What changed in this filing

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Item 1A. Risk Factors

2022-02-22 compared with 2021-02-22 · 258 added, 221 removed, 391 unchanged (55% of the section changed)

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Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.

• The full effect of the COVID-19 pandemic is uncertain and cannot be predicted.

The COVID-19 pandemic could worsen, or its effects may be prolonged, which could lead to a materially adverse effect on our business and results of operations.

• Our limited operating history and evolving digital offerings make it difficult to evaluate our current business and future prospects, and predict results of operations.

• Our future revenue depends on our ability to continue to attract new students, which have an inherently high rate of turnover primarily due to graduation.

• If search engines’ methodologies are modified or our search result page rankings decline for other reasons, student engagement with our website could decline, which may harm our business and results of operations.

• We face competition in aspects of our business, and we expect such competition to increase.

• The uncertainty surrounding the evolving educational landscape, the COVID-19 pandemic, the state of the student, and the demand for our evolving offerings make it difficult to predict our operational trends and results of operations.

• Our future revenue and growth depend on our ability to continue to attract new students to, and retain existing students on, our learning platform.

• If 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.

• The COVID-19 pandemic has impacted, and may continue to impact, our business, key metrics, and results of operations in volatile and unpredictable ways.

• We intend to offer new products and services to students to grow our business.

If our efforts are not successful, our business, results of operations, and financial condition could be adversely affected.

• Our current operations are international in scope and we plan to expand our international operations, which exposes us to risks inherent in international operations.

• We face competition in all aspects of our business, and we expect such competition to increase.

• We have a history of losses and we may not achieve or sustain profitability in the future.

• We rely on 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.

• Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks, including risks associated with credit card fraud.

• Our business is seasonal, and increased risk from disruption during peak periods makes our operating results difficult to predict.

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• We depend on mobile app stores and operating systems to grow our student user base and their engagement with our learning platform.

• If 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.

• Government regulation of education and student information is evolving, and unfavorable developments could have an adverse effect on our results of operations.

• Government 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.

• Colleges 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.

• Our 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.

• If we become subject to liability for the Internet content that we publish or that is uploaded to our websites by students, our results of operations could be adversely affected.

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• We may be subject to short selling strategies that may drive down the market price of our common stock.

Risks Related to Our Business and Industry

The full effect of the COVID-19 pandemic is uncertain and cannot be predicted.

The COVID-19 pandemic could worsen, or its effects may be prolonged, which could lead to a materially adverse effect on our business and results of operations.

The full effects of the COVID-19 pandemic cannot be predicted because of many uncertainties, including the deployment and long-term efficacy of vaccines and ongoing infection rate surges.

Governments and businesses have taken mitigation actions, including school and business closures, travel restrictions, and quarantines.

These actions could cause a general slowdown in the U.S.

and global economy, adversely impact our customers and partners, and disrupt our operations.

While our business was not materially and adversely affected by the COVID-19 pandemic during the year ended December 31, 2020, the COVID-19 pandemic may still have a material adverse impact on our business and result of operations in the near-term.

We are continuously monitoring our business and operations to take appropriate actions to mitigate risks arising from the COVID-19 pandemic, but there can be no guarantee that the actions we take will be successful.

Should the situation worsen or not improve, or our steps for risk mitigation fail, our business, liquidity, financial condition, results of operations, stock price and prospects may be materially and adversely affected.

All of our employees are currently working remotely because of the COVID-19 pandemic.

The health of our employees is of primary concern and at this time and we cannot reasonably predict when our employees can return to our offices.

We may need to take further precautionary measures to protect the health of our employees.

Additionally, our management team is focused on ongoing planning for and mitigating the risks of COVID-19, which may reduce their time for other initiatives.

The COVID-19 pandemic may lead to employee inefficiencies, operational and cybersecurity risks, logistics disruptions, and other circumstances which could have an adverse impact on our business and results of operations.

A significant number of U.S.

and international colleges ceased in-person classes during 2020 in an attempt to ensure the safety of their students.

Should the COVID-19 pandemic continue, colleges may face reduced enrollment and reduced income.

Further, if the COVID-19 pandemic continues to limit the functionality of colleges and universities, they may not have the financial resources to withstand prolonged declines in enrollment, diminishing revenues and even potential shutdowns and may be forced to close.

Additionally, uncertainties surrounding the COVID-19 pandemic have forced colleges to pay heightened attention to alternative methods of instruction, including online learning and related concerns, such as proctoring exams.

This increase in attention and demand may lead to additional scrutiny from the faculty of more traditional institutions, such as colleges or universities.

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Our limited operating history and evolving offerings make it difficult to evaluate our current business and future prospects, and predict results of operations.

Since July 2010, we have focused on expanding our offerings beyond textbooks, in many instances through the acquisition of other companies, such as Mathway and Thinkful.

Our newer products and services, such as skills-based learning, may not be integrated effectively into our business, achieve or sustain profitability, or achieve market acceptance at levels sufficient to justify our investment.

Because we have a limited operating history, in particular operating a fully digital platform, and the market for our products and services is rapidly evolving, it is difficult to predict our results of operations, particularly with respect to our newer offerings, and the ultimate market size for our products and services.

If the market for a comprehensive learning platform does not develop as we expect, or if we fail to address the needs of this market, our business and prospects could be harmed.

We face risks, expenses, and difficulties related to our specific business model, as well as those typically encountered by companies in their early stage of development, including the risks more fully described throughout this “Risk Factors” section as well as our ability to successfully accomplish the following, among other items:

Risks Related to Our Business and Growth

The uncertainty surrounding the evolving educational landscape, the COVID-19 pandemic, the state of the student, and the demand for our evolving offerings make it difficult to predict our operational trends and results of operations.

The uncertainty surrounding the evolving educational landscape, the COVID-19 pandemic, employment opportunities for students, the number of classes and the difficulty of the classes that the students take, and the demand and market for our products and services make it difficult to predict our operational trends and results of operations, particularly with respect to our newer offerings, and the ultimate market size for our products and services.

If the market and demand for a comprehensive learning platform does not develop as we expect, or if we fail to address the needs of this market, our business and prospects would be harmed.

We face risks, expenses, and difficulties related to our specific business model, including the risks more fully described throughout this “Risk Factors” section, which impede our ability to successfully accomplish the following, among other items:

• enhance and expand our Chegg Services offerings including developing new products and services;

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• expand our offerings internationally;

• prevent students from sharing accounts and cheating with other students;

• prevent students from sharing accounts with other students;

• prevent students from misusing our products and services in ways that violate our terms of services, applicable laws, or the code of conduct at their educational institutions;

• develop and scale a high-performance technology infrastructure to efficiently handle increased usage by students, especially during peak periods prior to each academic term.

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• price competition and our ability to react appropriately to such competition;

• the strength of the economy and the availability of attractive employment opportunities for our students;

• the trend of declining college enrollment;

• the types of classes our students are taking and whether they choose to take those classes pass/fail;

• the number and difficulty of assignments that professors are assigning and the number of assessments that professors are administering;

• changes by our competitors to their product and service offerings, including price and materials;

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• disruptions to our and our fulfillment partner’s informational technology systems, particularly during peak periods;

• government regulations, in particular regarding privacy and advertising and taxation policies;

• government regulations, in particular regarding privacy, academic integrity, advertising and taxation policies;

• operating costs and capital expenditures relating to expansion of our business;

• general macroeconomic conditions and economic conditions.

