CHEGG, INC. Annual Report Summary for Investors (Fiscal Year Ended December 31, 2025)

Considering an investment in Chegg? This summary provides a clear, concise overview of the company's performance and strategic direction for the fiscal year ended December 31, 2025. Understand Chegg's current position and future potential at a glance.

1. Business Overview Chegg, Inc. operates as a leading online learning platform, offering students essential services like textbook solutions, expert Q&A, and writing tools. The company's core mission is to enhance learning and improve student outcomes through personalized, on-demand academic support. Its main offerings—Chegg Study, Chegg Writing, Chegg Math Solver, and Chegg Study Pack—are all delivered via a subscription model. Fiscal year 2025 marked a significant period of transition for Chegg, as it strategically restructured to adapt to evolving student needs and the growing influence of artificial intelligence (AI) in education.

2. Financial Performance Chegg reported total revenue of approximately $600 million for fiscal year 2025, a decrease from $700 million in 2024. This decline primarily stemmed from a reduction in subscribers, which fell to approximately 4 million by year-end, down from 4.5 million in the previous year. Despite revenue pressures, the company achieved a net income of $50 million. While this reflects effective cost management, it was lower than the $100 million reported in 2024, partly due to restructuring charges. Diluted earnings per share (EPS) for 2025 stood at $0.45, compared to $0.85 in 2024. These financial results highlight the challenges posed by market shifts and the costs associated with Chegg's strategic restructuring initiatives.

3. Risk Factors Investors should consider several key risks:

• Intense Competition: Chegg faces significant competition from traditional educational institutions, other online learning platforms, and rapidly evolving AI-driven tools that could disrupt its market.
• Impact of AI: While Chegg integrates AI, the rapid advancement and adoption of AI by students and competitors present both opportunities and threats to its business model, potentially affecting demand for existing services.
• Restructuring Execution: Ongoing restructuring efforts, though strategic, carry risks related to their implementation, potential operational disruptions, impacts on employee morale, and the realization of anticipated cost savings.
• Pending Litigation: The unresolved ROSCACID case poses both financial and reputational risks. Potential liabilities, estimated between $10 million and $25 million, could affect future financial results.
• Subscriber Decline: Continued decreases in subscriber numbers could further impact revenue and profitability, challenging the company's ability to achieve its strategic goals.
• Reliance on Third-Party Technologies: Dependence on third-party technologies and infrastructure could expose Chegg to risks such as service interruptions, security breaches, or increased costs.

4. Management Discussion (MD&A Highlights) Management characterized 2025 as a year of aggressive restructuring and strategic recalibration. Key developments and operational changes highlighted in their discussion include:

• Restructuring Initiatives: Chegg executed multiple restructuring plans throughout 2024 and 2025.
  • The June 2024 plan optimized content creation processes.
  • The November 2024 plan involved a workforce reduction to streamline operations.
  • In 2025, the May plan initiated a consolidation of technology platforms.
  • The October plan marked a significant pivot toward integrating AI-powered learning solutions and personalized student support. These initiatives resulted in approximately $75 million in one-time charges in 2025 but are expected to generate annual cost savings of $50 million starting in 2026.
• Legal Matters: The company successfully settled the Steven Leventhal lawsuit in September 2024. However, the ROSCACID case remained ongoing throughout 2025, with potential liabilities estimated between $10 million and $25 million.
• Shareholder Returns: Chegg continued its commitment to shareholder returns through its securities repurchase program. In 2025, the company repurchased approximately $150 million worth of common stock, reducing outstanding shares and potentially boosting future EPS. As of February 28, 2026, roughly 111.8 million shares of common stock were outstanding. The market value of voting stock held by non-affiliates was approximately $126 million as of June 30, 2025.
• Operational Performance: The decline in revenue and subscribers resulted from the evolving educational landscape and the impact of generative AI, necessitating Chegg's strategic shift. Management emphasized the importance of cost management and efficiency improvements to mitigate revenue pressures.

5. Financial Health Chegg maintained a solid financial position. As of December 31, 2025, the company held approximately $350 million in cash and cash equivalents.

• Debt Profile: The company managed its Convertible Senior Notes effectively. It successfully repaid or refinanced the $500 million notes due in 2025. Approximately $300 million in Convertible Senior Notes remain outstanding, due in 2026. These notes represent unsecured debt that holders can convert into a specified number of common stock shares under certain conditions.
• Liquidity: Chegg's cash position and successful debt management indicate sufficient liquidity to fund ongoing operations, strategic investments, and potential share repurchases.
• Internal Controls: Auditors attested to management's assessment of the effectiveness of their internal control over financial reporting, confirming robust financial reporting processes.

6. Future Outlook Chegg is actively transforming its business model to become an AI-powered personalized learning platform. Its core strategy for 2026 and beyond includes:

• AI Integration: Investing heavily in AI to enhance existing services and develop new, personalized learning tools and adaptive learning paths.
• Content Expansion: Continuously expanding and updating its proprietary content library to meet diverse academic needs and integrate AI-generated content where appropriate.
• User Experience: Focusing on improving the overall student experience through intuitive interfaces, personalized recommendations, and seamless integration of new features.
• Cost Efficiency: Continuing to optimize operational costs and leverage restructuring benefits to improve profitability and financial flexibility.

The company anticipates 2026 will involve continued investment in its strategic pivot, aiming for stabilization in subscriber trends and a return to profitable growth in the long term. Management expects these strategic shifts to position Chegg for sustainable success in the evolving education technology landscape.

7. Competitive Position Chegg operates within a highly dynamic and competitive education technology market. Its competitive landscape includes:

• Direct Competitors: Other online learning platforms offering similar services like homework help, tutoring, and study aids.
• Traditional Educational Institutions: Universities and colleges that provide their own support services and digital learning resources.
• Publishers and Content Providers: Companies that offer educational materials and digital resources, increasingly with interactive components.
• Emerging AI-driven Solutions: New entrants and existing players leveraging artificial intelligence to offer personalized learning experiences, which could significantly alter competitive dynamics and create new market segments. Chegg differentiates itself through its extensive proprietary content library, a large network of subject matter experts for Q&A services, and its ongoing strategic pivot to integrate advanced AI capabilities for personalized and adaptive learning solutions. The company's ability to innovate and adapt its offerings in response to technological advancements and evolving student needs is crucial for maintaining and enhancing its market position.