In conjunction with this week’s report of its second quarter results for the period ending June 30, 2014, Chegg, the higher education learning platform based in Santa Clara, Calif., announced that it is partnering with Ingram Content Group to accelerate its transition to a pure digital business. Under the deal, Ingram will be responsible for the sourcing, warehousing, fulfillment, shipping and rental returns of all inventory.
In June, Chegg acquired the online, on-demand tutoring marketplace instEDU for $30 million as a part of its digital strategy. By having Ingram handle print textbook logistics, Chegg will be able to free up “significant cash” over the next six months, according to Chegg chairman and CEO Dan Rosensweig.
Although Chegg’s revenue increased 15% to $64.5 million compared to the second quarter of 2013, it's net loss deepened ti $8.2 million from $3.3 million in last year's second quarter. While print revenue increased only 5% in the quarter, digital revenue grew 54% year-over-year to $18.7 million, or 29% of total revenues, compared to 22% in the second quarter of 2013.
Chegg has already begun transferring current and new inventory to Ingram in anticipation of textbook volume for the coming fall semester. Chegg expects to continue migrating inventory ownership over the next several academic semesters and reducing its use of cash on print textbooks. Under the arrangement, Chegg will receive a commission for textbooks rented or sold through its web and mobile sites, recording such commissions as digital revenue.
“By leveraging Ingram’s world-class logistical capabilities, this alliance allows Chegg to maintain all of the advantages of brand, customer acquisition, marketing, and data from the print textbook business, while freeing up significant cash,” said Rosensweig.
John Ingram, chairman and CEO of Ingram Content Group, called this “a long-term strategic growth opportunity. Together, we will improve service and delivery speed for Chegg’s students through the combined forces of Chegg’s consumer brand and reach, and our expertise in distribution and logistics.”