What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-02-20 compared with 2023-02-21 · 237 added, 217 removed, 508 unchanged (47% of the section changed)

5 unchanged sentences

This summary does not address all of the risks that we face.

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.

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.

Risks Related to Our Business and Growth

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

colleges may continue to face reduced enrollment and students may continue to take fewer and less rigorous classes, which could negatively impact our business and results of operations.

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

• If we fail to innovate and offer new products and services in response to rapidly evolving technological and market developments, including AI, our competitive position and business prospects may be harmed.

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

colleges have faced, and may continue to face, reduced enrollment, which could negatively impact our business and results of operations.

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

• 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 historical growth may not be indicative of our future growth, and we expect our revenue growth rate to decline compared to prior years.

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

• If we fail to innovate in response to rapidly evolving technological and market developments, including artificial intelligence, our competitive position and business prospects may be harmed.

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

• We have a limited operating history in international jurisdictions and our expansion efforts into international markets may not be successful.

• The uncertainty surrounding the evolving educational landscape, including the impact of AI on learning and education, the state of the student including the amount and the extent to which AI will impact study habits and how students learn and/or complete their assignments, and the demand for our evolving offerings make it difficult to predict our operational trends and results of operations.

• If our efforts to drive user traffic, including search engine optimization, social media campaigns, and other marketing, are not successful, student discovery of, and engagement with, our learning platform could decline, which may harm our business and results of operations.

• 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.

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

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

• 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.

20 unchanged sentences

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

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

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

Our actual results could differ from the estimates and assumptions used to prepare our consolidated financial statements.

Risks Related to Intellectual Property

• Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations.

• Misuse of our platform and content, including digital piracy and improper sharing and misappropriation of user credentials, may continue to adversely affect our business, financial condition, and results of operation.

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

• Changes in or our failure to comply with the requirements for eligibility for the Digital Millennium Copyright Act (DMCA) safe harbors could harm our business.

• Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations.

• We are, and may in the future be, subject to intellectual property claims, which are costly to defend and could harm our business, financial condition, and results of operations.

12 unchanged sentences

Risks Related to Our Business and Growth

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

Our future revenue and growth depend on our ability to continue to attract new learners to, and retain existing learners 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 retention and the level of engagement by existing students with our learning platform.

The substantial majority of our revenues depends on small transactions made by a widely dispersed student population with an inherently high rate of turnover primarily as a result of graduation.

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

• 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;

The rate at which our student user base expands or declines, the rate at which we retain existing students, and the engagement with our learning platform may fluctuate because of several factors, including, among others:

• our ability to engage students with our suite of Subscription Services and the content contained therein;

• our ability to introduce new products and services that are favorably received by students, including a new AI-enabled interactive and personalized user experience;

• our ability to convert visitors to paying subscribers given the availability of free competitors and content;

• piracy and unauthorized use of our content;

• the decreasing number of students attending U.S.

• our ability to localize our content, localize our pricing, localize our payment and commerce tools, and create new apps in different languages and for different geographies to further our international expansion through increased conversion and retention;

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

• our ability to increase our total addressable market beyond STEM-B (science, technology, engineering, mathematics and business);

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

• changes in student spending levels and habits;

• the decreasing number of students attending U.S.

• the effectiveness of our sales and marketing efforts, including generating word-of-mouth referrals.

If we do not attract more students, retain our existing students, or if students do not increase their level of engagement with our platform, our revenues may grow more slowly than expected or decline.

If we do not attract more students, retain our existing students, or if students do not increase their level of engagement with our platform, our revenues will continue to decline.

The student demographic is characterized by rapidly changing tastes, preferences, behavior, brand loyalty, and price sensitivity.

Developing an enduring business model to serve this population is particularly challenging.

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.

Attracting new students depends not only on our investment in our brand and content and our

marketing efforts, but also on the perceived value of our products and services versus alternatives, some of which are free.

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.

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, adequately prevent unauthorized account sharing of our subscription program services, or prevent the piracy and illegal reproduction of our content.

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.

Having a strong brand can 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, including artificial intelligence and machine learning, 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, college, graduate school, lifelong learners throughout their careers, 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;

• ensure that our experts' content is reliable and helpful;

• 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 and regulatory agencies regarding how students use our content offerings, such as our Expert Questions and Answers service;

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

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

The uncertainty surrounding the evolving educational landscape, the demand and market for our products and services, and the lingering impact of the COVID-19 pandemic 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;

• develop and pursue a profitable business model and pricing strategy;

• acquire complementary products and services to expand and enhance our offerings;

• attract and retain students and increase their engagement with our content;

• expand our offerings internationally;

• 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 each academic term.

