Chegg (NYSE: CHGG) reported Q3 revenue of $77.74 million, surpassing analyst estimates by 1.9%. However, sales dropped 43.1% year on year. Next quarter’s revenue guidance of $71 million fell short of expectations by 13.7%. The company’s non-GAAP loss of $0 per share exceeded analyst predictions.

Chegg’s adjusted EPS came in at $0, beating analyst estimates of -$0.08. Adjusted EBITDA was $13.25 million, surpassing expectations by 73%. Operating margin improved from -163% to -22%. Free cash flow was -$943,000. Market capitalization stands at $96.51 million.

CEO Dan Rosensweig highlighted Chegg’s shift towards the skilling market. Initially a textbook rental service, Chegg now offers digital study and academic assistance. However, the company’s long-term performance shows weak demand and a 16.5% annual revenue decline over the last three years.

Despite beating revenue estimates this quarter, Chegg is projecting a 50.5% year-on-year sales decline next quarter. Analysts anticipate a 29.1% revenue decrease over the next 12 months, signaling potential demand challenges for the company’s products and services.

Chegg’s cash profitability has been impressive, with a free cash flow margin averaging 9.4% over the past two years. However, the company’s margin has declined by 16.5 percentage points recently, indicating potential increased investment needs and capital intensity in the future.

Read more at Yahoo Finance: Chegg (NYSE:CHGG) Beats Q3 Sales Expectations