In a significant overhaul aimed at streamlining operations and focusing on its student-first approach, Santa Clara-based tech company Chegg, Inc. has announced a company restructuring that will see a 23% reduction in its global workforce. An approximate 440 employees are affected by the job cuts, a move revealed earlier this week in a statement by President and CEO Nathan Schultz to the shareholders. "I am committed to our Student First mission and confident that we can achieve remarkable results serving learners around the world", Schultz stated, acknowledging the major strategic revision and, aiming to refocus the company's efforts to better serve their primary audience, according to KRON 4.
Amidst the workforce reduction, the company also communicated an ambitious plan to reinvigorate growth through an array of student-centric initiatives. These include an integration of AI in educational tools, a proprietary learning model, and over 100 million pieces of unique content. Chegg's strategy, detailed in a Shareholder Letter, as per Chegg, focuses on "providing holistic and differentiated product offerings for students," blending academic support with skills such as organizational proficiency, early career learning, and financial literacy within a single platform.
As part of the strategic overhaul, Chegg expects to see an expedited innovation process, a leaner organization, and savings of $40 to $50 million in non-GAAP expenses by 2025. Chief Financial Officer David Longo asserts, as cited by Chegg, "This action today delivers on our promise to better align our expense base with our current revenue trends," projecting a goal of 30%+ Adjusted EBITDA margin and at least $100 million in Free Cash Flow for 2025, while maintaining their second-quarter forecasts as shared on April 29.
The revitalization effort also includes closing two international facilities and various other cost rationalizations. Chegg's market approach following the announcement initially sent stocks upward, although they settled back to prior levels shortly after. The restructuring will involve a charge of $10 million to $14 million, with approximately half expected to be recorded in the second quarter, and the bulk due by the end of the fourth quarter of 2024. The company's plans reflect a dedication to not only consolidate its footprint in the education sector but also to potentially secure its financial stability long-term, despite the immediate impacts felt by the workforce and organizational structure.