• general macroeconomic conditions, including as a result of COVID-19.

We have focused in the past, and expect to continue to focus in the future, on expanding our offerings, in many instances through the acquisition of other companies, such as Busuu, Mathway and Thinkful.

Our newer products and services, such as skills-based learning and language learning, may not be integrated effectively into our business, achieve or sustain profitability, or achieve market acceptance at levels sufficient to justify our investment.

We have encountered and will continue to encounter these risks and if we do not manage them successfully, our business, financial condition, results of operations, and prospects may be materially and adversely affected.

Our future revenue depends on our ability to continue to attract new students, which have an inherently high rate of turnover primarily due to graduation.

Our future revenue and growth depend on our ability to continue to attract new students to, and retain existing students on, our learning platform.

The growth of our business depends on our ability to attract new students to use our products and services and to increase the level of engagement by existing students with our learning platform.

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The rate at which we expand our student user base and increase student engagement with our learning platform may decline or fluctuate because of several factors, including, among others:

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• our ability to engage students with our suite of Chegg Services and to introduce new products and services that are favorably received by students;

• our ability to produce compelling and engaging services, mobile applications and websites for students;

• the efficacy of our "Learn with Chegg" initiative and the ability of the enhanced personalization of our content to further retain and engage students on our learning platform;

• our ability and our fulfillment partner’s ability to consistently provide students with a convenient, high- quality experience for selecting, receiving, and returning print textbooks;

• our ability to grow our skills partnerships with providers who link us to employers and their learners;

• our ability to accurately forecast and respond to student demand for print textbooks;

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Attracting new students depends not only on investment in our brand and our marketing efforts, but also on the perceived value of our products and services versus alternatives.

If our efforts to satisfy our existing student user base are not successful or become less effective, or if the cost of such efforts were to significantly increase, we may not be able to attract new students as successfully or efficiently and, as a result, our business, results of operations, and financial condition could be adversely affected.

If our efforts to satisfy our existing student user base are not successful or become less effective, or if the cost of such efforts were to significantly increase, we may not be able to attract new students as successfully or efficiently and we may not be able to retain existing students on our platform.

As a result, our business, growth, results of operations, and financial condition could be adversely affected.

Additionally, even if we succeed in establishing brand awareness and loyalty, we may be unable to maintain and grow our student user base if we cannot offer competitive prices for our products and services or adequately prevent unauthorized account sharing of our subscription program services.

If we fail to expand our user base, our business, results of operations, and financial condition could be adversely affected.

If we fail to maintain and expand our user base, our business, results of operations, and financial condition could be adversely affected.

If 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.

We believe our brands are a key asset of our business.

Developing, protecting, and enhancing our “Chegg” brands are critical to expanding our student user base and increasing student engagement.

Strong brands also help to counteract the significant student turnover we experience from year to year as students graduate, and differentiate us from our competitors.

To succeed in our efforts to strengthen our brands’ identities, we must, among other activities:

• maintain our reputation as a trusted technology platform and source of content, services, and textbooks for students;

• maintain and improve the quality of our existing products, services, and technologies;

• introduce compelling products and services;

• adapt to changing technologies and changes in the learning environment;

• protect user data, such as passwords and personally identifiable information;

• adapt to students’ rapidly changing tastes, preferences, behavior, and brand loyalties;

• continue to expand our reach to students in high school, graduate school, and internationally;

• ensure that the student-posted content to our website is reliable and does not infringe on third-party copyrights or violate other applicable laws, our terms of use, or the ethical codes of those students’ colleges;

• protect our trademarks and other intellectual property rights;

• convert and integrate the brands and students that we acquire into the Chegg brand and Chegg.com;

• maintain and control the quality of our brand.

Our ability to successfully achieve these goals is not entirely within our control and we may not be able to maintain the strength of our brands or do so cost-effectively.

Factors that could negatively affect our brands include, among others:

• changes in student sentiment about the quality or usefulness of our products and services;

• technical or other problems that prevent us from providing our products and services reliably or otherwise negatively affect the student experience with our products and services;

• concern from colleges about how students use our content offerings, such as our Expert Questions and Answers service;

• brand conflict between acquired brands and the Chegg brand;

• student concerns related to privacy and use of data in our products and services;

• the reputation or products and services of competitive companies;

• students’ misuse of our products and services in ways that violate our terms of services, applicable laws, or the code of conduct at their colleges.

The COVID-19 pandemic has impacted, and may continue to impact, our business, key metrics, and results of operations in volatile and unpredictable ways.

The full effects of the COVID-19 pandemic cannot be predicted because of many uncertainties, including the deployment and long-term efficacy of vaccines and ongoing infection rate surges.

Governments and businesses have taken mitigation actions, including school and business closures, travel restrictions, and quarantines.

These actions could continue to cause a general slowdown in the U.S.

and global economy, adversely impact our customers and partners, disrupt our operations, and cause significant volatility in financial markets.

While our overall business was not materially and adversely affected by the COVID-19 pandemic during the year ended December 31, 2021, the COVID-19 pandemic may still have a material adverse impact on our business and result of operations in the near-term.

Should the situation worsen or not improve, or our steps or risk mitigation fail, our business, liquidity, financial condition, results of operations, stock price and prospects may be materially and adversely affected.

Most employees are currently working remotely because of the COVID-19 pandemic.

The health of our employees is of primary concern and at this time and we cannot reasonably predict when our employees can return to our offices.

We may need to take further precautionary measures to protect the health of our employees.

Additionally, our management team is focused on ongoing planning for and mitigating the risks of COVID-19, which may reduce their time for other initiatives.

A significant number of U.S.

and international colleges ceased in-person classes during 2021 in an attempt to ensure the safety of their students.

Additionally, according to The New York Times, total undergraduate college enrollment decreased 3.1% from the fall of 2020 to the fall of 2021, bringing the total decline since the fall of 2019 to 6.6% or approximately 1.2 million fewer students.

Should the COVID-19 pandemic continue, college enrollment may continue to decline.

Our business, growth, results of operations, and financial condition could be adversely affected as a result of a continued decrease in college enrollment.

As students returned to school in the fall of 2021, we started to see a slowdown in the education industry as a result of the COVID-19 pandemic, which resulted in a decline in traffic to education technology services, such as the ones we provide.

A combination of variants, increased employment opportunities and compensation, along with fatigue, all led to significantly fewer enrollments than expected.

Moreover, those students who have enrolled are taking fewer and less rigorous classes and are receiving less graded assignments.

As a result, we experienced a deceleration in the growth rates of our services and revenues that may continue.

Any reduction in the number of students accessing our learning platform could harm our business and results of operations.

This increase in attention and demand may lead to additional scrutiny from the faculty of more traditional institutions, such as colleges or universities.

We intend to offer new products and services to students to grow our business.

If our efforts are not successful, our business, results of operations, and financial condition could be adversely affected.

Our ability to attract and retain students and increase their engagement with our learning platform depends on our ability to connect them with appropriate products, people, or services.

Part of our strategy is to offer students new products and services in an increasingly relevant and personalized way.

We may develop such products and services independently, by acquisition, or in conjunction with third parties.

