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x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-3237489
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. employer identification no.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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The New York Stock Exchange
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|
•
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
¨
No
x
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•
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
¨
No
x
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•
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
x
No
¨
|
•
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
x
No
¨
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•
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
¨
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•
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
¨
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•
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
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•
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
¨
No
x
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•
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The aggregate market value of the voting stock held by non-affiliates of the registrant as of
June 30, 2017
, the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing price of such stock on such date as reported by the New York Stock Exchange on such date, was approximately
$1,009,536,032
. Shares of Common Stock held by each executive officer and director have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
|
•
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As of
January 31, 2018
, the Registrant had
109,962,798
outstanding shares of Common Stock.
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Regulations related to the Program Participation Agreement of the U.S. Department of Education and other similar laws and regulate the recruitment of students to colleges and other institutions of higher learning.
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•
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execute on our relatively new and evolving business model;
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•
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develop new products and services, both independently and with developers or other third parties;
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•
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attract and retain students and increase their engagement with our learning platform and our mobile applications;
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•
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attract and retain brands, colleges, universities and other academic institutions to our marketing services;
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•
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manage the growth of our business, including increasing or unforeseen expenses;
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•
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develop and scale a high performance technology infrastructure to efficiently handle increased usage by students, especially during peak periods prior to each academic term;
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•
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maintain and manage relationships with strategic partners, including Ingram, NRCCUA, and other distributors, publishers, wholesalers, colleges and brands;
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•
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develop a profitable business model and pricing strategy;
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•
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compete with companies that offer similar services or products;
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•
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expand into adjacent markets;
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•
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navigate the ongoing evolution and uncertain application of regulatory requirements, such as privacy laws, to our business, including our new products and services;
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•
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integrate and realize synergies from businesses that we acquire; and
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•
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expand into foreign markets.
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•
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our ability to attract and retain students and increase their engagement with our learning platform and mobile applications, particularly related to our Chegg Services subscribers;
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•
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the rate of adoption of our offerings;
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•
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our ability to successfully utilize the information gathered from our learning platform to enhance our Student Graph and target sales of complementary products and services to our students;
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•
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changes in demand and pricing for print textbooks and eTextbooks; Ingram's ability to manage fulfillment processes to handle significant volumes during peak periods and as a result of the potential growth in volume of transactions over time; changes by our competitors to their product and service offerings;
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•
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price competition and our ability to react appropriately to such competition;
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•
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our ability and Ingram's ability to manage their textbook library;
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•
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our ability to execute on our strategic partnership with Ingram;
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•
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disruptions to our internal computer systems and our fulfillment information technology infrastructure, particularly during peak periods; the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure;
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•
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our ability to successfully manage the integration of operations, technology and personnel resulting from our acquisitions;
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•
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governmental regulation in particular regarding privacy and advertising and taxation policies; and
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•
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general macroeconomic conditions and economic conditions specific to higher education.
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•
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require us to incur charges and substantial debt or liabilities;
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•
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cause adverse tax consequences, substantial depreciation or deferred compensation charges;
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•
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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
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•
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give rise to various litigation risks, including the increased likelihood of litigation.
|
•
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we may not generate sufficient financial return to offset acquisition costs;
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•
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we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, services, operations and personnel of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;
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•
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an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management;
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•
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an acquisition may delay adoption rates or reduce engagement rates for our products and services and those of the company acquired by us due to student uncertainty about continuity and effectiveness of service from either company;
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•
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we may encounter difficulties in, or may be unable to, successfully sell or otherwise monetize any acquired products and services;
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•
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an acquisition may not ultimately be complementary to our evolving business model; and
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•
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an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience.
|
•
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our ability to engage high school students with our
Chegg Writing, Chegg Tutors, Chegg Test Prep and College Admissions and Scholarship Services
;
|
•
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our ability to produce compelling supplemental materials and services for students to improve their outcomes throughout their educational journey;
|
•
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our ability to produce engaging mobile applications and websites for students to engage with our learning platform;
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•
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our ability and Ingram's ability to consistently provide students with a convenient, high quality experience for selecting, receiving and returning print textbooks;
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•
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our ability and Ingram's ability to accurately forecast and respond to student demand for print textbooks;
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•
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the pricing of our physical textbooks and eTextbooks for rental or sale in relation to other alternatives, including the prices offered by publishers or by other competing textbook rental providers;
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•
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the quality and prices of our offerings compared to those of our competitors;
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•
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the rate of adoption of eTextbooks and our ability to capture a significant share of that market;
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•
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changes in student spending levels;
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•
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changes in the number of students attending college;
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•
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the effectiveness of our sales and marketing efforts; and
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•
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our ability to introduce new products and services that are favorably received by students.
|
•
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maintain our reputation as a trusted source of content, services and textbooks for students;
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•
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maintain the quality of and improve our existing products, services and technologies;
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•
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maintain and control the quality of our brand while Ingram handles our textbook fulfillment logistics;
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•
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introduce products and services that are favorably received;
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•
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adapt to changing technologies, including developing and enhancing compelling mobile offerings for our learning platform;
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•
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adapt to students’ rapidly changing tastes, preferences, behavior and brand loyalties;
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•
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protect our students’ data, such as passwords and personally identifiable information;
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•
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protect our trademark and other intellectual property rights;
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•
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continue to expand our reach to students in high school, graduate school and internationally;
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•
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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;
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•
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adequately address students’ concerns with our products and services; and
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•
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convert and fully integrate the brands and students that we acquire, including Math 42, Imagine Easy Solutions and internships.com, into the Chegg brand and Chegg.com.
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•
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changes in student sentiment about the quality or usefulness of our learning platform and our products and services;
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•
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problems that prevent Ingram from delivering textbooks reliably or timely;
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•
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technical or other problems that prevent us from providing our products and services reliably or otherwise negatively affect the student experience on our website or our mobile application;
|
•
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concern from colleges about the ways students use our content offerings, such as our Expert Answers 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;
|
•
|
the reputation or products and services of competitive companies; and
|
•
|
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.
|
•
|
Products and Services for Students.
Our Chegg Services face competition from different businesses depending on the offering. For Chegg Study, our competitors primarily include publishers that provide study materials and online instructional systems. Additionally, we face competition from free services such as Yahoo! Answers and Brain.ly for our Expert Answers service. For our Chegg Writing service, we primarily face competition from other citation generating services such as Noodle Tools. For our Chegg Tutors services, we face competition from other online tutoring services such as Wyzant, Tutors.com and Varsity Tutors. The market for textbooks and supplemental materials is intensely competitive and subject to rapid change. We face competition from college bookstores, some of which are operated by Follett and Barnes & Noble Education, online marketplaces such as Amazon.com and providers of eTextbooks such as Apple iTunes and Blackboard, as well as various private textbook rental websites. Many students purchase from multiple textbook providers, are highly price sensitive and can easily shift spending from one provider or format to another. As a consequence, our Required Materials product line, which includes eTextbooks, competes primarily on price and further on selection and functionality and compatibility of the eTextbook Reader we utilize across a wide variety of desktop and mobile devices.
|
•
|
Brand Advertising
.
With respect to brands, we compete with online and offline outlets that generate revenues from advertisers and marketers, especially those that target high school and college students. In this area, we seek to partner with brands that have offerings that will interest or delight students and have received very positive comments and feedback from students on these offerings. We provide these brands with preferential access to our audience, which we believe represents a highly engaged portion of the target demographic of our brand partners.
|
•
|
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.
|
•
|
the CAN-SPAM Act of 2003 and similar laws adopted by a number of states regulate unsolicited commercial emails, create criminal penalties for emails containing fraudulent headers and control other abusive online marketing practices;
|
•
|
the U.S. Federal Trade Commission (FTC) has guidelines that impose responsibilities on companies with respect to communications with consumers and impose fines and liability for failure to comply with rules with respect to advertising or marketing practices they may deem misleading or deceptive; and
|
•
|
the TCPA restricts telemarketing and the use of automated telephone equipment. The TCPA limits the use of automatic dialing systems, artificial or prerecorded voice messages and SMS text messages. It also applies to unsolicited text messages advertising the commercial availability of goods or services. Additionally, a number of
|
•
|
our intellectual property and proprietary rights will provide competitive advantages to us;
|
•
|
our competitors or others will not design around our intellectual property or proprietary rights;
|
•
|
our ability to assert our intellectual property or proprietary rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties;
|
•
|
our intellectual property and proprietary rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak;
|
•
|
any of the patents, trademarks, copyrights, trade secrets or other intellectual property or proprietary rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; or
|
•
|
we will not lose the ability to assert our intellectual property or proprietary rights against or to license our intellectual property or proprietary rights to others and collect royalties or other payments.
|
•
|
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;
|
•
|
additional taxation of international costs and intercompany payments to our international subsidiaries associated with the Tax Cuts and Jobs Act of 2017;
|
•
|
political and economic instability; and
|
•
|
higher costs of doing business internationally.
|
•
|
borrow money and guarantee or provide other support for indebtedness of third-parties;
|
•
|
pay dividends on, redeem or repurchase our capital stock;
|
•
|
acquire entities or assets;
|
•
|
make investments in entities that we do not control, including joint ventures;
|
•
|
consummate a merger, consolidation or sale of all or substantially all of our assets;
|
•
|
enter into certain asset sale transactions; and
|
•
|
enter into secured financing arrangements;
|
•
|
actual or anticipated fluctuations in our financial condition and operating results, including as a result of the seasonality in our business that results from the academic calendar;
|
•
|
our announcement of actual results for a fiscal period that are higher or lower than projected results or our announcement of revenues or earnings guidance that is higher or lower than expected, including as a result of difficulty forecasting seasonal variations in our financial condition and operating results or the revenues generated by our offerings;
|
•
|
issuance of new or updated research or reports by securities analysts, including the publication of unfavorable reports or change in recommendation or downgrading of our common stock;
|
•
|
announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic relationships and partnerships, joint ventures or capital commitments;
|
•
|
actual or anticipated changes in our growth rate relative to our competitors;
|
•
|
changes in the economic performance or market valuations of companies perceived by investors to be comparable to us;
|
•
|
the expiration of market standoff or contractual lock-up agreements and future sales of our common stock by our officers, directors and existing stockholders or the anticipation of such sales;
|
•
|
issuances of additional shares of our common stock in connection with acquisitions;
|
•
|
share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;
|
•
|
lawsuits threatened or filed against us;
|
•
|
regulatory developments in our target markets affecting us, students, colleges or brands, publishers or our competitors;
|
•
|
political climate in the United States, with a focus on cutting or limiting budgets, higher education and taxation;
|
•
|
terrorist attacks or natural disasters or other such events impacting countries where we have operations;
|
•
|
international stock market conditions; and
|
•
|
general economic and market conditions, such as recessions, unemployment rates, the limited availability of consumer credit, interest rate changes and currency fluctuations.
