Shares of Chegg were falling in late trading Monday after the education technology company warned that students were using OpenAi’s ChatGPT to help with homework, hurting Chegg’s own efforts to add new customers.
Chegg reported quarterly non-GAAP earnings of 27 cents a share and sales of $187.6 million. Both numbers were ahead of consensus expectations for adjusted earnings of 26 cents per share and sales of $185.2 million, according to FactSet. But shares fell 32% to $11.90 in extended trade.
CEO…
Shares of Chegg were falling in late trading Monday after the education technology company warned that students were using OpenAi’s ChatGPT to help with homework, hurting Chegg’s own efforts to add new customers.
Chegg reported quarterly non-GAAP earnings of 27 cents a share and sales of $187.6 million. Both numbers were ahead of consensus expectations for adjusted earnings of 26 cents per share and sales of $185.2 million, according to FactSet. But shares fell 32% to $11.90 in extended trade.
CEO Dan Rosensweig said in prepared remarks for the company’s quarterly conference that Chegg saw no impact from ChatGPT during the early part of the year, when the company was meeting new subscription expectations.
“However, since March we have seen a huge spike in student interest in ChatGPT,” he said. “We now believe it has an impact on the growth rate of our new customers.”
Rosensweg said the company is prioritizing investments in artificial intelligence. Last month, the company revealed its AI learning service built using OpenAi’s GPT-4.
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“We believe we are in the best position to take advantage of advances in AI for the benefit of students, because we can leverage our own data,
We have over 150,000 of our experts, and over a decade of experience as we launched CheggMate,” he said in the press release.
Rosensweig described strong retention rates among existing users. Although enrollment trends are expected to improve, the company declined to provide an outlook beyond the second quarter. Chegg expects second-quarter revenue to be between $175 million and $178 million. FactSet’s consensus estimate prior to the report was $193.6 million.
Write to Connor Smith at connor.smith@barrons.com