SANTA CLARA, 27 October 2025 – Ed-tech company Chegg Inc. has announced a sweeping restructuring initiative as it grapples with the rapid advance of generative-AI tools, which are disrupting its core homework-help and textbook-rental business model. The company will cut 388 jobs globally, roughly 45% of its workforce, and has reinstated its former CEO, Dan Rosensweig, replacing current CEO Nathan Schultz, who will assume an advisory role.
The Forcing Function: AI and Traffic Losses
Chegg cited “the new realities of AI and reduced traffic from Google to content publishers” as principal reasons behind the sharp drop in usage and revenue. According to the company, these trends have challenged its business model built around step-by-step homework help, textbook rentals and tutoring services.
Costs, Impact & Strategy Pivot
The restructuring is expected to incur charges of about US$15 – 19 million in the first quarter of 2026, and US$12 – 16 million by the fourth quarter, as Chegg realigns operations and reduces its workforce.
In its public statement, the company reaffirmed it would continue as a standalone entity after concluding its strategic review, pulling back from prior speculation of a sale or privatisation.
Regional & Asian Investor Implications
Although Chegg is U.S.-based, the restructuring carries lessons and signals for Asian markets and investors:
- Industry disruption: The move underscores how AI adoption is reshaping the ed-tech sector globally—businesses offering content, homework help and tutoring must rethink models as students turn to free or partially free AI tools.
- Traffic & monetisation risks: Chegg’s drop in traffic and demand mirrors a broader risk for firms dependent on online traffic, search referrals and subscription models, a key consideration for regional ed-tech firms in Southeast Asia.
- Strategic leadership shifts: Bringing back Dan Rosensweig signals a return to veteran leadership during a turnaround phase, investors should note that leadership changes often accompany major shifts in strategy, business model and cost structure.
- Cost-structure and margins: With large-scale job cuts and cost provisions, timing for profit recovery is now further out, making cash-flow, margin and runway key focus points for investors.
What to Watch Next
For Asian stakeholders, the key developments to monitor include:
- How Chegg adapts its service offering in a world where generative-AI tools are available to students.
- Whether the company shifts into new geographies, product lines (e.g., credentialing, career services) or partnerships that align to the changed demand dynamics.
- Whether regional ed-tech companies emulate or diverge from Chegg’s strategy, some may accelerate pivot to AI-assisted tutoring models, others may face similar headwinds.
- The broader sentiment in ed-tech valuations, which may be under pressure if Chegg’s turnaround takes longer than expected.
