Chegg shares (NYSE:) fell more than 35% Tuesday in premarket trading after Chegg reduced its adjusted EBITDA and full-year revenues.

First-quarter adjusted EPS for Chegg was 32c. It is up from 28c the year before and surpasses consensus estimates of 24c. The net revenue was $202.2 million. This is 1.9% more YoY than the consensus estimate of $203.1 millions.

The net revenue for Q2 is expected to be $188 million-$192 million. This figure is well below analyst consensus at $209.8 million. According to analysts, the company will expect adjusted EBITDA of between $66 and $68 millions. That is lower than the $77.1 million consensus.

Chegg projects FY revenue between $740 million and $770 million. This is down from its previous forecast of $830million to $850million, but still within the consensus of $843.1 millions. Now, FY adjusted EBITDA will be between $220 and $235 millions. This is a decrease from the $260 to $270 million outlook and analysts’ expectations of $266.7million.

“We had a solid first quarter, and Chegg is executing well against our strategic objectives, despite continued industry headwinds,” said Dan Rosensweig, CEO & President of Chegg.

Piper Sandler analyst Arvind Ramnani cut the rating on CHGG stock to Neutral from Overweight with a price target of $21.00 (from $44.00) after “disappointing” results.

“In our view, we expect Chegg to remain in the penalty box in the near/medium term as this is the second time that CHGG has lowered guidance in six-months. For investors to have confidence in this stock they will need to observe a steady pattern of beat/raises, enrollment stability and other positive trends. Ramnani stated in a client letter that UDMY (earnings 5/4) could face similar headwinds to TWOU (5/10).

Nithin Pejaver, Citi Analyst, stated that Chegg is making one step forward while taking two back.

“With two negative surprises in the past three quarters, we believe a turnaround in sentiment for the better will require Chegg to demonstrate multiple quarters of recovery in subscriber trends.

By Senad Karaahmetovic