|
•
|
our board of directors is classified into three classes of directors with staggered three-year terms and directors can only be removed from office for cause and by the approval of the holders of at least two-thirds of our outstanding common stock;
|
•
|
subject to certain limitations, our board of directors has the sole right to set the number of directors and to fill a vacancy resulting from any cause or created by the expansion of our board of directors, which prevents stockholders from being able to fill vacancies on our board of directors;
|
•
|
only our board of directors is authorized to call a special meeting of stockholders;
|
•
|
certain litigation against us can only be brought in Delaware;
|
•
|
our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of common stock;
|
•
|
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders;
|
•
|
our stockholders cannot act by written consent;
|
•
|
our restated bylaws can only be amended by our board of directors or by the approval of the holders of at least two-thirds of our outstanding common stock; and
|
•
|
certain provisions of our restated certificate of incorporation can only be amended by the approval of the holders of at least two-thirds of our outstanding common stock.
|
|
High
|
Low
|
||||
Years Ended December 31, 2017
|
|
|
||||
Fourth quarter
|
$
|
16.49
|
|
$
|
13.99
|
|
Third quarter
|
$
|
15.36
|
|
$
|
11.96
|
|
Second quarter
|
$
|
12.99
|
|
$
|
8.05
|
|
First quarter
|
$
|
8.46
|
|
$
|
6.89
|
|
Years Ended December 31, 2016
|
|
|
||||
Fourth quarter
|
$
|
8.48
|
|
$
|
6.54
|
|
Third quarter
|
$
|
7.21
|
|
$
|
4.90
|
|
Second quarter
|
$
|
5.08
|
|
$
|
4.27
|
|
First quarter
|
$
|
6.56
|
|
$
|
3.47
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net revenues
|
$
|
255,066
|
|
|
$
|
254,090
|
|
|
$
|
301,373
|
|
|
$
|
304,834
|
|
|
$
|
255,575
|
|
Gross profit
|
174,891
|
|
|
134,489
|
|
|
111,524
|
|
|
93,849
|
|
|
80,515
|
|
|||||
Net loss
|
(20,283
|
)
|
|
(42,245
|
)
|
|
(59,210
|
)
|
|
(64,758
|
)
|
|
(55,850
|
)
|
|||||
Deemed dividend to preferred stockholders
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(102,557
|
)
|
|||||
Net loss attributable to common stockholders
|
$
|
(20,283
|
)
|
|
$
|
(42,245
|
)
|
|
$
|
(59,210
|
)
|
|
$
|
(64,758
|
)
|
|
$
|
(158,407
|
)
|
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.20
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(7.58
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted
|
100,022
|
|
|
90,534
|
|
|
86,818
|
|
|
83,205
|
|
|
20,902
|
|
|
December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
446,930
|
|
|
$
|
290,652
|
|
|
$
|
291,356
|
|
|
$
|
318,127
|
|
|
$
|
327,371
|
|
Deferred revenue
|
13,440
|
|
|
14,836
|
|
|
14,971
|
|
|
24,591
|
|
|
22,804
|
|
|||||
Common stock and additional paid-in capital
|
782,955
|
|
|
593,443
|
|
|
560,330
|
|
|
516,929
|
|
|
479,361
|
|
|||||
Total stockholders' equity
|
391,062
|
|
|
221,939
|
|
|
231,075
|
|
|
247,043
|
|
|
274,240
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Rental
|
$
|
—
|
|
|
—
|
%
|
|
$
|
39,837
|
|
|
16
|
%
|
|
$
|
120,365
|
|
|
40
|
%
|
Services
|
255,066
|
|
|
100
|
|
|
182,399
|
|
|
72
|
|
|
133,095
|
|
|
44
|
|
|||
Sales
|
—
|
|
|
—
|
|
|
31,854
|
|
|
12
|
|
|
47,913
|
|
|
16
|
|
|||
Total net revenues
|
255,066
|
|
|
100
|
|
|
254,090
|
|
|
100
|
|
|
301,373
|
|
|
100
|
|
|||
Cost of revenues
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Rental
|
—
|
|
|
—
|
|
|
28,637
|
|
|
11
|
|
|
98,162
|
|
|
33
|
|
|||
Services
|
80,175
|
|
|
31
|
|
|
56,206
|
|
|
22
|
|
|
45,458
|
|
|
15
|
|
|||
Sales
|
—
|
|
|
—
|
|
|
34,758
|
|
|
14
|
|
|
46,229
|
|
|
15
|
|
|||
Total cost of revenues
|
80,175
|
|
|
31
|
|
|
119,601
|
|
|
47
|
|
|
189,849
|
|
|
63
|
|
|||
Gross profit
|
174,891
|
|
|
69
|
|
|
134,489
|
|
|
53
|
|
|
111,524
|
|
|
37
|
|
|||
Operating expenses
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Technology and development
|
81,926
|
|
|
32
|
|
|
66,331
|
|
|
26
|
|
|
59,391
|
|
|
20
|
|
|||
Sales and marketing
|
51,240
|
|
|
20
|
|
|
53,949
|
|
|
21
|
|
|
64,082
|
|
|
21
|
|
|||
General and administrative
|
64,411
|
|
|
25
|
|
|
55,372
|
|
|
22
|
|
|
45,209
|
|
|
15
|
|
|||
Restructuring charges (credits)
|
1,047
|
|
|
1
|
|
|
(423
|
)
|
|
—
|
|
|
4,868
|
|
|
2
|
|
|||
Gain on liquidation of textbooks
|
(4,766
|
)
|
|
(2
|
)
|
|
(670
|
)
|
|
—
|
|
|
(4,326
|
)
|
|
(2
|
)
|
|||
Total operating expenses
|
193,858
|
|
|
76
|
|
|
174,559
|
|
|
69
|
|
|
169,224
|
|
|
56
|
|
|||
Loss from operations
|
(18,967
|
)
|
|
(7
|
)
|
|
(40,070
|
)
|
|
(16
|
)
|
|
(57,700
|
)
|
|
(19
|
)
|
|||
Total interest expense, net and other income (expense), net
|
486
|
|
|
—
|
|
|
(468
|
)
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|||
Loss before provision for income taxes
|
(18,481
|
)
|
|
(7
|
)
|
|
(40,538
|
)
|
|
(16
|
)
|
|
(57,731
|
)
|
|
(19
|
)
|
|||
Provision for income taxes
|
1,802
|
|
|
(1
|
)
|
|
1,707
|
|
|
(1
|
)
|
|
1,479
|
|
|
(1
|
)
|
|||
Net loss
|
$
|
(20,283
|
)
|
|
(8
|
)%
|
|
$
|
(42,245
|
)
|
|
(17
|
)%
|
|
$
|
(59,210
|
)
|
|
(20
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(1)
Includes share-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of revenues
|
$
|
316
|
|
|
|
|
$
|
172
|
|
|
|
|
$
|
262
|
|
|
|
|||
Technology and development
|
14,333
|
|
|
|
|
14,771
|
|
|
|
|
11,992
|
|
|
|
||||||
Sales and marketing
|
5,007
|
|
|
|
|
6,124
|
|
|
|
|
7,901
|
|
|
|
||||||
General and administrative
|
18,703
|
|
|
|
|
20,718
|
|
|
|
|
18,620
|
|
|
|
||||||
Total share-based compensation expense
|
$
|
38,359
|
|
|
|
|
$
|
41,785
|
|
|
|
|
$
|
38,775
|
|
|
|
|
Years Ended December 31,
|
|
Change in 2017
|
|
Change in 2016
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Chegg Services
|
$
|
185,683
|
|
|
$
|
129,335
|
|
|
$
|
94,285
|
|
|
$
|
56,348
|
|
|
44
|
%
|
|
$
|
35,050
|
|
|
37
|
%
|
Required Materials
|
69,383
|
|
|
124,755
|
|
|
207,088
|
|
|
(55,372
|
)
|
|
(44
|
)%
|
|
(82,333
|
)
|
|
(40
|
)%
|
|||||
Total net revenues
|
$
|
255,066
|
|
|
$
|
254,090
|
|
|
$
|
301,373
|
|
|
$
|
976
|
|
|
—
|
%
|
|
$
|
(47,283
|
)
|
|
(16
|
)%
|
|
Years Ended December 31,
|
|
Change in 2017
|
|
Change in 2016
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Cost of revenues
(1)
|
$
|
80,175
|
|
|
$
|
119,601
|
|
|
$
|
189,849
|
|
|
$
|
(39,426
|
)
|
|
(33
|
)%
|
|
$
|
(70,248
|
)
|
|
(37
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1)
Includes share-based compensation expense of:
|
$
|
316
|
|
|
$
|
172
|
|
|
$
|
262
|
|
|
$
|
144
|
|
|
84
|
%
|
|
$
|
(90
|
)
|
|
(34
|
)%
|
|
Years Ended December 31,
|
|
Change in 2017
|
|
Change in 2016
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Technology and development
(1)
|
$
|
81,926
|
|
|
$
|
66,331
|
|
|
$
|
59,391
|
|
|
$
|
15,595
|
|
|
24
|
%
|
|
$
|
6,940
|
|
|
12
|
%
|
Sales and marketing
(1)
|
51,240
|
|
|
53,949
|
|
|
64,082
|
|
|
(2,709
|
)
|
|
(5
|
)
|
|
(10,133
|
)
|
|
(16
|
)
|
|||||
General and administrative
(1)
|
64,411
|
|
|
55,372
|
|
|
45,209
|
|
|
9,039
|
|
|
16
|
|
|
10,163
|
|
|
22
|
|
|||||
Restructuring charges (credits)
|
1,047
|
|
|
(423
|
)
|
|
4,868
|
|
|
1,470
|
|
|
n/m
|
|
|
(5,291
|
)
|
|
n/m
|
|
|||||
Gain on liquidation of textbooks
|
(4,766
|
)
|
|
(670
|
)
|
|
(4,326
|
)
|
|
(4,096
|
)
|
|
611
|
|
|
3,656
|
|
|
(85
|
)
|
|||||
Total operating expenses
|
$
|
193,858
|
|
|
$
|
174,559
|
|
|
$
|
169,224
|
|
|
$
|
19,299
|
|
|
11
|
%
|
|
$
|
5,335
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1)
Includes share-based compensation expense of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Technology and development
|
$
|
14,333
|
|
|
$
|
14,771
|
|
|
$
|
11,992
|
|
|
$
|
(438
|
)
|
|
(3
|
)%
|
|
$
|
2,779
|
|
|
23
|
%
|
Sales and marketing
|
5,007
|
|
|
6,124
|
|
|
7,901
|
|
|
(1,117
|
)
|
|
(18
|
)
|
|
(1,777
|
)
|
|
(22
|
)
|
|||||
General and administrative
|
18,703
|
|
|
20,718
|
|
|
18,620
|
|
|
(2,015
|
)
|
|
(10
|
)
|
|
2,098
|
|
|
11
|
|
|||||
Share-based compensation expense
|
$
|
38,043
|
|
|
$
|
41,613
|
|
|
$
|
38,513
|
|
|
$
|
(3,570
|
)
|
|
(9
|
)%
|
|
$
|
3,100
|
|
|
8
|
%
|