In the future, we may invest in new products and services and other initiatives, but there is no guarantee these approaches will be successful.

The markets for new products and services may be unproven, and these products may include technologies and business models with which we have little or no prior experience or may significantly change our existing products and services.

In addition, we may be unable to obtain long-term licenses from third-party content providers and/or government regulatory approvals and licenses necessary to allow a new or existing product or service to function.

If our new or enhanced products and services do not engage our students or attract new students, or if we cannot obtain desirable third party content, we may not grow our student base or generate sufficient revenues, operating margin, or other value to justify our investments, and our business could be adversely affected.

If search engines’ methodologies are modified or our search result page rankings decline for other reasons, student engagement with our website could decline, which may harm our business and results of operations.

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Any reduction in the number of students directed to our website could harm our business and results of operations.

We face competition in aspects of our business, and we expect such competition to increase.

Our current operations are international in scope and we plan to expand our international operations, which exposes us to risks inherent in international operations.

Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the United States.

In addition to our employee base in the United States, we have employees in Germany, Israel, India, the United Kingdom and Spain, and we have retained professional employer organizations and staffing agencies to engage personnel in certain additional international locations.

Our international operations subject us to the compensation and benefits regulations of those jurisdictions, as well as other employer duties and obligations, that differ from the compensation and benefits regulations and duties and obligations in the United States.

Further, enrollments of learners from other countries requires us to comply with international data privacy and education regulations of those countries.

Failure to comply with international regulations or to adequately adapt to international markets could harm our ability to successfully operate our business and pursue our business goals.

We intend to expand our international operations and presence, and to make our products and services available in more international markets.

However, we have a limited operating history in international jurisdictions and expanding our international operations will require considerable management attention and resources to attract talented employees and students.

Our expansion efforts into international markets may not be successful.

In addition, we face risks in doing business internationally that could constrain our operations, increase our cost structure, and compromise our growth prospects, including:

• the need to localize and adapt content for specific countries, including translation into foreign languages;

• local laws restricting students from accessing online education platforms such as ours;

• data privacy laws that may require data to be handled in a specific manner, including storing, processing, and encrypting data solely on local servers;

• varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs;

• difficulties in staffing and managing foreign operations, including in countries in which foreign employees may become part of labor unions, employee representative bodies, workers’ councils or collective bargaining agreements, and challenges relating to work stoppages or slowdowns;

• different pricing environments, longer sales cycles, longer accounts receivable payment cycles, difficulties in adopting and supporting new and different payment preferences, and collections issues;

• new and different sources of competition and practices which may favor local competitors;

• the ability to protect and enforce intellectual property rights abroad;

• compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, legal systems, alternative dispute systems, including, but not limited to, employment, tax, privacy and data protection, economic sanctions and export controls, U.S.

and other anti-boycott authorities, anti-money laundering laws, and anti-bribery laws and regulations such as the U.S.

Foreign Corrupt Practices Act, the Office of Foreign Assets Controls, and the U.K.

• increased financial accounting and reporting burdens, complexities, and commercial infrastructures;

• risks associated with foreign tax regimes, trade tariffs, or similar issues, which could negatively impact international adoption of our offerings;

• fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S.

• adverse tax consequences, including the potential for required withholding taxes for our overseas employees;

• regional and economic political conditions.

If we cannot address these challenges, it could have an adverse effect on our business, results of operations, and financial conditions.

Our ability to gain market acceptance in any particular market is uncertain and the distraction of our senior management team could have an adverse effect on our business, results of operations, and financial condition.

Our business is seasonal, and increased risk from disruption during peak periods makes our operating results difficult to predict.

We derive a portion of our net revenues from print textbook rentals and, to a lesser extent, sale transactions, which occur in large part during short periods of time around the commencement of the fall, winter, and spring academic terms.

In particular, we and our partners experience the largest increase in rental and sales volumes during the last two weeks of August and first two weeks of September and to a lesser degree in December and January.

The increased volume of orders that we process during these limited periods of time means that any shortfalls or disruptions in our operations during these peak periods will have a disproportionately large impact on our Required Materials revenues.

If our distribution partners limited their service or otherwise suffer from business disruptions during these peak periods, we may be required to find alternatives for delivery, which may be more expensive, or we may be unable to deliver textbooks timely.

If there are delays in the delivery of our textbooks to students, we recognize less revenue from such transactions.

Additionally, our students could become dissatisfied with such delays and discontinue their use of our service, which could adversely affect our results of operations.

Revenues from Chegg Services, print textbooks that we own, and eTextbooks are primarily recognized ratably over the term a student subscribes to our Chegg Services, rents a print textbook or has access to an eTextbook.

This has generally resulted in our highest revenues and profitability in the fourth quarter as it reflects more days of the academic year.

As a result of this seasonality, which corresponds to the academic calendar, our revenues may fluctuate significantly quarter to quarter depending upon the timing of where we are in our “rush” cycle and sequential quarter-over-quarter comparisons of our net revenues and operating results are not likely to be meaningful.

In addition, should the current COVID-19 pandemic continue to worsen and colleges cannot withstand a prolonged shutdown, we may experience a shift or reduction in enrollments that could impact the seasonality of our business and further make our results of operations difficult to predict.

We face competition in all aspects of our business, and we expect such competition to increase.

Our products and services compete for students and we expect such competition to increase .

Chegg Services faces competition based on the particular offering.

For Chegg Study, our competitors primarily include platforms that provide study materials and online instructional systems, such as Course Hero, Quizlet, Khan Academy, and Bartleby.

For Chegg Study, our competitors primarily include platforms that provide study materials and online instructional systems, such as Course Hero, Quizlet, Khan Academy, Bartleby, and Brainly.

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

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

For Busuu, our competitors primarily include language learning platforms, such as Duolingo and Babbel.

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.

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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.

Many students purchase from multiple textbook providers, are highly price sensitive, and can easily shift spending from one provider or format to another.

As a consequence, our Required Materials product line, which includes eTextbooks, competes primarily on price and further on

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selection and functionality and compatibility of the eTextbook Reader we utilize across a wide variety of desktop and mobile devices.

Our industry is evolving rapidly and some of our competitors have adopted, and may continue to adopt, aggressive pricing policies, less stringent standards for user-uploaded content, and devote substantially more resources to marketing, website, and systems development than we do.

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To the extent such alliances are terminated or new alliances and relationships are established, our business could be harmed.

Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully.

As part of our business strategy, we have made and intend to continue to make acquisitions to add specialized employees, complementary businesses, products, services, operations, or technologies.

To be successful, we must timely and efficiently integrate acquired companies, including their technologies, products, services, operations, and personnel.

Acquired companies can be complex and time consuming to integrate and we may incur significant integration costs and we may not be able to offset our acquisition costs.

Acquisitions involve many risks that may negatively impact our financial condition and results of operations, including the risks that the acquisitions may:

• require us to incur charges and substantial debt or liabilities;

• cause adverse tax consequences, substantial depreciation, or deferred compensation charges;

• result in acquired in-process research and development expenses or in the future may require the amortization, write-down, or impairment of amounts related to deferred compensation, goodwill, and other intangible assets;

• give rise to various litigation and regulatory risks.

