Chegg slashes 45% of workforce, blames ‘new realities of AI’

Chegg It said on Monday it would lay off about 45% of its workforce, or 388 employees, as the “new realities” of artificial intelligence and declining traffic from internet searches lead to falling revenues.

Founded 20 years ago, the online education company has been influenced by the rise of generative AI software tools such as OpenAI’s ChatGPT, which are becoming increasingly popular among students. Chegg also filed a lawsuit Google In February, it argued that AI was harming traffic and sales of search results summaries.

The company reiterated that claim on Monday. saying Artificial intelligence and “reduced traffic from Google to content publishers” have hurt its business.

“As a result, and reflecting the company’s ongoing investment in artificial intelligence, Chegg is restructuring the way it operates its academic learning products,” the company said.

The cuts come after Chegg laid off 22 percent of its workforce in May, citing the growing adoption of artificial intelligence.

Chegg went public in 2013 and saw its stock price rise to $113.51 in February 2021, driven by the Covid pandemic and the shift to remote learning. The stock has since lost 99% of its value. Its market cap reached roughly $14.7 billion before falling to roughly $156 million.

The company also offers a newer suite of AI tools, including textbook rentals, homework help, and tutoring, as well as a service that automatically creates flashcards.

As part of Monday’s announcement, the company said Dan Rosensweig will return as CEO immediately and Nathan Schultz will step down and remain with Rosensweig and Chegg as executive advisors to the board.

Rosensweig, a former senior executive at Yahoo who joined Chegg as CEO in 2010, stepped down in April 2024 and handed over the job to Schultz, who was chief operating officer at the time.

Chegg also said it plans to remain an independent company and conclude a strategic review process that began earlier this year.

“After careful consideration of multiple recommendations, the board unanimously determined that remaining an independent public company offers the best opportunity to maximize long-term shareholder value,” the company said. he said.

In April, Chegg was at risk of being delisted from the New York Stock Exchange. Chegg got the warning The stock was trading at about 60 cents. Trading below $1 for 30 consecutive trading days triggers an alert. By May, the stock was back above $1.

— CNBC’s Ari Levy contributed to this report.

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