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Chegg vs. Udemy: Which EdTech Stock Has the Edge Heading Into 2026?
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Key Takeaways
Chegg is restructuring its model, slashing costs and shifting focus from academics to skilling growth.
CHGG revenues fell 42% in Q3 2025, but skilling units are targeting sustained double-digit growth.
Udemy is growing subscriptions, now 74% of revenues, though enterprise retention and consumer growth lag.
The online education market is undergoing a structural reset as learner behavior shifts toward flexible, outcome-oriented skill development and generative AI reshapes how knowledge is consumed. Within this evolving edtech landscape, Chegg, Inc. (CHGG - Free Report) and Udemy, Inc. (UDMY - Free Report) represent two distinct approaches to monetizing digital learning platforms, each responding to similar industry pressures from very different starting points.
Chegg has historically focused on academic support for students, while Udemy operates a broad, global marketplace centered on professional skills and enterprise learning. Both companies rely on scalable, subscription-driven models and are actively adapting their platforms to address AI disruption, competitive intensity and changing customer expectations. At the same time, each is recalibrating its cost structure and investment priorities as profitability and revenue durability become more important to investors.
With 2026 approaching, the contrast between Chegg’s restructuring-led transition and Udemy’s subscription-focused expansion makes this comparison particularly timely. Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for CHGG Stock
This California-based education technology company is in the midst of a structural reset as it adapts to rapid changes in student behavior, traffic dynamics and the growing influence of generative AI. Chegg has repositioned the operating model by separating the legacy academic services business from the growth-oriented skilling operations, allowing it to better align capital and resources with longer-term demand trends in workforce education and professional learning.
The restructuring has already produced a meaningful shift in the cost base. In the third quarter of 2025, non-GAAP operating expenses declined 46% year over year, reflecting the impact of a leaner organizational structure. During the same period, adjusted EBITDA exceeded internal expectations, supported by aggressive cost actions. Looking ahead, the company expects total non-GAAP expenses to decline from $536 million in 2024 to under $250 million by 2026, signaling a materially lower fixed-cost profile and improved operating leverage over time.
Despite these internal improvements, near-term headwinds remain. In the third quarter of 2025, total revenues declined 42% year over year, caused by reduced traffic in legacy academic services and pressure on advertising-related revenues. The company continues to navigate disruption from AI-driven alternatives, shifts in student usage patterns and the operational complexity of transitioning away from its historical core business, which adds uncertainty around the timing of stabilization.
Looking forward, momentum within Chegg Skilling provides a clearer path to recovery. The consolidated Busuu and Chegg Skills unit is expected to deliver 14% year-over-year revenue growth in the fourth quarter of 2025, with the company targeting sustained double-digit growth beyond 2025. Expansion into B2B channels, improving engagement metrics and rising demand for AI, language and job-related skills position the company to gradually offset legacy declines and reestablish a more durable growth profile heading into 2026.
The Case for UDMY Stock
This California-based online learning and teaching provider is executing a multi-year shift toward a more predictable, subscription-led business model as demand for continuous upskilling accelerates. The company operates across both consumer and enterprise markets, positioning its platform around professional skill development, AI enablement and workforce transformation. This dual exposure allows the company to participate in long-term learning trends while steadily improving revenue quality and visibility.
Operational progress was evident in the third quarter of 2025, when total revenues reached $196 million, slightly up year over year and above guidance. During the same period, consolidated subscription revenues increased 8% year over year and accounted for 74% of total revenues, reflecting the success of the company’s strategic pivot. Adjusted EBITDA margin expanded to 12% in the third quarter of 2025, up from 6% a year earlier, supported by operating discipline, mix shift toward higher-margin subscriptions and improving gross margin, which rose to 67%.
However, near-term challenges persist beneath these improvements. Udemy Business revenues grew 5% year over year in the third quarter of 2025, but net dollar retention stood at 93%, pressured by downsizing of legacy COVID-era contracts and ongoing customer optimization. In the consumer segment, total revenue growth remains constrained as the company intentionally deemphasizes transactional course sales, creating a short-term drag despite subscription revenues rising 43% year over year in the same period.