• we may encounter difficulties or unforeseen expenditures to integrate an acquired company;

• an acquisition may disrupt our business, divert resources, increase expenses, and distract our management;

• an acquisition may reduce or delay adoption and engagement rates for our acquired products and services because of student uncertainty about continuity and effectiveness;

• an acquisition may subject us to laws and operational challenges in new jurisdictions with which we are unfamiliar;

• we may not successfully transition acquired users to the Chegg platform and therefore may not realize the potential benefits of these acquisitions;

• we may incur unforeseen costs as a result of the pre-acquisition activities of businesses and technologies we acquire;

• we may be required to honor the pre-existing contractual relationships of businesses we acquire, which contracts may be on terms that we would not have otherwise accepted;

• it may be difficult to monetize any acquired products and services;

• an acquisition may not ultimately be complementary to our offerings;

• an acquisition may involve the entry into markets where we have little or no prior experience.

Our ability to acquire and integrate larger or more complex businesses, products, services, operations, or technologies in a successful manner is unproven.

We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all.

To finance any future acquisitions, we may issue equity or equity-linked securities, which could be dilutive, or debt, which could be costly, potentially dilutive, and impose substantial restrictions on the conduct of our business.

If we fail to successfully complete any acquisitions or integrate them into our company, or identify and address liabilities associated with the acquisition, our business, results of operations, and financial condition could be adversely affected.

If 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.

We depend on the continued contributions of our senior management and other key personnel.

In particular, we rely on the contributions of our President, Chief Executive Officer, and Co-Chairperson, Dan Rosensweig.

All of our executive officers and key employees are at-will employees, meaning they may terminate their employment relationship at any time.

If we lose the services of one or more members of our senior management team or other key personnel, or if one or more of them decides to join a competitor or otherwise compete directly or indirectly with us, we may not be able to successfully manage our business or achieve our business objectives.

Our future success also depends on our ability to identify, attract, and retain highly skilled personnel.

Competition for these employees is intense.

Qualified individuals are in high demand, particularly in the San Francisco Bay Area where our executive offices are located, and if we cannot attract or retain the personnel we need to succeed, our business may suffer.

We have a history of losses and we may not achieve or sustain profitability in the future.

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As of December 31, 2021, we had an accumulated deficit of $337.2 million.

We expect to make significant investments in the development and expansion of our business and, as a result, our cost of revenues and operating expenses may increase.

We expect to make significant investments in the development and expansion of our business and, as a result, our cost of revenues and operating

expenses may increase.

We may not succeed in increasing our revenues sufficiently to offset these higher expenses, and our efforts to grow the business may be more expensive than we anticipate.

We may incur significant losses in the future for a number of reasons, including slowing demand for our products and services, increasing competition, decreased spending on education, and other risks described in this Annual Report on Form 10-K.

We may incur significant losses in the future for a number of reasons, including slowing or lower demand for our products and services, increasing competition, decreased spending on education, and other risks described in this Annual Report on Form 10-K.

We may encounter unforeseen expenses, challenges, complications, delays, and other unknown factors, many of which are exacerbated by the effects of the COVID-19 pandemic, as we pursue our business plan.

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If we do achieve profitability, we may not be able to sustain or increase such profitability.

If our efforts to build strong brands are not successful, we may not be able to grow our student user base, which could adversely affect our results of operations.

We believe our brands are a key asset of our business.

Developing, protecting, and enhancing our “Chegg” brands are critical to expanding our student user base and increasing student engagement.

Strong brands also help to counteract the significant student turnover we experience from year to year as students graduate, and differentiate us from our competitors.

To succeed in our efforts to strengthen our brands’ identity, we must, among other activities:

• maintain our reputation as a trusted technology platform and source of content, services, and textbooks for students;

• maintain and improve the quality of our existing products, services, and technologies;

• introduce compelling products and services;

• adapt to changing technologies and changes in the learning environment;

• protect user data, such as passwords and personally identifiable information;

• adapt to students’ rapidly changing tastes, preferences, behavior, and brand loyalties;

• continue to expand our reach to students in high school, graduate school, and internationally;

• protect our trademarks and other intellectual property rights;

• convert and integrate the brands and students that we acquire into the Chegg brand and Chegg.com;

• maintain and control the quality of our brand.

Our ability to successfully achieve these goals is not entirely within our control and we may not be able to maintain the strength of our brands or do so cost-effectively.

Factors that could negatively affect our brands include, among others:

• changes in student sentiment about the quality or usefulness of our products and services;

• technical or other problems that prevent us from providing our products and services reliably or otherwise negatively affect the student experience with our products and services;

• concern from colleges about how students use our content offerings, such as our Expert Questions and Answers service;

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• brand conflict between acquired brands and the Chegg brand;

• student concerns related to privacy and use of data in our products and services;

• the reputation or products and services of competitive companies;

• students’ misuse of our products and services in ways that violate our terms of services, applicable laws, or the code of conduct at their colleges.

We rely on 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.

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or facilitate other types of online payments, and our business and results of operations could be adversely affected.

We may experience some loss from fraudulent credit card transactions, including potential liability for not obtaining signatures from students in connection with the use of credit cards.

We may experience some loss from fraudulent credit card transactions, including potential liability for not obtaining signatures from students in connection with the use of credit cards or fraudulent payments to educators as part of Uversity.

While we do have safeguards in place, we cannot be certain that other fraudulent schemes will not be successful.

A failure to adequately control fraudulent transactions could harm our business and results of operations.

Our business is seasonal, and increased risk from disruption during peak periods makes our operating results difficult to predict.

If textbooks are not delivered timely to students, they could become dissatisfied and discontinue their use of our service, which could adversely affect our results of operations.

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This has generally resulted in our highest revenues and profitability in the fourth quarter as it reflects more days of the academic year.

We depend on mobile app stores and operating systems to grow our student user base and their engagement with our learning platform.

There is no guarantee that students will use our mobile apps, such as the mobile version of our website, m.chegg.com, Chegg Prep, and Chegg Study, rather than competing products.

We are dependent on the interoperability of our mobile apps with popular third-party mobile operating systems such as Google's Android and Apple's iOS, and their placement in popular app stores like the Google Play Store and the Apple App Store, and any changes in such systems that degrade our products’ functionality or give preferential treatment or app store placement to competitive products could adversely affect the access and usage of our applications on mobile devices.

usage of our applications on mobile devices.

If it is more difficult for students to access and use our apps on their mobile devices, our student growth and engagement levels could be harmed.

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Additionally, if platforms such as Google Chrome, Safari, or Firefox, limit our access to or understanding of advertising and marketing audiences, they could reduce our advertising rates and ultimately reduce our revenues from brand advertising.

For example, the release of iOS 14 on Apple devices brought with it a number of new changes, including the need for app users to opt in before their identifier for advertisers (“IDFA”) can be accessed by an app (which is currently expected to come into effect in 2021).

For example, the release of iOS 14 on Apple devices brought with it a number of new changes, including the need for app users to opt in before their identifier for advertisers (IDFA) can be accessed by an app.

Apple’s IDFA is a string of numbers and letters assigned to Apple devices which advertisers use to identify app users to deliver personalized and targeted advertising.

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Our decisions may not result in the long-term benefits that we expect, in which case our level of student satisfaction and engagement, business, and results of operations could be harmed.

If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be adversely affected.

