What changed in this filing

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Item 1. Business

2021-02-22 compared with 2020-02-20 · 92 added, 63 removed, 136 unchanged (53% of the section changed)

Chegg is a Smarter Way to Student.

As the leading direct-to-student learning platform, we strive to improve educational outcomes by putting the student first in all our decisions.

We support students on their journey from high school to college and into their career with tools designed to help them pass their test, pass their class, and save money on required materials.

Our services are available online, anytime and anywhere, so we can reach students when they need us most.

A Smarter Way to Student ® .

We strive to improve educational outcomes by putting the student first.

We support students on their journey from high school to college and into their careers with tools designed to help them learn their course materials, succeed in their classes, save money on required materials, and learn the most in-demand skills.

Our services are available online, anytime and anywhere.

Students subscribe to our subscription services, which we collectively refer to as Chegg Services.

Our primary Chegg Services include Chegg Study, Chegg Writing, Chegg Tutors, Chegg Math Solver, and Thinkful .

Our Chegg Study subscription service provides “Expert Answers” and step-by-step “Textbook Solutions,” helping students with their course work.

When students need help creating citations for their papers, they can use one of our Chegg Writing properties, including EasyBib, Citation Machine, BibMe, and CiteThisForMe .

When students need additional help on a subject, they can reach a live tutor online, anytime, anywhere through Chegg Tutors.

Our primary Chegg Services include Chegg Study, Chegg Writing, Chegg Math Solver, Chegg Study Pack, Thinkful, and Mathway.

Our Chegg Study subscription service provides “Expert Questions and Answers” and step-by-step “Textbook Solutions,” helping students with their course work.

When students need writing help, including plagiarism detection scans and creating citations for their papers, they can use our Chegg Writing service.

Our Chegg Math Solver subscription service helps students understand math by providing a step-by-step math solver and calculator.

In October 2019, we completed our acquisition of Thinkful, Inc.

(Thinkful), a skills-based learning platform that offers professional courses directly to students across the United States, to expand our offerings.

In 2019 , over 3.9 million students subscribed to our Chegg Services, an increase of 29% year over year from 3.1 million in 2018 .

We offer Required Materials, which includes an extensive print textbook and eTextbook library for rent and sale, helping students save money compared to the cost of buying new.

To deliver services to students, we partner with a variety of third parties.

We source print textbooks, eTextbooks, and supplemental materials directly or indirectly from publishers in the United States, including Cengage Learning, Pearson, McGraw Hill, Sage Publications, and MacMillan.

In 2019 , students rented or bought over 5.2 million textbooks and eTextbooks from Chegg.

We also offer our Chegg Study Pack as a premium subscription bundle of our Chegg Study, Chegg Writing, and Chegg Math Solver services.

Our Thinkful skills-based learning platform offers professional courses focused on the most in-demand technology skills.

In June 2020, we completed our acquisition of Mathway, LLC (Mathway), an online, on-demand math problem solving company that covers a vast range of subject areas in mathematics, including pre-algebra, algebra, trigonometry, pre-calculus, calculus, and linear algebra and related disciplines.

Beginning in January 2021, our Chegg Tutors service will no longer be offered as a standalone service but rather offered as an additional feature within our other Chegg Services allowing students to find live chat human help on our learning platform through our network of tutors.

In 2020, approximately 6.6 million students subscribed to our Chegg Services, an increase of 67% year over year from 3.9 million in 2019.

Required Materials includes our print textbook and eTextbook offerings, which help students save money compared to the cost of buying new.

We offer an extensive print textbook library primarily for rent and also for sale both on our own and through our print textbook partners.

We partner with a variety of third parties to source print textbooks and eTextbooks directly or indirectly from publishers in the United States, including Cengage Learning, Pearson, McGraw Hill, Sage Publications, and John Wiley & Sons, Inc.

We offer products and services that help students improve their outcomes throughout their educational journey.

Our offerings fall into two categories:

Chegg Services, which encompasses our digital products and services, and Required Materials, which primarily includes print textbooks and eTextbooks.

Chegg Services, which encompasses our subscription services, and Required Materials, which primarily includes print textbooks and eTextbooks.