Looking ahead, the company expects consolidated subscription revenue growth to move closer to double digits in 2026, with subscriptions representing roughly three-quarters of total revenues. Strong momentum in consumer subscriptions, a robust enterprise pipeline and improving unit economics support a forward-looking thesis centered on durability, margin stability and scalable growth as the company enters the next phase of its transformation.
Stock Performance & Valuation
As witnessed from the chart below, in the past six months, Chegg’s share price performance stands below Udemy’s alongside the Zacks Internet - Software industry and the Zacks Computer and Technology sector.
Image Source: Zacks Investment Research
Considering valuation, Udemy is currently trading above Chegg on a forward 12-month price-to-sales (P/S) ratio basis.
Image Source: Zacks Investment Research
Comparing EPS Estimate Trends: CHGG vs. UDMY
Chegg’s earnings estimates for 2026 have trended upward over the past 60 days to 18 cents per share. The estimated figures for 2026 imply year-over-year growth of 228.6%.
CHGG EPS Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UDMY’s 2026 EPS indicates year-over-year growth of 0.8%. The 2026 EPS estimates have trended downward over the past 60 days.
UDMY EPS Trend
Image Source: Zacks Investment Research
Which EdTech Stock Is the Better Buy Now?
Chegg and Udemy are both adapting to structural changes across digital learning, but their fundamentals point to different investment profiles heading into 2026. Udemy continues to benefit from its transition toward a subscription-led model and expanding enterprise presence, which supports revenue stability and margin improvement. However, its current setup suggests more measured upside as growth normalizes and execution risks remain tied to customer optimization and competitive pressure.
Chegg, by comparison, is emerging from a significant restructuring with a leaner cost structure and improving earnings visibility as its skilling platform gains traction. While legacy academic pressures persist, the company’s sharper earnings recovery profile and discounted valuation enhance its near-term risk-reward balance.
Given these dynamics, Chegg appears better positioned for upside heading into 2026 and currently sports a Zacks Rank #1 (Strong Buy), while Udemy, with a Zacks Rank #3 (Hold), may appeal more to investors seeking stability rather than acceleration. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Chegg vs. Udemy: Which EdTech Stock Has the Edge Heading Into 2026?
Key Takeaways
The online education market is undergoing a structural reset as learner behavior shifts toward flexible, outcome-oriented skill development and generative AI reshapes how knowledge is consumed. Within this evolving edtech landscape, Chegg, Inc. (CHGG - Free Report) and Udemy, Inc. (UDMY - Free Report) represent two distinct approaches to monetizing digital learning platforms, each responding to similar industry pressures from very different starting points.
Chegg has historically focused on academic support for students, while Udemy operates a broad, global marketplace centered on professional skills and enterprise learning. Both companies rely on scalable, subscription-driven models and are actively adapting their platforms to address AI disruption, competitive intensity and changing customer expectations. At the same time, each is recalibrating its cost structure and investment priorities as profitability and revenue durability become more important to investors.
With 2026 approaching, the contrast between Chegg’s restructuring-led transition and Udemy’s subscription-focused expansion makes this comparison particularly timely. Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for CHGG Stock
This California-based education technology company is in the midst of a structural reset as it adapts to rapid changes in student behavior, traffic dynamics and the growing influence of generative AI. Chegg has repositioned the operating model by separating the legacy academic services business from the growth-oriented skilling operations, allowing it to better align capital and resources with longer-term demand trends in workforce education and professional learning.
The restructuring has already produced a meaningful shift in the cost base. In the third quarter of 2025, non-GAAP operating expenses declined 46% year over year, reflecting the impact of a leaner organizational structure. During the same period, adjusted EBITDA exceeded internal expectations, supported by aggressive cost actions. Looking ahead, the company expects total non-GAAP expenses to decline from $536 million in 2024 to under $250 million by 2026, signaling a materially lower fixed-cost profile and improved operating leverage over time.