|
Years Ended December 31,
|
|
Change in 2017
|
|
Change in 2016
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Interest expense, net
|
$
|
(74
|
)
|
|
$
|
(171
|
)
|
|
$
|
(247
|
)
|
|
$
|
97
|
|
|
(57
|
)%
|
|
$
|
76
|
|
|
(31
|
)%
|
Other income (expense), net
|
560
|
|
|
(297
|
)
|
|
216
|
|
|
857
|
|
|
n/m
|
|
|
(513
|
)
|
|
n/m
|
|
|||||
Total interest expense, net and other income (expense), net
|
$
|
486
|
|
|
$
|
(468
|
)
|
|
$
|
(31
|
)
|
|
$
|
954
|
|
|
n/m
|
|
|
$
|
(437
|
)
|
|
n/m
|
|
|
Years Ended December 31,
|
|
Change in 2017
|
|
Change in 2016
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Provision for income taxes
|
$
|
1,802
|
|
|
$
|
1,707
|
|
|
$
|
1,479
|
|
|
$
|
95
|
|
|
6
|
%
|
|
$
|
228
|
|
|
15
|
%
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Consolidated Statements of Cash Flows Data:
|
|
|
|
|
|
||||||
Net cash provided by (used in) operating activities
|
$
|
51,148
|
|
|
$
|
24,938
|
|
|
$
|
(82
|
)
|
Net cash (used in) provided by investing activities
|
$
|
(136,234
|
)
|
|
$
|
(5,963
|
)
|
|
$
|
8,271
|
|
Net cash provided by (used in) financing activities
|
$
|
134,214
|
|
|
$
|
(8,675
|
)
|
|
$
|
2,723
|
|
|
Less than
|
|
More than
|
||||||||||||||||
|
Total
|
|
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
5 Years
|
||||||||||
Purchase obligations
|
$
|
22,245
|
|
|
$
|
14,457
|
|
|
$
|
7,688
|
|
|
$
|
100
|
|
|
$
|
—
|
|
Operating lease obligations
(1)
|
6,626
|
|
|
2,934
|
|
|
2,977
|
|
|
715
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
28,871
|
|
|
$
|
17,391
|
|
|
$
|
10,665
|
|
|
$
|
815
|
|
|
$
|
—
|
|
|
Page
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
126,457
|
|
|
$
|
77,329
|
|
Short-term investments
|
81,742
|
|
|
—
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $259 and $436 at December 31, 2017 and December 31, 2016, respectively
|
10,855
|
|
|
10,451
|
|
||
Prepaid expenses
|
2,043
|
|
|
2,579
|
|
||
Other current assets
|
7,845
|
|
|
21,014
|
|
||
Total current assets
|
228,942
|
|
|
111,373
|
|
||
Long-term investments
|
20,305
|
|
|
—
|
|
||
Textbook library, net
|
—
|
|
|
2,575
|
|
||
Property and equipment, net
|
47,493
|
|
|
35,305
|
|
||
Goodwill
|
125,272
|
|
|
116,239
|
|
||
Intangible assets, net
|
21,153
|
|
|
20,748
|
|
||
Other assets
|
3,765
|
|
|
4,412
|
|
||
Total assets
|
$
|
446,930
|
|
|
$
|
290,652
|
|
Liabilities and stockholders' equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
7,049
|
|
|
$
|
5,175
|
|
Deferred revenue
|
13,440
|
|
|
14,836
|
|
||
Accrued liabilities
|
31,074
|
|
|
44,319
|
|
||
Total current liabilities
|
51,563
|
|
|
64,330
|
|
||
Long-term liabilities
|
|
|
|
||||
Total other long-term liabilities
|
4,305
|
|
|
4,383
|
|
||
Total liabilities
|
55,868
|
|
|
68,713
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.001 par value – 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2017 and December 31, 2016
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value – 400,000,000 shares authorized; 109,667,640 and 91,708,839 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively
|
110
|
|
|
92
|
|
||
Additional paid-in capital
|
782,845
|
|
|
593,351
|
|
||
Accumulated other comprehensive loss
|
(282
|
)
|
|
(176
|
)
|
||
Accumulated deficit
|
(391,611
|
)
|
|
(371,328
|
)
|
||
Total stockholders' equity
|
391,062
|
|
|
221,939
|
|
||
Total liabilities and stockholders' equity
|
$
|
446,930
|
|
|
$
|
290,652
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net revenues:
|
|
|
|
|
|
||||||
Rental
|
$
|
—
|
|
|
$
|
39,837
|
|
|
$
|
120,365
|
|
Services
|
255,066
|
|
|
182,399
|
|
|
133,095
|
|
|||
Sales
|
—
|
|
|
31,854
|
|
|
47,913
|
|
|||
Total net revenues
|
255,066
|
|
|
254,090
|
|
|
301,373
|
|
|||
Cost of revenues:
|
|
|
|
|
|
||||||
Rental
|
—
|
|
|
28,637
|
|
|
98,162
|
|
|||
Services
|
80,175
|
|
|
56,206
|
|
|
45,458
|
|
|||
Sales
|
—
|
|
|
34,758
|
|
|
46,229
|
|
|||
Total cost of revenues
|
80,175
|
|
|
119,601
|
|
|
189,849
|
|
|||
Gross profit
|
174,891
|
|
|
134,489
|
|
|
111,524
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Technology and development
|
81,926
|
|
|
66,331
|
|
|
59,391
|
|
|||
Sales and marketing
|
51,240
|
|
|
53,949
|
|
|
64,082
|
|
|||
General and administrative
|
64,411
|
|
|
55,372
|
|
|
45,209
|
|
|||
Restructuring charges (credits)
|
1,047
|
|
|
(423
|
)
|
|
4,868
|
|
|||
Gain on liquidation of textbooks
|
(4,766
|
)
|
|
(670
|
)
|
|
(4,326
|
)
|
|||
Total operating expenses
|
193,858
|
|
|
174,559
|
|
|
169,224
|
|
|||
Loss from operations
|
(18,967
|
)
|
|
(40,070
|
)
|
|
(57,700
|
)
|
|||
Interest expense, net and other income (expense), net:
|
|
|
|
|
|
||||||
Interest expense, net
|
(74
|
)
|
|
(171
|
)
|
|
(247
|
)
|
|||
Other income (expense), net
|
560
|
|
|
(297
|
)
|
|
216
|
|
|||
Total interest expense, net and other income (expense), net
|
486
|
|
|
(468
|
)
|
|
(31
|
)
|
|||
Loss before provision for income taxes
|
(18,481
|
)
|
|
(40,538
|
)
|
|
(57,731
|
)
|
|||
Provision for income taxes
|
1,802
|
|
|
1,707
|
|
|
1,479
|
|
|||
Net loss
|
$
|
(20,283
|
)
|
|
$
|
(42,245
|
)
|
|
$
|
(59,210
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.20
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.68
|
)
|
Weighted average shares used to compute net loss per share, basic and diluted
|
100,022
|
|
|
90,534
|
|
|
86,818
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(20,283
|
)
|
|
$
|
(42,245
|
)
|
|
$
|
(59,210
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
||||||
Change in unrealized (loss) gain on available for sale investments
|
(187
|
)
|
|
25
|
|
|
(8
|
)
|
|||
Change in foreign currency translation adjustments, net of tax
|
81
|
|
|
(29
|
)
|
|
(151
|
)
|
|||
Other comprehensive loss
|
(106
|
)
|
|
(4
|
)
|
|
(159
|
)
|
|||
Total comprehensive loss
|
$
|
(20,389
|
)
|
|
$
|
(42,249
|
)
|
|
$
|
(59,369
|
)
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Shares
|
|
Par
Value |
|
Additional Paid-In
Capital |
|
Accumulated Other Comprehensive Loss
|
|
Accumulated
Deficit |
|
Total Stockholders’ Equity
|
|||||||||||
Balances at December 31, 2014
|
84,008
|
|
|
$
|
84
|
|
|
$
|
516,845
|
|
|
$
|
(13
|
)
|
|
$
|
(269,873
|
)
|
|
$
|
247,043
|
|
Issuance of common stock upon exercise of stock options and ESPP
|
2,165
|
|
|
2
|
|
|
13,694
|
|
|
—
|
|
|
—
|
|
|
13,696
|
|
|||||
Net issuance of common stock for settlement of restricted stock units (RSUs)
|
1,624
|
|
|
2
|
|
|
(8,712
|
)
|
|
—
|
|
|
—
|
|
|
(8,710
|
)
|
|||||
Warrant exercises
|
368
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock in connection with acquisition
|
125
|
|
|
—
|
|
|
825
|
|
|
—
|
|
|
—
|
|
|
825
|
|
|||||
Repurchase of common stock
|
(190
|
)
|
|
—
|
|
|
(1,185
|
)
|
|
—
|
|
|
—
|
|
|
(1,185
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
38,775
|
|
|
—
|
|
|
—
|
|
|
38,775
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(159
|
)
|
|
—
|
|
|
(159
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,210
|
)
|
|
(59,210
|
)
|
|||||
Balances at December 31, 2015
|
88,100
|
|
|
88
|
|
|
560,242
|
|
|
(172
|
)
|
|
(329,083
|
)
|
|
231,075
|
|
|||||
Issuance of common stock upon exercise of stock options and ESPP
|
590
|
|
|
1
|
|
|
2,103
|
|
|
—
|
|
|
—
|
|
|
2,104
|
|
|||||
Net issuance of common stock for settlement of RSUs
|
3,019
|
|
|
3
|
|
|
(10,779
|
)
|
|
—
|
|
|
—
|
|
|
(10,776
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
41,785
|
|
|
—
|
|
|
—
|
|
|
41,785
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,245
|
)
|
|
(42,245
|
)
|
|||||
Balances at December 31, 2016
|
91,709
|
|
|
92
|
|
|
593,351
|
|
|
(176
|
)
|
|
(371,328
|
)
|
|
221,939
|
|
|||||
Issuance of common stock in connection with follow-on offering, net of offering costs
|
11,500
|
|
|
12
|
|
|
147,597
|
|
|
—
|
|
|
—
|
|
|
147,609
|
|
|||||
Issuance of common stock upon exercise of stock options and ESPP
|
3,280
|
|
|
3
|
|
|
23,653
|
|
|
—
|
|
|
—
|
|
|
23,656
|
|
|||||
Net issuance of common stock for settlement of RSUs
|
3,155
|
|
|
3
|
|
|
(20,115
|
)
|
|
—
|
|
|
—
|
|
|
(20,112
|
)
|
|||||
Warrant exercises
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
