Will Busuu's 15% Growth Make Chegg a Language-Learning Leader?

Chegg's (CHGG) language-learning segment, Busuu, reported 15% year-over-year revenue growth in Q2 2025, driven by 39% B2B and 6% B2C expansion, largely attributed to AI-powered features. Chegg anticipates Busuu will generate $48 million in revenue by 2025 and achieve positive adjusted EBITDA by Q1 2026, positioning it as a primary growth engine. While operating in a competitive edtech landscape against players like Duolingo, CHGG shares have surged 48.7% over the past month and trade at a discounted forward price-to-sales multiple, despite 2025 earnings estimates indicating a loss; the stock currently holds a Zacks Rank #1 (Strong Buy).

Analysis

Chegg's strategic pivot towards its language-learning unit, Busuu, is demonstrating initial success, positioning it as a primary growth driver. The segment posted 15% year-over-year revenue growth in the second quarter, propelled by exceptional 39% growth in its B2B business and a more moderate 6% in B2C. This momentum is attributed to the integration of AI-powered features that are enhancing user engagement and retention. Management has set clear targets for Busuu, forecasting $48 million in revenue for 2025 and positive adjusted EBITDA by the first quarter of 2026. Despite this positive narrative in a key segment, a significant headwind exists in the company's overall earnings profile. Analyst estimates for 2025 project a loss per share, representing a 114.7% year-over-year decline, and have been revised downward in the last 60 days. However, the outlook for 2026 anticipates a return to break-even. The stock has reacted strongly to the growth story, surging 48.7% in the past month while still trading at a discounted forward price-to-sales ratio of 0.48 relative to peers, creating a dichotomy between recent momentum and near-term fundamental weakness.

Key Decisions for Investors

• Investors may consider the current discounted valuation and strong momentum in the Busuu segment as an attractive entry point for a potential turnaround story, contingent on execution.
• It is critical to weigh the growth narrative against the significant near-term risk highlighted by contracting 2025 earnings estimates, which suggest continued pressure on the core business.
• Monitor Chegg's progress toward its stated goals of $48 million in Busuu revenue for 2025 and positive adjusted EBITDA by Q1 2026, as these are key catalysts for validating the bull thesis.
• Keep a close watch on competitive dynamics with rivals like Duolingo, as sustained outperformance by Busuu is necessary for Chegg to solidify its position in the language-learning market.