Chegg Services

Our Chegg Study subscription service helps students master challenging concepts on their own through the use of “Expert Answers,” “Textbook Solutions,” video content, and practice quizzes.

We offer our “Expert Answers” service, which allows students to ask questions on our website and receive similarly detailed explanations from subject matter experts.

Our Chegg Study subscription service helps students master challenging concepts on their own through the use of “Expert Questions and Answers” and “Textbook Solutions.” We offer our “Expert Questions and Answers” service, which allows students to ask questions on our website and receive similarly detailed explanations from subject matter experts.

For high demand print textbooks and eTextbooks, we offer “Textbook Solutions,” which are step-by-step explanations to help students solve the questions at the end of each chapter in their textbooks.

As of December 31, 2019 , Chegg had an archive of 30 million Expert Answers and 5 million Textbook Solutions, which students can immediately access through their paid subscription.

As of December 31, 2020, Chegg had an archive of approximately 47 million Expert Questions and Answers and approximately 6 million Textbook Solutions, which students can immediately access through their paid subscription.

These subscription services are available on our website and on mobile devices through our native application and our mobile website.

Chegg Writing.

Chegg Writing consists of a free, ad supported, service and a premium paid subscription service.

This service includes popular websites such as EasyBib, Citation Machine, BibMe, and CiteThisForMe which provide tools with capabilities such as citation, bibliography, anti-plagiarism, grammar, sentence structure, spell check, and instant feedback to help students revise, edit, and improve their written work.

When students need to cite their sources in written work, they can use our writing tools to automatically generate sources in the required formats.

Chegg Tutors .

Complementing our other study tools, students can find human help on our learning platform through our network of live tutors.

Students can access help online, anywhere, anytime, either synchronously or asynchronously.

Instead of paying for expensive, offline tutors that require scheduling and travel time, students can find tutors whenever they need additional help on a subject.

Our tutors are qualified to help students with a wide range of topics, including science, technology, engineering, mathematics, business, history, foreign languages, and English literature, as well as test prep and a variety of other highly-requested subjects.

Students can subscribe to weekly or monthly packages, or choose to use the service on a pay-as-you-go basis.

Our Chegg Writing service consists of a free, ad-supported service and a premium paid subscription service providing students with a suite of tools, including plagiarism detection scans, grammar and writing fluency checking, expert personalized writing feedback, and premium citation generation.

Students can create citations from over 7,000 citation styles including MLA, APA, and Chicago.

Students can also upload papers to have them scanned for plagiarism by checking against billions of sources and check for over 200 types of writing and grammar errors.

Students can also have a writing professional proofread their papers and receive personalized feedback within 24 hours of submission.

Chegg Writing also includes the popular website properties EasyBib, Citation Machine, BibMe, and CiteThisForMe.

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Chegg Math Solver.

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This subscription service is available on our website and on mobile devices through our native application and our mobile website.

In October 2019, we completed our acquisition of Thinkful, a skills-based learning platform that offers professional courses in software engineering, data science, data analytics, product design, and product management directly to students across the United States .

In June 2020, we acquired Mathway, an online, on-demand math problem solving company that covers a vast range of subject areas in mathematics, including pre-algebra, algebra, trigonometry, pre-calculus, calculus, and linear algebra and related disciplines.

We expect this acquisition to strengthen our existing Chegg Math Solver service with the addition of new subjects, languages, and international reach.

Chegg Study Pack.

Our Chegg Study Pack is a premium subscription bundle that consists of several of our most popular Chegg Services product offerings, including Chegg Study, Chegg Writing, Chegg Math Solver, video content, and practice quizzes.

This package creates an integrated platform of connected academic support services that increases our value proposition to students.

This subscription service is available on our website and on mobile devices through our mobile website.

Chegg Study Pack is also available across our domestic and international markets.

Thinkful is our skills-based learning platform that offers professional courses in software engineering, UX/UI design, digital marketing, data science, product management, data analytics, product design, and technical project management directly to students across the United States.

Thinkful focuses on teaching students the most in-demand technology skills so that they can be prepared for the workforce.

Students have the option to sign up for courses under two different study plans:

immersion and flex.

Immersion courses are highly intensive, full time courses requiring 50-60 hours per week and provide for students to graduate in about five months.

