Chegg says its AI education tool has attracted 'very positive' feedback, and shares rally

Education technology company Chegg Inc. on Monday reported second-quarter sales that topped expectations, with trends in attracting and keeping customers improving as the quarter progressed, and the company talked up the potential to deliver better AI learning-assistance tools where ChatGPT comes up short. Shares jumped 23.8% after the bell on Monday. The company reported net income of $24.6 million, but a diluted loss per share of 11 cents. That compared to net income of $7.5 million, or 6 cents a share, in the same quarter last year. Revenue fell to $182.9 million from $194.7 million in the prior-year quarter. Adjusted earnings per share came in at 28 cents. Analysts polled by FactSet expected Chegg to report adjusted earnings per share of 29 cents, on revenue of $176.5 million. Executives said they expected third-quarter sales of between $151 million and $153 million, compared with FactSet forecasts for $152 million. Management said that feedback to the beta version of its new AI tools, launched in May, was "very positive." They also noted a survey that found that younger students were "not comfortable with the exact information ChatGPT puts out."

-Bill Peters

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08-07-23 1640ET

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