We anticipate that our ability to accurately forecast financial results for future periods will be most limited at the time we present our second quarter financial results, which will generally occur midsummer and precede the “fall rush.” Additionally, we expect our results of operations to fluctuate in the future based on a variety of factors, many of which are outside our control and difficult to predict.

As a result, period-to-period comparisons of our results of operations may not be a good indicator of our future or long-term performance.

The following factors may affect us from period-to-period and may affect our long-term performance:

• our ability to attract, retain and engage students with our offerings;

• changes to search engines and application marketplaces that drive traffic to our platform;

• the rate of adoption of our offerings;

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

• the trend of declining college enrollment;

• rapidly changing technological developments, such as artificial intelligence and machine learning, that may disrupt the education landscape;

• the number and 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;

• our ability to integrate acquired businesses, including personnel;

• our ability to identify and target sales of complementary products and services to our students;

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

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

• general macroeconomic conditions, including inflation, recession, and the war in Ukraine.

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.

colleges may continue to face reduced enrollment and students may continue to take fewer and less rigorous classes, which could negatively impact our business and results of operations.

According to the National Student Clearinghouse, total undergraduate college enrollment in the United States has decreased by over 7%, or a loss of over 1 million students, since the beginning of the COVID-19 pandemic.

If we fail to innovate and offer new products and services in response to rapidly evolving technological and market developments, including AI, our competitive position and business prospects may be harmed.

Our future success depends, in part, on our ability to anticipate and respond effectively to the threat and opportunity presented by new technology disruption and developments.

These include new software applications or related services based on AI and machine learning, among other developments.

New technologies, including those based on AI, can provide students with more immediate responses than traditional tools.

Over time, the accuracy of these tools and their ability to handle complex questions may improve, which may be disruptive to education technology businesses, such as ours.

Our success also depends, in part, on our ability to develop and scale a high-performance technology infrastructure to efficiently handle increased usage by students, especially during peak periods each academic term.

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

In April 2023, we announced our pivot to AI with a partnership with OpenAI to utilize GPT-4 in our offerings;

and in August 2023, we announced a partnership with Scale AI to develop proprietary LLMs to provide a generative experience through Chegg as a personalized learning assistant.

Beginning in September 2023, we started to roll out the first phase of our new AI-powered user experience, and we are continuing to make significant investments in AI initiatives.

If our new offerings or changes to existing offerings fail to engage students, or if our business plans are unsuccessful, we may fail to attract or retain students or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be materially adversely affected.

We cannot predict the effect of technological changes on our business.

Failure to keep pace with these technological developments or otherwise bring to market products that reflect these technologies could have a material adverse impact on our overall business and results of operations.

We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis.

We may invest in new products, 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.

The effort to gain technological expertise and develop new technologies in our business requires us to incur significant expenses.

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

If we cannot offer new technologies as quickly as our competitors, or if our competitors develop more cost-effective technologies or product offerings, we could experience a material adverse effect on our operating results, growth and financial condition.

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

Our products and services compete for students, and we expect such competition to increase as our industry evolves rapidly .

We face significant competition from education and learning companies, many of which are developing their own AI products and technologies, as well as other companies that are not specifically focused on education and learning services but whose broad AI offerings may nonetheless significantly impact education and learning.

Our services face competition from other education and learning companies based on the particular offering.

These competitors are using AI technology to build on their historical offerings.

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

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

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

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

For Skills, 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.

Our competitors that are not specifically focused on education and learning services but whose AI offerings may impact education

and learning include companies such as Google, OpenAI, Microsoft, Meta, and Anthropic.

Certain educational institutions, such as the University of Michigan, are also developing AI tools which may compete with our offerings.

AI technologies may also significantly facilitate the entry of new competitors into our industry.

Our competition may develop products and technologies that are similar or superior to our technologies or are more cost-effective to develop and deploy.

Given the long history of development in the AI sector, other parties may have (or in the future may obtain) patents or other proprietary rights that would prevent, limit, or interfere with our ability to make, use, or sell our own AI products.

Further, our ability to continue to develop and effectively deploy AI technologies is dependent on access to specific third-party large language models, equipment and other physical infrastructure, such as processing hardware and network capacity, as to which we cannot control the availability or pricing, especially in a highly competitive environment.