Flex courses allow for students to set their own schedule requiring 25-30 hours per week and provide for students to graduate in about six months.

In addition to the courses, our Thinkful offering provides students with networking, interviewing, and career services.

Other Services.

We also provide students with other services such as Chegg Prep (formerly Chegg Flashcards) and Internships.

We also provide students with other services, such as Chegg Prep and Chegg Internships.

Required Materials

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For students looking to save on the cost of required materials, we rent and sell print textbooks and eTextbooks.

Most of the print textbook transactions are rentals, although we also offer both new and used books for sale at a slight markup to our acquisition cost.

In 2014, we implemented a partnership with Ingram, which we expanded in May 2015, so that Ingram fulfilled all of our print textbook rentals and sales.

Most of the print textbook transactions are rentals, although we also offer both new and used textbooks for sale at a slight markup to our acquisition cost.

In 2014, we implemented a partnership with Ingram, which we expanded in May 2015, so that Ingram fulfilled our print textbook rentals and sales.

In October 2019, we signed a strategic logistics agreement with FedEx Supply Chain, Inc.

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We have also entered into agreements with other partners to provide their textbooks for rental or sale.

In participation with certain publishers, we also offer “Instant Access” to eTextbooks as a one-week free trial of our eTextbook service, and allows the student to access the eTextbook while the print copy is in transit.

All eTextbooks obtained from Chegg are viewed through the VitalSource Bookshelf which provides students with eTextbooks on PCs, tablets and smart phones, providing access anytime, anywhere that students are connected to the Internet and students can save a portion of the book for offline access.

In participation with certain publishers, we also offer “Instant Access” to eTextbooks as a one-week free trial of our eTextbook service, and allow the student to access the eTextbook while the print copy is in transit.

All eTextbooks obtained from Chegg are viewed through our eTextbook reader which provides students with eTextbooks on PCs, tablets and smart phones, providing access anytime, anywhere that students are connected to the Internet and students can save a portion of the book for offline access.

The eTextbook reader enables fast and easy navigation, keyword search, text highlighting, note taking and further preserves those notes in an online notepad with the ability to view highlighting and notes across platforms.

Supplemental Materials.

We also offer students access to other materials from publishers, professors, students and subject matter experts.

These include related materials like study guides, lab manuals or digital services provided by publishers, commonly known as “Whole Course Solutions” or “Integrated Learning Systems.” We tailor our merchandising of these materials based on the student’s core textbook.

Technology and Platform Integration

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We employ technological innovations whenever possible to increase efficiency and scale in our business.

Our products rely upon and leverage the information underlying our Student Graph discussed in more detail below.

Our products rely upon and leverage the information underlying our “Student Graph” and “Content Graph Technology” discussed in more detail below.

We will continue to invest in building technologies around our data, search and solutions.

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This personalization and customization results from our Student Graph and our search technology.

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Student Graph .

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Many students come to us for textbook rentals, and in our search results we not only provide the relevant textbook, but also begin to build awareness of our other services.

For instance, when a student searches for a textbook, we can show relevant Chegg Study solutions and available Chegg Tutors that are knowledgeable about the searched textbook.

Data Sourcing and Graph Technology .

For instance, when a student searches for a textbook, we can show relevant Chegg Study solutions or Flashcard decks.

Data Sourcing and Content Graph Technology .

Not all information relevant to students on our platform is made available by service, product, list or user-input.

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We have mobile applications on Apple iOS and Google Android.

Our mobile apps are built as hybrid applications leveraging the Chegg application programming interface (API) and server-side HTML5.

We also maintain a mobile version of our website:

Our mobile apps are built as hybrid applications leveraging the Chegg application programming interface (API).

Taking advantage of capabilities unique to the mobile platform, we offer some functionality on mobile that is not available on our website, such as textbook barcode scanning for price comparisons and Chegg Flashcards.

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West Coast and U.S.

We use one region for our test/development/stage/failover environment and the other for our production environment.

Our architecture consists primarily of front end applications, backend services, operational databases, and reporting subsystems.

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The architecture is also designed to allow for expansion into new international markets.

Network Security .

Our platform includes encryption, antivirus, firewall and patch-management technologies to help protect our systems distributed across cloud-hosting providers and our business offices.

Information Security .

