Chegg

“In April 2023, we announced our pivot to AI with a partnership with OpenAI to utilize GPT-4 in our offerings. Beginning in September 2023, we started to roll out the first phase of our new AI-powered user experience, and we are continuing to make significant investments in AI initiatives.”

“We have built large language models, and are leveraging frontier models, specific to academic subjects and use cases that cater to learner needs.”

“We've built into our financials already the investments that we're making in AI.”

“A couple of years ago, we got punched in the face by AI, and now we're using AI to punch back.”

“We will continue to expand into enterprises and schools over the next few years using AI and data to dramatically expand and personalize our catalog while making our courses even more affordable.”

“Beginning in Q3, we are soft launching the next generation of Chegg. By combining our proprietary data, AI, and deep insight into how students learn and build careers, we will reduce the friction for students to get internships and then jobs.”

“Our new agentic coach, which understands each learner's goals and the context of each interaction, helps you prepare for the moments that matter, like a client call, a presentation, or an interview.”

“We have already had more than 10,000 students use the beta and provide feedback, and we will begin rolling out the new service across both Chegg and our site, Internships.com, starting in the third quarter and all throughout 2027.”

“Second quarter CapEx was $3.7 million, down by 49% year-over-year.”

“Yeah. Well, if you think about it, what Chegg's legacy, Chegg was AI before there was AI. We have a pristine 100 and something million pairs of Q&A that we built on our expert network.”

“We leverage the latest in distributed systems, machine learning, data analytics, and generative AI to increase efficiency and scale in our business.”

“Our unique assets, such as our 100 million pieces of education content, our reach with learners around the globe, and our 150,000 subject matter experts, come together to deliver the most effective learning experience possible.”

“The decrease was primarily due to the absence of the $38.2 million content and related assets charge, lower contractor spend of $4.4 million”

“We will continue to expand into enterprises and schools over the next few years using AI and data to dramatically expand and personalize our catalog while making our courses even more affordable.”

“That will come later, but it's not so much the partners we're picking, it's the content we're creating. That content will constantly evolve, same as the answers and the questions did for students on academics around the professional needs of students. It will be led by what companies are actually recommending the necessary skills that students will have. AI allows us to do all that quickly, affordably, personalize each experience.”

“In November 2024 and June 2024, we announced restructuring plans that included reductions of our global workforce of approximately 760 employees, or approximately 22% of our workforce, to better align our cost structure with recent industry challenges that are negatively impacting our business, including increased competition and student adoption of generative AI products.”

“We leverage the latest in distributed systems, machine learning, data analytics, and generative AI to increase efficiency and scale in our business.”

“AI created real headwinds for this company, and we responded by strengthening our balance sheet, rebuilding an AI-first cost structure, and expanding our vision towards a much larger opportunity.”

“Underlying all of this has been the restructuring of our workforce to becoming AI -first. AI allows us to personalize learning, improve outcomes, and scale more efficiently and affordably, giving us a much leaner operating model, which allows us to return to being a growth business with high margins.”

“Turning to expenses, Q2 non-GAAP operating expenses were $32.3 million, nearly cutting our expenses in half compared to the second quarter of last year. This significant reduction reflects our disciplined approach to expense management and enhanced use of AI to improve productivity and drive efficiencies across the company.”

“As we execute on our strategy, AI is improving operational efficiency across the company and driving meaningful gains in profitability and cash generation.”

“Operating expenses decreased $74.6 million, or 70%, and $132.1 million, or 65%, during the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to lower employee-related expenses as a result of prior year restructuring actions.”

“We've built a strong foundation for the future and are encouraged by the continued durability of our Academic Services products, driven by strong monthly retention, the progress we are making leveraging AI to meaningfully improve our cost structure, the early traction we are seeing with new skilling distribution partnerships, and the significant opportunity we see to expand through employability.”

“Starting last fall, we embarked on our next big chapter, re-architecting the company to be AI-first, building a sustainable cost structure, and strengthening our balance sheet so we could accelerate our bigger vision.”

“We offer programs designed to train learners on the latest technical skills, such as AI, coding, data analytics, and cybersecurity.”