38,359
|
|
|
—
|
|
|
—
|
|
|
38,359
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(106
|
)
|
|
—
|
|
|
(106
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,283
|
)
|
|
(20,283
|
)
|
|||||
Balances at December 31, 2017
|
109,668
|
|
|
$
|
110
|
|
|
$
|
782,845
|
|
|
$
|
(282
|
)
|
|
$
|
(391,611
|
)
|
|
$
|
391,062
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(20,283
|
)
|
|
$
|
(42,245
|
)
|
|
$
|
(59,210
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Textbook library depreciation expense
|
—
|
|
|
9,267
|
|
|
43,553
|
|
|||
Amortization of warrants and deferred loan costs
|
—
|
|
|
105
|
|
|
151
|
|
|||
Other depreciation and amortization expense
|
19,337
|
|
|
14,520
|
|
|
11,511
|
|
|||
Share-based compensation expense
|
38,359
|
|
|
41,785
|
|
|
38,775
|
|
|||
Provision (release) for bad debts
|
47
|
|
|
58
|
|
|
(77
|
)
|
|||
Gain on liquidation of textbooks
|
(4,766
|
)
|
|
(670
|
)
|
|
(4,326
|
)
|
|||
Loss from write-offs of textbooks
|
314
|
|
|
1,090
|
|
|
5,297
|
|
|||
Realized loss (gain) on sale of securities
|
21
|
|
|
(11
|
)
|
|
—
|
|
|||
Loss from write-off of property and equipment
|
1,368
|
|
|
—
|
|
|
967
|
|
|||
Interest accretion on deferred consideration
|
(626
|
)
|
|
—
|
|
|
—
|
|
|||
Change in assets and liabilities net of effect of acquisition of businesses:
|
|
|
|
|
|
||||||
Accounts receivable
|
(175
|
)
|
|
(127
|
)
|
|
712
|
|
|||
Prepaid expenses and other current assets
|
13,550
|
|
|
10,039
|
|
|
(27,878
|
)
|
|||
Other assets
|
647
|
|
|
1,437
|
|
|
(592
|
)
|
|||
Accounts payable
|
2,649
|
|
|
(728
|
)
|
|
(4,236
|
)
|
|||
Deferred revenue
|
(1,396
|
)
|
|
(272
|
)
|
|
(9,620
|
)
|
|||
Accrued liabilities
|
2,087
|
|
|
(9,499
|
)
|
|
5,237
|
|
|||
Other liabilities
|
15
|
|
|
189
|
|
|
(346
|
)
|
|||
Net cash provided by (used in) operating activities
|
51,148
|
|
|
24,938
|
|
|
(82
|
)
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of textbooks
|
—
|
|
|
(886
|
)
|
|
(32,297
|
)
|
|||
Proceeds from liquidations of textbooks
|
6,943
|
|
|
25,646
|
|
|
38,260
|
|
|||
Purchases of marketable securities
|
(128,247
|
)
|
|
(7,633
|
)
|
|
(35,610
|
)
|
|||
Proceeds from sale of marketable securities
|
16,393
|
|
|
22,830
|
|
|
350
|
|
|||
Maturities of marketable securities
|
9,750
|
|
|
6,844
|
|
|
47,840
|
|
|||
Purchases of property and equipment
|
(26,142
|
)
|
|
(24,689
|
)
|
|
(8,253
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
(14,931
|
)
|
|
(27,055
|
)
|
|
—
|
|
|||
Purchase of strategic equity investment
|
—
|
|
|
(1,020
|
)
|
|
(2,019
|
)
|
|||
Net cash (used in) provided by investing activities
|
(136,234
|
)
|
|
(5,963
|
)
|
|
8,271
|
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Common stock issued under stock plans, net
|
23,659
|
|
|
2,104
|
|
|
13,696
|
|
|||
Payment of taxes related to the net share settlement of equity awards
|
(20,115
|
)
|
|
(10,779
|
)
|
|
(8,710
|
)
|
|||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(2,263
|
)
|
|||
Payment of deferred cash consideration related to acquisitions
|
(16,939
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from follow-on offering, net of offering costs
|
147,609
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
134,214
|
|
|
(8,675
|
)
|
|
2,723
|
|
|||
Net increase in cash and cash equivalents
|
49,128
|
|
|
10,300
|
|
|
10,912
|
|
|||
Cash and cash equivalents, beginning of period
|
77,329
|
|
|
67,029
|
|
|
56,117
|
|
|||
Cash and cash equivalents, end of period
|
$
|
126,457
|
|
|
$
|
77,329
|
|
|
$
|
67,029
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow data:
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
85
|
|
|
$
|
50
|
|
|
$
|
95
|
|
Income taxes
|
$
|
1,790
|
|
|
$
|
1,094
|
|
|
$
|
827
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Accrued purchases of long-lived assets
|
$
|
3,573
|
|
|
$
|
2,333
|
|
|
$
|
1,771
|
|
Issuance of common stock related to prior acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
825
|
|
Classification
|
|
Useful Life
|
Computers and equipment
|
|
3 years
|
Software
|
|
3 years
|
Furniture and fixtures
|
|
5 years
|
Leasehold improvements
|
|
Shorter of the remaining lease term or the estimated useful life of 5 years
|
Content
|
|
Shorter of the licensed content term or the estimated useful life of 5 years
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(20,283
|
)
|
|
$
|
(42,245
|
)
|
|
$
|
(59,210
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares used to compute net loss per share, basic and diluted
|
100,022
|
|
|
90,534
|
|
|
86,818
|
|
|||
|
|
|
|
|
|
||||||
Net loss per share, basic and diluted
|
$
|
(0.20
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.68
|
)
|
|
Years Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Options to purchase common stock
|
3,045
|
|
|
10,799
|
|
|
11,446
|
|
RSUs and PSUs
|
153
|
|
|
1,239
|
|
|
200
|
|
Employee stock purchase plan
|
5
|
|
|
15
|
|
|
—
|
|
Warrants to purchase common stock
|
—
|
|
|
200
|
|
|
299
|
|
Total common stock equivalents
|
3,203
|
|
|
12,253
|
|
|
11,945
|
|
|
December 31, 2017
|
||||||||||
|
Cost
|
|
Net Unrealized Loss
|
|
Fair Value
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
Cash
|
$
|
98,370
|
|
|
$
|
—
|
|
|
$
|
98,370
|
|
Money market funds
|
5,358
|
|
|
—
|
|
|
5,358
|
|
|||
Commercial paper
|
22,729
|
|
|
—
|
|
|
22,729
|
|
|||
Total cash and cash equivalents
|
$
|
126,457
|
|
|
$
|
—
|
|
|
$
|
126,457
|
|
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
$
|
38,850
|
|
|
$
|
(27
|
)
|
|
$
|
38,823
|
|
Corporate securities
|
23,001
|
|
|
(43
|
)
|
|
22,958
|
|
|||
U.S. treasury securities
|
19,978
|
|
|
(17
|
)
|
|
19,961
|
|
|||
Total short-term investments
|
$
|
81,829
|
|
|
$
|
(87
|
)
|
|
$
|
81,742
|
|
|
|
|
|
|
|
||||||
Long-term corporate securities
|
$
|
20,405
|
|
|
$
|
(100
|
)
|
|
$
|
20,305
|
|
|
Cost
|
|
Fair Value
|
||||
Due in 1 year or less
|
$
|
104,558
|
|
|
$
|
104,471
|
|
Due in 1-2 years
|
20,405
|
|
|
20,305
|
|
||
Investments not due at a single maturity date
|
5,358
|
|
|
5,358
|
|
||
Total
|
$
|
130,321
|
|
|
$
|
130,134
|
|
|
December 31, 2017
|
||||||||||
|
Total
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
||||||
Assets:
|
|
|
|
|
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
5,358
|
|
|
$
|
5,358
|
|
|
$
|
—
|
|
Commercial paper
|
22,729
|
|
|
—
|
|
|
22,729
|
|
|||
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
38,823
|
|
|
—
|
|
|
38,823
|
|
|||
Corporate securities
|
22,958
|
|
|
—
|
|
|
22,958
|
|
|||
U.S. treasury securities
|
19,961
|
|
|
19,961
|
|
|
—
|
|
|||
Long-term corporate securities
|
20,305
|
|
|
—
|
|
|
20,305
|
|
|||
Total assets measured and recorded at fair value
|
$
|
130,134
|
|
|
$
|
25,319
|
|
|
$
|
104,815
|
|
|
December 31, 2016
|
||
Textbook library
|
$
|
33,980
|
|
Less accumulated depreciation
|
(31,405
|
)
|
|
Textbook library, net
|
$
|
2,575
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Computer and equipment
|
$
|
2,449
|
|
|
$
|
1,597
|
|
Software
|
5,317
|
|
|
4,324
|
|
||
Furniture and fixtures
|
2,893
|
|
|
2,148
|
|
||
Leasehold improvements
|
7,154
|
|
|
5,342
|
|
||
Content
|
70,110
|
|
|
49,725
|
|
||
Property and equipment
|
87,923
|
|
|
63,136
|
|
||
Less accumulated depreciation and amortization
|
(40,430
|
)
|
|
(27,831
|
)
|
||
Property and equipment, net
|
$
|
47,493
|
|
|
$
|
35,305
|
|
Initial cash consideration
|
$
|
12,717
|
|
Net working capital adjustment
|
53
|
|
|
Escrow
|
2,244
|
|
|
Fair value of purchase consideration
|
$
|
15,014
|
|
Net tangible assets
|
$
|
60
|
|
Acquired intangible assets:
|
|
||
Trade name
|
50
|
|
|
Domain names
|
230
|
|
|
Non-compete agreements
|
70
|
|
|
Developed technology
|
5,510
|
|
|
Content Library
|
70
|
|
|
Total acquired intangible assets
|
5,930
|
|
|
Total identifiable assets acquired
|
5,990
|
|
|
Goodwill
|
9,024
|
|
|
Total fair value of purchase consideration
|
$
|
15,014
|
|
Initial cash consideration
|
$
|
22,007
|
|
Net working capital adjustment
|
200
|
|
|
Fair value of deferred cash consideration
|
17,127
|
|
|
Escrow
|
4,200
|
|
