Chegg Cuts Staff, CEO Replaced Amid AI Disruption

Chegg, an educational technology company, is undergoing significant restructuring due to the impact of artificial intelligence and reduced traffic from Google. The company is laying off approximately 45% of its workforce, which equates to 388 employees globally, to reduce costs and streamline operations.

Furthermore, Chegg is bringing back Dan Rosensweig as CEO, replacing Nathan Schultz, who will now serve as an executive advisor. These changes reflect the challenges Chegg faces as AI-powered tools gain traction in the education sector.

Highlights

• Chegg is laying off 45% of its workforce (388 employees) due to AI's impact and reduced Google traffic.
• Dan Rosensweig returns as CEO, replacing Nathan Schultz, to navigate the company through these challenges.
• The company expects to incur $15-19 million in restructuring charges in Q1 2026 and $12-16 million by Q4 2026.

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Top 5 Key Insights

• AI Disruption: Chegg's core business of providing homework help and tutoring is being significantly disrupted by free and readily available AI tools. This shift has led to a decline in traffic and revenue for the company, forcing it to adapt to the new landscape.

• Cost Reduction: The layoffs are part of Chegg's broader strategy to reduce costs and streamline operations in response to declining revenues. The company anticipates incurring significant restructuring charges over the next year as it realigns its business.

• Leadership Change: The return of Dan Rosensweig as CEO signals a strategic shift for Chegg. Rosensweig previously led the company from 2010 to June 2024 and is expected to bring stability and experience as Chegg navigates its challenges.

• Strategic Review Conclusion: Chegg had initiated a strategic review to explore options, including a sale or take-private transaction. The company has concluded the review and decided to continue operating as an independent entity.

• Stock Performance: Chegg's stock price has fallen significantly, reflecting investor concerns about the company's future prospects in the face of AI disruption. The company's shares have declined by more than 10% this year, following an 85.6% drop in 2024.

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Expert Insights

Reuters: "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".

Value The Markets: "Chegg's layoffs and restructuring efforts showcase the company's struggle against the rapid rise of AI tools, which could keep shareholders on edge about long-term profitability".

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Wrap Up

Chegg's struggles highlight the significant impact AI is having on various industries, especially education technology. The company's response through layoffs, leadership changes, and strategic realignment reflects the need for businesses to adapt quickly to technological advancements.

The future of Chegg depends on its ability to innovate and integrate AI into its offerings to remain competitive in a rapidly evolving market.

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Author

Kenji Tanaka - A technology futurist and digital strategist based in Tokyo, specializing in emerging tech trends and their impact. He explains complex innovations and the future of digital skills for Enlightnr readers.