Shares of Chegg Inc. (NYSE:CHGG) jumped on Tuesday after the connected learning platform provider reported its fourth-quarter results. The company beat analyst estimates for both revenue and earnings, pushing the stock up about 15.5% by 12:10 p.m. EST.
Chegg reported fourth-quarter revenue of $73.5 million, up 17% year over year and about $2.9 million higher than the average analyst estimate. On a non-GAAP basis, which treats the transition of textbook inventory investment, logistics, and fulfillment for Chegg's print textbook business to Ingram Content Group as complete, revenue grew by 30% year over year.
Non-GAAP earnings per share came in at $0.15, up from $0.10 in the prior-year period and $0.02 better than analyst forecasts. For the first quarter of 2018, Chegg expects to produce revenue between $73 million and $75 million and adjusted EBITDA between $14 million and $16 million. For the full year, the company is calling for revenue between $295 million and $300 million, along with adjusted EBITDA between $74 million and $76 million.
Chegg's 2018 guidance represents an increase from previous guidance. CFO Andy Brown added some details:
We remain confident we will achieve the 2018 financial model targets we articulated three years ago, most notably to achieve 25% adjusted EBITDA margin, while growing Chegg Services revenue greater than 30%. In addition, as a result of our transition to an all-digital model, the business has become more predictable, as the majority of our revenue comes from subscriptions, giving us much greater visibility. With that, and based on the strength of our performance in Q4, we are raising our guidance for 2018.
While Chegg has yet to turn an annual GAAP profit, its focus on digital services could turbocharge growth after a few years of lackluster results.