By Miles Kruppa
Online education company Chegg is laying off 319 employees, 21% of its total staff, and said it expects to fall short of its previously announced financial targets for next year as artificial-intelligence tools continue to eat into its online homework solutions business.
Chief executive Nathan Schultz said the popularity of products such as ChatGPT and the introduction of AI summaries in Google search were weighing on Chegg's revenue expectations. Web traffic from non-subscribers declined 37% in October compared to the same month last year, he said in prepared remarks.
The company, whose stock has fallen 99% since 2021, has already been impacted by students turning to ChatGPT and other AI chatbots rather than paying for study help from Chegg.
Schultz said Chegg now expects to miss its targets of $100 million in free cash flow and 30% adjusted EBITDA in 2025.
Shares in Chegg were down 13% in after-hours trading.
Here are some additional details from Chegg's third-quarter earnings report:
-- Total net revenues fell 13% to $136.6 million in the third quarter, beating analyst expectations.
-- Coupled with cuts announced earlier this year, the layoffs will result in expected savings of $100 million to $120 million next year.
-- Chegg's board of directors approved $300 million in securities repurchases.
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(END) Dow Jones Newswires
November 12, 2024 17:36 ET (22:36 GMT)
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