|
Hold-back
|
500
|
|
|
Fair value of purchase consideration
|
$
|
44,034
|
|
Cash
|
$
|
59
|
|
Accounts receivable
|
2,610
|
|
|
Favorable lease acquired
|
300
|
|
|
Other acquired assets
|
212
|
|
|
Acquired intangible assets:
|
|
||
Trade names
|
1,840
|
|
|
Domain names
|
1,330
|
|
|
Advertiser relationships
|
6,600
|
|
|
User base
|
550
|
|
|
Non-compete agreements
|
508
|
|
|
Developed technology
|
5,660
|
|
|
Total acquired intangible assets
|
16,488
|
|
|
Total identifiable assets acquired
|
19,669
|
|
|
Liabilities assumed
|
(573
|
)
|
|
Net identifiable assets acquired
|
19,096
|
|
|
Goodwill
|
24,938
|
|
|
Total fair value of purchase consideration
|
$
|
44,034
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Beginning balance
|
$
|
116,239
|
|
|
$
|
91,301
|
|
Additions due to acquisitions
|
9,024
|
|
|
24,938
|
|
||
Foreign currency translation adjustment
|
9
|
|
|
—
|
|
||
Ending balance
|
$
|
125,272
|
|
|
$
|
116,239
|
|
|
December 31, 2017
|
|||||||||||||
|
Weighted-Average Amortization
Period
(in months)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|||||||
Developed technologies and content library
|
70
|
|
|
$
|
20,657
|
|
|
$
|
(10,220
|
)
|
|
$
|
10,437
|
|
Customer lists
|
47
|
|
|
9,970
|
|
|
(5,480
|
)
|
|
4,490
|
|
|||
Trade names
|
46
|
|
|
5,793
|
|
|
(3,465
|
)
|
|
2,328
|
|
|||
Non-compete agreements
|
30
|
|
|
1,798
|
|
|
(1,506
|
)
|
|
292
|
|
|||
Master service agreements
|
21
|
|
|
1,030
|
|
|
(1,030
|
)
|
|
—
|
|
|||
Indefinite-lived trade name
|
—
|
|
|
3,600
|
|
|
—
|
|
|
3,600
|
|
|||
Foreign currency translation adjustment
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||
Total intangible assets
|
57
|
|
|
$
|
42,854
|
|
|
$
|
(21,701
|
)
|
|
$
|
21,153
|
|
|
December 31, 2016
|
|||||||||||||
|
Weighted-Average Amortization
Period
(in months)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|||||||
Developed technologies
|
60
|
|
|
$
|
15,077
|
|
|
$
|
(8,245
|
)
|
|
$
|
6,832
|
|
Customer lists
|
47
|
|
|
9,970
|
|
|
(3,673
|
)
|
|
6,297
|
|
|||
Trade names
|
47
|
|
|
5,513
|
|
|
(1,998
|
)
|
|
3,515
|
|
|||
Non-compete agreements
|
30
|
|
|
1,728
|
|
|
(1,249
|
)
|
|
479
|
|
|||
Master service agreements
|
21
|
|
|
1,030
|
|
|
(1,005
|
)
|
|
25
|
|
|||
Indefinite-lived trade name
|
—
|
|
|
3,600
|
|
|
—
|
|
|
3,600
|
|
|||
Total intangible assets
|
51
|
|
|
$
|
36,918
|
|
|
$
|
(16,170
|
)
|
|
$
|
20,748
|
|
2018
|
$
|
5,311
|
|
2019
|
4,347
|
|
|
2020
|
2,874
|
|
|
2021
|
1,518
|
|
|
2022
|
1,075
|
|
|
Thereafter
|
2,428
|
|
|
Total
|
$
|
17,553
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Reimbursement from Ingram and other partners
|
$
|
4,219
|
|
|
$
|
18,759
|
|
Other
|
3,626
|
|
|
2,255
|
|
||
Other current assets
|
$
|
7,845
|
|
|
$
|
21,014
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Payable to Ingram and other partners
|
$
|
8,001
|
|
|
$
|
8,237
|
|
Taxes payable
|
3,337
|
|
|
2,927
|
|
||
Chegg credit
|
2,457
|
|
|
2,341
|
|
||
Accrued purchases of long-lived assets
|
3,573
|
|
|
2,333
|
|
||
Accrued deferred cash consideration related to acquisition
|
—
|
|
|
17,378
|
|
||
Other
|
13,706
|
|
|
11,103
|
|
||
Accrued liabilities
|
$
|
31,074
|
|
|
$
|
44,319
|
|
2018
|
$
|
2,934
|
|
2019
|
2,038
|
|
|
2020
|
939
|
|
|
2021
|
485
|
|
|
2022
|
230
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
6,626
|
|
|
December 31, 2017
|
|
Warrants to purchase common stock
|
100,000
|
|
Outstanding stock options
|
8,066,846
|
|
Outstanding RSUs and PSUs
|
14,335,115
|
|
Shares available for grant under the stock plans
|
11,177,175
|
|
Shares available for issuance under employee stock purchase plan
|
5,849,986
|
|
Total common shares reserved for future issuance
|
39,529,122
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of revenues
|
$
|
316
|
|
|
$
|
172
|
|
|
$
|
262
|
|
Technology and development
|
14,333
|
|
|
14,771
|
|
|
11,992
|
|
|||
Sales and marketing
|
5,007
|
|
|
6,124
|
|
|
7,901
|
|
|||
General and administrative
|
18,703
|
|
|
20,718
|
|
|
18,620
|
|
|||
Total share-based compensation expense
|
$
|
38,359
|
|
|
$
|
41,785
|
|
|
$
|
38,775
|
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Expected term (years)
|
5.50
|
|
|
5.50-6.00
|
|
||
Expected volatility
|
56.94
|
%
|
|
50.68%-51.69%
|
|
||
Dividend yield
|
—
|
%
|
|
—
|
%
|
||
Risk-free interest rate
|
1.43
|
%
|
|
1.75%-1.86%
|
|
||
Weighted-average grant-date fair value per share
|
$
|
2.58
|
|
|
$
|
3.54
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Expected term (years)
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
|||
Expected volatility
|
38.15%-45.57%
|
|
|
35.10%-75.74%
|
|
|
36.20%-49.59%
|
|
|||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Risk-free interest rate
|
1.04%-1.42%
|
|
|
0.38%-0.62%
|
|
|
0.09%-0.31%
|
|
|||
Weighted-average grant-date fair value per share
|
$
|
3.55
|
|
|
$
|
1.79
|
|
|
$
|
1.98
|
|
|
Options Outstanding
|
|||||||||||
|
Number of
Options
Outstanding
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
Weighted-Average Remaining Contractual Term in Years
|
|
Aggregate
Intrinsic
Value
|
|||||
Balance at December 31, 2016
|
11,333,624
|
|
|
$
|
8.60
|
|
|
5.22
|
|
$
|
6,608,611
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(2,902,403
|
)
|
|
7.13
|
|
|
|
|
|
|||
Canceled
|
(364,375
|
)
|
|
12.23
|
|
|
|
|
|
|||
Balance at December 31, 2017
|
8,066,846
|
|
|
$
|
8.97
|
|
|
4.64
|
|
$
|
59,318,983
|
|
|
|
|
|
|
|
|
|
|||||
As of December 31, 2017
|
|
|
|
|
|
|
|
|||||
Options exercisable
|
8,033,749
|
|
|
$
|
8.98
|
|
|
4.63
|
|
$
|
59,002,312
|
|
Options vested and expected to vest
|
8,064,829
|
|
|
$
|
8.97
|
|
|
4.64
|
|
$
|
59,299,650
|
|
|
RSUs and PSUs Outstanding
|
|||||
|
Number of RSUs and PSUs
Outstanding
|
|
Weighted
Average Grant Date
Fair Value
|
|||
Balance at December 31, 2016
|
14,142,109
|
|
|
$
|
5.20
|
|
Granted
|
6,800,381
|
|
|
9.10
|
|
|
Released
|
(5,362,478
|
)
|
|
5.73
|
|
|
Canceled
|
(1,244,897
|
)
|
|
6.16
|
|
|
Balance at December 31, 2017
|
14,335,115
|
|
|
$
|
6.78
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current income taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
(103
|
)
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
State
|
100
|
|
|
321
|
|
|
263
|
|
|||
Foreign
|
1,523
|
|
|
959
|
|
|
778
|
|
|||
Total current income taxes
|
1,520
|
|
|
1,262
|
|
|
1,041
|
|
|||
|
|
|
|
|
|
||||||
Deferred income taxes:
|
|
|
|
|
|
||||||
Federal
|
(992
|
)
|
|
503
|
|
|
484
|
|
|||
State
|
75
|
|
|
48
|
|
|
56
|
|
|||
Foreign
|
1,199
|
|
|
(106
|
)
|
|
(102
|
)
|
|||
Total deferred income taxes
|
282
|
|
|
445
|
|
|
438
|
|
|||
Total income tax provision
|
$
|
1,802
|
|
|
$
|
1,707
|
|
|
$
|
1,479
|
|
|
Years Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued expenses and reserves
|
$
|
1,665
|
|
|
$
|
5,069
|
|
Share-based compensation
|
14,430
|
|
|
23,864
|
|
||
Deferred revenue
|
—
|
|
|
1,085
|
|
||
Net operating loss carryforwards
|
71,653
|
|
|
73,708
|
|
||
Property and equipment, textbooks and intangibles assets
|
3,905
|
|
|
5,168
|
|
||
Other items
|
960
|
|
|
1,407
|
|
||
Gross deferred tax assets
|
92,613
|
|
|
110,301
|
|
||
Valuation allowance
|
(91,183
|
)
|
|
(110,045
|
)
|
||
Total deferred tax assets
|
1,430
|
|
|
256
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Other
|
(2,869
|
)
|
|
(1,413
|
)
|
||
Total deferred tax liabilities
|
(2,869
|
)
|
|
(1,413
|
)
|
||
|
|
|
|
||||
Net deferred tax liability
|
$
|
(1,439
|
)
|
|
$
|
(1,157
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning balance
|
$
|
4,882
|
|
|
$
|
4,849
|
|
|
$
|
4,272
|
|
Increase in tax positions for prior years
|
280
|
|
|
478
|
|
|
82
|
|
|||
Decrease in tax positions for prior years
|
(101
|
)
|
|
(855
|
)
|
|
(416
|
)
|
|||
Decrease in tax positions for prior year settlement
|
(172
|
)
|
|
(32
|
)
|
|
(61
|
)
|
|||
Decrease in tax positions for prior years due to statutes lapsing
|
(169
|
)
|
|
(76
|
)
|
|
—
|
|
|||
Increase in tax positions for current year
|
978
|
|
|
595
|
|
|
948
|
|
|||
Change due to translation of foreign currencies
|
74
|
|
|
(77
|
)
|
|
24
|
|
|||
