Chegg (NYSE: CHGG) reported a mixed Q4 with revenue below consensus and adj. EBITDA ahead of consensus. Print revenue declined 46% y/y, in-line with PiperJaffray analyst, Mike Olson's estimated of -46%, and digital revenue grew 34% y/y, below his 42% estimate. Digital represented 56% of total, up from 34% in Q4'14. The company's Q1'16 revenue and EBITDA outlook is below consensus, as is the FY16 guidance.

Chegg's transition away from physical textbook rentals to an entirely digital revenue base is progressing and has potential to result in a much more attractive target operating model beginning in 2017E, but this transition results in some degree of volatility when it comes to estimate changes. Ingram is now fully running the textbook purchasing and logistics pieces of Chegg's business.

No change to the Overweight rating but Olson cut his PT to $6.00 (from $9.50) on a multiple reduction to 10x FY17E EV/EBITDA from the prior 25x 2016E.

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Shares of Chegg closed at $5.34 yesterday.