Chegg’s (CHGG) growth in its digital business helped it beat expectations in the second quarter, according to CEO Dan Rosensweig. ‘The transition to digital is going even faster than we expected, so right now things look great,’ he said. In its latest earnings report, Chegg reported a 62% increase in digital revenue. The company also reported that 70% of its customers are using Chegg for something other than its traditional textbook rental business. ‘It’s very interesting because five years ago, that’s all we could do. Four years ago we didn’t even have a penny of digital business,’ said Rosensweig. ‘Now this year we’re predicting between $137-million and $145-million worth of digital.’ Chegg has expanded its business to include products like Chegg Study, which provides homework help, and Chegg Tutors, which provides online tutoring. He added these are higher growth, higher margin businesses, that are enabling the company to be cash flow positive. Rosensweig said while Chegg’s textbook rental business has competition from local bookstores or Amazon (AMZN), he believes Chegg is unique in the education category in the same way companies like LinkedIn (LNKD), Facebook (FB) and Netflix (NFLX) are unique.
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