Chegg surges 20% in after-hours trade, announces restructuring plan, layoffs

Investing.com - Chegg Inc (NYSE:CHGG) experienced a 20.3% surge in post-market deals on Monday after announcing a restructuring plan which will see the exit of 441 employees, representing 23% of the company's global workforce.

Nathan Schultz, Chegg President and CEO said, “Today, we executed a restructuring effort, a major step in my plans to refocus Chegg and return to subscriber and revenue growth. These changes are designed to make us a more focused, more efficient, uncomplicated, and quicker-moving company. Our renewed focus on our core audience – the student – will allow us to address an unmet need with an offering that is differentiated, holistic, and verticalized for education.”

The strategy involves delivering holistic and unique product offerings for students, combining academic and functional support. This approach will integrate aspects such as organizational proficiency, early career learning, financial literacy, and community into a single affordable platform. The aim is to address gaps in the student experience, setting Chegg apart from other companies that offer one-dimensional learning support or broad, generic offerings.

Chegg's unique selling proposition will include a single platform that leverages artificial intelligence specific to education, a proprietary learning model, over 100 million pieces of content, subject matter experts ensuring quality, and now, 360-degree functional support services. This comprehensive approach extends Chegg's value beyond traditional online educational support.

By 2025, the company anticipates realizing non-GAAP expense savings of $40 million to $50 million, resulting from employee departures, closure of two offices outside of the United States, and other cost rationalizations.

Chegg predicts it will incur a $10 million to $14 million charge related to the restructuring, with about half of this in the second quarter and the majority of charges incurred by the fourth quarter of 2024.