Chegg Inc., a Santa Clara-based online learning platform, said Monday it will cut about 45% of its workforce – roughly 388 employees – as it confronts what it calls "the new realities of AI and reduced traffic from Google to content publishers."
In its official statement, the company said the restructuring plan reflects "a significant decline in Chegg’s traffic and revenue," which it has attributed to shifts in generative AI and changing search patterns.
Chegg said the layoffs will reduce reduce 2026 non-GAAP expenses by about $100 million to $110 million and result in charges of $15 million to $19 million, mostly in cash severance.
It expects to provide more information during its third-quarter earnings call on Nov. 10.
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Executive Chairman Dan Rosensweig will return as president and chief executive officer, effective immediately, as part of the overhaul. Nathan Schultz, who succeeded Rosensweig in 2024, will step down and serve as an executive advisor to Rosensweig and the board.
"As I return to the CEO role, I’m confident Chegg has a bright future, and I look forward to exploring all paths to drive growth and enhance shareholder value," Rosensweig said in the release.
The company confirmed it will remain an independent public company after months of reviewing options, including a sale or going private.
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"After thoughtful consideration of multiple proposals, the Board of Directors unanimously determined that remaining an independent public company offers the best opportunity to maximize long-term shareholder value," the company said.
The company said AI adoption and reduced Google search traffic have caused a significant drop in traffic and revenue.
"The new realities of AI and reduced traffic from Google to content publishers have led to a significant decline in Chegg’s traffic and revenue," the company stated.
To adapt, Chegg said it will streamline operations to lower costs and invest more in what it calls its fastest-growing area – the $40 billion-plus ‘skilling market.’"
Chegg said it plans to expand beyond traditional study help into a "skilling-focused business-to-business organization" offering programs in language learning, workplace readiness and AI-related skills.
These new segments are projected to bring in about $70 million in 2025 revenue and achieve double-digit growth in 2026.
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Chegg reiterated its third-quarter guidance and cautioned investors about "risks and uncertainties" tied to the evolving AI landscape – including "the effects of AI technology on our business and the economy generally" and its ability to "stabilize the business by attracting new learners" amid traffic declines.
