What's Happening?
Chegg Inc. has announced a significant restructuring plan that involves laying off 45% of its global workforce, totaling 388 employees. The company attributes this decision to substantial revenue declines caused by the 'new realities of AI' and reduced
traffic from Google to content publishers. As part of the restructuring, Executive Chairman Dan Rosensweig will reassume the roles of President and Chief Executive Officer, while Nathan Schultz, the current President and CEO, will transition to an Executive Advisor role. Chegg aims to deliver its academic learning services with a substantially lower cost structure, expecting to reduce 2026 non-GAAP expenses by approximately $100-$110 million. The company anticipates incurring $15-$19 million in charges, primarily related to cash severance payments for the dismissed employees.
Why It's Important?
This restructuring highlights the growing impact of artificial intelligence on traditional business models, particularly in the education sector. Chegg's decision to cut nearly half of its workforce underscores the challenges companies face in adapting to technological advancements that disrupt established revenue streams. The move is significant for stakeholders, including employees, investors, and the broader educational services industry, as it reflects a shift towards more cost-effective operations and a focus on high-growth opportunities like the $40 billion+ skilling market. Chegg's pivot to business-to-business organizations and AI-related skills courses indicates a strategic realignment to capture emerging market opportunities.
What's Next?
Chegg plans to share additional details about the restructuring during its third-quarter 2025 earnings call on November 10, 2025. The company is focusing on increasing cash flow to invest in its highest growth opportunities, such as its professional language learning platform Busuu and AI-related skills courses. These initiatives are projected to generate approximately $70 million in revenue in 2025. As Chegg navigates this transition, stakeholders will be watching closely to see how the company adapts to the evolving educational landscape and whether it can successfully leverage AI to enhance its offerings and improve financial performance.
Beyond the Headlines
The restructuring at Chegg raises broader questions about the ethical and societal implications of AI-driven changes in employment. As companies increasingly rely on AI to streamline operations, the workforce may face challenges related to job security and the need for reskilling. This development could prompt discussions on the role of AI in shaping future employment trends and the importance of balancing technological innovation with workforce stability.