Despite these internal improvements, near-term headwinds remain. In the third quarter of 2025, total revenues declined 42% year over year, caused by reduced traffic in legacy academic services and pressure on advertising-related revenues. The company continues to navigate disruption from AI-driven alternatives, shifts in student usage patterns and the operational complexity of transitioning away from its historical core business, which adds uncertainty around the timing of stabilization.
Looking forward, momentum within Chegg Skilling provides a clearer path to recovery. The consolidated Busuu and Chegg Skills unit is expected to deliver 14% year-over-year revenue growth in the fourth quarter of 2025, with the company targeting sustained double-digit growth beyond 2025. Expansion into B2B channels, improving engagement metrics and rising demand for AI, language and job-related skills position the company to gradually offset legacy declines and reestablish a more durable growth profile heading into 2026.
The Case for UDMY Stock
This California-based online learning and teaching provider is executing a multi-year shift toward a more predictable, subscription-led business model as demand for continuous upskilling accelerates. The company operates across both consumer and enterprise markets, positioning its platform around professional skill development, AI enablement and workforce transformation. This dual exposure allows the company to participate in long-term learning trends while steadily improving revenue quality and visibility.
Operational progress was evident in the third quarter of 2025, when total revenues reached $196 million, slightly up year over year and above guidance. During the same period, consolidated subscription revenues increased 8% year over year and accounted for 74% of total revenues, reflecting the success of the company’s strategic pivot. Adjusted EBITDA margin expanded to 12% in the third quarter of 2025, up from 6% a year earlier, supported by operating discipline, mix shift toward higher-margin subscriptions and improving gross margin, which rose to 67%.
However, near-term challenges persist beneath these improvements. Udemy Business revenues grew 5% year over year in the third quarter of 2025, but net dollar retention stood at 93%, pressured by downsizing of legacy COVID-era contracts and ongoing customer optimization. In the consumer segment, total revenue growth remains constrained as the company intentionally deemphasizes transactional course sales, creating a short-term drag despite subscription revenues rising 43% year over year in the same period.
Looking ahead, the company expects consolidated subscription revenue growth to move closer to double digits in 2026, with subscriptions representing roughly three-quarters of total revenues. Strong momentum in consumer subscriptions, a robust enterprise pipeline and improving unit economics support a forward-looking thesis centered on durability, margin stability and scalable growth as the company enters the next phase of its transformation.
Stock Performance & Valuation
As witnessed from the chart below, in the past six months, Chegg’s share price performance stands below Udemy’s alongside the Zacks Internet - Software industry and the Zacks Computer and Technology sector.
Image Source: Zacks Investment Research
Considering valuation, Udemy is currently trading above Chegg on a forward 12-month price-to-sales (P/S) ratio basis.
Image Source: Zacks Investment Research
Comparing EPS Estimate Trends: CHGG vs. UDMY
Chegg’s earnings estimates for 2026 have trended upward over the past 60 days to 18 cents per share. The estimated figures for 2026 imply year-over-year growth of 228.6%.
CHGG EPS Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UDMY’s 2026 EPS indicates year-over-year growth of 0.8%. The 2026 EPS estimates have trended downward over the past 60 days.
UDMY EPS Trend
Image Source: Zacks Investment Research
Which EdTech Stock Is the Better Buy Now?
Chegg and Udemy are both adapting to structural changes across digital learning, but their fundamentals point to different investment profiles heading into 2026. Udemy continues to benefit from its transition toward a subscription-led model and expanding enterprise presence, which supports revenue stability and margin improvement. However, its current setup suggests more measured upside as growth normalizes and execution risks remain tied to customer optimization and competitive pressure.
Chegg, by comparison, is emerging from a significant restructuring with a leaner cost structure and improving earnings visibility as its skilling platform gains traction. While legacy academic pressures persist, the company’s sharper earnings recovery profile and discounted valuation enhance its near-term risk-reward balance.
Given these dynamics, Chegg appears better positioned for upside heading into 2026 and currently sports a Zacks Rank #1 (Strong Buy), while Udemy, with a Zacks Rank #3 (Hold), may appeal more to investors seeking stability rather than acceleration. You can see the complete list of today’s Zacks #1 Rank stocks here.