Chegg said on Monday it would lay off about 45% of its workforce, or 388 employees, as the “new realities” of artificial intelligence and diminished traffic from internet search have led to plummeting revenue.

The online education company, founded 20 years ago, has been hit by the rise of generative AI software tools, such as OpenAI’s ChatGPT, which have become increasingly popular among students. Chegg also sued Google in February, arguing that AI summaries of search results have hurt its traffic and sales.

The company reiterated that claim on Monday, saying AI and “reduced traffic from Google to content publishers” have damaged its business.

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

The cuts come after Chegg in May laid off 22% of its workforce, citing increasing adoption of AI.

Chegg went public in 2013 and saw its stock price hit a high of $113.51 in February 2021, boosted by the Covid pandemic and a shift to remote learning. The stock has since lost 99% of its value. Its market cap peaked at about $14.7 billion, before falling to roughly $156 million.

The company offers textbook rentals, homework help and tutoring, as well as a newer suite of AI tools like a service that automatically generates flashcards.

As part of Monday’s announcement, the company said Dan Rosensweig will return as CEO effective immediately, replacing Nathan Schultz, who will step down from the role and remain as an executive advisor to Rosensweig and Chegg’s board.

Rosensweig, a former top executive at Yahoo who joined Chegg as CEO in 2010, stepped down from the post in April 2024, handing the job to Schultz, who was operating chief at the time.

Chegg also said it plans to remain a standalone company, ending a strategic review process that began 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.

In April, Chegg was at risk of being delisted from the New York Stock Exchange. Chegg received the warning when the stock was trading at about 60 cents. Trading below $1 over a consecutive 30 trading-day period triggers a warning. By May, the stock was back over $1.

— CNBC’s Ari Levy contributed to this report.

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