Chegg Inc (NYSE: CHGG), an online education expert, confirmed on Monday that the sudden slowdown that the online education sector experienced recently led to a plummeting of its share prices.
Dan Rosenweig, the company’s Chief Executive Officer, said on Monday that:
In late September it became clear to us that the education industry is experiencing a slowdown that we believe is temporary and is a direct result of the COVID-19 pandemic.
Senior management statements
Chegg’s President and Chief Executive Officer said:
Over the last year and a half, we experienced extraordinary growth and, in midst of a strong year, had a solid third quarter, growing Chegg Services revenue 23% year-over-year.
However, he claimed that it became clear to them that the education sector was experiencing a sudden slowdown that they believed would not last long and was initially directly caused by the coronavirus pandemic.
The CEO went on further and claimed that despite the trends the company was currently experiencing, the team they have in place has continued to work at very high levels. As a result, Dan says that the company can come out of this predicament even stronger and will be able to take all the advantages that lay before it.
This month, the company’s BoD gave the go-ahead for a $500 million increase to Chegg’s existing securities repurchase program. This approval authorizes the repurchase of $1 billion of the company’s common stock.
Financial highlights
In the third quarter of this fiscal year, the company reported a 12% year-over-year increase, representing a $171.9 million total net revenue. They also saw a 23% year-over-year growth of its service revenue which came to $146.8 million.
The company’s total net revenues included required materials and Chegg services revenue. Chegg services mainly include; Mathway, Thinkful, Chegg Study Pack, Chegg Math Solver, Chegg Writing, and Chegg Study. Required Materials, on the other hand, include eTextbooks and print textbooks.
In this quarter, Chegg also reported a total net income of about $6.7 million and a $33.9 million Non-GAAP net income.
Chegg opened at $39.34 on Tuesday but is down 45% to trade at $32.38 at the time of writing.
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