Chegg lays off 45% of workforce as AI impacts online learning business

Chegg Inc., a Santa Clara-based online education platform, said Monday it will cut about 45% of its workforce — roughly 388 employees — as it faces what it calls “the new realities of artificial intelligence and declining traffic from Google to content publishers.”

The company said in its official statement that the restructuring plan reflects a “significant decline in Chegg’s traffic and revenue,” which it attributed to shifts in generative artificial intelligence and changing search patterns.

The layoffs will reduce 2026 non-GAAP expenses by about $100 million to $110 million and will result in charges ranging from $15 million to $19 million, mostly in the form of a cash bonus, Chegg said.

It expects to provide more information during its third-quarter earnings call on November 10.

Lay off? This is why losing your job may be the best break of your life

CEO Dan Rosenzweig will return as President and CEO, effective immediately, as part of a comprehensive overhaul. Nathan Schultz, who succeeds Rosensweig in 2024, will step down and serve as an executive advisor to Rosensweig and the Board of Directors.

“With my return to the CEO role, I am confident that Chegg has a bright future, and I look forward to exploring all paths to drive growth and enhance shareholder value,” Rosensweig said in the statement.

The company confirmed that it will remain an independent public company after months of reviewing options, including selling or turning into a private company.

Will self-driving trucks replace drivers by 2027?

Google AI on mobile. (Jonathan Ra/Noor Photo via Getty Images/Getty Images)

“After careful consideration of multiple proposals, the Board of Directors unanimously decided that remaining an independent public company provides the best opportunity to maximize shareholder value over the long term,” the company said.

The company said the adoption of artificial intelligence and the decline in Google search traffic caused a significant decline in traffic and revenue.

Chegg’s headquarters are in Santa Clara, California, United States (David Paul Morris/Bloomberg via Getty Images/Getty Images)

“The new realities of artificial intelligence and a decline in traffic from Google to content publishers have led to a significant decline in Chegg’s traffic and revenue,” the company stated.

In order to adapt, Chegg said it will streamline operations to cut costs and invest more in what it calls the fastest-growing region — a “skills market” worth more than $40 billion.

The Google logo and the words Artificial Intelligence are shown in this illustration. (Reuters/Dado Rovik/Illustration/Archive photo/Reuters Photos)

Chegg said it plans to expand beyond traditional tuition assistance into a “skills-focused business organization” and offer programs in language learning, workplace readiness and AI-related skills.

These new sectors are expected to generate approximately $70 million in revenue in 2025 and achieve double-digit growth in 2026.

Click here to get FOX Business on the go

Chegg reiterated its third-quarter guidance and warned investors of “risks and uncertainties” associated with the evolving AI landscape — including “the impacts of AI technology on our business and the economy generally” and its ability to “stabilize the business by attracting new learners” amid declining traffic.