The move to distance learning sparked a business boost for Chegg in 2020, and CEO Dan Rosensweig doesn’t see the exponential growth slowing significantly in the new year.
“When the pandemic is over, we don’t expect any significant slowdown in growth as this is not just the trend, it’s the trend,” he said on CNBC’s Squawk Alley on Tuesday. “”
When U.S. colleges closed campuses or restricted face-to-face classes due to the coronavirus pandemic, Chegg stocks barely blinked. The triple-digit rise in the stock’s stock this year reflects the company’s bet on the inevitable, according to Rosensweig, the former Yahoo executive who has led Chegg for the past decade.
“We’re looking at what the inevitable looks like over the next few years,” he added.
Chegg was founded in 2005 by students at Iowa State University in hopes of disrupting the school book market by renting them out. Chegg is now a more tech-savvy company, benefiting from the sudden disruption to society caused by efforts to slow the spread of Covid-19. For the past two quarters, the company posted record growth of over 60% compared to quarterly growth of around 30% in the past.
The company has built a networked learning platform that offers e-textbooks, on-demand and online tutoring services.
James Tahaney loads textbooks onto a pallet to prepare for shipment at the Chegg warehouse in Shepherdsville, Kentucky on April 29, 2010.
John Sommers II | Bloomberg | Getty Images
While Chegg is involved in higher education, the effects of distance learning are being felt in college and elementary school classrooms, Rosensweig said. The company is a leading education service provider and now has 3.9 million subscribers, up 29% year over year.
In addition to many parents now working from home, many K-12 students are adapting to the trends of studying from home. According to Rosensweig, school districts must also adapt to a hybrid model and equip schools with technology that can be used both in the classroom and remotely. Every student will also need broadband access, he added.
In higher education, the proverbial student is not exactly what most people in America expect, Rosensweig said. Students are getting older, the average age in the US is 25, and they need a curriculum that is more skill-based and flexible on work hours.
Even if students return to physical classrooms, Chegg hopes to harness the need for technology to complement and enhance the learning experience.
“The American student doesn’t look what people think and they need more help,” said Rosensweig, adding, “40% of them work 30 hours a week or more [and] cannot be planned in a classroom, it has to be more distant. “
Chegg is now also observing international growth, which, according to Rosensweig, was not on the company’s radar six months ago. While Chegg’s business, which grossed $ 438.62 million in the first three quarters of 2020, is heavily dependent on the U.S., the company is currently active in around 190 countries, Rosensweig said.
Chegg’s revenues through September have already exceeded 2019 levels.
“The pandemic really showed how important it is not only domestically, but also internationally,” said Rosensweig.
Chegg shares fell less than 1% on Wednesday lunchtime. Since bottoming out during the coronavirus-triggered sell-off in March, the stock has risen about 260%.