San Francisco: In a clear warning for edtech platforms worldwide that ChatGPT can destroy their businesses in the near future, US-based online learning service Chegg saw its stock plummet more than 40 per cent after it admitted that AI chatbot ChatGPT has affected its finances.
California-based Chegg reported a 7 per cent decline in revenue (year-on-year) at $187.6 million in the first quarter of 2023. Its subscribers dropped 5 per cent to 5.1 million.
The news sent ripples through the education sector, with shares in London-listed Pearson falling over 8.7 per cent on Tuesday, Financial Times reported.
According to Dan Rosensweig, CEO and President of Chegg, generative AI would affect the society and business "at a faster pace than people are used to".
"In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups. Since March, we saw a significant spike in student interest in ChatGPT. We now believe it's having an impact on our new customer growth rate," he said during the company's quarterly earnings call.
The company launched CheggMate, a new service built with OpenAI's GPT-4, last month to retain students.
"As artificial intelligence technology continues to evolve at a rapid pace, we are embracing it aggressively and prioritizing our investments to meet this opportunity," said Rosensweig.
"We believe we are in the best position to take advantage of the advancements in AI for the benefit of students, because we can leverage our proprietary data, our 150,000+ experts, and our decade-plus years of experience as we launch CheggMate," he added.
Its subscription services revenues declined 3 per cent year-on-year to $168.4 million in Q1.