Chegg (CHGG) risk factors, FY2024 10-K

Risks Related to Our Business and Growth

1. 01Our revenue has declined and our business depends on our ability to continue to attract new learners to, and retain existing learners on, our learning platform
2. 02If we fail to innovate and offer new products and services in response to rapidly evolving technological and market developments, including AI, our competitive position and business prospects may be harmed
3. 03We face competition in all aspects of our business, including with respect to AI, and we expect such competition to increase
4. 04education such as Chegg. These developments have negatively impacted our industry and our business and may continue to impact our overall traffic and accelerate the decline in the number of new subscribers that sign up for our services
5. 05Our exploration of strategic alternatives may not be successful and may disrupt our ongoing business, result in increased expenses and present certain other risks
6. 06U.S. colleges have faced, and may continue to face, reduced enrollment, which could negatively impact our business and results of operations
7. 07Our international operations, and the expansion thereof, subject us to increased challenges, risks, and costs, which could adversely affect our business, financial condition, and results of operations
8. 08We have a limited operating history in international jurisdictions and our expansion efforts into international markets may not be successful
9. 09If our efforts to drive user traffic, including search engine optimization, social media campaigns, and other marketing, are not successful, student discovery of, and engagement with, our learning platform could decline, which may harm our business and results of operations
10. 10If our efforts to build and maintain strong brands are not successful, we may not be able to grow our student user base, which could adversely affect our results of operations
11. 11Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets
12. 12We have a history of losses, and we may not achieve or sustain profitability in the future
13. 13If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives
14. 14We have undertaken, and may in the future undertake, internal restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition
15. 15We depend on mobile app stores and operating systems to grow our student user base and their engagement with our learning platform
16. 16Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks, including risks associated with credit card fraud
17. 17We rely on Amazon Web Services (AWS) and other third-party software and service providers to provide systems, storage, and services for our website and any disruption of such services or a material change to our arrangements could adversely affect our business
18. 18Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully
19. 19If we fail to convince brands of the benefits of advertising on our learning platform, or if platforms such as Google Chrome, Safari, or Firefox limit our access to advertising and marketing audiences, or the data required to effectively reach those audiences, our business could be harmed
20. 20We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at all
21. 21Our core value of putting students first may conflict with the short-term interests of our business
22. 22Adverse litigation judgments or settlements resulting from legal proceedings in which we are or may be involved could expose us to monetary damages or limit our ability to operate our business
23. 23If we are not able to manage the growth of our business both in terms of scale and complexity, our business could be adversely affected
24. 24Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict

Risks Related to Our Industry

1. 25Government regulation of education and student information is evolving, and unfavorable developments could have an adverse effect on our business, results of operations, and financial condition
2. 26Colleges and certain governments may restrict online access or access to our website, which could lead to the loss of or slowing of growth in our student user base and their level of engagement with our platform
3. 27If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be adversely affected
4. 28We are subject to U.S. trade control laws that may restrict growth prospects and impose liability if we are non-compliant

Risks Related to Taxes and Accounting Matters

1. 29We may be subject to greater than anticipated liabilities for income, property, sales, and other taxes, and any successful action by federal, state, foreign, or other authorities to collect additional taxes could adversely harm our business
2. 30Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve subjective judgments and estimates formulated by our management. Our actual results could differ from the estimates and assumptions used to prepare our consolidated financial statements

Risks Related to Intellectual Property

1. 31Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations
2. 32Misuse of our platform and content, including digital piracy and improper sharing and misappropriation of user credentials, may continue to adversely affect our business, financial condition, and results of operation
3. 33applications that may facilitate piracy and new forms of intellectual property infringement through the unauthorized reproduction of copyrighted content to “train” AI applications and to create unauthorized derivative works
4. 34If we become subject to liability for the Internet content that we publish or that is uploaded to our websites by students or other users, our results of operations could be adversely affected
5. 35Changes in or our failure to comply with the requirements for eligibility for the Digital Millennium Copyright Act (DMCA) safe harbors could harm our business
6. 36We are, and may in the future be, subject to intellectual property claims, which are costly to defend and could harm our business, financial condition, and results of operations
7. 37Some aspects of our technology include open-source software, and any failure to comply with the terms of one or more of these open-source licenses could harm our business

Risks Related to Data Privacy

1. 38The compromise of our information technology systems or data, including through computer malware, viruses, hacking, phishing attacks, spamming and other security incidents, could harm our business and results of operations
2. 39Furthermore, prior to our acquisition of Thinkful and Mathway, each discovered that an unauthorized party may have gained access to certain confidential information or personal information of users
3. 40We collect, process, store and use personal information and other sensitive data, which subjects us to stringent and evolving U.S. and foreign laws, governmental regulation, contractual obligations, policies and other legal obligations
4. 41Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future
5. 42Public scrutiny of Internet privacy issues and actual or perceived failure to comply with our obligations with respect to privacy and data security could harm our business, including by damaging our reputation and relationships with students and educators
6. 43We are subject to privacy and cybersecurity laws across multiple jurisdictions which are highly complex, overlapping, and which create compliance challenges that may expose us to substantial costs, liabilities, or loss of customer trust. Our actual or perceived failure to comply with these laws could harm our business
7. 44Our business, including our ability to operate internationally, could be adversely affected if new legislation or regulations are adopted or due to changes in interpretations or implementations of current legislation and regulations

Risks Related to Ownership of Our Common Stock

1. 45Our stock price has been and will likely continue to be volatile
2. 46We may be subject to short-selling strategies that may drive down the market price of our common stock
3. 47Delaware law and provisions in our restated certificate of incorporation and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock
4. 48Our securities repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock

Risks Related to Our Convertible Senior Notes

1. 49Our operations are susceptible to earthquakes, floods, rolling blackouts and other types of power loss, and public health crises. If these or other natural or man-made disasters were to occur, our business and results of operations would be adversely affected