Chegg announces move to reduce workforce by 22% as students turn to AI

• Chegg saw revenue decline 30% year-over-year in Q1 2025
• 248 workers (22%) will lose their jobs this year
• Other cost-cutting measures are confirmed

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 fiscal quarter.

Chegg has seen declining web traffic for months, and it's expected that this trend could even worsen in the short term, hence the decision to take drastic measures and lay off more than a fifth of its current workforce.

Chegg blames AI for drop in revenue, layoffs

In its earnings post, Chegg CEO Nathan Schultz blamed Google's implementation and expansion of AI Overviews for its continued dominance in the search market (something that the US Department of Justice has already complained about) and the interest in its Gemini AI chatbot.

Schultz also noted that OpenAI has launched free subscriptions to ChatGPT Plus for college students, with Anthropic also following a similar path, putting Chegg's business at risk.

Despite announcing two restructurings in 2024, the company is being forced to take things further by closing physical offices across the US and Canada by the end of 2025. The company will also be "limiting [its] upper funnel marketing, reducing new product development efforts, and finally cutting [its] general and administrative expenses."

The 248 roles at risk are predominantly "concentrated in the US and Canada," with Chegg Study and corporate services seeing the biggest redundancies of 66%.

The company hopes to save an additional $45-55 million in 2025 on top of the $120 million in savings it predicts from its 2024 restructuring efforts. Further savings of $100-110 million, impacted by the most recent cost-cutting events, are expected for 2026.

CFO David Longo added: "Looking ahead, industry challenges continue to cause a notable decline in traffic and subscriber acquisitions."

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