Some of our competitors have adopted, and may continue to adopt, aggressive pricing policies (including free offerings), less stringent standards for user-uploaded content, and devote substantially more resources to marketing, website, and systems development than we do.

We also face risks from strategic alliances by other education ecosystem participants.

New competition may come from companies with greater brand recognition, and have significantly greater financial, marketing, and other resources than we do.

We may, in the future, establish alliances or relationships with other competitors or potential competitors.

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

colleges have faced, and may continue to face, reduced enrollment, which could negatively impact our business and results of operations.

According to the National Student Clearinghouse, since 2010, total undergraduate college enrollment in the United States has decreased by approximately 2.8 million.

Chegg derives a significant portion of its revenue from students attending U.S.

3 unchanged sentences

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, Canada, 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.

In addition to our employee base in the United States, we have employees in Canada, 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.

1 unchanged sentence

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 have a limited operating history in international jurisdictions and our expansion efforts into international markets may not be successful.

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.

20 unchanged sentences

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.

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

We depend in part on various search engines to direct a significant amount of traffic to our website.

Similarly, we depend on mobile app stores such as Google Play Store and the Apple App Store to allow students to locate and download Chegg mobile applications that enable our services.

Our ability to maintain the number of students directed to our website is not entirely within our control.

Our competitors’ SEO efforts may result in their websites receiving a higher search result page ranking than ours, or search engines could revise their methodologies to improve their search results, which could adversely affect the placement of our search result page ranking.

If search engine companies modify their search algorithms in ways that are detrimental to our search result page ranking or in ways that make it harder for students to find our website, or if our competitors’ SEO efforts are more successful than ours, overall growth could slow, including the number of subscribers to Chegg Services, student engagement could decrease, and fewer students may use our platform.

The uncertainty surrounding the evolving educational landscape, including the impact of AI on learning and education, the state of the student including the amount and the extent to which AI will impact study habits and how students learn and/or complete their assignments, 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 state of the student, 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.

Given the current environment of uncertainty, we may not be able to provide annual financial guidance.

Additionally, we expect our results of operations to fluctuate in the future based on a variety of factors, many of which are outside our control and difficult to predict.

As a result, period-to-period comparisons of our results of operations may not be a good indicator of our future or long-term performance.

The following factors, including the risks more fully described throughout this "Risk Factors" section, may affect us from period-to-period and may affect our long-term performance:

• our ability to attract, retain and engage students with our offerings;

• rapidly changing technological developments, such as AI and machine learning, that may disrupt the education landscape and our response to those developments, including our ability to successfully integrate AI technology into our offerings;

• increased competition as a result of advances in AI technology from companies that have not historically competed with us in education services, such as Alphabet, OpenAI, Microsoft, Meta, and Anthropic;

• changes to the way students discover our content or a decline in our search engine result page rankings;

• the rate of adoption of our offerings;

• the trend of declining college enrollment;

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

• our ability to accurately forecast financial results for future periods, especially at the time we present our second quarter financial results, which will generally occur midsummer and precede our “fall rush”;

• our ability to integrate acquired businesses, including personnel;

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

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

• general macroeconomic conditions, including inflation, recession, and global conflicts.

If our efforts to drive user traffic, including search engine optimization, social media campaigns, and other marketing, are not successful, student discovery of, and engagement with, our learning platform could decline, which may harm our business and results of operations.

We have depended in the past on various search engines and free marketing tools to direct a significant amount of traffic to our website, but we are increasingly investing in other channels, including social media campaigns, to drive traffic and make us more discoverable to students.

Similarly, we depend on mobile app stores such as the Google Play Store and the Apple App Store to allow students to locate and download Chegg mobile applications that enable our services.

Our ability to maintain the number of students directed to our learning platform is not entirely within our control.

Our competitors’ efforts to drive student discovery of, and engagement with, their offerings may be more successful than ours.

Their websites may receive a higher search result page ranking than ours, or search engines could revise their methodologies or algorithms in ways that could adversely affect the placement of our search result page ranking or otherwise make it harder for students to find our learning platform.

Our website has experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future.

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

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, content, 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.

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.

Our historical growth may not be indicative of our future growth, and we expect our revenue growth rate to decline compared to prior years.

We experienced volatile revenue growth in recent periods with revenues of $766.9 million and $776.3 million during the years ended December 31, 2022 and 2021, respectively.

You should not rely on our revenue for any previous quarterly or annual period as any indication of our revenue or revenue growth in future periods.

