Chegg Cuts 388 Jobs in Major AI-Driven Restructuring

Education technology company Chegg eliminated 388 positions on October 27, 2025, representing 45% of its workforce in one of the most significant layoffs in the edtech sector this year. The Santa Clara-based company announced the dramatic workforce reduction alongside the appointment of a new CEO as part of a comprehensive overhaul aimed at addressing mounting pressure from artificial intelligence disruption in the online learning market.

The sweeping job cuts reflect Chegg's struggle to maintain relevance as AI-powered study tools and chatbots increasingly compete with its traditional homework help and textbook rental services. The company has faced declining subscriber numbers and revenue challenges as students turn to free AI alternatives for academic assistance.

Context of the Decision

Chegg's massive workforce reduction stems from the fundamental shift in how students access educational support. The rise of sophisticated AI tools like ChatGPT and other generative AI platforms has severely impacted demand for Chegg's core subscription services. Students now rely on free AI chatbots for homework help, study guidance, and explanations that previously required paid subscriptions to Chegg's platform.

The company's leadership cited the need to streamline operations and pivot toward AI-integrated services to remain competitive. This strategic overhaul involves significant cost reduction measures, with personnel expenses representing the largest operational cost for the technology company. The layoffs are part of a broader restructuring plan designed to position Chegg for long-term sustainability in an AI-dominated educational landscape.

Impact on Operations

The layoffs affected multiple departments across Chegg's operations, with significant reductions in customer service, content creation, and engineering teams. The company's San Francisco Bay Area headquarters bore the brunt of the cuts, though specific departmental breakdowns were not immediately disclosed.

Engineering and product development teams faced substantial reductions as Chegg consolidates its technology initiatives around AI integration. The content creation division, responsible for developing study materials and textbook solutions, also experienced major cuts as the company shifts toward automated content generation.

Customer support operations were streamlined significantly, reflecting reduced subscriber volumes and the company's move toward AI-powered customer service solutions. The layoffs also impacted marketing and business development roles as Chegg narrows its focus on core profitable segments.

Company Financial Background

Chegg went public in 2013 and experienced rapid growth during the COVID-19 pandemic as remote learning drove demand for digital educational tools. The company's stock peaked in early 2021 when it reached a market capitalization exceeding $12 billion. However, shares have declined dramatically since then as competition intensified and growth stagnated.

The company's subscription model, which once generated steady revenue from millions of students, has faced increasing pressure. Quarterly earnings reports throughout 2024 and 2025 showed declining subscriber numbers and reduced average revenue per user. The financial strain necessitated aggressive cost-cutting measures to maintain profitability and preserve cash reserves.

Chegg's revenue model relied heavily on recurring subscriptions for homework help, textbook solutions, and tutoring services. As AI alternatives gained popularity, the company struggled to justify its subscription fees, leading to customer churn and reduced pricing power.

Industry Outlook

The education technology sector faces widespread disruption from AI advancement. Several edtech companies have announced similar workforce reductions as they adapt to changing market dynamics. Traditional online learning platforms are scrambling to integrate AI capabilities while maintaining competitive advantages.

Industry analysts predict continued consolidation in the edtech space as companies with outdated models struggle to compete with AI-powered alternatives. The shift represents a fundamental transformation in how educational technology delivers value to students and institutions.

Companies that successfully integrate AI into their platforms while maintaining human expertise are expected to emerge stronger. However, those relying on traditional content delivery models face continued pressure to innovate or risk obsolescence.

Conclusion

Chegg's dramatic workforce reduction signals the company's recognition that incremental changes cannot address the existential threat posed by AI disruption. The appointment of new leadership alongside these layoffs suggests a comprehensive strategy to rebuild the company around AI-integrated services. Success will depend on Chegg's ability to leverage its brand recognition and educational expertise while embracing the technological transformation reshaping the industry.

Chegg Cuts 248 Jobs in Major Workforce Reduction as EdTech Sector Faces Continued Pressure

Chegg, the online education platform, laid off 248 employees on May 12, 2025, representing 22% of its total workforce. The significant workforce reduction reflects ongoing challenges in the education technology sector as companies struggle with declining user engagement and increased competition from AI-powered learning tools.

The layoffs come as Chegg continues to face pressure from changing student behaviors and the rise of generative AI platforms that offer free homework assistance. The company, which built its business model around subscription-based study help and textbook rentals, has seen its market position eroded by competitors offering similar services at lower costs or for free.

Context of the Decision

The workforce reduction represents Chegg's effort to streamline operations and reduce costs amid declining revenue growth. The company has struggled to maintain its subscriber base as students increasingly turn to free AI tools like ChatGPT for homework help and study assistance. This shift has forced Chegg to reevaluate its business model and operational structure.

The timing of the layoffs aligns with broader cost-cutting measures across the tech industry, where companies are prioritizing profitability over growth. Chegg's decision to reduce its workforce by more than one-fifth signals the severity of challenges facing the company as it attempts to adapt to a rapidly changing educational landscape.

Impact on Operations

The layoffs likely affected multiple departments across Chegg's operations, including customer service, content development, and engineering teams. Given the scale of the reduction, both technical and non-technical roles were impacted. The company's content creation teams, responsible for developing study materials and solutions, may have been particularly affected as Chegg looks to automate more of its content generation processes.

Sales and marketing departments also likely experienced cuts as the company refocuses its customer acquisition strategy. The reduction in workforce will require remaining employees to take on additional responsibilities while the company works to maintain service quality for its existing subscriber base.

Company Financial Background

Chegg went public in 2013 and experienced significant growth during the COVID-19 pandemic as students shifted to remote learning. The company's stock price peaked in early 2021, reaching over $100 per share, but has since declined dramatically as growth slowed and competition intensified.

The company's revenue model relies heavily on subscription services, including Chegg Study and Chegg Writing, which provide students with textbook solutions, expert Q&A, and writing assistance. However, monthly active users have declined in recent quarters, putting pressure on the company's financial performance and forcing management to implement cost reduction measures.

Chegg has also faced criticism and legal challenges related to academic integrity concerns, with some educational institutions blocking access to its services. These challenges have further complicated the company's growth prospects and contributed to investor skepticism about its long-term viability.

Industry Outlook

The education technology sector has experienced significant turbulence following the pandemic-driven boom. Many EdTech companies that saw explosive growth during remote learning periods are now grappling with normalized demand and increased competition. The emergence of sophisticated AI tools has particularly disrupted traditional homework help and tutoring services.

Companies like Coursera and Udemy have also faced similar challenges, though they have diversified their offerings to include professional development and corporate training. Chegg's focus on the college student market has made it more vulnerable to shifts in student behavior and preferences.

The rise of free AI-powered study tools has fundamentally altered the competitive landscape, forcing established players to innovate rapidly or risk obsolescence. Many EdTech companies are now investing heavily in AI integration to remain relevant, but this transition requires significant resources and strategic repositioning.

Conclusion

Chegg's decision to eliminate 248 positions reflects the harsh realities facing traditional EdTech companies in an AI-driven market. The substantial workforce reduction indicates the company's recognition that significant structural changes are necessary to remain competitive. Moving forward, Chegg will need to successfully integrate AI capabilities while maintaining its value proposition to students and educational institutions. The company's ability to navigate this transition period will determine whether it can regain its footing in the evolving education technology landscape.