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Zovio and Chegg Revenue Stream Earnings and Future Implications

It is becoming more apparent that this pandemic will change human behavior for a long time to come even after the virus has been resolved, and the online learning trend will only continue to grow due to the accessibility, convenience, and affordability of eLeanring platforms and associated services. We decided cover two companies that we believe will continue to make waves in this space: Zovio and Chegg.

Let’s start with the lesser known education technology services company, Zovio, based out of San Diego and  valued at a market cap of $129.2 million. They have 4 main components to their ecosystem

Ashford University – A high quality virtual learning university. They’re partnering with University of Arizona for their global campus – the acquisition is expected to close by the end of the year (expect the stock to jump on good news). There will be a long-term strategic services agreement – Zovio will continue to provide its enterprise education technology which uses advanced data analytics to provide personalized and innovative online education to enhance the learning experience and student success. If fully approved, this acquisition should solidify credibility and create opportunities to build further relationships.

Tutor Me – Online tutorship service. Connect with an online tutor in less than 30 seconds, 24/7. It doesn’t matter if you want help with a single problem or you need a 3-hour lesson. TutorMe has more than 115 university partners and the Covid pandemic is driving increased demand for online tutorship services. In Q2, customer usage increased 350% and partner usage and 850% year-over-year. TutorMe is expanding their partnership with McGraw Hill which is likely to expose the service to many millions of students.

Fullstack Academy – award-winning, immersive coding bootcamp offering web development and cybersecurity training to students looking for competitive paying and in-demand tech jobs. Fullstack offers full- and part-time programs in New York and Chicago, in addition to working with colleges and universities to expand their program offerings and close technological skills gaps in their local communities. They added 4 new partnerships during the Quarter – Cal Tech, University of Oklahoma, Virginia Tech and San Jose State. Coding and Cyber security bootcamps and courses are high in demand because the tech space and security space is growing. Zovio claims that by end of 2020 Fullstack Academy is likely to have double the partnerships they had expected, and this track record of theirs to outperform will likely continue.

Learn @Forbes – Learn@Forbes provides access to 700 self-paced courses, certifications, and specially-curated learning programs in leadership, management, marketing, human resources, and other in-demand skills. Learn@Forbes for Business works with employers to create custom employment development programs that employees can access 24/7. At the end of Q2 2,400 active subscribers, an increase of about 30% from the first quarter.

Now let’s take a look at how a more established company in the same space, Chegg, is bringing in the revenue with their offerings…

Rent & Buy TextbooksChegg offers textbook rentals at a very affordable price, and as long as the students send their textbooks back in time it is a great deal for them.

Chegg Study – Buy step-by-step solutions to textbook questions including videos and practice sets. Since remote learning will be popular, students will certainly be purchasing solutions. What if they don’t have the exact problem in their database that one is searching for? Well, they have a great solution for that – Expert Q/A allows you to send in a photo of the problem and with a quick turnaround time, an expert will assist with the solution.

Chegg Writing – Allows you to scan your document through their system to spot if you copied too much from a legit source; keeps you from getting in trouble from accidental plagiarism. Teachers can also use this tool to catch students plagiarizing. They also provide an advanced grammar and spelling error checker.

Flashcards – Resources to help you study for exams including AP exams.

Math Solver – Detailed explanations to all your math problems including step-by-step method solutions.

Online Tutor Service – Online tutors in virtually all subjects accessible around the clock. Parents will likely gladly open their pocketbooks and pay for online tutorship services to ensure that their child is getting a good education.

On August 3rd for Q2 Chegg announced that it brought in 153 million in revenue, beating estimates by over 30 million and that’s a 63% increase year-over-year, resulting in a $0.37 EPS which beat estimates by $.05 EPS. There were 3.7 million Chegg Services subscribers which is a 67% increase from the previous year. They also raised next quarters guidance which is great news. Many times companies downplay their future projections so that they can beat them and drive stock market prices higher, but the confident ones continually raise guidance.

Something to look out for is international expansion – Chegg has been investing internationally and according to CFO Andy Brown, this expands beyond just English speaking countries. They are heavily involved in the STEM fields (Science, Tech, Engineering, and Math) and they see north of 100 million students are addressable with their services.

Check out the two videos below for in-depth discussion about these two companies.

***Disclaimer: This article/video is based merely on opinions and should be used for entertainment purposes only. I am not a financial advisor. 

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