Chegg Reports 48% Revenue Decline but Achieves Net Income Recovery in Q1 2026

Chegg, Inc. reported a significant decline in financial performance for the first quarter of 2026, with net revenues of $63.3 million, a decrease of 48% from $121.4 million in the same period of 2025. The company's gross profit also fell to $37.9 million, down from $67.4 million, reflecting a gross margin of 60% compared to 56% a year earlier. Chegg's net income for the quarter was $228,000, a notable recovery from a net loss of $17.5 million in the prior year, indicating a shift towards profitability despite the substantial drop in revenue.

The decline in revenue was primarily driven by a 57% decrease in Academic Services, which fell to $45.7 million from $105.3 million. This drop was attributed to reduced subscription revenue and advertising services, largely due to decreased traffic to Chegg's platform. In contrast, revenues from Chegg Skilling increased by 9% to $17.6 million, supported by growth in workforce skilling programs and language learning services. The company has been focusing on integrating its skilling offerings with academic services to enhance user engagement and retention.

Operationally, Chegg has seen a reduction in its workforce-related expenses due to restructuring efforts initiated in previous fiscal periods. Total operating expenses decreased by 60% to $38.9 million, down from $96.4 million, with significant reductions in research and development, sales and marketing, and general administrative costs. The company reported a 69% decrease in research and development expenses, reflecting its strategic shift to streamline operations and focus on core offerings.

Chegg's cash and cash equivalents totaled $33.5 million as of March 31, 2026, an increase from $31.1 million at the end of 2025. However, the company’s total liabilities decreased significantly to $123.0 million from $158.4 million, primarily due to the early extinguishment of a portion of its convertible senior notes. The company’s liquidity position remains stable, with management indicating that existing resources are sufficient to fund operations for at least the next 12 months.

Looking ahead, Chegg acknowledges the challenges posed by increased competition from generative AI products and changes in search engine dynamics, particularly with Google's AI Overviews search experience. The company is committed to evolving its platform to better meet the needs of learners and improve engagement through AI-driven personalized support. Chegg aims to leverage its investments in skilling and academic services to drive future growth, although it remains cautious about the potential impacts of market conditions on its business trajectory.