Chegg (CHGG) Q1 2026 earnings summary

Executive summary

• Q1 2026 exceeded expectations for revenue, adjusted EBITDA, and free cash flow, achieving positive GAAP net income for the first time in two years.

• Strategic focus on AI-driven Skilling business, with a leaner structure and high margins positioning for future growth.

• Skilling segment showed strong momentum with new enterprise and channel partnerships, product innovation, and expansion into accredited offerings.

• Chegg Study and Academic Services generated strong free cash flow and retention despite ongoing search headwinds.

• Approximately 40% of costs removed in the past six months, with a path to zero debt and increased free cash flow.

Financial highlights

• Q1 2026 total net revenue was $63.3 million, with Skilling revenue up 9% year-over-year to $18 million.

• Academic Services revenue was $45.7 million.

• Adjusted EBITDA was $15.5 million, with a 24% margin; free cash flow was $3.1 million, including $12.9 million in severance payments.

• Gross margin was 60% (non-GAAP: 62%).

• Ended Q1 with $68 million in cash and investments and a net cash position of $34.1 million.

Outlook and guidance

• Double-digit Skilling revenue growth expected for full year 2026, with acceleration in the second half.

• Q2 2026 guidance: Skilling revenue of $17.5–$18 million, total revenue of $49–$50 million, gross margin of 51–52%, adjusted EBITDA of $5–$6 million, and CapEx of ~$1 million.

• CapEx for 2026 targeted at a 60% reduction, with 90% allocated to Skilling.

• Full repayment of convertible debt expected by September 2026.