“Chegg Skilling revenues increased $0.3 million, or 2%, and $1.8 million, or 5%, during the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to an increase in our workforce skilling programs primarily related to our AI-focused programs.”

“Chegg Study subscribers have access to personalized, step-by-step learning support powered by AI, computational engines, and subject matter experts.”

“We are already seeing encouraging trends at two important and early indicators: retention rate, which for Q1 is up over 100 basis points year-over-year, and engagement.”

“In April 2023, we announced our pivot to AI with a partnership with OpenAI to utilize GPT-4 in our offerings. Beginning in September 2023, we started to roll out the first phase of our new AI-powered user experience, and we are continuing to make significant investments in AI initiatives.”

“We expanded our distribution partnerships, which we expect to contribute more meaningfully later this year, while remaining focused on efficiently managing our Academic Services products to maximize cash generation. Chegg Study monthly retention continued to be very strong, reinforcing its long-term cash generation potential.”

“Chegg Study subscribers have access to personalized, step-by-step learning support powered by AI, computational engines, and subject matter experts. Subscribers engage with our conversational experience that delivers the right support at the right time.”

“In particular, Google's roll out of Artificial Intelligence Overview (AIO) has created and is expected to continue to create headwinds for our industry and our business, most notably reductions in traffic to our website and customers subscribing to our services.”

“Across our industry, there has been a continued increase in the adoption of free and paid generative AI products for academic support, and students are increasingly turning to generative AI for academic support, such as homework and exams, as well as assistance in other areas of daily life.”

“Global non-subscriber traffic to Chegg declined year-over-year 8% in Q2 2024, 19% in Q3 2024, 39% in Q4 2024 and we entered 2025 with trends looking even more unfavorable, at negative 49% year-over-year for the month of January 2025.”

“In November 2024 and June 2024, we announced restructuring plans that included reductions of our global workforce of approximately 760 employees, or approximately 22% of our workforce, to better align our cost structure with recent industry challenges that are negatively impacting our business, including increased competition and student adoption of generative AI products.”

“We have depended in the past on various search engines and free marketing tools to direct a significant amount of traffic to our website, but we are increasingly investing in other channels, including social media campaigns, to drive traffic and make us more discoverable to students.”

“changes to the way students discover our content or a decline in our search engine result page rankings;”

“Our website has experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future.”

“Increased availability and adoption of AI tools and products, including the continued increase in availability and adoption of free and paid generative AI services by students, has reduced, and is expected to continue to reduce, traffic to our website and customers subscribing to our services.”

“For example, the AI Overview feature of Google's search results, which includes questions and solutions for education, keeps users on Google search results instead of leading them to our site.”

“This has negatively impacted our industry and is expected to continue to negatively impact traffic to our platform and accelerate the decline in the number of new subscribers that sign up for our services, adversely affecting our business, operating results and financial condition.”

“Academic Services revenues decreased $53.6 million, or 61%, during the three months ended June 30, 2026, compared to the same period in 2025. The decrease was primarily due to a decrease in subscription revenue of $46.7 million and advertising services revenue of $1.1 million, primarily related to reduced traffic which led to fewer subscribers, as well as a decrease in content licensing revenue of $5.6 million.”

“On February 24, 2025, we filed a complaint in the U.S. District Court for the District of Columbia against Google, asserting federal antitrust claims and common-law unjust enrichment claims, in connection with Google's expansion of its AI Overview ("AIO") search experience, and seeking damages, restitution, disgorgement, and injunctive relief. Google moved to dismiss the amended complaint on July 25, 2025.”

“AI created real headwinds for this company, and we responded by strengthening our balance sheet, rebuilding an AI-first cost structure, and expanding our vision towards a much larger opportunity.”

“A couple of years ago, we got punched in the face by AI, and now we're using AI to punch back.”

“We have huge legacy customers that still use Chegg. You can see that in our numbers. You can see that in the amount of traffic that we're generating. We have the ability to reach students in the millions. Awareness won't be difficult for us because we still get massive traffic.”

“We expanded our distribution partnerships, which we expect to contribute more meaningfully later this year, while remaining focused on efficiently managing our Academic Services products to maximize cash generation. Chegg Study monthly retention continued to be very strong, reinforcing its long-term cash generation potential.”