Laws or regulations may be enacted which restrict or prohibit use of emails or similar marketing activities that we currently rely on.

• the CAN-SPAM Act of 2003 and similar laws adopted by a number of states regulate unsolicited commercial emails, create criminal penalties for emails containing fraudulent headers, and control other abusive online marketing practices;

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• the FTC has guidelines that impose responsibilities on companies with respect to communications with consumers and impose fines and liability for failure to comply with rules with respect to advertising or marketing practices they may deem misleading or deceptive;

• the Telephone Consumer Protection Act of 1991 (the (TCPA) restricts telemarketing and the use of automated telephone equipment.

The TCPA limits the use of automatic dialing systems, artificial or prerecorded voice messages, and SMS text messages.

It also applies to unsolicited text messages advertising the commercial availability of goods or services.

Additionally, a number of states have enacted statutes that address telemarketing, such as do-no call lists and “no rebuttal statutes” that require the telemarketer to end the call when the consumer indicates that he or she is not interested in the product being sold.

Restrictions on telephone marketing, including calls and text messages, are enforced by the FTC, the Federal Communications Commission, state-level regulators and through the availability of statutory damages and class action lawsuits for violations of the TCPA;

• the CCPA, which came into effect and became enforceable in 2020.

Additionally, although not effective until January 1, 2023, the California Privacy Rights Act (the “CPRA”), which expands upon the CCPA, was passed in the recent election on November 3, 2020.

The CCPA and CPRA require companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of certain data sharing with third parties, and provides a private right of action for security breaches.

The burdens imposed by the CCPA and CPRA and other similar laws that may be enacted at the federal and state level may require us to modify our data processing practices and policies and how we advertise to our users and to incur substantial expenditure to comply.

Even if no relevant law or regulation is enacted, we may discontinue use or support of these activities if we become concerned that students or potential students deem them intrusive or they otherwise adversely affect our reputation, goodwill and brand.

If our marketing activities are curtailed, our ability to attract new students may be adversely affected.

Our business and growth may suffer if we cannot hire and retain key personnel.

We depend on the continued contributions of our senior management and other key personnel.

In particular, we rely on the contributions of our President, Chief Executive Officer, and Co-Chairperson, Dan Rosensweig.

All of our executive officers and key employees are at-will employees, meaning they may terminate their employment relationship at any time.

Our future success also depends on our ability to identify, attract, and retain highly skilled personnel.

We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at all.

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If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our stockholders may experience substantial dilution.

Government regulation of education and student information is evolving, and unfavorable developments could have an adverse effect on our results of operations.

Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets.

Our business is dependent on, among other factors, general economic conditions, which affect student spending and brand advertising.

Prior to the COVID-19 pandemic, state and federal funding levels at colleges across the United States remained below historic levels, which led to increased tuition and decreased amounts of financial aid offered to students.

The COVID-19 pandemic has adversely affected federal and state budgets for education and caused significant economic volatility.

To the extent that these trends continue, students may elect to not attend colleges and universities and reduce the amount they spend on educational content and textbooks.

In addition to decreased spending by students, colleges and brands may reduce their spend on our advertising services.

Any of the foregoing may have an adverse effect on our business.

If we are not able to manage the growth of our business both in terms of scale and complexity, our business could be adversely affected.

As we grow, the operations and technology infrastructure we use to manage and account for our operations will become more complex, and managing these aspects of our business will become more challenging.

Acquisitions of new companies,

products, and services create integration risk, while developing and enhancing products and services involves significant time, labor, and expense as well as other challenges, including managing the length of the development cycle, entering new markets, regulatory compliance, evolution of sales and marketing, and protecting proprietary rights.

Any future expansion will likely place significant demand on our resources, capabilities and systems, and we may need to develop new processes and procedures and expand our infrastructure to respond to these demands.

If we are not able to manage the growth of our business, we may not be able to maintain or increase our revenues as anticipated or recover any associated acquisition or development costs, and our business could be adversely affected.

Risks Related to Our Industry

Government 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.

Our ability to deliver course content to students enrolled in Thinkful skills-based learning programs may be subject to state oversight including regulatory approvals and licensure for the course content, the faculty members teaching the content, and the recruiting, admissions, and marketing activities associated with the business.

Thinkful's efforts to obtain necessary approvals and licenses began prior to our acquisition of the business and continues following the acquisition.

We monitor changes to the state regulatory requirements applicable to our Chegg’s business activities, including Thinkful;

We monitor changes to the state regulatory requirements applicable to our business activities, including Thinkful;

however, if we do not obtain the appropriate licenses or address evolving state requirements, it may result in governmental or regulatory proceedings or actions by private litigants, which could potentially harm our business, results of operations, and financial condition.

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Our business may also be subject to laws specific to students, such as the Family Educational Rights and Privacy Act, the Delaware Higher Education Privacy Act, and a California statute which restricts the access by postsecondary educational institutions of prospective students’ social media account information.

Compliance levels include obtaining government licenses, disclosures, consents, transfer restrictions, and notice and access provisions for which we may in the future need to build further infrastructure to support.

We cannot guarantee that we or our acquired companies prior to our acquisition thereof have been or will be fully compliant in every jurisdiction, due to lack of clarity concerning how existing laws and regulations governing educational institutions affect our business and lengthy governmental compliance process timelines.

Compliance requires, without limitation, making disclosures, obtaining consents, and restrictions on transferring data for which we may in the future need to build further infrastructure to support.

We cannot guarantee that we or our acquired companies have been or will be fully compliant in every jurisdiction, due to lack of clarity concerning how existing laws and regulations governing educational institutions affect our business and lengthy governmental compliance process timelines.

Moreover, as the education industry continues to evolve, increasing regulation by federal, state, and foreign agencies becomes more likely.

Recently, California adopted the Student Online Personal Information Protection Act which prohibits operators of online services used for K-12 school purposes from using or sharing student personal information and Colorado adopted House Bill 16-1423 designed to protect the use of student personal data in elementary and secondary school.

For example, California adopted the Student Online Personal Information Protection Act which prohibits operators of online services used for K-12 school purposes from using or sharing student personal information, Illinois adopted the Student Online Personal Protection Act which went into effect on July 1, 2021 and regulates how we collect and process data, and Colorado adopted House Bill 16-1423 designed to protect the use of student personal data in elementary and secondary school.

These acts do not apply to general audience Internet websites but it is unclear how these acts will be interpreted and the breadth of services that will be restricted by them.

Other states may adopt similar statutes.

Certain states have also adopted statutes, such as California Education Code § 66400, which prohibit the preparation or sale of material that should reasonably be known will be submitted for academic credit.

These statutes are directed at enterprises selling term papers, theses, dissertations, and the like, which we do not offer, and were not designed for services like ours which are designed to help students understand the relevant subject matter.

Although we will continue to work with academic institutions to enforce our honor code and otherwise discourage students from misusing our services, other states may adopt similar or broader versions of these types of statutes, or the interpretation of the existing or future statutes may impact whether they are cited against us or where we can offer our services.

Additionally, for-profit postsecondary institutions, many of which provide course offerings predominantly online, remain under intense regulatory and other scrutiny.

Allegations of abuse of federal financial aid funds and other statutory violations against for-profit higher education companies, even if unfounded, could negatively impact our opportunity to succeed due to increased regulation or decreased demand for our offerings.