Our platform includes encryption, antivirus, firewall, intrusion prevention, and patch-management technologies to help protect our systems distributed across cloud-hosting providers and our business offices.

Our existing products and services undergo periodic security assessment.

New features are developed according to our secure software development lifecycle process.

We also monitor for anomalies relating to authentication, data transfers, system, and user behavior as well as cloud configuration changes.

Internal Management Systems .

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We also drive brand awareness with streaming radio and display advertising on major online and mobile advertising networks, such as Google Display Network.

We integrate our textbook services on affiliates’ websites and work with a large advertising network that recruits individual online affiliates in exchange for pre-determined revenue share or commissions.

We integrate our textbook services on affiliates’ websites and work with a large advertising network that recruits

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individual online affiliates in exchange for pre-determined revenue share or commissions.

We utilize three types of email marketing campaigns:

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Student Advocacy

We are committed to providing a high level of customer service to our students.

We trust our students, understand the critical role our products and services have in their education, and strive to resolve all problems quickly and thoroughly.

We are committed to providing a high level of customer service to our students and our brand promise of putting students first.

We trust our students, understand the critical role our products and services have in their learning journey, and strive to resolve all problems quickly and thoroughly.

Our student advocacy team can be reached directly through phone, email, and online chat during business hours.

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For Chegg Writing, we primarily face competition from other citation generating and grammar and plagiarism services such as Grammarly.

For Chegg Tutors, we face competition from other online tutoring services such as Wyzant.

For Chegg Math Solver, we face competition from other equation solver services such as Mathway and Symbolab.

For Thinkful, we face competition from other online learning platforms and online "bootcamp" courses such as General Assembly, Galvanize, Flatiron School, and Lambda School.

Additionally, the market for textbooks and supplemental materials is intensely competitive and subject to rapid change.

For Chegg Math Solver and Mathway, we face competition from other equation solver services such as Photomath and Symbolab.

For Thinkful, we face competition from other online learning platforms and online “skills accelerator” courses both in the direct-to-consumer category, including General Assembly, Galvanize, Inc., Flatiron School, Codecademy, DataCamp, and Lambda, Inc., as well as white-label and co-branded providers who compete for adult learners through third party institutions, including 2U, Inc., Simplilearn, and Kenzie Academy.

Additionally, the market for textbooks is intensely competitive and subject to rapid change.

We face competition from college bookstores, some of which are operated by Follett and Barnes & Noble Education, online marketplaces such as Amazon.com, providers of eTextbooks, as well as various private textbook rental websites.

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Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain jurisdictions, we may be unable to protect our proprietary technology.

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As of December 31, 2020, we had 33 issued patents that will expire between 2031 and 2037 and 12 patent applications pending in the United States.

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As of December 31, 2020, we owned over 700 registered domain names.

We also have a number of pending trademark applications in the United States and foreign jurisdictions and unregistered marks that we use to promote our brand.

We own 31 U.S.

trademark registrations and 28 foreign registrations.

We also have a number of pending trademark applications in the United States and unregistered marks that we use to promote our brand.

From time to time we expect to file additional patent, copyright, and trademark applications in the United States and abroad.

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In addition, certain states, including Utah and Massachusetts, have laws that impose criminal penalties on the production and distribution of content that is “harmful to a minor.”

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The Digital Millennium Copyright Act (DMCA) provides relief for claims of circumvention of copyright protected technologies and includes a safe harbor intended to reduce the liability of online service providers for hosting, listing, or linking to third-party content that infringes copyrights of others.

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The CCPA also includes special requirements for California consumers under the age of 16.

As of December 31, 2019 , we had 1,401 full-time employees.

We also engage temporary employees and consultants.

None of our employees are represented by labor unions or covered by a collective bargaining agreement.

We have not experienced any work stoppages and we consider our relations with our employees to be good.

Human Capital

As of December 31, 2020, we had 1,941 employees, of which 1,616 were full-time and 325 were part-time.

Additionally, 815 were located outside the United States.

None of our workforce is covered under a collective bargaining agreement.

We appreciate that our employees are our greatest asset and place a premium on the importance of their retention, growth, and development.

We offer competitive compensation, including salary and equity, and benefits packages tailored to each of our locations around the world.

