Chegg revealed a far-reaching restructuring plan Monday that will cut 248 positions—about 22% of its staff—as the formerly dominant education site struggles to compete with quickly emerging artificial intelligence products that are transforming how students find academic assistance.
The company’s sudden shrinking is more than just employee cuts. Chegg will also close all U.S. and Canadian offices within 2025 while slashing expenses on marketing, product development, and administrative activities.
“We’re convinced that larger economic forces will continue to place pressure on our company, and we expect to see business conditions worsen further before they eventually get better,” CEO Nathan Schultz said in the release.
The overhaul is in response to the existence threat posed by AI tools like ChatGPT and Gemini AI by Google, providing instant responses and personalized assistance at no or minimal cost. The tools have radically altered student behavior, with a mass shift away from traditional homework assistance websites.
Recent figures also highlight the dilemma of the firm. Chegg reported a jaw-dropping 31% fall in subscribers to 3.2 million in the first quarter of 2025 as revenue fell a staggering 30% to $121 million during the period.
Impact of AI on Education Support
The academic help market has completely changed over the last year. Google’s AI Summaries now provide instant answers to questions within search results, rather than pointing over to sites like Chegg.
Meanwhile, rivals like OpenAI and Anthropic have moved into the education market in full force with free or discounted use of their AI products.
Chegg’s interactions with the AI behemoths have turned increasingly contentious. The company just sued Google, alleging that Google’s AI-powered summaries have sucked up demand from original content sources.
“What we’re witnessing is a fundamental change in how students are interacting with learning content,” education technology analyst Maya Chen said. “If AI can provide customized explanations for free in seconds, then companies like Chegg must either evolve their value proposition or face ongoing decline.”
Financial Impacts and Future Directions
The restructuring will cost Chegg $34-38 million, with most of the charges in the second and third quarters of 2025. The company estimates, however, that there will be substantial cost savings, $45-55 million in 2026 and as much as $110 million.
These savings can create leeway, but Chegg’s market share has fallen drastically from its heights of the pandemic years. It has lost roughly 90% of its market capitalization since its 2013 IPO, with especially uneven performance in the last few months.
Chegg management is also cautious about near-term prospects, warning investors that things may get worse before a recovery takes hold. The company’s troubles are part of broader disruption in the education technology sector, where AI-powered tools are forcing incumbent players to rethink their core offerings.
For students who have become dependent on Chegg, this reorganization represents a shift toward AI-driven academic assistance. For investors and onlookers, it is a lesson in how rapidly technology disruption can topple profitable business models, even in a sector that has historically been highly resistant to disruption.
As Chegg implements these significant cuts and office closures in the coming months, the edtech industry watches closely to see if the company can successfully transition in a more AI-focused world.