Ending balance
|
$
|
5,772
|
|
|
$
|
4,882
|
|
|
$
|
4,849
|
|
|
2017 Restructuring Plan
|
|
2015 Restructuring Plan
|
|
|
||||||||||||||
|
Workforce Reduction Costs
|
|
Lease Termination and Other Costs
|
|
Workforce Reduction Costs
|
|
Lease Termination and Other Costs
|
|
Total
|
||||||||||
Balance at January 1, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55
|
|
|
$
|
2,463
|
|
|
$
|
2,518
|
|
Restructuring credits
|
—
|
|
|
—
|
|
|
—
|
|
|
(423
|
)
|
|
(423
|
)
|
|||||
Cash payments
|
—
|
|
|
—
|
|
|
(55
|
)
|
|
(1,734
|
)
|
|
(1,789
|
)
|
|||||
Balance at December 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
306
|
|
|
306
|
|
|||||
Restructuring charges (credits)
|
941
|
|
|
148
|
|
|
—
|
|
|
(42
|
)
|
|
1,047
|
|
|||||
Cash payments
|
(897
|
)
|
|
(128
|
)
|
|
—
|
|
|
(43
|
)
|
|
(1,068
|
)
|
|||||
Write-offs
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||||
Balance at December 31, 2017
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
221
|
|
|
$
|
265
|
|
|
December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Chegg Services
|
$
|
185,683
|
|
|
$
|
129,335
|
|
|
$
|
94,285
|
|
Required Materials
|
69,383
|
|
|
124,755
|
|
|
207,088
|
|
|||
Total net revenues
|
$
|
255,066
|
|
|
$
|
254,090
|
|
|
$
|
301,373
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31, 2017
|
|
June 30, 2017
|
|
September 30, 2017
|
|
December 31, 2017
|
||||||||
Total net revenues
|
$
|
62,602
|
|
|
$
|
56,317
|
|
|
$
|
62,640
|
|
|
$
|
73,507
|
|
Gross profit
|
$
|
41,206
|
|
|
$
|
39,275
|
|
|
$
|
40,284
|
|
|
$
|
54,126
|
|
Net (loss) income
|
$
|
(6,401
|
)
|
|
$
|
(6,025
|
)
|
|
$
|
(11,516
|
)
|
|
$
|
3,659
|
|
Weighted average shares used to compute net (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
92,830
|
|
|
95,047
|
|
|
103,041
|
|
|
108,968
|
|
||||
Diluted
|
92,830
|
|
|
95,047
|
|
|
103,041
|
|
|
121,557
|
|
||||
Net (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.07
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.03
|
|
Diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.03
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31, 2016
|
|
June 30, 2016
|
|
September 30, 2016
|
|
December 31, 2016
|
||||||||
Total net revenues
|
$
|
66,654
|
|
|
$
|
53,036
|
|
|
$
|
71,343
|
|
|
$
|
63,057
|
|
Gross profit
|
$
|
27,731
|
|
|
$
|
31,629
|
|
|
$
|
32,644
|
|
|
$
|
42,485
|
|
Net loss
|
$
|
(15,685
|
)
|
|
$
|
(9,008
|
)
|
|
$
|
(16,063
|
)
|
|
$
|
(1,489
|
)
|
Weighted average shares used to compute net loss per share, basic and diluted
|
89,118
|
|
|
90,416
|
|
|
91,059
|
|
|
91,526
|
|
||||
Net loss per share, basic and diluted
|
$
|
(0.18
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.02
|
)
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Management's Annual Report on Internal Control Over Financial Reporting
|
(c)
|
Changes in Internal Control over Financial Reporting
|
|
Years Ended December 31, 2017, 2016, and 2015
|
||||||||||||||
|
Balance at
Beginning of Year |
|
Provision (Release) for Bad Debts
|
|
Net Write-offs
|
|
Balance at
End of Year |
||||||||
Allowance for doubtful accounts
|
|
|
|
|
|
|
|
||||||||
2017
|
$
|
436
|
|
|
$
|
47
|
|
|
$
|
(224
|
)
|
|
$
|
259
|
|
2016
|
$
|
378
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
436
|
|
2015
|
$
|
559
|
|
|
$
|
(77
|
)
|
|
$
|
(104
|
)
|
|
$
|
378
|
|
|
Years Ended December 31, 2017, 2016, and 2015
|
||||||||||||||
|
Balance at
Beginning of Year |
|
Provision for Refunds
|
|
Refunds Issued
|
|
Balance at
End of Year |
||||||||
Refund Reserve
|
|
|
|
|
|
|
|
||||||||
2017
|
$
|
487
|
|
|
$
|
22,446
|
|
|
$
|
(22,651
|
)
|
|
$
|
282
|
|
2016
|
$
|
4,538
|
|
|
$
|
26,373
|
|
|
$
|
(30,424
|
)
|
|
$
|
487
|
|
2015
|
$
|
6,174
|
|
|
$
|
39,919
|
|
|
$
|
(41,555
|
)
|
|
$
|
4,538
|
|
|
|
|
|
Incorporated by Reference
|
||||||||
Exhibit
No.
|
|
Exhibit
|
|
Form
|
|
File No
|
|
Filing Date
|
|
Exhibit No.
|
|
Filed
Herewith
|
|
|
10-K
|
|
001-36180
|
|
3/4/16
|
|
3.01
|
|
|
||
|
|
10-K
|
|
001-36180
|
|
3/4/16
|
|
3.02
|
|
|
||
|
|
S-1/A
|
|
333-190616
|
|
10/01/13
|
|
4.01
|
|
|
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
4.02
|
|
|
||
|
|
S-1/A
|
|
333-190616
|
|
10/01/13
|
|
10.01
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.02
|
|
|
||
|
|
S-1/A
|
|
333-190616
|
|
10/25/13
|
|
10.04
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.05
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.06
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.07
|
|
|
||
|
|
10-K
|
|
001-36180
|
|
3/6/14
|
|
10.07
|
|
|
||
|
|
10-K
|
|
001-36180
|
|
3/6/14
|
|
10.08
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
8/14/13
|
|
10.09
|
|
|
||
|
|
10-K
|
|
001-36180
|
|
3/6/14
|
|
10.09
|
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.14
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.15
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.16
|
|
|
||
|
|
S-1
|
|
333-190616
|
|
08/14/13
|
|
10.17
|
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
8-K
|
|
001-36180
|
|
5/2/16
|
|
99.03
|
|
|
||
|
|
8-K
|
|
001-36180
|
|
9/22/16
|
|
99.1
|
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
X
|
||
101.INS
|
|
XBRL Instance
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Labels
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition
|
|
|
|
|
|
|
|
|
|
X
|
†
|
Confidential treatment has been granted for portions of this exhibit by the SEC.
|
††
|
Confidential treatment has been requested for portions of this exhibit pursuant to Rule 24b-2 promulgated under the Exchange Act. These portions have been omitted and submitted separately to the Securities and Exchange Commission.
|
*
|
Indicates a management contract or compensatory plan.
|
**
|
This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.
|
|
CHEGG, INC.
|
||
February 26, 2018
|
By:
|
|
/S/ DAN ROSENSWEIG
|
|
|
|
Dan Rosensweig
|
|
|
|
President, Chief Executive Officer and Chairman
|
Name
|
Title
|
Date
|
|
|
|
/S/ DAN ROSENSWEIG
|
President, Chief Executive Officer and Chairman
|
February 26, 2018
|
Dan Rosensweig
|
(Principal Executive Officer)
|
|
|
|
|
/S/ ANDREW BROWN
|
Chief Financial Officer
|
February 26, 2018
|
Andrew Brown
|
(Principal Financial Officer)
|
|
|
|
|
/S/ ROBIN TOMASELLO
|
Vice President, Corporate Controller
|
February 26, 2018
|
Robin Tomasello
|
(Principal Accounting Officer)
|
|
|
|
|
|
Director
|
|
Jeffrey Housenbold
|
|
|
|
|
|
/S/ RENEE BUDIG
|
Director
|
February 26, 2018
|
Renee Budig
|
|
|
|
|
|
/S/ MARNE LEVINE
|
Director
|
February 26, 2018
|
Marne Levine
|
|
|
|
|
|
/S/ RICHARD SARNOFF
|
Director
|
February 26, 2018
|
Richard Sarnoff
|
|
|
|
|
|
/S/ TED SCHLEIN
|
Director
|
February 26, 2018
|
Ted Schlein
|
|
|
|
|
|
|
Director
|
|
John York
|
|
|
1.
|
Position
.
|
2.
|
Compensation
.
|
3.
|
Stock Options and Restricted Stock Units
.
|
4.
|
Benefits
.
|
5.
|
At-Will Employment
.
|
6.
|
Confidential Information and Invention Assignment Agreement
.
|
7.
|
Section 409A
.
|
8.
|
No Inconsistent Obligations
.
|
1.
|
Definitions.
|
2.
|
Obligations of the Parties Relating to Rental Catalog.
|
(a)
|
Chegg will, at its own expense, (i) use commercially reasonable efforts generate rental transactions with all of the IHH Inventory through the Chegg Platform and marketing activities, upon the terms and conditions and at the market prices determined by Chegg, in its reasonable commercial discretion; and (ii) process and administer the rental transactions, including being merchant of record, payment processing, sales tax compliance, customer service and support (in accordance with the Standard Policies), data systems, and asset recovery and collections services; and (iii) and provide near real time information to IHH in a mutually agreeable format so that IHH may promptly fulfill customer orders for the Inventory consistent with the Guaranteed Delivery Date.
|
(b)
|
Chegg will use commercially reasonable efforts to collect from Consumers the amounts charged and due with respect to the Consumer Orders in accordance with its Standard Policies and the terms set forth on Section 6 of the Confidential Appendix.
