Chegg Announces 22% Workforce Reduction as AI Tools Disrupt EdTech Industry
6 Sources
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Chegg to lay off 22% of workforce as AI tools shake up edtech industry
May 12 (Reuters) - Chegg (CHGG.N), opens new tab 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. The company, an online
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Chegg announces move to reduce workforce by 22% as students turn to AI
Online learning platform Chegg has announced plans to lay off around 22% of its workforce - 248 employees - to cut costs and streamline operations. The news was bundled with the announcement of a less-than-ideal 30% drop in quarterly revenue, with the company generating $121.4 million in its first
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How AI Stole This Company's Customers and Led to Big Layoffs
In a press release announced Monday, the company's CEO Nathan Schultz explained that he believes "macroeconomic trends will continue to put pressure on our company and business trends will worsen before they get better." Schultz explained that the pressures on Chegg's business mean it will
[4]
Chegg to lay off 22% of workforce as AI tools shake up edtech industry
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. The company, an online education firm that offers textbook rentals,
[5]
Homework tool Chegg to slash 22% of workforce as AI bots steal away...
Chegg on Monday announced plans to slash 22% of its workforce as artificial intelligence bots steal students away from its study and homework help tools. The online platform, which offers textbook rentals and step-by-step homework tutorials, said it has been struggling as Google's AI Overviews
[6]
Chegg to lay off 22% of workforce as AI tools shake up edtech industry
(Reuters) -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. The company, an online education firm that offers textbook
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Chegg, an online education platform, plans to lay off 22% of its workforce and close offices in response to declining revenue and user base, largely attributed to the rise of AI-powered educational tools.
Chegg Announces Significant Workforce Reduction
Chegg, a prominent online education platform, has announced plans to lay off approximately 22% of its workforce, amounting to 248 employees
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. This decision comes as part of a broader restructuring effort aimed at cutting costs and streamlining operations in response to changing market dynamics and increased competition from AI-powered educational tools1
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.Financial Impact and Market Response
The company reported a substantial decline in its first-quarter results for 2025. Chegg's revenue dropped by 30% to $121 million, with subscription services revenue falling by nearly a third to $108 million
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. The subscriber count also saw a significant decrease of 31%, bringing the total number of subscribers down to 3.2 million1
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. Despite these challenging figures, Chegg's shares experienced a 4.8% increase following the announcement5
.AI's Disruptive Influence on EdTech
Chegg attributes much of its recent struggles to the rising popularity of AI-powered educational tools among students
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. The company specifically pointed to Google's AI Overviews and Gemini AI platform as factors contributing to the decline in web traffic to its own platform1
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. Additionally, other AI companies such as OpenAI and Anthropic are offering free or discounted access to their language models for college students, further intensifying the competition2
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.Restructuring Measures and Cost Savings
As part of its restructuring plan, Chegg will implement several cost-cutting measures:
- Closing physical offices in the U.S. and Canada by the end of 2025
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- Reducing marketing efforts, particularly in the upper funnel
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- Limiting new product development initiatives
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- Cutting general and administrative expenses
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These measures are expected to result in cost savings of $45-55 million in 2025 and $100-110 million in 2026
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. The company anticipates incurring restructuring charges of $34-38 million, primarily in the second and third quarters of 20251
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.Related Stories
Legal Action Against Google
In February 2025, Chegg filed a federal antitrust lawsuit against Google, alleging that the search engine's AI-generated summaries at the top of search results pages were unfairly diverting traffic away from Chegg's website
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. The lawsuit claims that Google's practices are eroding demand for original content and undermining publishers' ability to compete1
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.Industry Implications and Future Outlook
Chegg's CEO, Nathan Schultz, expressed a somber outlook, stating that "macroeconomic trends will continue to put pressure on our company and business trends will worsen before they get better"
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. This situation highlights the broader challenges facing traditional EdTech companies as they navigate the rapidly evolving landscape shaped by AI advancements in education2
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.As the EdTech industry continues to grapple with these changes, companies like Chegg may need to innovate and adapt their business models to remain competitive in an increasingly AI-driven educational environment
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