Chegg (CHGG) risk factors, FY2025 10-K

Risks Related to Our Business and Growth

1. 01Failure to successfully execute our skilling-focused business-to-business strategy and realize the anticipated benefits of our business transformation and related restructuring plan could have a material adverse effect on our business financial resultsNew
2. 02Our revenue has declined and our business depends on our ability to continue to attract new learners to, and retain existing learners on, our learning platform54% rewritten
3. 03If 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
4. 04We face competition in all aspects of our business, including with respect to AI, and we expect such competition to increase85% rewritten
5. 05and plagiarism services, such as Grammarly. For Chegg Math, we face competition from other equation solver services, such as Photomath, Gauthmath, and SymbolabNew
6. 06U.S. colleges have faced, and may continue to face, reduced enrollment, which could negatively impact our business and results of operations
7. 07We have a limited operating history in international jurisdictions and our expansion efforts into international markets may not be successful39% rewritten
8. 08If 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 operations29% rewritten
9. 09If 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
10. 10Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets25% rewritten
11. 11We have a history of losses, and we may not achieve or sustain profitability in the future33% rewritten
12. 12If 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
13. 13We 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 condition31% rewritten
14. 14We depend on customers having access to and choosing to use our mobile apps in order to acquire new student users and expand their engagement with our learning platformNew
15. 15Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks, including risks associated with credit card fraud
16. 16We 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
17. 17Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully
18. 18If 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
19. 19We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at all40% rewritten
20. 20Our core value of putting students first may conflict with the short-term interests of our business
21. 21Adverse 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
22. 22If we are not able to manage the changes in our business both in terms of scale and complexity, our business could be adversely affected39% rewritten

Risks Related to Our Industry

1. 23Government 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. 24Colleges 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. 25If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be adversely affected22% rewritten
4. 26We 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. 27We 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. 28Our 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. 29Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations31% rewritten
2. 30Misuse 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 operation31% rewritten
3. 31If 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
4. 32Changes in or our failure to comply with the requirements for eligibility for the Digital Millennium Copyright Act (DMCA) safe harbors could harm our business
5. 33We 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
6. 34Some 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. 35The 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. 36Our efforts to prevent hackers and others from entering our computer systems or accessing our data may not be fully effective and we cannot guarantee that future events will not occur that have a material impact on our businessNew
3. 37We 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 obligations78% rewritten
4. 38Public 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
5. 39We 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
6. 40Our 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 regulations44% rewritten

Risks Related to Our Securities

1. 41Our failure to regain compliance with the continued listing requirements of the NYSE, or any future failure to remain in compliance with such standards, could result in the delisting of our common stock, which would have an adverse impact on the trading, liquidity and market price of our common stockNew
2. 42Our stock price has been and will likely continue to be volatile
3. 43We may be subject to short-selling strategies that may drive down the market price of our common stock
4. 44Delaware 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
5. 45Our 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 stock75% rewritten
6. 46Our 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 affected57% rewritten