Chegg Inc. (CHGG) is set to trim its global workforce by 23% as part of an initiative to enhance operational efficiency.
On Monday, CHGG's stock closed at $2.61, down $0.18 or 6.45%. However, post-market trading saw a significant uptick, with the stock rising by $0.51 or 19.54%.
The company's renewed strategy involves aligning its focus on students carrying comprehensive course loads and seeking positive educational outcomes and holistic support.
The planned restructuring will result in the departure of 441 employees, accounting for 23% of Chegg's total global staff.
By 2025, Chegg anticipates achieving non-GAAP expense savings between $40 million and $50 million. These savings will stem from employee reductions, the shuttering of two overseas offices, and other cost-saving measures.
The company expects to record restructuring charges ranging from $10 million to $14 million, approximately half of which will be incurred in the second quarter, with the bulk of the charges expected by the fourth quarter of 2024.
Under its restructuring blueprint, Chegg will increase investment in its international program, initially targeting six countries. The strategy also includes diversifying distribution channels, such as direct partnerships with educational institutions.
Furthermore, Chegg plans to initiate a new branding and marketing strategy aimed at reaching students in high school and early college stages.
For 2025, Chegg is steadfast in achieving a 30%+ Adjusted EBITDA margin goal and anticipates delivering at least $100 million in Free Cash Flow. The company also reaffirmed its previously stated guidance for the second quarter.
