May 12 (Reuters) - Chegg ( CHGG ) said on Monday it

would lay off about 22% of its workforce, or 248 employees, to

cut costs and streamline its operations as students increasingly

turn to AI-powered tools such as ChatGPT over traditional edtech

platforms.

The company, an online education firm that offers textbook

rentals, homework help and tutoring, has been grappling with a

decline in web traffic for months and warned that the trend

would likely worsen before improving.

Google's expansion of AI Overviews is keeping web traffic

confined within its search ecosystem while gradually shifting

searches to its Gemini AI platform, Chegg ( CHGG ) said, adding that

other AI companies including OpenAI and Anthropic were courting

academics with free access to subscriptions.

As part of the restructuring announced on Monday, Chegg ( CHGG ) will

also shut its U.S. and Canada offices by the end of the year and

aim to reduce its marketing, product development efforts and

general and administrative expenses.

The majority of the resulting charges of $34 million to $38

million are expected to be incurred in the second and third

quarters.

Chegg ( CHGG ) expects cost savings of between $45 and $55 million in

2025 and $100 to $110 million in 2026 due to the restructuring.

It also reported first-quarter results on Monday, saying

subscribers declined 31% in the period to 3.2 million. Revenue

declined 30% to $121 million, as its subscription services

revenue fell by nearly a third to $108 million.

In February, Chegg ( CHGG ) sued Google saying Google's

internet search engine was eroding demand for original content

and undermining publishers' ability to compete with its

artificial intelligence-generated overviews, thereby causing a

drop in visitors and subscribers.

Chegg ( CHGG ) had 1,271 employees as of December 31.

(Reporting by Kritika Lamba in Bengaluru; Editing by Devika

Syamnath)