Homework tool Chegg to slash 22% of workforce as AI bots steal away students
The online platform, which offers textbook rentals and step-by-step homework tutorials, said it has been struggling as Google's AI Overviews squash web traffic, and firms like OpenAI and Anthropic offer discounts and deals to college students on their language models.
'We believe the macroeconomic trends will continue to put pressure on our company and business trends will worsen before they get better,' CEO Nathan Schultz said in a press release.
Chegg announced plans to slash its workforce as AI bots steal away customers.
Pavlo Gonchar/SOPA Images / Shutterstock
'As part of this, we regrettably will be parting ways with approximately 22% or 248 of our talented team members, which is a challenging decision and one I'm saddened by,' he added.
Chegg also plans to close its physical offices in the US and Canada by the end of the year, as well as cut back on new product development and reduce administrative costs.
These cost-cutting measures will save Chegg approximately $45 million to $55 million in 2025, and $100 million to $110 million in 2026, the company said.
It expects to incur restructuring charges of $34 million to $38 million, mostly from severance payments.
Shares in Chegg jumped 4.8% on Monday.
Chegg disclosed its subscriber count declined 31%, to 3.2 million, as the company reported its first-quarter results on Monday.
Chegg reported a decline in subscribers and subscription revenue on Monday.
JHVEPhoto – stock.adobe.com
Revenue plunged 30% to $121 million, as revenue from subscription services fell by nearly a third to $108 million.
It suffered a net loss of $17.5 million in the same period.
In February, Chegg filed a federal antitrust lawsuit against Google, claiming the search engine's AI summaries, which populate at the top of the results page, have decimated its site traffic and revenue.
Google has argued that its AI summaries send web traffic to 'a greater diversity of sites.'
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