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Chegg, Kaplan Test Prep Team Up to Offer Test Prep Services

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Chegg, Inc. (CHGG - Free Report) , the leading student-first connected learning platform, has teamed up with Kaplan Test Prep for developing distinct test prep services exclusively through Chegg at minimum pocket pinch.

The latest partnership will make Kaplan the exclusive test prep partner for Chegg. Founded in 1938, Kaplan Test Prep is the world leader in providing educational and career services to individuals, schools and businesses.

Hence, the pact will help test-takers to get Kaplan’s industry-leading comprehensive prep courses, practice products, and books for the GRE, GMAT, LSAT, MCAT, SAT, and ACT through alongside Chegg Tutors, Chegg’s 24/7 online expert tutor matching service.

The two firms also intend to release new online test prep programs aimed at meeting the needs of test-takers at lower costs. These programs will be introduced with GMAT, SAT, and GRE options and will be sold exclusively by Chegg.

Apart from affordability, Chegg and Kaplan will assure the effectiveness of these products with a Satisfaction Guarantee. With this, they will provide students the opportunity to study yet another time for free if they have not yet achieved their goal scores.

Lee Weiss, vice president, Kaplan Test Prep stated, “With Chegg’s extensive distribution network, Kaplan’s world class content, and our joint focus on technology, we expect to provide students with the all the test prep offerings they need in one place.”

Chegg’s Performance

Chegg came up with better-than-expected results in the second quarter of 2017. Earnings and revenues also improved from the year-ago level courtesy of the company’s strategy of delivering high quality and low-cost educational products and services. Also, the increasing popularity of online, on-demand human help for different courses at college and high school levels drives profits.

Chegg’s bottom line showed solid improvement of 20% year over year in the second quarter. The company’s net revenue in the quarter increased 6.3% year over year.

Chegg’s gross profit increased 24.4% in the quarter and gross margin of 70% was at the high end of the company’s guided range, driven by strength in Chegg Study and Writing Tools services.

Adjusted EBITDA of $10.1 million shows substantial improvement from the year-ago level of $7.2 million. The figure is also above the company’s expectations of $7-$9 million in adjusted EBITDA.

This Zacks Rank #2 (Buy) company’s shares have rallied 93% so far this year compared with the industry’s growth of 15.7%. Estimates for 2017 have moved upward over the last 60 days. The company has been able to beat earnings estimates in three of the last four quarters, resulting in an average positive surprise of 41.48%. Moreover, earnings for the current quarter and year are expected to increase by a significant 90.5% and 174.6%, respectively.

The latest partnership accompanied with the company’s continued focus on delivering affordable high quality educational products and services will enable it to move further upward.

Other Key Picks

Other well-placed stocks in the same industry are AppFolio, Inc. (APPF - Free Report) , Amber Road, Inc. (AMBR - Free Report) and Apptio Inc. (APTI - Free Report) .

AppFolio, a Zacks Rank #1 (Strong Buy) stock, is expected to witness 166.7% growth in earnings this year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amber, a Zacks Rank #2 company, surpassed earnings estimates in each of the trailing four quarters, with an average beat of 15.11%, while Apptio surpassed earnings estimates in each of the trailing four quarters, the average beat being 32.54%. Apptio also carries a Zacks Rank #2.

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