Chegg 2015 Annual Report Download - page 53

Table of Contents
14
and as such, we may be unable to adjust spending quickly enough to offset any unexpected revenues shortfall. Accordingly, any
shortfall in net revenues may cause significant variation in operating results in any quarter.
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 and retain students and increase their engagement with our connected learning platform and
mobile applications, particularly at the beginning of each academic term;
• the rate of adoption of our offerings;
• changes in demand for print textbook rentals, including as a result of pricing changes for alternatives or by us;
• changes in demand for eTextbooks, including as a result of pricing changes by publishers;
• our ability and Ingram's ability to manage fulfillment processes to handle significant volume increases in the
number of students and student selections, during peak periods and as a result of the potential growth in volume
of transactions over time;
• our ability to successfully utilize the information gathered from our connected learning platform to target sales of
complementary products and services to our users;
• changes by our competitors to their product and service offerings;
• price competition and our ability to react appropriately to such competition;
• our ability and Ingram's ability to manage the textbook library;
• our ability to execute on the expanded partnership with Ingram to facilitate our transition to digital content;
• disruptions to our internal computer systems and our fulfillment information technology infrastructure,
particularly during peak periods;
• the effectiveness of Ingram's shipping center, 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, technology and personnel resulting from
acquisitions;
• governmental regulation in particular regarding privacy and advertising and taxation policies; and
• general macroeconomic conditions and economic conditions specific to higher education.
Difficulties that could arise from our partnership with Ingram may have an adverse effect on our business and results of
operations.
We rely on Ingram to make new investments in the textbook library and fulfill our print textbook rentals and sales
orders. We purchase used books on Ingram’s behalf, including books through our buyback program, and invoice Ingram at cost.
As we continue to focus on reducing the expense and investment necessary to support the rental of Chegg owned textbooks, we
have become increasingly committed to this strategic partnership. If our continuing partnership with Ingram is interrupted or if
Ingram experiences disruptions in its business or is not able to perform as anticipated, or we experience problems with the
transition of inventory and logistics and fulfillment activities to Ingram, Ingram may not be able to reimburse us for the books
we have procured on their behalf, especially before we move to normal payment terms in 2017, or we may experience
operational difficulties, an inability to fulfill print textbook orders, increased costs and a loss of business, as well as a greater
than expected deployment of capital for textbook acquisition, that may have a material adverse effect on our business, results of
operations and financial condition. Furthermore, if we are unable to achieve the financial return targets set forth in our
agreement with Ingram, we could be required to make additional payments to Ingram which could adversely affect our results
of operations.