Chegg Plans 22% Workforce Layoffs Amid Edtech Challenges

Chegg announced a significant restructuring plan involving a 22% workforce reduction, equating to 248 employees, primarily affecting its U.S. and Canada operations and focused on Chegg Study and corporate services. The company cited declining web traffic and increased competition from AI-driven educational tools, including Google's Gemini AI platform and free offerings from OpenAI and Anthropic, as key challenges impacting its business. As part of the restructuring, Chegg will close its U.S. and Canada offices by the end of 2025, reduce marketing, product development, and administrative expenses, and expects to realize cost savings of $45 million to $55 million in 2025 and $100 million to $110 million in 2026. Despite a 30% year-over-year revenue decline to $121 million in Q1 and a 31% drop in subscription users, the company reported results that beat analyst expectations and expressed confidence in ongoing strategic alternatives. Chegg also faces additional charges of $34 million to $38 million related to the restructuring, including employee transition and severance costs, and negotiated an early lease termination to reduce obligations. Analyst sentiment remains cautious, with concerns over financial decline, subscriber losses, and risks including a potential NYSE delisting, resulting in a Hold rating and a $3.25 price target for the stock.