As we grow our business, we expect our revenue growth rates to decline compared to prior years or turn negative for a number of reasons, which may include more challenging comparisons to prior periods as our revenue grows, lower revenues from print textbooks as a result of our partnership with GT Marketplace, LLC (GT) beginning in April 2022, slowing demand for our platform or offerings, increasing competition, increasing regulation, lower enrollment in higher education, a decrease in the growth of our overall market or market saturation, and our failure to capitalize on growth opportunities.

In addition, our growth rates are likely to experience increased volatility, and may decline or turn negative, as the world recovers from the COVID-19 pandemic and societal and economic circumstances shift.

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, 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, we face competition from other equation solver services, such as Photomath, Gauthmath, and Symbolab.

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

white-label and co-branded providers who compete for adult learners through third party institutions, including 2U, Inc., Simplilearn, and Kenzie Academy.

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.

We also face risks from strategic alliances by other education ecosystem participants.

New competition may come from companies with greater brand recognition, and have significantly greater financial, marketing, and other resources than we do.

We may, in the future, establish alliances or relationships with other competitors or potential competitors.

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

If we fail to innovate in response to rapidly evolving technological and market developments, including artificial intelligence, our competitive position and business prospects may be harmed.

Our future success depends, in part, on our ability to anticipate and respond effectively to the threat and opportunity presented by new technology disruption and developments.

These may include new software applications or related services based on artificial intelligence, machine learning, or robotics.

We may be exposed to competitive risks related to the adoption and application of new technologies by established market participants or new entrants, start-up companies and others.

New technologies, including those based on artificial intelligence, can provide students with more immediate responses than traditional tools.

Over time, the accuracy of these tools and their ability to handle complex questions may improve, which may be disruptive to education technology businesses, such as ours.

We cannot predict the effect of technological changes on our business.

We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis.

Additionally, the effort to gain technological expertise and develop new technologies in our business requires us to incur significant expenses.

Similarly, our competitors may achieve higher social media engagement than ours, social media companies may alter their algorithms in ways that disadvantage our content, or the social media platforms we use may become less popular with students, each of which may adversely impact the effectiveness of our campaigns.

If our competitors’ efforts to increase user traffic are more successful than ours, overall growth could slow, including the number of Subscription Services subscribers, student engagement could decrease, and fewer students may use our platform.

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

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.

Having a strong brand can 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, including AI and machine learning, 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, college, graduate school, lifelong learners throughout their careers, and internationally;

• ensure that our experts' content is reliable and helpful;

• 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, especially as we introduce our new AI-enabled interactive and personalized user experience;

• the quality and accuracy of our content;

• 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 and regulatory agencies regarding how students use our content offerings, such as our Expert Questions and Answers service;

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

• the reputation of the products and services of competitive companies;

• students’ misuse of our products and services in ways that violate our Terms of Use, our Honor Code, other company policies, applicable laws, or the code of conduct at their educational institutions.

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.

Adverse economic conditions, including inflation, rising interest rates, market uncertainty, and war (including the war in Ukraine and the Israel-Hamas war), may adversely impact our ability to attract new students to, and retain existing students on, our platform.

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

In addition to decreased spending by students as a result of these economic conditions, business partners may reduce their spend on our offerings and brands may reduce their spend on our advertising services.

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

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

We have experienced significant net losses since our incorporation in July 2005, and we may continue to experience net losses in the future.

We have experienced cumulative net losses since our incorporation in July 2005, and we may continue to experience net losses in the future.

As of December 31, 2023, we had an accumulated deficit of $52.4 million.

3 unchanged sentences

We may encounter unforeseen expenses, challenges, complications, delays, and other unknown factors, as we pursue our business plan.

While our Subscription Services revenues have grown in recent periods, this growth may not be sustainable and we may not be able to achieve or maintain profitability.

During the year ended December 31, 2023, we have experienced a 6% decrease in Subscription Services subscribers and a 5% decrease in Subscription Services revenue year-over-year.

Although we expect to continue to make significant investments in efforts to attract new, and retain existing, subscribers and increase Subscription Services revenue, we may not succeed in doing so.

To sustain profitability, we may need to change our operating infrastructure, scale our operations more efficiently, reduce our costs, or implement changes in our product and services offerings.

If we fail to timely implement these changes or we cannot implement them for any reason, including due to factors beyond our control, our business may suffer, which may hinder our ability to sustain or increase such profitability.

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 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, brands may reduce their spend on our advertising services.

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

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.

5 unchanged sentences

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.

Our 2013 Equity Incentive Plan terminates on June 6, 2023.

