Chegg 2013 Annual Report Download - page 66

products, 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, which could be dilutive, or debt, which could be costly and require substantial
restrictions on the conduct of our business. If we fail to successfully complete any acquisitions, integrate the
services, products or technologies associated with such acquisitions into our company, or identify and address
liabilities associated with the acquired business or assets, our business, revenue and operating results could be
adversely affected. Any future acquisitions we complete may not achieve our goals.
Our operating results are expected to be difficult to predict based on a number of factors.
We expect our operating results to fluctuate in the future based on a variety of factors, many of which are
outside our control and are difficult to predict. As a result, period-to-period comparisons of our operating results
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 students and increase their engagement with our platform, particularly at the
beginning of each academic term;
• the rate of adoption of our non-print products and digital services;
• our ability to manage our fulfillment processes to handle significant increases in the number of students
and student selections, both in peak periods and resulting in potential growth in the volume of
transactions over time;
• our ability to successfully utilize the Student Graph to target sales of complementary products and
services;
• changes by our competitors to their product and service offerings;
• price competition and our ability to react appropriately to such competition;
• our ability to manage our textbook library;
• disruptions to our internal computer systems and our fulfillment information technology infrastructure,
particularly during peak periods;
• the effectiveness of our shipping center and those of our partners, particularly in peak periods;
• the amount and timing of operating costs and capital expenditures relating to expansion of our
business, operations and infrastructure;
• our ability to successfully manage the integration of operations and technology resulting from
acquisitions;
• governmental regulation and taxation policies; and
• general economic conditions and economic conditions specific to higher education.
We purchase and price textbooks based on anticipated levels of demand and other factors that we estimate
based on historical experience and various other assumptions. If actual results differ materially from our
estimates, our gross margins may decline.
Our print textbook rental distribution model requires us to make substantial investments in our textbook
library based on our expectations regarding numerous factors, including ongoing demand for these titles in print
form. To realize a return on these investments, we must rent each purchased textbook multiple times, and as
such, we are exposed to the risk of carrying excess or obsolete textbooks. We typically plan our textbook
purchases based on factors such as pricing, our demand forecast for the most popular titles, estimated timing of
edition changes, estimated utilization levels and planned liquidations of stale, old or excess titles in our textbook
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