Chegg 2014 Annual Report Download - page 59

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short period of time due to increased demand, we may experience system interruptions that make our website unavailable or
prevent us or our partner from efficiently fulfilling rental orders, which may reduce the volume of textbooks we are able to rent
or sell and may also impact our ability to sell marketing services to colleges and brands. If our platform is unavailable when
students attempt to access it or it does not load as quickly as they expect, we may rent or sell fewer textbooks and services. In
addition, during peak periods, we utilize independent contractors and temporary personnel to supplement our workforce
primarily in our warehouse and student advocacy organizations. Competition for qualified personnel has historically been
intense, and we may be unable to adequately staff our warehouse and student advocacy organizations during these peak periods.
For example, during the 2014 fall rush period, our staffing agencies were not able to provide as many temporary personnel as
we expected. Any understaffing could lead to an increase in both the amount of time required to ship a book, which could lead
to customer dissatisfaction, and the amount of time required to process a rental return, which could result in us purchasing more
inventory than necessary. Moreover, UPS and FedEx, the third-party carriers that we rely on to deliver textbooks to students,
and publishers, wholesalers and distributors that ship directly to our students may be unable to meet our shipping and delivery
requirements during peak periods. Any such disruptions to our business could cause our customers to be dissatisfied with our
products and services and have an adverse effect on our revenue.
Computer malware, viruses, hacking, phishing attacks and spamming could harm our business and results of operations.
Computer malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruptions and
delays in our services and operations and loss, misuse or theft of data. Computer malware, viruses, computer hacking and
phishing attacks against online networking platforms have become more prevalent and may occur on our systems in the future.
We believe that we could be a target for such attacks because of the incidence of hacking among students.
Any attempts by hackers to disrupt our website service or our internal systems, if successful, could harm our business,
be expensive to remedy and damage our reputation or brand. Our network security business disruption insurance may not be
sufficient to cover significant expenses and losses related to direct attacks on our website or internal system. Efforts to prevent
hackers from entering our computer systems are expensive to implement and may limit the functionality of our services.
Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to
maintain performance, reliability, security and availability of our products and services and technical infrastructure may harm
our reputation, brand and our ability to attract students to our website. Any significant disruption to our website or internal
computer systems could result in a loss of students, colleges or brands and, particularly if disruptions occur during the peak
periods at the beginnings of each academic term, could adversely affect our business and results of operations.
We may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our
platform is accessible and delivers a satisfactory user experience to students.
It is important to our success that students be able to access our platform at all times. We have previously experienced,
and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors,
including infrastructure changes, human or software errors and capacity constraints due to an overwhelming number of students
accessing our platform simultaneously. If our platform is unavailable when students attempt to access it or it does not load as
quickly as they expect, students may seek other services to obtain the information for which they are looking and may not
return to our platform as often in the future, or at all. This would negatively impact our ability to attract students and brands and
the frequency with which they use our website and mobile applications.
Our platform functions on software that is highly technical and complex and may now or in the future contain
undetected errors, bugs, or vulnerabilities. Some errors in our software code may only be discovered after the code has been
deployed. Any errors, bugs, or vulnerabilities discovered in our code after deployment, inability to identify the cause or causes
of performance problems within an acceptable period of time or difficultly maintaining and improving the performance of our
platform, particularly during peak usage times, could result in damage to our reputation or brand, loss of students, colleges and
brands, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results.
We expect to continue to make significant investments to maintain and improve the availability of our platform and to
enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints,
upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and
anticipated changes in technology, our business and operating results may be harmed.
We have a disaster recovery program to transition our operating platform and data to a failover location in the event of
a catastrophe and have tested this capability under controlled circumstances, however, there are several factors ranging from
human error to data corruption that could materially lengthen the time our platform is partially or fully unavailable to our
student user base as a result of the transition. If our platform is unavailable for a significant period of time as a result of such a