Chegg to slash 45% of workforce, bring back old CEO as ‘new realities of AI’ squash revenue

Online homework helper Chegg said Monday that it will slash 45% of its workforce and bring back its previous CEO as it grapples with the “new realities of AI,” including reduced web traffic and revenue, following significant cuts earlier this year.

The education site – which offers textbook rentals and tutoring – said it will cut 338 employees as Google’s AI overviews squash web traffic and students flock to AI chatbots like ChatGPT.

Also on Monday, the company said Dan Rosensweig will return as CEO effectively immediately – replacing his successor, Nathan Schultz, who will stay on as an executive advisor.

Rosensweig, formerly Yahoo’s chief operating officer, joined Chegg as chief executive in 2010. He stepped down in April 2024.

“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,” the company said in a statement Monday.

“As a result, and reflecting the company’s continued investment in AI, Chegg is restructuring the way it operates its academic learning products.”

Chegg also announced that it plans to remain a standalone company following a strategic review process that launched earlier this year.

“After thoughtful consideration of multiple proposals, the board unanimously determined that remaining an independent public company offers the best opportunity to maximize long-term shareholder value,” the company said.

Chegg, which was founded 20 years ago, has attempted to keep up with the times, adding new tools to its site like AI-generated flashcards to help students study.

But firms like OpenAI and Anthropic have offered discounts and deals on their language models to win over college students.

In February, Chegg filed a federal antitrust lawsuit against Google, alleging its AI summaries have hurt site traffic and sales. 

Google has argued its summaries – which automatically populate at the top of search results – send web traffic to “a greater diversity of sites.”

The latest cuts are expected to save Chegg between $100 million and $110 million, and result in charges of approximately $15 million to $19 million. 

The company already slashed 22% of its workforce in May, blaming the cuts on the rise of AI. 

At the time, it announced plans to shutter its physical offices in the US and Canada by the end of the year, as well as cut back on new product development and reduce administrative costs.

In April, the New York Stock Exchange warned Chegg that it was at risk of being delisted as its stock traded at about 60 cents. Firms receive a warning when trading below $1 for 30 days in a row.

The stock jumped back over $1 by May.

Shares in Chegg fell 1% premarket Monday. The stock has dropped about 14.3% so far this year.