Key Takeaways
- Online learning platform Chegg is reducing its workforce by 22%, meaning 248 employees will lose their jobs.
- The company’s revenue fell by 30% in the first quarter compared to last year.
- Chegg attributes these challenges to students increasingly using AI tools for learning.
- Additional cost-saving plans include closing offices and scaling back on marketing and product development.
Online learning company Chegg is making significant changes, announcing a plan to lay off about 22% of its staff. This move will affect 248 employees as Chegg aims to cut costs and streamline its operations.
This decision comes as the company reported a challenging first quarter, with revenue dropping by 30% year-over-year to $121.4 million. According to TechRadar, Chegg has been experiencing declining web traffic for months, prompting these drastic measures.
Chegg’s CEO, Nathan Schultz, pointed to the rise of artificial intelligence as a key factor. He mentioned Google’s AI Overviews and the popularity of AI chatbots like OpenAI’s ChatGPT and offerings from Anthropic, which are increasingly used by students, sometimes for free.
This isn’t the first time Chegg has restructured. Despite two efforts in 2024, the company is now taking further steps. These include closing physical offices across the US and Canada by the end of 2025.
Chegg also plans to limit its marketing, reduce spending on new product development, and cut general and administrative expenses. The job cuts will primarily impact roles in the US and Canada, with Chegg Study and corporate services seeing the largest reductions.
Through these actions, Chegg hopes to achieve substantial savings. They aim for an additional $45-55 million in 2025, building on $120 million in savings from 2024. Further savings of $100-110 million are anticipated for 2026.
CFO David Longo acknowledged the ongoing difficulties, stating, “Looking ahead, industry challenges continue to cause a notable decline in traffic and subscriber acquisitions.”
