Chegg to Lay Off 22% of Workforce, Cut Costs Amid AI Competition and Declining Revenue

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Updated May 12, 2025, 06:57 PM

Chegg Inc. announced a significant restructuring plan, including the layoff of 22% of its workforce, or 248 employees, in response to declining subscriber numbers and revenue. The company reported a 31% drop in subscribers to 3.2 million and a 30% decrease in revenue to $121.4 million for the first quarter of 2025. The layoffs are part of broader cost-cutting measures as Chegg faces increased competition from AI-powered tools like ChatGPT, which are drawing students away from traditional edtech platforms. Additionally, Chegg is expanding its AI content licensing, which generated $4 million in revenue this quarter with projected growth expected next quarter.

In addition to the layoffs, Chegg plans to close its physical offices in the U.S. and Canada by the end of the year. The company also aims to reduce marketing, product development, and administrative expenses. These measures are expected to save Chegg between $45 million and $55 million in 2025 and between $100 million and $110 million in 2026. Chegg anticipates incurring restructuring charges of $34 million to $38 million, primarily for severance payments. The company is also planning further layoffs and exploring new partnerships to navigate the competitive landscape.

The company's challenges are compounded by a lawsuit filed against Google in February, alleging that Google's AI summaries are reducing web traffic to Chegg's site. CEO Nathan Schultz expressed regret over the layoffs but emphasized the necessity of the measures due to ongoing macroeconomic pressures and worsening business trends.

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Sources

reuters.com(3)nypost.com techmeme.com news.google.com

New York Post

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Homework tool Chegg to slash 22% of workforce as AI bots steal away students

Reuters Legal

@ReutersLegal

Chegg 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.

Techmeme

@Techmeme

Chegg says subs dropped 31% in Q1 to 3.2M; it will lay off 248 employees, or ~22% of its staff, to cut costs as students keep turning to AI tools like ChatGPT (Kritika Lamba / Reuters)