Source: Investing Published 11/25/2024, 16:39
Santa Clara, Calif. – Chegg Inc. (NYSE:CHGG), the education technology company known for its learning platform, has reached agreements to repurchase approximately $116.6 million of its 0% convertible notes due 2026. The repurchase, for an aggregate cash price of approximately $96.2 million, is part of Chegg’s ongoing securities repurchase program and is scheduled to close on December 3, 2024, subject to the satisfaction of all customary closing conditions.
Following the completion of the transaction, approximately $127.9 million of the aggregate principal amount of the notes is expected to remain outstanding. In addition, Chegg will have approximately $207.5 million outstanding under its securities repurchase program.
This repurchase transaction is consistent with the Company’s strategic financial management and does not constitute a public offering or solicitation of these securities. There will be no sale of the securities in any jurisdiction where it would be unlawful to do so prior to registration or qualification under the securities laws of such jurisdiction.
Chegg has established itself as a significant player in the edtech industry, providing personalized academic support to students around the world. The platform, which leverages artificial intelligence and a network of subject matter experts, aims to enhance students’ academic and professional skills. The Company’s shares are publicly traded on the New York Stock Exchange under the symbol CHGG.
The press release also includes forward-looking statements regarding the details of the repurchase and the amount remaining under the repurchase program, which are subject to market conditions and other factors that may affect the completion of the transaction and its final terms.
The Company cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including fluctuations in the price of the common stock and capital market conditions. Chegg has committed to updating the public as required by law and has detailed the risk factors in its filings with the Securities and Exchange Commission.
including its Annual Report on Form 10-K for the year ended December 31, 2023, and its Quarterly Report for the period ended September 30, 2024.
The information in this article is based on a press release issued by Chegg.
In other recent news, educational services company Chegg, Inc. reported mixed results for the third quarter, with revenue of $137 million and adjusted EBITDA of $22 million, beating market expectations. However, the company also disclosed a significant non-cash impairment charge of $195.7 million and a decline in subscribers, attributed to industry challenges and the development of AI search tools. In response, Chegg announced a restructuring plan, including workforce reductions and a focus on marketing strategies and product improvements.
The company also entered into agreements to repurchase approximately $116.6 million of its 0% convertible notes due 2026, a move that is in line with its financial strategy to manage debt and return value to shareholders. Following the repurchase, Chegg will have approximately $207.5 million available for further securities repurchases under the current program.
Piper Sandler revised its outlook on Chegg by lowering its price target to $1.50 from $2.00 previously, while maintaining an “underweight” rating. For the fourth quarter, Chegg expects total revenue between $141 million and $143 million.
and adjusted EBITDA between $32 million and $34 million. These are among the latest developments at Chegg.
InvestingPro Insights
Chegg’s recent move to repurchase a significant portion of its convertible notes is in line with its strategic financial management, as reflected in InvestingPro’s latest data. The company’s market cap stands at $209.66 million, indicating its current market valuation.
Despite the challenges Chegg faces, as evidenced by its 9.74% decline in revenue over the past twelve months, the company maintains an impressive gross profit margin of 78.61%. This suggests that Chegg still has strong pricing power and efficiencies in its core operations, which could prove crucial as it navigates its current financial restructuring.
