Chegg Inc., an online learning platform based in Santa Clara, has announced on Monday that it will reduce its workforce by roughly 45%, which translates to about 388 employees, in light of what it describes as a “recession.” The decline in traffic from Google to content publishers has also contributed to this decision.
The company stated that this restructuring plan is a response to a “significant decline” in both traffic and revenue, which they link to developments in generative AI and shifts in search behaviors.
According to Chegg, the financial repercussions—estimated to be between $100 million and $110 million—will result in severance claims of approximately $15 million to $19 million, primarily in cash payments. More detailed information is expected during the company’s third quarter results presentation on November 10th.
Dan Rosensweig, the Executive Chairman, will reassume the role of Chairman and CEO immediately as part of this restructuring. Nathan Schultz, who took over from Rosensweig in 2024, will transition to an executive advisor role.
In a public statement, Rosensweig expressed optimism about Chegg’s future, asserting that he looks forward to identifying new avenues for growth and enhancing shareholder value. The company confirmed it will remain an independent public entity after evaluating potential options like a sale or privatization.
The organization cited decreased traffic and revenue as being significantly influenced by AI advancements and reduced Google search traffic. To adapt, Chegg plans to streamline operations and boost investments in its business strategy, focusing on the “skills market,” which they believe has potential exceeding $40 billion.
Chegg aims to evolve beyond standard learning assistance by developing a business-to-business model that emphasizes skills training programs in areas like language skills, workplace readiness, and AI. This new approach could yield around $70 million in revenue by 2025, with double-digit growth anticipated in 2026.
Additionally, Chegg has reiterated its guidance for the third quarter, cautioning investors about the “risks and uncertainties” presented by the rapidly changing AI landscape, particularly regarding the effects of AI on its business and its ability to attract and retain learners.
