig reported that the beta version of their generative AI experience, launched in May, has garnered positive feedback from users.
"We firmly believe that we are uniquely positioned to deliver an unparalleled, personalized learning experience for students by leveraging our assets, vision, and strong financial standing," said Rosensweig.
Despite a 50% drop in stock following the March quarter due to students opting for AI chatbots over Chegg's services, the recent developments have instilled confidence in investors. On Thursday, Chegg shares experienced an 11% rise, closing at $10.60. However, it is worth noting that the stock has declined by more than 90% since its record high of $113.51 in February 2021.
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