Chegg, the online education firm located in Santa Clara, is reducing its workforce by 319 employees. Chegg faces its second significant reduction in just six months as the homework assistance firm grapples with the challenges posed by contemporary AI chatbots.
Chegg revealed that a new round of layoffs will affect 21% of its workforce, according to a filing with the Securities and Exchange Commission on Tuesday. The organization announced the update together with a harsh quarterly financial summary; Chegg experienced a loss exceeding $212 million from July to September.
In his prepared remarks accompanying the report, CEO Nathan Schultz conveyed a sense of optimism while acknowledging that it is a challenging period for his company. Chegg offers tools for grammar and plagiarism checks, in addition to tailored study assistance for individual courses, along with widely utilized textbook solution guides.
“Technology shifts have created headwinds for our industry and Chegg’s business specifically,” Schultz said. “Recent advancements in the AI search experience and the adoption of free and paid generative AI services by students, have resulted in challenges for Chegg. These factors are adversely affecting our business outlook and are requiring us to refocus and adjust the size of our business.”
According to Schultz, the latest round of layoffs aims to achieve savings of $60 to $70 million in 2025, following the cost reductions initiated by the previous layoff of 441 workers in June. However, it remains uncertain whether the reductions will suffice. According to its reported financial results, Chegg has experienced a decline in revenue for the third consecutive year from July to September, with total losses amounting to $830 million through September.