Chegg to cut 22% of staff as AI applications disrupt edtech market

Chegg announced on Monday it would reduce its staff by approximately 22%, or 248 workers, in an effort to save money and streamline operations as more students rely on artificial intelligence-based tools like ChatGPT instead of legacy edtech solutions.

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 rollout of AI Overviews is keeping web traffic within its search ecosystem while increasingly routing searches to its Gemini AI platform, Chegg added, noting other AI firms such as OpenAI and Anthropic were wooing scholars with grants for free subscription access.

As a part of the restructuring on Monday, Chegg is also closing its U.S. and Canada offices within the year and trying to scale back on its marketing, product development initiatives and general and administrative costs.

Most of the resulting charges of between $34 million and $38 million are to be taken within the second and third quarters.

Chegg forecasts cost savings of $45 million to $55 million in 2025 and $100 million to $110 million in 2026 from restructuring.

It also released first-quarter results on Monday, reporting that subscribers fell 31% during the period to 3.2 million. Revenue fell 30% to $121 million, as its revenue from subscription services dropped by almost a third to $108 million.

Chegg sued Google in February alleging Google's web search engine was eroding original content demand and destabilizing publishers' competitiveness with its artificial intelligence-produced summaries, consequently leading to a decline in visitors and subscribers.

Chegg employed 1,271 people as of December 31.