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Edtech Chegg's strong quarter eases fears about ChatGPT impact; shares rally

Reuters
Updated ·1-min read

(Reuters) — Chegg (CHGG) rallied 23% in premarket trading on Tuesday, after better-than-expected quarterly sales and an in-line forecast for the current quarter eased worries about the impact of ChatGPT on the educational services company's business.

The Santa Clara, California-based firm said Monday it expects revenue to be in the range of $151 million to $153 million for the third quarter. That compares with analysts' average estimate of $152.37 million, according to Refinitiv data.

The maker of study materials was among the first companies to flag that a significant spike in student interest in so-called large language models such as ChatGPT was eating into its new customer growth rate.

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"We launched the beta version of our initial generative AI experience in May and feedback has been very positive," CEO Dan Rosensweig said.

(090309 Boston, MA) Boston University student Kathleen Davies checks out the website for book rental company chegg.com at Angora Cafe on Commonwealth Avenue with chegg.com spokesperson Greg Fournier, Thursday, September 03, 2009. Staff photo by Angela Rowlings. (Photo by Angela Rowlings/MediaNews Group/Boston Herald via Getty Images)
Boston University student Kathleen Davies checks out Chegg.com. (Photo by Angela Rowlings/MediaNews Group/Boston Herald via Getty Images) (MediaNews Group/Boston Herald via Getty Images via Getty Images)

The company reported second-quarter sales of $182.9 million, compared with analysts' average estimate of $176.51 million.

(Reporting by Pratik Jain in Bengaluru; Editing by Shinjini Ganguli and Shilpi majumdar)