Chegg 2015 Annual Report Download - page 56

Table of Contents
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If we fail to convince colleges and brands of the benefits of advertising on our platform or to use our marketing services, our
business could be harmed.
Our business strategy includes increasing our revenues from enrollment marketing services and brand advertising.
Colleges and brands may view our connected learning platform as experimental and unproven. They may not do business with
us, or may reduce the amounts they are willing to spend to advertise with us, if we do not deliver ads, sponsorships and other
commercial content and marketing programs in an effective manner, or if they do not believe that their investment in
advertising with us will generate a competitive return relative to other alternatives. Our ability to grow the number of colleges
that use our enrollment marketing services and brands that use our brand advertising, and ultimately to generate advertising and
marketing services revenues, depends on a number of factors, including our ability to successfully:
• compete for advertising and marketing dollars from colleges, brands, online marketing and media companies and
advertisers;
• penetrate the market for student-focused advertising;
• develop a platform that can deliver advertising and marketing services across multiple channels, including print,
email, Internet, mobile applications and other connected devices;
• improve our analytics and measurement solutions to demonstrate the value of our advertising and marketing
services;
• maintain the retention, growth and engagement of our student user base;
• strengthen our brand and increase our presence in media reports and with publicity companies that utilize online
platforms for advertising and marketing purposes;
• create new products that sustain or increase the value of our advertising and marketing services and other
commercial content;
• manage changes in the way online advertising and marketing services are priced;
• weather the impact of macroeconomic conditions and conditions in the advertising industry and higher education
in general; and
• manage legal developments relating to data privacy, advertising or marketing services, legislation and regulation
and litigation.
If we are not able to manage the growth of our business both in terms of scale and complexity, our operating results and
financial condition could be adversely affected.
We have expanded rapidly since we launched our online print textbook rental service in 2007. We anticipate further
expanding our operations to offer additional products, services and content to help grow our student user base and to take
advantage of favorable market opportunities. As we grow, our operations and the technology infrastructure we use to manage
and account for our operations will become more complex, and managing these aspects of our business will become more
challenging. Any future expansion will likely place significant demands on our resources, capabilities and systems, and we may
need to develop new processes and procedures and expand the size of our infrastructure to respond to these demands. If we are
not able to respond effectively to new and increasingly complex demands that arise because of the growth of our business, or, if
in responding to such demands, our management is materially distracted from our current operations, our operating results and
financial condition may be adversely affected.
We may not realize the anticipated benefits of acquisitions, which could disrupt our business and harm our financial
condition and results of operations.
As part of our business strategy, we have made and intend to make acquisitions to add specialized employees,
complementary businesses, products, services, operations or technologies. Realizing the benefits of acquisitions depends, in
part, on our successful integration of acquired companies including their technologies, products, services, operations and
personnel in a timely and efficient manner. We may incur significant costs integrating acquired companies and if our integration
efforts are not successful we may not be able to offset our acquisition costs. Acquisitions involve many risks that may
negatively impact our financial condition and results of operations, including the risks that the acquisitions may:
• require us to incur charges and substantial debt or liabilities;
• cause adverse tax consequences, substantial depreciation or deferred compensation charges;
• result in acquired in-process research and development expenses or in the future may require the amortization;
write-down or impairment of amounts related to deferred compensation, goodwill and other intangible assets;
and
• give rise to various litigation risks, including the increased likelihood of litigation.