Chegg will cut 441 employees, nearly a quarter of its workforce, as the struggling education technology company scrambles to reinvent itself in an era dominated by free artificial intelligence chatbots.
The Santa Clara firm announced the reductions Monday through a shareholder letter from newly installed CEO Nathan Schultz, who assumed the top post on June 1. Schultz inherits a business in freefall. Chegg’s stock has cratered more than 97% from its 2021 peak, while profit margins collapsed throughout 2023.
“We are not continuing business as usual,” Schultz wrote.
The layoffs span three countries. Roughly 35% of affected workers sit in the United States, 20% in Israel, and the rest in India, where most of the cuts hit content management teams. About one-fifth of the eliminated roles fall under skills training. The remaining 39% spread across other departments. All terminations will finish by the end of 2024.
This marks Chegg’s second major layoff round in about a year. The company previously dismissed 80 workers, according to a Securities and Exchange Commission filing.
Schultz framed the restructuring as a necessary pivot. “We needed to become a leaner, more efficient, uncomplicated, and quicker-shifting company,” he wrote. The new strategy aims to offer students “360 degrees of individualized support,” bundling academic help with mental wellness resources, career guidance, and financial literacy training.
Chegg’s troubles trace directly to ChatGPT’s viral launch in late 2022. The OpenAI chatbot attracted the same core demographic: students hunting for homework answers. By May 2023, then-CEO Dan Rosensweig admitted the AI tool was eating into customer acquisition. The company stopped forecasting future revenue entirely.
That admission represented a stunning reversal. In 2021, Forbes profiled Chegg under the headline “This $12 Billion Company Is Getting Rich Off Students Cheating Their Way Through Covid.”
Schultz now faces the challenge of convincing students to pay for services that increasingly resemble what AI offers at no cost. Whether a leaner Chegg can compete remains the central question for investors and employees alike.
