Chegg’s CEO as soon as mentioned he is the ‘poster baby’ for AI shock. Now, the corporate is slashing 45% of employees

• The edtech firm will remove 388 positions globally, about 45% of its employees, in a serious restructuring aimed toward reducing prices and reshaping operations for an AI-first market setting.​
• Chegg attributed the cuts to generative AI’s speedy adoption amongst college students and decreased Google referrals to content material publishers, which it mentioned have materially eroded demand for its companies.​
• The corporate expects restructuring expenses of roughly $15 to $19 million by early 2026, alongside plans to scale back 2026 non-GAAP bills by roughly $100 to $110 million, in keeping with Reuters protection summarizing the corporate’s assertion.​

• Government chairman Dan Rosensweig has been reinstated as CEO, changing Nathan Schultz, who will function an government adviser as a part of the overhaul.​
• Rosensweig beforehand led Chegg for greater than a decade, and his return accompanies the pivot to a leaner working mannequin below strain from AI-native rivals and altering pupil behaviors.​

• Chegg’s management has lengthy acknowledged AI’s disruptive pressure: in July 2023, Rosensweig informed a Fortune viewers he had develop into a “poster baby” for the disruption of AI after Chegg’s inventory plunged 48% when it warned that ChatGPT was impacting new buyer progress.​
• In that Fortune dialogue on the Brainstorm Tech convention, he outlined “CheggMate,” a generative AI studying assistant skilled on the corporate’s massive corpus of verified Q&A, pitching a customized, reliable tutor that adapts to a pupil’s wants and context.​

• Chegg’s warning about ChatGPT’s impression triggered a dramatic inventory selloff, and the corporate’s counter-strategy centered on constructing a dependable, student-specific AI assistant built-in into its core product expertise.​
• That occasion spotlighted a broader rigidity in AI and training—pupil reliance on AI instruments for solutions versus deeper studying—whereas noting Chegg’s stance that integrity and efficient pedagogy should evolve alongside know-how.​

• Chegg’s legacy strengths—search-driven discovery, a paid homework-help library, and knowledgeable Q&A—had been undermined as college students shifted to free, general-purpose chatbots and as search platforms surfaced AI-generated solutions, lowering referral site visitors to content material websites.​
• The corporate frames the restructuring as essential to ship studying companies on a a lot decrease price base whereas it retools product experiences round generative AI, although the timing and depth of product-market restoration stay unsure.​

• Chegg concluded a strategic overview and opted to proceed working independently after weighing options akin to a sale or going non-public, a choice disclosed alongside the workforce cuts and management change.​
• Shares have been below extreme strain over the previous two years, reflecting investor skepticism in regards to the velocity and effectiveness of Chegg’s AI pivot amid intensifying competitors from common and specialised AI tutors.​

• Generative AI has reset pupil expectations on immediacy, personalization, and value—compressing the worth of static reply repositories and transactional tutoring in favor of conversational, context-aware assistants.​
• Fortune’s earlier reporting captured this inflection: Chegg’s path ahead hinges on reworking AI from an exterior headwind right into a native functionality that may ship trusted solutions, adapt to pupil wants, and uphold educational integrity at scale.

​For this story, Fortune used generative AI to assist with an preliminary draft. An editor verified the accuracy of the knowledge earlier than publishing.