Chegg announced on Monday that it will lay off approximately 22% of its employees—about 248 positions—in a major cost-cutting effort aimed at reorganizing the company’s operations. The move comes as students increasingly shift from traditional educational platforms to AI-based tools like ChatGPT.
The online education company, known for textbook rentals, tutoring, and homework assistance, has seen a significant drop in web traffic. Company officials expect this trend to continue in the near term before seeing any potential improvement.
Chegg also pointed to the growing influence of AI tools in search and education. According to the company, Google’s AI Overviews feature is keeping users within its search ecosystem, limiting web traffic to external sites. Meanwhile, AI firms like OpenAI and Anthropic are offering free academic subscriptions, attracting Chegg’s core user base.
As part of the restructuring, Chegg plans to shut down its offices in the United States and Canada by year-end. The company will also scale back spending across marketing, product development, and administrative functions.
The restructuring is expected to result in charges of between $34 million and $38 million, mostly in the second and third quarters. However, Chegg anticipates annual savings of $45 million to $55 million in 2025, and up to $110 million by 2026.
Chegg reported a steep 31% decline in subscribers for the first quarter, dropping to 3.2 million. Revenue also fell 30% to $121 million, with subscription-based services accounting for $108 million of that total.
Earlier this year, Chegg filed a lawsuit against Google, accusing the tech giant of diminishing demand for original content and diverting users through AI-generated search results, negatively affecting traffic and subscriptions.
As of the end of 2023, Chegg employed 1,271 people.
