Chegg to Lay Off 388 Employees in the U.S.
"Revenue Down Due to Proliferation of Generative AI"
Chegg, a U.S.-based online education company, is implementing a large-scale restructuring that will reduce its workforce by 45%. This move comes in response to a sharp decline in performance caused by the proliferation of generative artificial intelligence (AI) and a decrease in Google search traffic.
Recently, Fox News in the U.S. reported that “on the 27th (local time), Chegg decided to lay off 388 employees, which amounts to about 45% of its total workforce.”
Chegg issued a statement saying, “The spread of generative AI and changes in search patterns have significantly reduced Chegg’s visitor numbers and revenue,” and added, “This restructuring plan reflects that reality.”
The company stated that, as a result of these layoffs, it expects to reduce its non-GAAP (excluding one-time or non-cash expenses) costs by approximately $100 million to $110 million (142.85 billion to 157.08 billion won) by 2026. However, it also noted that one-time expenses of $15 million to $19 million (2.1 billion to 2.7 billion won) will be incurred. Chegg plans to release further details about the restructuring during its third-quarter earnings announcement scheduled for November 10.
As part of this organizational overhaul, Dan Rosensweig, Chairman of the Board, will return as President and Chief Executive Officer (CEO). In a statement, Rosensweig said, “I remain confident in Chegg’s future and will explore every avenue to drive growth and maximize shareholder value.”
In recent months, Chegg considered various options, including a sale or going private, but ultimately decided to remain independent, stating, “Remaining as an independent public company is the best choice to maximize long-term shareholder value.”
The company emphasized, “The spread of AI and the decline in Google search traffic have dealt a significant blow to Chegg’s traffic and revenue.” In response, Chegg announced plans to reduce costs and focus investments in the skilling (vocational education) market. The company plans to shift from its traditional learning support services to become a B2B vocational education organization, offering corporate training in job competencies, language education, and AI-related technology programs.
Chegg stated that this new division is targeting revenue of approximately $70 million (99.946 billion won) in 2025, and expects to achieve double-digit growth in 2026.
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