Chegg Inc. is set to lay off approximately 22% of its workforce, impacting around 248 employees, as the company grapples with the increasing adoption of artificial intelligence (AI) in education. The announcement was made on May 12, 2025.
In response to declining web traffic and user engagement, Chegg will also close its physical offices in the United States and Canada by the end of 2025. These restructuring efforts are projected to save the company $45 to $55 million in 2025 and $100 to $110 million in 2026.
Financial Impact
Chegg's Q1 2025 earnings revealed a 30% decrease in revenue, totaling $121.4 million, compared to the previous year. The company reported a net loss of $17.5 million, with subscription revenue dropping to $107.6 million. The number of subscribers also declined by 31% to 3.2 million. Despite these losses, Chegg is exploring strategic alternatives and has seen some success in content licensing deals with AI companies, generating $4 million in Q1.
Adapting to the AI Revolution
Chegg is facing stiff competition from AI-powered tools like ChatGPT and Google Gemini, which are attracting students with instant answers and personalized assistance. This shift in student behavior has prompted Chegg to restructure and explore new revenue streams, including content licensing and business-to-institution programs. The company is also pursuing legal action against Google, alleging that its AI Overviews feature is retaining traffic that would have otherwise visited Chegg's website.