Chegg 2014 Annual Report Download - page 53

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invest in new products and services and other initiatives to generate revenue, but there is no guarantee these approaches will be
successful. Acquisitions of new companies and products creates integration risk, while development of new products and
services and enhancements to existing products and services involves significant time, labor and expense and is subject to risks
and challenges including managing the length of the development cycle, entry into new markets, integration into our existing
business, regulatory compliance, evolution in sales and marketing methods and maintenance and protection of intellectual
property and proprietary rights. If we are not successful with our new products and services, we may not be able to maintain or
increase our revenue as anticipated or recover any associated development costs, and our financial results could be adversely
affected. For example, in 2014 we acquired, but later determined that we would not continue to support or look to expand our
print coupon business and as a result, in 2014 recorded an impairment charge of $1.6 million related to the write-off of
intangible assets from that acquisition.
If our efforts to build a strong brand are not successful, we may not be able to grow our student user base, which could
adversely affect our operating results.
We believe our brand is a key asset of our business. Developing, protecting and enhancing the “Chegg” brand is
critical to our ability to expand our student user base and increase student engagement with our platform. A strong brand also
helps to counteract the significant student turnover we experience from year to year as students graduate.
To succeed in our efforts to strengthen brand identity, we must, among other activities:
• maintain our reputation as a trusted source of content and services for students;
• maintain the quality of and improve our existing products and services;
• continue to introduce products and services that are favorably received;
• adapt to changing technologies;
• adapt to students’ rapidly changing tastes, preferences, behavior and brand loyalties;
• protect our students’ data, such as passwords and personally identifiable information;
• protect our trademark and other intellectual property rights;
• continue to expand our reach to students in high school, graduate school and internationally;
• ensure that the content posted to our website by students 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;
• adequately address students’ concerns with our products and services; and
• convert and fully integrate the brands and students that we acquire, including the InstaEDU brand and the
students who use InstaEDU.com, and the Internships.com brand and the students who use Internships.com into
the Chegg brand and Chegg.com.
Our ability to successfully achieve these goals is not entirely within our control and may not be able to maintain the
strength of our brand or do so in a cost effective manner. Factors that could negatively affect our brand include:
• changes in student sentiment about the quality or usefulness of our products and services;
• concern from colleges about the ways students use our content offerings, such as our Q&A service;
• brand conflict between acquired brands and the Chegg brand;
• student concerns related to privacy and the way in which we use student data as part of our products and
services;
• 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; and
• technical or other problems that prevent us from delivering our products and services in a rapid and reliable
manner or that otherwise affect the student experience on our website.
Our future revenue depends on our ability to continue to attract new students from a high school and college student
population that has an inherently high rate of turnover primarily due to graduation, requiring us to invest continuously in
marketing to the student population to build brand awareness and loyalty, which we may not be able to accomplish on a
cost-effective basis or at all.
We are dependent on the acquisition of new students from a high school and college student population that has an
inherently high rate of turnover primarily due to graduation. Most incoming college students will not have previously used
products and services like the ones we provide. We rely heavily on word-of-mouth and other marketing channels, including
online advertising, search engine marketing and social media. The student demographic is characterized by rapidly changing
tastes, preferences, behavior and brand loyalty. Developing an enduring business model to serve this population is particularly
challenging. Our ability to attract new students depends not only on investment in our brand and our marketing efforts, but on