Dateline: SANTA CLARA, May 12, 2025 – Chegg (CHGG.N) announced plans to cut about 22% of its workforce as students shift to AI tools.
- Layoffs affect 248 employees, restructuring planned.
- Chegg expects significant cost savings by 2026.
- First-quarter revenue down 30% year-over-year.
Market reaction & context
The education technology sector has faced significant challenges as artificial intelligence steadily replaces traditional learning tools. Chegg’s announcement comes as Google expands its AI initiatives, impacting companies like Chegg and its competitors in the online education space. The stock was trading down 5.8% following the announcement.
Detailed analysis
Chegg revealed it would lay off approximately 248 employees as part of its strategy to cut costs and improve operational efficiency, reflecting a broader trend of consolidation in the educational technology sector. The layoffs are a response to a sustained decline in web traffic and subscription rates, with Chegg reporting a 31% drop in subscribers during the first quarter, now totaling 3.2 million.
The company cited increasing competition from AI-powered tools such as OpenAI’s ChatGPT and Google’s Gemini platform, which have become preferred resources for students conducting academic inquiries. In tandem with these cuts, Chegg plans to shut down its U.S. and Canada offices by the end of the year and implement reductions in marketing expenses and product development.
Outlook / management quote
“We need to make decisive changes to better position our company for future success,” said Chegg’s management. The restructuring is expected to result in costs between $34 million and $38 million in the short term, with projected savings of $45 to $55 million in 2025 and $100 to $110 million in 2026.
Conclusion
As Chegg navigates the transition to an increasingly competitive tech landscape, its proactive approach to workforce and operational restructuring may be essential for long-term viability. The company’s focus on AI and cost management reflects the ongoing digitization of educational resources and a shifting market landscape.
No investment advice. For informational purposes only.
References
1 Chegg to lay off 22% of workforce as AI tools shake up edtech industry. CNBC. Retrieved May 12, 2025.
2 Chegg to lay off 22% of workforce as AI tools shake up edtech industry. Reuters. Retrieved May 12, 2025.
3 Chegg to lay off 22% of workforce as AI tools shake up edtech industry. AOL. Retrieved May 12, 2025.