Chegg will collect all applicable sales tax relating to the Consumer Orders and timely file all appropriate sales tax returns and timely remit all sales taxes to the proper taxing authorities. Chegg agrees to reasonably cooperate with IHH and furnish IHH with any records or information as may be reasonably requested by IHH to account for, to provide information to applicable taxing authorities, and/or file its sales, use and property tax returns. If at any point during the Term, if all orders processed through Chegg are fulfilled with IHH owned inventory and Chegg desires to turn over all sales tax collected on such IHH owned Inventory to IHH, and for IHH to take over responsibility of remitting sales tax to the proper taxing authorities, the
|
(c)
|
Beginning May 1, 2015, and continuing through the Term, IHH authorizes Chegg to procure textbook inventory, in accordance with the terms and conditions of this 2015 Agreement, in the amounts set out in Section 2 of the attached Confidential Appendix. IHH will reimburse Chegg for those inventory purchases at Chegg’s acquisition cost, pursuant to the payment terms for such purchases set out in this 2015 Agreement.
|
(d)
|
Chegg will determine, based on its analysis of market conditions, the exact amount of investment to dedicate to sourcing on IHH’s behalf (up to the applicable yearly maximum values shown in Section 1 of the Appendix ) in each period, as well as which vendors to use as sourcing partners. Sources of books for the rental catalog will include buyback, pre-buy, CDF/JIT rental (defined as books purchased from a vendor and shipped by such vendor directly to customer), customer donations, and bulk purchases from wholesalers, distributors, and publishers, and returns from JIT sales. All rental book sources listed above will be subject to revenue targets as set out in Section 6 of the attached Confidential Appendix.
|
(e)
|
In the event of underperformance, book investment targets will be reduced according to the existing overall revenue miss in accordance with the example set forth in Section 2 of the attached Confidential Appendix. Underperformance is defined as failure to meet revenue targets cumulatively on all tranches sourced to date.
|
(f)
|
During the term of this 2015 Agreement, IHH shall make available for consignment to Chegg the IHH Inventory (or inventory of like kind). Inventory may be comprised of new or used textbooks identified and procured for IHH from third parties by Chegg on behalf of and for the account of IHH under the terms and conditions specified in this 2015 Agreement. IHH shall retain all ownership of the IHH Inventory (unless and until any such IHH Inventory is sold as provided for herein) that it consigns to Chegg pursuant to this 2015 Agreement. Chegg shall not acquire and shall have no right, title or interest in or claims to the IHH Inventory except as specifically set out herein.
|
(g)
|
IHH will bear the ultimate risk of asset loss and collections related to IHH Inventory including IBG warehouse related losses, whether by virtue of shipping and handling, storage, casualty, force majeure, shrinkage, fraud, and theft. Chegg will bear responsibility for Consumer fraud. Chegg’s terms of use will specify that students will be charged for the asset in the event of damage or non-return. Any losses for which Chegg is responsible will not change the portfolio revenue requirements for Chegg to provide for IHH. Any losses for which IHH is responsible will have the full source cost for these books removed from the effective book investment on which revenue targets are calculated.
|
(h)
|
IHH will at all times insure [***] of the FMV of the Combined Inventory against loss or damage in an amount sufficient to cover the costs of repurchasing such Combined Inventory, and provide Chegg with a certificate evidencing such insurance. In the event that greater than [***] of the Combined Inventory is damaged, lost or destroyed in an event or series of events while under IHH’s control or the control of [***], IHH authorizes Chegg to use up to the insurance recovery amount to repurchase books on IHH’s behalf for the rental catalog. All remaining revenue targets associated with the lost inventory will be cancelled. New
|
(i)
|
Revenue targets and associated risk sharing are outlined in Section 6 of the Confidential Appendix.
|
i.
|
JIT Sale units shall be included in [***] which IHH will provide for the program relationship. IHH will handle all [***] shipping payments for JIT Sale units, and Chegg will provide revenue share to IHH according to Section 3 of the Confidential Appendix. This revenue share will be provided for every JIT Sale unit transacted and will compensate IHH both for the ownership of the JIT Sale units as well as for the management of the [***]. All JIT Sale related payments between Chegg and IHH will be subject to
[***]
day payment terms.
|
ii.
|
JIT Sale purchases that are returned to IHH shall enter into the rental portfolio at full source cost (and be counted against all elements of the rental catalog revenue targets and maximum allowable source costs) Process and payments related to moving this inventory to the rental catalog shall follow the table in section 3 of the Confidential Appendix
|
iii.
|
Chegg shall continue to control pricing on JIT Sale units, with revenue share defined by Section 3 of the Confidential Appendix
|
iv.
|
IHH and Chegg will jointly work to enable this JIT Sale process on or by January 1, 2016. Expected transactions are represented in the table in Section 3 of the attached Confidential Appendix.
|
i.
|
IHH and Chegg will jointly work to enable IHH’s ownership of Partner Buyback by May 2, 2015 for the purpose of continuing to realize full source cost reductions that are made possible through a larger buyback catalog and through migration of selected titles to the rental catalog.
|
ii.
|
IHH will absorb ownership of Partner Buyback upon receipt of the book from students. For those books IHH does not transfer to IHH’s ongoing inventory or cherry pick for inclusion in the rental catalog, revenue share to IHH will be triggered upon liquidation of the books to 3
rd
Party Vendors. Revenue share will be paid as specified in Section 3 of the Confidential Appendix.
|
iii.
|
IHH grants permission to Chegg to transfer Partner Buyback inventory to the rental catalog for the purposes of improving financial returns on the rental consignment arrangement
.
In the event that Partner Buyback inventory is transferred into the rental catalog for purposes of this arrangement,, the full source cost shall be counted against all elements of the rental catalog revenue targets and maximum allowable source costs, effective on the month of transfer to the rental catalog.
|
iv.
|
Payment timing and invoices associated with Partner Buyback will be dictated in accordance with the table set forth in section 3 of the Confidential Appendix.
|
v.
|
The parties will also work toward enablement of IHH’s ability to leverage the Partner Buyback catalog for inventory at the parties’ earliest convenience. In the event IHH, at its own discretion, decides to transfer Partner Buyback inventory into its own (non-rental) catalog, no revenue share shall be triggered.
|
4.
|
Logistics Amendment.
Chegg and IBG hereby enter this Logistics Amendment to amend the Logistics Agreement to contain the terms and conditions set forth in this Section 4. To the extent the following are directly or by the context clearly inconsistent with similar terms and conditions contained in the Logistics Agreement, the terms and conditions of this Section 4 shall control.
|
(a)
|
The term of this Logistics Agreement is amended to expire or terminate on the same date as that certain 2015 Inventory Purchase and Consignment Agreement (the “2015 Agreement”), dated as of April 3, 2015, by and among Ingram Hosting Holdings Inc., a Delaware corporation (“IHH”) and Chegg expires or is terminated, except as provided for otherwise in connection an early termination provision of the 2015 Agreement as set out in Section 10 thereof. Unless otherwise defined in this Logistics Agreement, capitalized terms used in this Logistics Amendment shall have the meaning as ascribed to such term in the 2015 Agreement.
|
(b)
|
IBG will package the Combined Inventory in Chegg branded boxes provided by Chegg to protect against damage during shipment. IBG will be responsible for the cost of the packing services and materials at its facility with respect to the Combined Inventory, excluding the cost of Chegg supplied boxes.
|
(c)
|
IBG will ship the Combined Inventory contained in the Chegg Order to the Consumer. The determination of shipping upgrade offers that would materially change the cost of goods sold will be made by Chegg in its reasonable discretion, but must be approved by IBG. Chegg agrees that it will pass through all fees collected from Consumers for shipping in accordance with revenue sharing as specified in Section 6 of the Confidential Appendix. When the Combined Inventory has been shipped from IBG to Consumer, IBG will notify Chegg electronically and in near real time of how long it took IBG to ship the Combined Inventory, the date and time of shipment, and any assigned tracking number. IBG’s shipping time will meet the requirements set out in Section 1 of the 2015 Agreement Confidential Appendix.
|
(d)
|
IBG will be prepared to receive up to [***] units of inbound Chegg Inventory (aka Consumer rentals) by May 2, 2015 to support the May/June 2015 inbound textbook season, and Chegg will receive the remainder of approximately [***] units of the May/June inbound textbook season into the Chegg warehouse. Such remaining [***] units will then move from the Chegg warehouse to the IBG warehouse by the end of June 2015 without incurring an IBG handling cost. All Chegg Inventory other than the approximately [***] units described above transferred from the Chegg warehouse to the
|
(e)
|
IBG will be prepared to receive one hundred (100%) of inbound Chegg Inventory (to include 100% of summer student rentals and 100% of sourcing purchases (bulk and pre-buy/ buyback)) by [***] to support [***] textbook season. As amended hereby, the Logistics Agreement will apply to Chegg Inventory stored in IBG’s warehouses under the 2015 Agreement.
|
(f)
|
IBG will take over one hundred percent (100%) of outbound textbook shipping for Chegg Inventory by [***], and be prepared to receive all remaining Chegg Inventory by [***], to support the [***] textbook rush period.
|
(g)
|
Aligned to the above, by [***], all Chegg Inventory will move through IBG’s logistics operations for inbound and outbound handling for the duration of the Logistics Agreement.
|
(h)
|
IBG and Chegg will work together to enable consistent performance improvement in providing rapid shipping to students, with targets as set out in Section 1 of the 2015 Agreement Confidential Appendix.
|
(i)
|
IBG will fulfill Insert and other Brand Partnership add-ons to Textbook Orders [need definitions of all at Chegg’s direction, and aligned to the shipping parameters and rate provisions set forth in Section 10 of the 2015 Agreement Confidential Appendix. These add-ons shall include targeted and national inserts (both in individual inserts and packages of multiple inserts), stickers, and branded boxes
.
|
(j)
|
If IBG is unable to fulfill an order in a timely manner, the value of the orders cancelled as a result of such failure will count toward the revenue targets specified herein. Additionally, if such failures total more than $
[***]
in Net Revenue (as defined in the Section 6 of the 2015 Agreement Confidential Appendix) in any quarter, IBG shall pay Chegg its commission on such Net Revenue, as if such Net Revenue were fulfilled, as specified in Section 6 of the 2015 Agreement Confidential Appendix.
|
(k)
|
If IBG misses their guaranteed delivery date for reasons not directly related to weather or [***] (or other third party shipping service) performance in more than [***] of orders in any rush period, a rush period defined as the months of December/January and August/September, Chegg will bill IBG back for refunds and customer contact costs (at a rate of $[***] per contact)that relate to the delivery issues and the textbook that is the subject of such refund shall be returned to IBG and become part of the IHH Inventory (as defined in the 2015 Agreement). Refunds under this section shall count toward applicable revenue targets in Section 6 of the 2015 Agreement Confidential Appendix. IBG may, in its discretion, use a different third party shipping provider to fulfill Chegg orders other than [***], so long as any new shipping provider meets the same guaranteed delivery date schedule.
|
(l)
|
Logistics fees shall be governed by Section 4 of the 2015 Agreement Confidential Appendix. Any logistics fees not covered by the 2015 Agreement shall continue to be governed by the Logistics Agreement.
|
(m)
|
Chegg will pay IBG a startup fee of [***] for building preparation and setup of the new IBG warehouse. Provided that the Logistics Agreement is still in full force and effect, on or before April 1, 2017, IBG will refund [***] of the startup fee to Chegg.
|
(n)
|
All customer information provided to IBG by Chegg, including but not limited to Chegg customer contact information, is Chegg’s confidential information, and is being provided to IBG solely for the purpose of fulfilling textbook orders under the Logistics Agreement, which purpose shall include the use of such customer information by IBG to evaluate and promote warehousing and freight efficiencies. Upon termination of this Logistics Agreement, IBG shall delete all Chegg customer information, and provide Chegg with written confirmation of such deletion except for any such information it is required by law to retain.