Certain jurisdictions have also adopted statutes, such as California Education Code § 66400, which prohibit the preparation or sale of material that should reasonably be known will be submitted for academic credit.

These laws and regulations are directed at enterprises selling term papers, theses, dissertations, and the like, which we do not offer, and were not designed for services like ours which are designed to help students understand the relevant subject matter.

Although we will continue to work with academic institutions to enforce our honor code and otherwise discourage students from misusing our services, other jurisdictions (including international jurisdictions) may adopt similar or broader versions of these types of laws and regulations, or the interpretation of the existing or future laws and regulations may impact whether they are cited against us or where we can offer our services.

The adoption of any laws or regulations that adversely affect the popularity or growth in the use of the Internet particularly for educational services, including laws limiting the content and learning programs that we can offer, and the audiences that we can offer that content to, may decrease demand for our service offerings and increase our cost of doing business.

Future regulations, or changes in laws and regulations or their existing interpretations or applications, could also hinder our operational flexibility, raise compliance costs, and result in additional historical or future liabilities for us, resulting in adverse impacts on our business and our results of operations.

While we expect and plan for new laws, regulations, and standards to be adopted over time that will be directly applicable to the Internet and to our student-focused activities, any existing or new legislation applicable to our business could expose us to substantial liability, including significant expenses necessary to comply with such laws and regulations and potential penalties or fees for non-compliance, and could negatively impact the growth in the use of the Internet for educational purposes and for our services in particular.

expose us to substantial liability, including significant expenses necessary to comply with such laws and regulations and potential penalties or fees for non-compliance, and could negatively impact the growth in the use of the Internet for educational purposes and for our services in particular.

We may also run the risk of retroactive application of new laws to our business practices that could result in liability or losses.

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Any such developments could harm our business, results of operations, and financial condition.

Our business depends on general economic conditions and their effect on spending behavior by students and advertising budgets.

Our business is dependent on, among other factors, general economic conditions, which affect student spending and brand advertising.

The COVID-19 pandemic has adversely affected federal and state budgets for education and caused significant economic volatility.

To the extent that these trends continue or the economy stagnates or worsens, students may elect to not attend colleges and universities and reduce the amount they spend on educational content and textbooks.

In addition to decreased spending by students, colleges and brands may reduce their spend on our advertising services.

Any of the foregoing may have an adverse effect on our business.

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Colleges 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.

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Any reduction in the number of students directed to our website would harm our business and results of operations.

If we are required to discontinue certain of our current marketing activities, our ability to attract new students may be adversely affected.

Laws or regulations may be enacted which restrict or prohibit use of emails or similar marketing activities that we currently rely on.

CAN-SPAM regulates unsolicited commercial emails and imposes civil and criminal penalties for abusive practices;

the FTC imposes penalties on companies for misleading and deceptive marketing practices;

TCPA restricts telemarketing and the use of automated telephone equipment;

and CCPA requires us to make certain disclosures regarding our marketing practices, allows consumers to opt-out of certain data sharing practices.

Newly enacted laws such CDPA and CPA will place additional restrictions on our marketing practices.

Notwithstanding existing laws, we may discontinue use or support of these activities if we become concerned that students or potential students deem them intrusive or they otherwise adversely affect our reputation, goodwill and brand.

If our marketing activities are curtailed, our ability to attract new students may be adversely affected.

We are subject to U.S.

trade control laws that may impose restrict growth prospects and impose liability if we are non-compliant.

company with U.S.

origin software applications, we are required to comply with U.S.

trade controls.

Our activities are subject to U.S.

economic sanctions laws and regulations administered by the Department of the Treasury, Office of Foreign Assets Control (OFAC), which prohibit most transactions with embargoed jurisdictions or prohibited parties without a specific or general license from OFAC.

Additionally, the U.S.

Department of Commerce, Bureau of Industry and Security (BIS) administers the Export Administration Regulations (EAR), which restrict exports of software subject to the EAR to embargoed countries and prohibited parties.

Although we have taken precautions to prevent our platform, services and software applications from being provided in embargoed jurisdictions and to prohibited parties, and we continue to enhance our policies and procedures relating to sanctions and export compliance, we may not be able to prevent all transactions that are noncompliant with U.S.

trade controls.

Sanctions and export violations can result in significant fines or penalties, as well as reputational harm and loss of business.

Our customers outside of the United States generated approximately 11.1% of our net revenues during the year ended December 31, 2021, and our growth strategy includes further expanding our operations and customer base across all major global markets.

An escalation in sanctions or export controls against regions where we operate, or the issuance of new sanctions designations or export restrictions against individuals and entities located in various regions, could result in decreased ability to provide our platform, services and software applications to existing or potential customers.

Any limitation on our ability to operate in various global markets could adversely affect our business performance and growth prospects.

Risks Related to Taxes and Accounting Matters

We 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.

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Also, under the CARES Act, net operating loss arising in 2018, 2019 and 2020 can be carried back five years.

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In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the Code), our ability to utilize net operating loss carryforwards or other tax attributes, such as tax credits, in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.

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It is possible that any future ownership change could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.

Our effective tax rate may fluctuate as a result of new tax U.S.

and worldwide laws, our interpretations of those new tax laws, and final guidance on 2017 Tax Act, which are subject to significant judgments and estimates.

The ongoing effects of the new tax laws, 2017 Tax Act’s final guidance, and the refinement of provisional estimates could make our results difficult to predict.

Our effective tax rate may fluctuate in the future as a result of new tax laws and final guidance on 2017 Tax Act.

The new tax laws and 2017 Tax Act’s final guidance will have a meaningful impact on our provision for income taxes once we release our valuation allowance.

Due to the complexities involved in applying the provisions of new tax legislation and 2017 Tax Act’s final guidance, we may make reasonable estimates of the effects in our financial statements.

As we collect and prepare necessary data and interpret the new tax legislation as well as final guidance on 2017 Tax Act, we may make adjustments that could affect our financial position and results of operations as well as our effective tax rate in the period in which the adjustments are made.

The 2020 Finance Bill was passed by the Parliament of India as Financial Act with amendments.

The 2020 Finance Bill replaced the Dividend Distribution Tax on our distributing India entity with the withholding tax imposed on the U.S.

recipient shareholders.

As a result of the 2020 Finance Bill, we released $0.3 million of our withholding tax deferred tax liability related to deemed distributions from our entity in India.

Our 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.

We have employees in Germany, Israel, and India and we own a minority stake in a learning platform for high school and college students in Brazil.

Although today our international operations represent less than 10% of our total consolidated operating expenses, we expect to continue to expand our international operations, and to make our products and services available in more international markets.

International operations are subject to particular challenges and risks, some of which we may not currently face, including multiple languages, cultures, customs, tax systems, legal systems, alternative dispute systems, regulatory systems, and commercial infrastructures.

Further, such operations may exacerbate existing risks, including risks associated with employees, compliance with applicable foreign laws and regulations, protecting and enforcing intellectual property rights, and complying with anti-bribery laws.

New international markets may also have educational systems, technology, and online industries that are different, more regulated, or less well developed than those in the United States, and if we cannot address these challenges, it could have an adverse effect on our business, results of operations, and financial conditions.