All employees are offered training and development opportunities, from leadership training and coaching to career development programs for all levels of employees.

We believe that a diverse workforce makes us a stronger company and helps us better serve the needs of our customers.

We are focused on understanding our culture, belonging and diversity strengths and opportunities and defining and executing on a strategy to support further progress.

We have employee-driven resource groups that are aligned around creating a culture of belonging and awareness for our diverse workforce.

These groups are centered around gender, ethnicity, sexual orientation or other shared attributes, which we believe help build community and enable opportunities for both personal and professional development.

We continue to focus on building a strong talent pipeline to create more opportunities for workplace diversity, support greater representation within the organization, and build a company that is truly reflective of the diverse audience we serve.

2020 was truly an unprecedented year.

As a result of the COVID-19 pandemic, our global employee population transitioned to working remotely overnight.

With that change came many challenges for our employees that required us to increase our support programs.

To help our employees with the change and uncertainty we implemented a childcare reimbursement program and provided technology and office equipment reimbursements for our employees to set up ergonomically safe workspaces at home.

We also increased our mental health offerings to provide face to face video sessions with licensed mental health experts for all employees.

We provided flexible time off for employees to deal with the challenges facing them from childcare, schooling, mental health and overall wellness.

We also increased our all employee communications to help employees feel connected in a new virtual world.

Information about seasonality is set forth in the section “Seasonality of Our Business” in Part II, Item 7 of this Annual Report on Form 10-K.

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We hired our current Chief Executive Officer in 2010, who implemented our current business strategy to create the leading direct-to-student learning platform for students to help them improve their outcomes.

Beginning in 2010, we made a series of strategic acquisitions to expand our Chegg Services, including Cramster in 2010 to add Chegg Study, InstaEDU in 2014 to add Chegg Tutors, internships.com in 2014 to add to our Internship service, Imagine Easy Solutions in 2016 to add Chegg Writing and programmatic advertising, Cogeon GmbH in 2017 to add Chegg Math Solver, WriteLab in 2018 to add enhanced features to Chegg Writing, StudyBlue in 2018 to add Chegg Prep (formerly Chegg Flashcards), and Thinkful in 2019 to add a skills-based learning platform.

We completed our initial public offering (IPO) in November 2013, a follow-on offering in August 2017, and issued convertible senior notes in April 2018 and March/April 2019.

Beginning in 2010, we made a series of strategic acquisitions to expand our Chegg Services, including Cramster in 2010 to add Chegg Study, InstaEDU in 2014 to add tutoring services, internships.com in 2014 to add to Chegg Internships, Imagine Easy Solutions in 2016 to add Chegg Writing and programmatic advertising, Cogeon GmbH in 2017 to add Chegg Math Solver, WriteLab in 2018 to add enhanced features to Chegg Writing, StudyBlue in 2018 to add Chegg Prep, Thinkful in 2019 to add a skills-based learning platform and Mathway in 2020 to strengthen our Chegg Math Solver.

We completed our initial public offering (IPO) in November 2013, a follow-on offering in August 2017, and issued convertible senior notes in April 2018, March/April 2019, and August 2020.

Our common stock is listed on the New York Stock Exchange under the symbol “CHGG.” Our principal executive offices are located at 3990 Freedom Circle, Santa Clara, California 95054 and our telephone number is (408) 855-5700.

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Available Information

Our website address is www.chegg.com and our Investor Relations website address is investor.chegg.com.

Our website address is www.chegg.com and our Investor Relations website address is www.investor.chegg.com.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are filed with the U.S.

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We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements, and other information with the SEC.

Such reports and other information filed by the Company with the SEC are available free of charge on our website at investor.chegg.com when such reports are available on the SEC’s website.

We use our www.chegg.com/mediacenter website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Accordingly, investors should monitor www.chegg.com/mediacenter, in addition to following our press releases, SEC filings, and public conference calls and webcasts.

Such reports and other information filed by the Company with the SEC are available free of charge on our website at www.investor.chegg.com when such reports are available on the SEC’s website.

We use our www.chegg.com/press website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Accordingly, investors should monitor www.chegg.com/press, in addition to following our press releases, SEC filings, and public conference calls and webcasts.

The contents of the websites referred to above are not incorporated into this filing.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business