Chegg announced on Monday that it plans to reduce its workforce by 22%, or about 248 positions. This decision comes as artificial intelligence tools are increasingly taking over space traditionally occupied by Chegg’s research and homework assistance services.
The company, which specializes in textbook rentals and detailed homework help, is facing challenges as AI options like Google’s AI Summary and offerings from OpenAI attract students with enticing discounts and features.
The CEO, Nathan Schultz, shared in a press release that they anticipate ongoing macroeconomic pressures that may worsen business conditions. “It’s a tough call, but we believe these trends aren’t going to let up anytime soon,” he remarked.
As part of the restructuring, Chegg will be closing its physical offices in the U.S. and Canada by year’s end, alongside halting new product development and cutting down on management expenses. These savings are projected to amount to around $45-$55 million in 2025 and between $100-$110 million in 2026.
The company expects to incur restructuring costs ranging from $34 million to $38 million, mainly related to retirement benefits for laid-off employees.
Interestingly, shares of Chegg saw a 4.8% increase on Monday despite the tough news. The company’s latest quarterly report indicated a subscriber count drop of 31%, bringing the total to 3.2 million.
On the revenue front, it reported a 30% decline, totaling $121 million, with subscription revenue dipping nearly 30% to $188 million. Unfortunately, Chegg recorded a net loss of $17.5 million during the same period.
Earlier in February, Chegg initiated a federal anti-trust lawsuit against Google, alleging that the AI-generated summaries positioned at the top of search results have significantly harmed the company’s web traffic and revenues. Google, on its part, argues that its AI summary actually directs users to a wider array of websites.
