Online education platform Chegg has announced plans to lay off around 22% of its workforce—amounting to 248 employees—as part of a broad restructuring effort aimed at cutting costs and addressing the growing impact of artificial intelligence tools in the education space.
The company, which offers textbook rentals, tutoring, and homework help, revealed the decision on Monday, citing a significant drop in web traffic and increasing student reliance on AI-powered alternatives such as OpenAI’s ChatGPT.
Chegg said that the expansion of Google’s AI Overviews and the popularity of tools like Gemini have kept users within Google’s own ecosystem, negatively affecting traffic to external educational platforms. The firm also noted that other AI developers, including Anthropic, have been offering free access to students and academics, intensifying the competition.
In addition to the layoffs, Chegg will be closing its offices in the United States and Canada by the end of 2024. The company said the restructuring would also involve cuts to marketing, product development, and general administrative functions.
The changes are expected to result in charges of between $34 million and $38 million, mostly in the second and third quarters. However, the company anticipates long-term cost savings of $45 to $55 million in 2025 and up to $110 million by 2026.
The announcement came alongside Chegg’s first-quarter financial results, which showed a sharp 31% decline in subscribers to 3.2 million and a 30% drop in revenue to $121 million. Revenue from subscription services alone fell to $108 million.
Earlier this year, Chegg filed a lawsuit against Google, accusing the tech giant of harming publishers by redirecting traffic away from original content and reducing user engagement with traditional educational platforms.
As of the end of 2023, Chegg employed 1,271 staff.