We expect that our shareholders will vote on a new equity incentive plan at our upcoming annual shareholders meeting for 2023.

If our shareholders do not approve our new equity incentive plan, we may not be able to compensate our key employees commensurate with other companies in the San Francisco Bay Area with whom we compete for talent, and we may lose their services.

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.

As of December 31, 2023, there were 11,877,920 shares available for grant under the 2023 Equity Incentive Plan.

Given the number of shares available for grant and given the decrease in our stock price, we may need to request that our shareholders vote on a new equity incentive plan sooner than previously anticipated.

If our shareholders do not approve a new equity incentive plan or if we are not able to grant employees the appropriate number of shares, we may not be successful in compensating our key employees commensurate with other technology companies with whom we compete for talent, and we may lose their services.

In addition, we may not be able to attract their replacements.

If we cannot retain our key employees, we may not be able to achieve our business objectives and our financial condition could be materially negatively impacted.

If we cannot retain our key employees or attract adequate replacements, we may not be able to achieve our business objectives and our financial condition could be materially negatively impacted.

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

1 unchanged sentence

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.

Each operating system provider has broad discretion to make changes to its operating systems or payment services or change the manner in which their mobile operating systems function and to change and interpret its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us.

For example, such changes could limit, eliminate or otherwise interfere with our products, our ability to distribute our applications through their stores, our ability to update our applications, including to make bug fixes or other feature updates or upgrades, the features we provide, the manner in which we market our products, our ability to access native functionality, or other aspects of mobile devices, and our ability to access information about our users that they collect.

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.

16 unchanged sentences

Our reliance makes us vulnerable to any errors, interruptions, or delays in their operations.

Any disruption in the services provided by third-party providers, including AWS, could harm our reputation or

brand, cause us to lose subscribers or revenues or incur substantial recovery costs and distract management from operating our business.

Further, these third-party software and service providers may experience operational difficulties, including increased usage of their software and services from time to time.

If they cannot adapt to the increase in demand or fail to ensure availability of their software and services, our ability to service users’ requests may be impacted, which could have an adverse impact on our result of operations.

Any disruption in the services provided by third-party providers, including AWS, could harm our reputation or brand, cause us to lose subscribers or revenues or incur substantial recovery costs and distract management from operating our business.

Further, these third-party software and service providers may experience operational difficulties, including increased

usage of their software and services from time to time.

AWS may terminate its agreement with us upon 30 days’ notice.

2 unchanged sentences

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.

Our recent prior acquisitions include Busuu, Mathway, and Thinkful.

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

14 unchanged sentences

• 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.

• an acquisition may involve 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.

1 unchanged sentence

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.

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.

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.

Our business strategy includes increasing our revenues from brand advertising.

Brands may not do business with us, or may reduce their advertising spend with us, if we do not deliver ads, sponsorships, and other commercial content and marketing programs effectively, or if they do not believe that their investment will generate a competitive return relative to other alternatives.

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.

Brands may not do business with us, or may reduce their advertising spend with us, if we do not deliver ads, sponsorships, and other commercial content and marketing

programs effectively, or if they do not believe that their investment will generate a competitive return relative to other alternatives.

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.

24 unchanged sentences

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.

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.

Our business is seasonal, and disruptions during peak periods can make, and have made, our operating results difficult to predict.

7 unchanged sentences

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 business activities, including Thinkful;

Our ability to deliver course content to students enrolled in Chegg Skills (formerly 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.

Chegg Skills' 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 business activities, including Chegg Skills;

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.

10 unchanged sentences

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.

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.

Similarly, the adoption of any laws or regulations affecting the ability of service providers to periodically charge consumers for, among other things, recurring subscription payments may materially adversely affect our business, financial condition and results of operations.

Legislation or regulation regarding the foregoing, or changes to existing legislation or regulation governing subscription payments, are being considered in many U.S.

We have been in the past, and may be in the future, subject to claims under such laws or regulations.

As the regulatory framework for machine learning, artificial intelligence, and automated decision making evolves, our business, financial condition, and results of operations may be adversely affected by related laws or regulations.

It is possible that new laws and regulations will be adopted in the U.S.

(at the federal or state level) or in non-U.S.

jurisdictions, or that existing laws and regulations may be interpreted in ways that would affect the operation of our business, including our learning platform and the ways in which we use artificial intelligence and machine learning technology.

We may not always be able to anticipate how regulators will apply existing laws to AI, predict how new legal frameworks will develop to address AI, or otherwise respond to these frameworks as they are still rapidly evolving.

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.

