Chegg, Inc. CHGG used its second-quarter 2026 earnings call to recast the company around employability, moving beyond academic support toward an AI-driven platform designed to help students build skills, find internships and land jobs. CEO and executive chairman Dan Rosensweig said that the initial service will begin a soft launch in the third quarter.
The shift comes as total revenues fell 51% year over year in the quarter, while management points to a leaner cost structure and continued cash generation. Second-quarter revenues of $51.8 million surpassed the Zacks Consensus Estimate of $49.8 million. The non-GAAP loss per share of $0.02 was narrower than the consensus estimate for loss of $0.05.
CHGG Recasts Its Growth Story Around Jobs
Rosensweig said that Chegg’s long-term goal is a return to growth with high margins and strong free cash flow, but the route now centers on helping students move from education to employment.
The planned platform will combine job search and matching with coaching on majors, courses and skills. It will also support resumes, applications, alum outreach, interview preparation and targeted skill building.
More than 10,000 students have used the beta. Management plans to roll out the service through Chegg and Internships.com beginning in the third quarter and continue expanding it throughout 2027.
Chegg Builds Out Employability Stack
Rosensweig positioned Chegg Skills as a key component of the employability strategy. Skilling revenues rose 2% year over year to $17.5 million in the second quarter.
The company has signed six new partners, including OpenSesame and Dale Carnegie, with launches planned for the second half. Management also intends to expand Skills into enterprises, schools and Europe.
Chegg is recasting language learning as a workplace performance offering. Rosensweig said that an agentic coach would help learners prepare for client calls, presentations and interviews, with workflow integration planned for early next year.
CHGG Uses AI to Reset Cost Base
CFO David Longo said that second-quarter non-GAAP operating expenses were $32.3 million, nearly half the prior-year level, reflecting restructuring and greater use of AI to improve productivity.
Adjusted EBITDA was $9.1 million, with a 17% margin. The second-quarter free cash flow was $6.4 million despite $1.5 million in severance payments, while the first-half free cash flow reached $9.5 million.
Longo said that Chegg ended the quarter with $72.3 million in cash and investments, and $38.5 million in net cash. The company repurchased $1.7 million worth of stock and expects to fully repay its convertible debt in the third quarter.
Chegg Guides for Softer Q3
Management plans to guide on total revenues rather than separate Academic Services and Chegg Skilling revenues, citing integration around employability.
For the third quarter, Chegg expects total revenues of $43-$44 million, a gross margin of 48-49% and an adjusted EBITDA of $1-$2 million.
CHGG Q&A Sharpens Employability Case
A Needham analyst asked how Chegg would differentiate its new offering from other job and networking platforms, and build student awareness. Rosensweig emphasized Chegg’s existing student reach, data and Internships.com traffic.
He said that the platform is designed to connect academic history, skills, alum relationships and job applications in one place. Management plans to use AI to make related content more personalized and affordable.
On cash flow, Longo said that nearly all restructuring-related severance payments are behind the company. He called the third quarter traditionally slower and the fourth quarter the strongest cash-generation quarter, while maintaining an expectation for a positive second-half free cash flow.
Chegg Keeps Transition Disciplined
Management framed restructuring, debt reduction and cash generation as the financial base for a broader strategic reset. The employability product remains early in its rollout, with management describing the buildout as a multi-year effort.
The priorities coming out of the call are to launch the employment experience, broaden Skills distribution, use AI to lower costs and preserve free cash flow, while pursuing a return to growth.
Zacks Signals for CHGG
CHGG currently carries a Zacks Rank #3 (Hold). Its Momentum Score of A, Growth Score of B and VGM Score of B are favorable grades within the Style Score framework, while its Value Score of C is less strong. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The framework emphasizes Zacks Rank #1 and #2 (Buy) stocks paired with A or B Style Scores. CHGG’s Zacks Rank of 3 is more neutral despite favorable Momentum, Growth and VGM scores, and the Zacks Rank can change as earnings estimates are revised after the results.
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Chegg, Inc. (CHGG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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