Chegg 2014 Annual Report Download - page 68

Table of Contents
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Our international operations are subject to increased challenges and risks.
We have employees in Israel, India and the People’s Republic of China (China), we indirectly contract with individuals
in the Ukraine, and we expect to continue to expand our international operations in the future. However, we have limited
operating history as a company outside the United States, and our ability to manage our business and conduct our operations
internationally requires considerable management attention and resources and is subject to the particular challenges of
supporting a rapidly growing business in an environment of multiple languages, cultures, customs, tax systems, legal systems,
alternative dispute systems, regulatory systems and commercial infrastructures. Operating internationally has required and will
continue to require us to invest significant funds and other resources, subjects us to new risks and may increase the risks that we
currently face, including risks associated with:
• recruiting and retaining talented and capable employees in foreign countries and maintaining our company
culture across all of our offices;
• compliance with applicable foreign laws and regulations;
• compliance with anti-bribery laws including, without limitation, compliance with the Foreign Corrupt Practices
Act;
• currency exchange rate fluctuations;
• political and economic instability; and
• higher costs of doing business internationally.
As part of our business strategy, we may make our products and services available in more countries outside of the
U.S. market, where we are currently focused. The markets in which we may undertake international expansion may have
educational systems, technology and online industries that are different or less well developed than those in the United States,
and if we are unable to address the challenges of operating in international markets, it could have an adverse effect on our
results of operations and financial condition.
Colleges and certain governments may restrict access to the Internet or 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.
The growth of our business and our brand depends on the ability of students to access the Internet and the products and
services available on our website. Colleges that provide students with access to the Internet either through physical computer
terminals on campus or through wired or wireless access points on campus could block or restrict access to our website, content
or services or the Internet generally for a number of reasons including security or confidentiality concerns, regulatory reasons,
such as compliance with the Family Educational Rights and Privacy Act, which restricts the disclosure of student information,
or concerns that certain of our products and services, such as Chegg Study, may contradict or violate their policies.
We depend in part on colleges to provide their students with access to the Internet. If colleges modify their policies in
ways that are detrimental to the growth of our student user base or in ways that make it harder for students to use our website,
or if our competitors’ are able to reach more students than us, the overall growth in our student user base could slow, student
engagement could decrease, and we could lose revenue. Any reduction in the number of students directed to our website would
harm our business and operating results.
In addition to our U.S. operations, we currently offer our college and university matching service in China. The
Chinese government may seek to restrict access to the Internet or to our website specifically and our content and services could
be suspended, blocked (in whole or in part) or otherwise adversely impacted in China. Any restrictions on the use of our
website by students could lead to the loss or slowing of growth in the number of students who use our platform or the level of
student engagement.
Our operations are susceptible to earthquakes, floods, rolling blackouts and other types of power loss. If these or other
natural or man-made disasters were to occur, our operations and operating results would be adversely affected.
Our business and operations could be materially adversely affected in the event of earthquakes, blackouts or other
power losses, floods, fires, telecommunications failures, break-ins, acts of terrorism, inclement weather, shelving accidents or
similar events. Our executive offices are located in the San Francisco Bay Area, an earthquake-sensitive area. In the recent past,
California has experienced deficiencies in its power supply, resulting in occasional rolling blackouts. Our textbook warehouse
is located in Shepardsville, Kentucky, which is adjacent to a flood zone. We store our textbook library in a single location in
Kentucky and if floods, fire, inclement weather including extreme rain, wind, heat or cold or accidents due to human error were
to occur and cause damage to our warehouse and our textbook library, our ability to fulfill orders for textbook rental and sales
transactions would be materially and adversely affected and our results of operations would suffer, especially if such events