Chegg has announced another wave of mass layoffs, cutting 319 employees as the once dominant homework help platform fights to survive the generative AI revolution. The Santa Clara company revealed Tuesday that 21% of its workforce will disappear in a restructuring that signals just how deeply chatbots like ChatGPT have disrupted its business model.
The news landed alongside a devastating quarterly earnings disclosure. Chegg hemorrhaged more than $212 million between July and September, pushing its total losses for the year to $830 million through the end of that period. CEO Nathan Schultz described the moment as a “testing time” in prepared remarks filed with the Securities and Exchange Commission.
Schultz pointed squarely at Google’s new AI-generated search summaries as a primary antagonist. Instead of directing users to outside websites, Google now extracts and presents information directly on its results page, a shift Schultz characterized as transforming the search giant “from being a search origination point to the destination.”
Meanwhile, generative AI services present a second, perhaps more existential threat. Students increasingly view free tools like ChatGPT as “strong alternatives” to Chegg’s paid subscriptions. A recent Wall Street Journal investigation documented the toll: over 500,000 subscribers have abandoned the platform since ChatGPT launched in late 2022. Many of those lost customers had been paying nearly $20 per month.
The company’s stock chart tells a dramatic rise and fall story. Chegg’s valuation soared during pandemic-era remote learning, reaching roughly $12 billion by early 2021. That figure has since cratered to approximately $159 million, a brutal collapse that mirrors the broader upheaval in digital education.
Schultz insisted the company plans to adapt rather than retreat. Chegg has reportedly built an “arena” for testing various AI models and intends to “integrate AI into the full learning journey.” The current layoffs, combined with June’s elimination of 441 positions, aim to deliver between $60 and $70 million in savings during 2025.
Revenue has now declined for three consecutive years during the July to September period. Spokesperson Candace Sue confirmed that all affected employees received severance packages and job placement support. Whether these cost-cutting measures can stabilize the business remains an open question as the fundamental value proposition of subscription-based homework assistance continues to erode.