Our effective tax rate may fluctuate as a result of new U.S.

and worldwide tax laws and our interpretations of those new tax laws, which are subject to significant judgments and estimates.

The ongoing effects of the new tax laws and the refinement of provisional estimates could make our results difficult to predict.

Our effective tax rate may fluctuate in the future as a result of new tax laws.

The new tax laws could have a meaningful impact on our provision for income taxes once we release our valuation allowance.

Due to the complexities involved in applying the provisions of new tax legislation, we may make reasonable estimates of the effects in our financial statements.

As we collect and prepare necessary data and interpret the new tax legislation, we may make adjustments that could affect our financial position and results of operations as well as our effective tax rate in the period in which the adjustments are made.

Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve subjective judgments and estimates by our management.

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These estimates and assumptions affect the reported values of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities.

We make critical estimates and assumptions involving accounting matters, including with respect to textbook library, revenue recognition, valuation of long-lived assets and goodwill, income taxes, and share-based compensation expense.

We make critical estimates and assumptions involving accounting matters including textbook library, revenue recognition, valuation of long-lived assets and goodwill, and share-based compensation expense.

These estimates and assumptions involve matters that are inherently uncertain and require us to make subjective and complex judgments.

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If we used different estimates and assumptions or used different methods to determine these estimates, our financial results could differ, which could have a material negative impact on our financial condition and reported results of operations.

For more information about our critical accounting policies and use of estimates,

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see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies, Significant Judgments and Estimates.”

Risks Related to Growth and Expansion

We intend to offer new products and services to students to grow our business.

If our efforts are not successful, our business, results of operations, and financial condition could be adversely affected.

Our ability to attract and retain students and increase their engagement with our learning platform depends on our ability to connect them with appropriate products, people, or services.

Part of our strategy is to offer students new products and services in an increasingly relevant and personalized way.

We may develop such products and services independently, by acquisition, or in conjunction with third parties.

In the future, we may invest in new products and services and other initiatives, but there is no guarantee these approaches will be successful.

If we are not able to manage the growth of our business both in terms of scale and complexity, our business could be adversely affected.

Acquisitions of new companies, products, and services create integration risk, while developing and enhancing products and services involves significant time, labor, and expense as well as other challenges, including managing the length of the development cycle, entering new markets, regulatory compliance, evolution of sales and marketing, and protecting proprietary rights.

Our growth strategy includes acquisitions, and we may not be able to execute on our acquisition strategy or integrate acquisitions successfully.

As part of our business strategy, we have made and intend to continue to make acquisitions to add specialized employees, complementary businesses, products, services, operations, or technologies.

To be successful, we must timely and efficiently integrate acquired companies, including their technologies, products, services, operations, and personnel.

Acquired companies can be complex and time consuming to integrate and we may incur significant integration costs and we may not be able to offset our acquisition costs.

Acquisitions involve many risks that may negatively impact our financial condition and results of operations, including the risks that the acquisitions may:

• require us to incur charges and substantial debt or liabilities;

• cause adverse tax consequences, substantial depreciation, or deferred compensation charges;

• give rise to various litigation and regulatory risks.

• we may encounter difficulties or unforeseen expenditures to integrate an acquired company;

• an acquisition may disrupt our business, divert resources, increase expenses, and distract our management;

• an acquisition may reduce or delay adoption and engagement rates for our acquired products and services because of student uncertainty about continuity and effectiveness;

• we may not successfully transition acquired users to the Chegg platform and therefore may not realize the potential benefits of these acquisitions;

• it may be difficult to monetize any acquired products and services;

• an acquisition may not ultimately be complementary to our offerings;

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• an acquisition may involve the entry into markets where we have little or no prior experience.

Our ability to acquire and integrate larger or more complex businesses, products, services, operations, or technologies in a successful manner is unproven.

We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all.

For more information about our critical accounting policies and use of estimates, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies, Significant Judgments and Estimates.”

Risks Related to Intellectual Property

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If we become liable, third parties may initiate litigation against us and our business may suffer.

For example, in June 2017, the Examinations Institute of the American Chemical Society filed a complaint against us in the U.S.

District Court for the Northern District of California claiming, among other things, that we infringed their copyrights by answering and displaying questions uploaded by our users to our Q&A service.

For example, on September 13, 2021, Pearson Education, Inc.

(Pearson) filed a complaint captioned Pearson Education, Inc.

(Pearson Complaint) in the United States District Court for the District of New Jersey against the Company (Case 2:21-cv-16866), alleging infringement of Pearson’s registered copyrights and exclusive rights under copyright in violation of the United States Copyright Act.

Others may send us communications that make allegations without initiating litigation.

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However, we may be unable to secure intellectual property protection for all of our technology and methodologies or the steps we take to enforce our intellectual property rights may be inadequate.

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be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace, and our ability to attract customers may be adversely affected.

If the protection of our intellectual property and proprietary rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace, and our ability to attract customers may be adversely affected.

Third parties may challenge any patents, copyrights, trademarks, and other intellectual property and proprietary rights owned or held by us.

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We have in the past received and expect to continue to receive, communications alleging that physical textbooks sold or rented by us are counterfeit.

While our fulfillment partner has systems for inspecting the physical textbooks in our catalog of textbooks, many of the textbooks sold or rented to students are shipped directly from our suppliers, and, despite inspection, unauthorized or counterfeit textbooks may inadvertently be included in the catalog of textbooks we offer and may be, without our knowledge that they are unauthorized or counterfeit, subsequently sold or rented by us to students, and we may be subject to allegations of civil or criminal liability.

civil or criminal liability.

We may implement additional measures in an effort to protect against these potential liabilities that could require us to spend substantial resources.

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Any requirement to disclose our proprietary source code or pay damages for breach of contract could have a material adverse effect on our business, financial condition and results of operations.

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Risks Related to Data Privacy

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Our facilities are also vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures, and similar events.

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Our facilities and information systems, as well as those of our third-party service providers, are also subject to break-ins, sabotage, intentional acts of vandalism, cybersecurity risks including cyberattacks such as computer viruses and denial of service attacks, the failure of physical, administrative, and technical security measures, terrorist acts, natural disasters, human error, the financial insolvency of our third-party vendors, and other unanticipated problems or events.

These information systems have periodically experienced and will continue to experience both directed attacks and loss of, misuse of, or theft of data.

For example, on or about April 9, 2020, we had a breach in which an outside hacker may have illegally obtained personal information, including name and social security number, from approximately 700 current and former employees.

We notified impacted employees and regulatory officials, and made a credit-monitoring service available, at no charge, to impacted current and former employees.

Moreover, due to the current COVID-19 pandemic, there is an increased risk that we may experience cybersecurity related incidents as a result of our employees, service providers, and third parties working remotely on less secure systems.

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Any changes in such laws and regulations or a change or differing interpretation or application to our business of the existing laws and regulations, including the GDPR, could also hinder our operational flexibility, raise compliance costs and, particularly if our compliance efforts are deemed to be insufficient, result in additional historical or future liabilities and regulatory scrutiny for us, resulting in adverse impacts on our business and our results of operations.

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In addition, we may be subject to regulatory investigations or litigation in connection with a security breach or related issue, and we could also be liable to third parties for these types of breaches.

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District Court for the Northern District of California against us and our CEO.