29 unchanged sentences

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 15% of our net revenues during the year ended December 31, 2022, and our growth strategy includes further expanding our operations and customer base across all major

global markets.

Our customers outside of the United States generated approximately 14% of our net revenues during the year ended December 31, 2023, 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.

20 unchanged sentences

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.

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

Our actual results could differ from the estimates and assumptions used to prepare our consolidated financial statements.

The accounting standards that we use in preparing our financial statements are often complex and require us to make significant estimates and assumptions in interpreting and applying those standards.

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 revenue recognition and deferred revenue, impairment of acquired intangible assets and other long-lived assets, goodwill and indefinite lived intangible assets, share-based compensation expense, and benefit from (provision for) income taxes.

These estimates and assumptions affect the

reported values of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities.

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

Although we believe we have the experience and processes to enable us to formulate appropriate assumptions and produce reasonably dependable estimates, these assumptions and estimates may change significantly in the future and could result in the reversal of previously recognized revenues and profit.

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.

1 unchanged sentence

Risks Related to Intellectual Property

Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations.

Our success and ability to compete depends in part on our intellectual property and our other proprietary business information.

We rely and expect to continue to rely on a combination of trademark, copyright, patent, and trade secret protection laws, as well as confidentiality and license agreements with our employees, consultants, and third parties with whom we have relationships to protect our intellectual property and proprietary rights.

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.

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.

Third parties may knowingly or unknowingly infringe, misappropriate, or otherwise violate our patents, copyrights, trademarks, and other proprietary rights and we may not be able to prevent infringement, misappropriation, or other violations.

Any attempt by us to prevent or address such violations may involve substantial expense to us.

Additionally, if we fail to protect our domain names, it could adversely affect our reputation and brand and make it more difficult for students to find our website, our content, and our services.

If we pursue litigation to assert our intellectual property or proprietary rights, an adverse decision could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights, or otherwise negatively impact our business, financial condition, and results of operations.

We are a party to a number of third-party intellectual property license agreements.

For example, we have entered into agreements with textbook publishers that provide access to textbook questions and other content for our Chegg Study subscription service.

We cannot guarantee that the third-party intellectual property we license will not be licensed to our competitors or others in our industry.

In the future, we may want or need to obtain additional licenses or renew existing license agreements.

We cannot predict whether other license agreements can be obtained or renewed on acceptable terms, or at all.

For example, our license agreements with multiple textbook publishers, including Pearson Education, Inc.

expired or terminated without renewal.

Any failure to obtain or renew such third-party intellectual property license agreements on commercially competitive terms could adversely affect our business and results of operations.

Misuse of our platform and content, including digital piracy and improper sharing and misappropriation of user credentials, may continue to adversely affect our business, financial condition, and results of operation.

A substantial portion of our revenue comes from our Subscription Services and the distribution of our educational content to our paid subscribers through our learning platform.

Our content has been subject to unauthorized copying and widespread digital dissemination without an economic return to us.

Some students may misuse our products and services in ways that violate our Terms of Use, our Honor Code, other company policies, applicable laws, or the code of conduct at their educational institutions.

We have experienced improper sharing and misappropriation of user credentials, allowing for parties to access content and services that they have not paid for.

Through such misuse of our platform and content, students may be able to access our offerings for free or at a reduced cost relative to our paid subscription, which has and may continue to negatively impact our ability to attract students to, and retain students on, our platform.

The impact of misuse of our platform and content on our revenues and subscriptions is hard to quantify, but we believe that illegal copying and dissemination of our content, improper sharing and misappropriation of user credentials, and other forms of unauthorized activity have had a substantial

negative impact on our revenues and subscriptions.

Also, despite the potential benefits of AI technology, the advancement of AI may increase certain risks and adverse impacts associated with misuse of our content, including the development of AI applications that may facilitate piracy and new forms of intellectual property infringement through the unauthorized reproduction of copyrighted content to “train” AI applications and to create unauthorized derivative works.

If we fail to obtain appropriate relief through the judicial process or the complete enforcement of judicial decisions issued in our favor (or if judicial decisions are not in our favor) or fail to develop effective means of protecting our content and enforcing our intellectual property rights, our business, financial condition, and results of operations may be negatively impacted.

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

26 unchanged sentences

Any determination in litigation that a DMCA safe harbor does not shield us from liability could negatively impact our business, financial condition, and results of operations.

Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business, financial condition, and results of operations.

Our success and ability to compete depends in part on our intellectual property and our other proprietary business information.

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.

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.