What's Happening?
Chegg, Inc., a prominent educational technology company, has announced a significant restructuring plan that includes the reduction of approximately 388 positions, representing 45% of its global workforce. This decision, made public on October 27, 2025,
is largely influenced by the growing impact of artificial intelligence on the education sector, including decreased traffic from search engines and the rise of generative AI tools like ChatGPT. Chegg, known for its textbook rentals and online tutoring services, had a workforce of 1,271 employees as of December 31, 2024. The company has completed a strategic review, advised by Goldman Sachs, and decided to remain an independent public entity to better position itself in the expanding skilling market, which is projected to exceed $40 billion. Chegg is shifting towards a business-to-business model focusing on professional language learning and AI-related skills development, expecting significant revenue growth in these areas.
Why It's Important?
The restructuring at Chegg highlights the transformative impact of artificial intelligence on the educational technology industry. As AI tools become more prevalent, companies like Chegg are forced to adapt their business models to remain competitive. The shift towards a business-to-business model and focus on AI-related skills development reflects broader industry trends and the growing demand for workplace readiness and professional language learning. This move could potentially benefit Chegg by tapping into the lucrative skilling market, projected to grow significantly in the coming years. However, the workforce reduction also underscores the challenges faced by employees in the sector, as AI continues to reshape traditional roles and functions.
What's Next?
Chegg's leadership changes are part of the restructuring, with Dan Rosensweig reassuming the role of President and CEO, replacing Nathan Schultz, who will transition to an advisory position. The company anticipates non-GAAP expense reductions of $100 million to $110 million in 2026, while incurring charges for severance payments. Chegg has reaffirmed its third-quarter 2025 revenue and adjusted EBITDA guidance, with further details expected during its earnings call on November 10, 2025. The company aims to return to revenue growth and improve financial stability amid the evolving market conditions.
Beyond the Headlines
Chegg's restructuring reflects broader industry pressures as AI tools reshape student access to academic support. The company's lawsuit against Google over AI-generated search summaries highlights the competitive challenges faced by educational technology firms. As AI continues to evolve, companies must navigate ethical and legal dimensions, balancing innovation with the impact on employees and traditional business models.
