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Chegg Announces Major Layoffs and Office Closures as AI Competition Intensifies

The education tech company will cut 22% of its workforce, shut U.S. and Canada offices, and restructure in response to declining revenue and subscriber losses driven by AI-powered alternatives.

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Overview

  • Chegg is laying off 22% of its workforce, affecting 248 employees, as part of a cost-cutting restructuring plan.
  • The company will close its U.S. and Canada offices by the end of 2025 and terminate its Santa Clara headquarters lease early, saving $5.3 million in obligations.
  • Chegg reported a 31% drop in subscribers to 3.2 million and a 30% revenue decline to $121 million in Q1 2025 due to competition from AI tools like ChatGPT and Google’s AI Overviews.
  • The restructuring will incur charges of $34–$38 million in the next two quarters but is expected to save $45–$55 million in 2025 and $100–$110 million in 2026.
  • Chegg’s antitrust lawsuit against Google, filed in February, alleges that Google’s AI Overviews harm web traffic and subscription-based content providers like Chegg.