Why Chegg Stock Soared Today

By Evan Niu, CFA Markets Fool.com

What happened

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Shares of Chegg (NYSE: CHGG) have soared today, up by 26% as of 12:15 p.m. EDT, after the company reported first-quarter earnings and issued strong guidance for the current quarter.

So what

Revenue declined a modest 6% to $62.6 million, which was still better than the $58.4 million in sales that analysts were expecting. That translated into non-GAAP earnings per share of $0.06, also topping the consensus estimate of $0.03 per share in adjusted profit.

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The company now has 1.1 million Chegg Services subscribers and 99 million total Chegg Study content views.

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Now what

Thanks to strength in the services business, Chegg is raising its guidance for 2017. Second-quarter revenue is expected in the range of $52 million to $54 million, including services revenue of $42 million to $44 million. For the full year, revenue should be $235 million to $240 million, including services revenue of $175 million to $180 million. Full-year 2017 free cash flow should be $15 million to $20 million. CEO Dan Rosensweig said the growing services business continues to drive growth and profitability, noting that Chegg Study is the largest direct-to-student subscription learning service.

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Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.