The complaint was filed by a purported Chegg stockholder and alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, based on allegedly misleading statements regarding our security measures to protect users’ data and related internal controls and procedures, as well as our second quarter 2018 financial results.

The complaint was filed by a purported Chegg stockholder and alleges claims under Sections 10(b) and 20(a) of the Exchange Act, as amended, based on allegedly misleading statements regarding our security measures to protect users’ data and related internal controls and procedures, as well as our second quarter 2018 financial results.

Such litigation, regulatory investigations, and our technical activities intended to prevent future security breaches are likely to require additional management resources and expenditures.

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Additionally, if third parties we work with, such as colleges and brands, violate applicable laws or our policies, such violations may also put our student users’ information at risk and could in turn have an adverse effect on our business.

We 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.

We have internal and publicly posted policies regarding our collection, processing, use, disclosure, deletion and security of information.

Although we endeavor to comply with our policies and documentation, we may at times fail to do so or be accused of having failed to do so.

The publication of our privacy policies and other documentation that provide commitments about data privacy and security can subject us to potential actions if they are found to be deceptive, unfair, or otherwise misrepresent our actual practices, which could materially and adversely affect our business, financial condition and results of operations.

In addition, compliance with inconsistent or new privacy and cybersecurity laws could impact our business

strategies and the availability of previously useful data, increase our potential liability, increase our compliance costs, require changes in business practices and policies and adversely impact our business.

Public scrutiny of Internet privacy issues may result in increased regulation and different industry standards, which could deter or prevent us from providing our current products and services to students, thereby harming our business.

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Any significant change to applicable laws, regulations or industry standards or practices regarding the use or disclosure of data that students choose to share with us or regarding the manner in which the express or implied consent of consumers for such use and disclosure is obtained may require us to modify our products and services, possibly in a material manner, and may limit our ability to develop new products and services that make use of the data that we collect about our student users.

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Our reputation and relationships with students, tutors, and educators would be harmed if our users’ data, particularly billing data, were to be accessed by unauthorized persons.

We maintain personal data regarding students, tutors, and educators, who use our platform through our Thinkful service, including names and, in many cases, mailing addresses, and, in the case of tutors and educators, information necessary for payment and tax filings.

We maintain personal data regarding students, tutors, and educators, including names and, in many cases, mailing addresses, and, in the case of tutors and educators, information necessary for payment and tax filings.

We take measures to protect against unauthorized intrusion into our users’ data.

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In the past, the publication of such commentary about us by a disclosed short seller has precipitated a decline in the market price of our common stock, and future similar efforts by other short sellers may have similar effects.

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In addition, if we are subject to unfavorable allegations promoted by short sellers, even if untrue, we may have to expend a significant amount of resources to investigate such allegations and defend ourselves from possible shareholder suits prompted by such allegations, which could adversely impact our business, results of operations, and financial condition.

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This exclusive forum provision will not apply to claims that are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of Chancery of the State of Delaware does not have subject matter jurisdiction.

For instance, the provision would not preclude the filing of claims brought to enforce any liability or duty created by the Exchange Act or Securities Act or the rules and regulations thereunder in federal court.

For instance, the provision would not preclude the filing of claims brought to enforce any liability or duty created by the Exchange Act or Securities Act of 1933, as amended (Securities Act) or the rules and regulations thereunder in federal court.

Our 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.

In June 2020, our board of directors approved a securities repurchase program authorizing our repurchase of up to $500.0 million of our common stock and/or convertible notes, through open market purchases, block trades, and/or privately negotiated transactions or pursuant to Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements.

In November 2021, our board of directors approved a $500.0 million increase to our existing securities repurchase program authorizing the repurchase of up to $1.0 billion of our common stock and/or convertible notes, through open market purchases, block trades, and/or privately negotiated transactions or pursuant to Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements.

The timing, volume, and nature of the repurchases will be determined by management based on the capital needs of the business, market conditions, applicable legal requirements, and other factors.

Through December 31, 2020, we have repurchased $57.4 million of aggregate principal amount of the 2023 notes in privately-negotiated transactions for an aggregate consideration of $149.6 million and have $350.4 million remaining under the repurchase program.

The repurchase program will end on December 31, 2021.

During the year ended December 31, 2021, we entered into an accelerated share repurchase (ASR) agreement for $300.0 million and repurchased $100.0 million of aggregate principal amount of the 2025 notes in privately-negotiated transactions for an aggregate consideration of $184.9 million.

During the year ended December 31, 2020, we repurchased $57.4 million of aggregate principal amount of the 2023 notes in privately-negotiated transactions for an aggregate consideration of $149.6 million.

As of December 31, 2021 $365.5 million remains under the repurchase program, which has no expiration date and will continue until otherwise suspended, terminated or modified at any time for any reason by our board of directors.

Repurchases pursuant to our securities repurchase program could affect the price of our common stock and increase its volatility.

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Additionally, repurchases under our securities repurchase program will diminish our cash reserves, which could impact our ability to further develop our business and service our indebtedness.

There can be no assurance that any repurchases will enhance stockholder

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value because the market price of our common stock may decline below the levels at which we repurchased such shares.

There can be no assurance that any repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares.

Any failure to repurchase securities after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price.

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Servicing our convertible senior notes requires a significant amount of cash, and we may not have sufficient cash flow or cash on hand to repay them, settle conversions in cash or to repurchase them upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase.

In August 2020, we issued $1.0 billion in aggregate principal amount of our 0.0% convertible senior notes due 2026 (the 2026 notes).

In March/April 2019, we issued $800 million in aggregate principal amount of 0.125% convertible senior notes due 2025 (the 2025 notes).

In April 2018, we issued $345 million in aggregate principal amount of our 0.25% convertible senior notes due 2023 (the 2023 notes and together with the 2026 notes and the 2025 notes, the notes).

In August 2020, we issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 (2026 notes).

The aggregate principal amount of the 2026 notes includes $100 million from the initial purchasers fully exercising their option to purchase additional notes.

In March 2019, we issued $700 million in aggregate principal amount of 0.125% convertible senior notes due in 2025 (2025 notes) and in April 2019, the initial purchasers fully exercised their option to purchase $100 million of additional 2025 notes for aggregate total principal amount of $800 million.

The 2025 notes and 2026 notes are collectively referred to as the “notes.” The notes were issued in private placements to qualified institutional buyers pursuant to Rule 144A of the Securities Act .

Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the notes, depends on our future performance, which is subject to many factors, including, economic, financial, competitive and other, beyond our control.

We may not be able to generate cash flow from operations, in the foreseeable future, sufficient to service our debt and make necessary capital expenditures and may therefore be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance the notes, which may not be redeemed prior to September 2023 for the 2026 notes, March 2022 for the 2025 notes, and May 2021 for the 2023 notes subject to certain conditions related to the price of our common stock, will depend on the capital markets and our financial condition at such time.

Our ability to refinance the notes, which may not be redeemed prior to September

2023 for the 2026 notes, March 2022 for the 2025 notes subject to certain conditions related to the price of our common stock, will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, and limit our flexibility in planning for and reacting to changes in our business.

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Moreover, damage to or total destruction of our executive offices resulting from earthquakes may not be covered in whole or in part by any insurance we may have.

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UNRESOLVED STAFF COMMENTS

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 1A. Risk Factors