|
(o)
|
A material breach by IHH of the 2015 Agreement shall constitute a breach by IBG of the Logistics Agreement.
|
(p)
|
IBG Accounting and Reports. IBG shall keep accurate records regarding all Chegg transaction and shall provide the following records to Chegg for accounting purposes:
|
•
|
SKU-level reporting on inserts added into orders fulfilled with Chegg or IBG textbooks
|
•
|
Chegg-owned units handled and shipped (inbound and outbound) tied to invoices for logistics fees
|
•
|
Daily outbound reporting and real-time inbound reporting enablement through the configuration of the Chegg
[***]
feed with IBG inbound and outbound [***]
|
•
|
Inventory status reports (for purpose of tracking books lost or damaged in warehouse, for all Chegg and IHH-consigned inventory), including inventory disposition (shipped, liquidated, or transferred to IHH inventory)
|
•
|
Invoice (automated or manual) data for inventory purchased from IHH for JIT Sale or CDF Rental purposes (title, ISBN, quantity, price)
|
(q)
|
EXCEPT FOR A BREACH OF CONFIDENTIALITY SECTION 14 (a) OF THE 2015 AGREEMENT INVOLVING IBG’S INTENTIONAL AND WILLFUL DISCLOSURE OF CHEGG CUSTOMER NAMES AND/OR CHEGG CUSTOMER CONTACT INFORMATION TO A THIRD PARTY FOR MATERIAL FINANCIAL GAIN, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR THE OTHER FOR ANY INCIDENTAL, INDIRECT OR CONSEQUENTIAL LOSSES OR DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGE); AND NEITHER PARTY’S CUMULATIVE LIABILITY FOR DIRECT DAMAGES RELATED TO ANY CLAIMS ARISING FROM OR RELATING TO THIS LOGISTICS AGREEMENT, REGARDLESS OF THE NATURE OF THE CLAIM, EXCEED THE AMOUNT OF FEES PAID OR PAYABLE UNDER THIS LOGISTICS AGREEMENT FOR ONE YEAR.
|
(r)
|
IBG and Chegg agree that the terms and conditions of Confidentiality Section 14(a) of the 2015 Agreement shall apply to Confidential Information shared by the parties under this Logistics Agreement.
|
5.
|
Payments/Reporting.
|
(a)
|
Rental Revenue Payments
. During the term of this 2015 Agreement, Chegg shall provide IHH with a preliminary monthly report within three (3) business days of IHH’s fiscal month end, and a final detailed statement as of IHH’s fiscal month end as set forth in Section 5(b) below within (10) ten business days of Chegg’s fiscal (calendar) month end, outlining all amounts owed to IHH for IHH’s fiscal month. The total payments owed from Chegg and IHH to the other party will be paid by Chegg and IHH within thirty (30) days from each calendar month end, unless extended payment terms are otherwise specified herein
|
(b)
|
Inventory Sourcing Reimbursement
. During the term of this Agreement, Chegg shall provide IHH with a report of books sourced on IHH’s behalf each month, including the price paid for the book and identifying information such as the ISBN, as specified as Section 5(c). Chegg shall cause the sourced books to be delivered to the appropriate location, either the Consumer, the Chegg warehouse, or one of the IBG warehouses. The price which IHH is invoiced for these books shall reflect the full source cost of the inventory. IHH shall pay Chegg for the full source cost of the books on the schedule set out in Section 8 of the attached Confidential Appendix.
|
(c)
|
Chegg Accounting and Reports
.
Chegg shall keep complete and accurate records of all matters relating to this 2015 Agreement. The accounting statements shall be provided to IHH in Spreadsheet format, within one spreadsheet each for rental transactions, liquidation transactions, JIT Sales transactions and Partner Buyback transactions. Each transaction shall be separately accounted within the records.
|
•
|
ISBN
|
•
|
Title
|
•
|
Sourcing month (to trigger revenue targets and risk sharing payments)
|
•
|
Rental price or Liquidation Price, as the case may be, and the applicable fees
|
•
|
Units of the Title sold
|
•
|
Unique Book ID shared between Chegg systems and IHH systems
|
•
|
Transaction Type
|
•
|
Rental Period
|
•
|
Order ID
|
•
|
Consumer ID
|
•
|
Ship-to Address
|
•
|
Higher education institution name, campus address, and zip code.
|
•
|
Territory Sold (might be needed if sold outside U.S.)
|
6.
|
Audit.
|
(a)
|
Each Party will cooperate with the another Party’s reasonable requests by email or other agreed upon electronic means, for financial and accounting related documents which directly relate to the transactions in this 2015 Agreement.
|
(b)
|
In the event that IHH desires a more thorough audit, it may appoint at its own expense initially, its independent public accounting firm to examine Chegg’s books, records and systems at the audited party’s offices relating to the subject matter of this 2015 Agreement, provided that any such audit is no more often than once per calendar year. Such audits shall be scheduled within [***] following delivery of notice and shall be conducted during normal business hours in a manner that does not interfere unreasonably with the audited party’s business operations. If such audit reveals that Chegg has underpaid IHH by more than [***] of the amount due, the reasonable cost of the audit shall be paid by Chegg, in addition to the amount of the underpayment. If the audit reveals an overpayment by Chegg, IHH shall promptly pay the amount of the overage to Chegg.
|
(c)
|
Within
[***]
of written notice, once per fiscal year basis, for the purpose of confirming IHH’s compliance with its obligations under this 2015 Agreement, Chegg may at its election request IHH’s Internal Audit department or IHH’s independent public accounting firm to perform specified procedures related to book purchase or shipping cost information provided to Chegg by IHH under this 2015 Agreement. If Chegg elects to use IHH’s independent public accounting firm Chegg shall be responsible for any costs of the independent public accounting firm provided that if the independent accounting firm determines that there has been an over payment by Chegg of more than [***] of the total amounts due to IHH for the previous [***] period IHH shall pay the reasonable costs of such audit (up to the amount of the over payment) in addition to promptly refunding all overpaid amounts. If the audit reveals an underpayment by Chegg, Chegg shall promptly pay IHH the amount of the underpayment.
|
7.
|
No Exclusivity.
The services and obligations of the parties hereunder are on a non-exclusive basis. IHH and Chegg acknowledge that
Chegg obtains inventory from third parties, and IHH provides inventory to third parties and IBG provides fulfillment, warehouse, logistical and other services to third parties. None of the Parties has any duty nor obligation to deal exclusively with the other, and none of the Parties shall be restricted from conducting its own book rental business without the participation or involvement of the any other Party.
|
8.
|
Marks.
Neither Chegg nor IHH shall have the right to use the other Party’s trademarks, service marks or logos (collectively called the “Marks”) except as permitted by the owner of the respective Marks. All parties acknowledge that Chegg and IHH are the exclusive owners of their respective Marks (and all goodwill associated therewith will inure solely to each owner’s benefit).
|
9.
|
Chegg Network Liquidation of Inventory.
IHH grants permission to Chegg to, from time to time, liquidate portions of the IHH inventory for the purposes of maximizing the financial return of the consigned books. In such event, Chegg agrees to liquidate such IHH Inventory reasonably consistent
|
10.
|
Term and Termination.
|
(a)
|
Term
. The term of this Agreement shall commence on May 1, 2015 and expire May 20, 2020 (the “Term”).
|
(b)
|
Early Termination:
Early termination of this 2015 Agreement shall be possible at any time, by a Party owed money from the other Party, if the Party owing money has materially failed to meet timely payment obligations to the other Party as set out in the Payment Section of this 2015 Agreement. This termination clause may only be exercised after written notice to the Party owing money, and failure to fully cure by that Party within 60 days.
|
(c)
|
Early termination of this 2015 Agreement shall be possible by either Party by giving written notice to the other Party between [***] and [***] (“Early Termination Window”), specifying either (i) ongoing uncured material breaches of this 2015 Agreement by the other Party, (ii) [***] a demonstrated capital constraint due to (A) a change in law materially affecting the industries in which [***] operate, (B) domestic, foreign or international market or economic events that, in totality, are materially adverse to the industries in which [***] operate; or (C) a material adverse change in the financial, banking or security markets that is materially adverse to the industries in which [***] operate, or (iii)
[***]. The filing of such a notice by one Party during the Early Termination Window shall automatically extend the window to [***]. If the other Party has not demonstrated that it has remedied the breaches described in (c)(i) (or that such breaches did not occur or were not material) or IHH has demonstrated that the conditions of (c)(ii) or (c)(iii) have been met, by [***], and the notice has not been withdrawn, this 2015 Agreement will terminate on [***]. The Parties may follow a similar procedure for early termination in 2018-19.
|
(d)
|
In case of any early termination of this 2015 Agreement, the following shall apply: If [***] terminates under the [***] above, or [***] initiates the termination due to a failure [***] under the payments or ongoing material breach early termination clauses [***], Chegg shall have an option to
[***]
for up to [***] following such termination on the same terms and conditions as then in effect. If [***] terminates under the [***] clause, in addition to the other provisions of this section, [***] agrees that it will [***].
|
(e)
|
Effect of Termination
. If this 2015 Agreement is terminated for any reason, Chegg shall cease generating Consumer Orders with IHH Inventory. This 2015 Agreement shall survive with respect to any IHH Inventory then in the hands of Consumers pursuant to active Rental Agreements, and Chegg will (at IHH’s expense) facilitate the return of such IHH Inventory in the ordinary course of operations consistent with the Service Policies applicable to such outstanding IHH Inventory. In the event of early termination Chegg will either liquidate or buy back the IHH Inventory at its option. The minimum amount due to IHH as a result of such buyback or liquidation will be subject to a floor as outlined in Section 5 of the Confidential Appendix. To the extent that proceeds from liquidation exceed the floor, Chegg
|
(f)
|
If the Logistics Agreement or the 2015 Agreement is terminated by Chegg prior to May 20, 2020, Chegg shall pay to IHH an amount equal to (i) the remaining rental payments owned by IHH under the lease entered into on March 10, 2015 by IHH for the new warehouse (the “New Warehouse”) to receive and hold the Chegg Inventory under this 2015 Agreement
plus
(ii) the applicable portion of the unamortized capital investment made by IHH related to the equipping and set up of the New Warehouse, as shown in the table set forth in Section 9 of the attached Confidential Appendix. Chegg will not be required to make a payment under this subsection if the termination is based on a section 10(b) or (c) breach by IHH under this 2015 Agreement.
|
11.
|
Events of Default
. A Party shall be deemed to have defaulted under this 2015 Agreement, and the non-defaulting Party shall be entitled to the remedies set forth in Section 17 hereof, upon the occurrence of any of the following events of default (an “Event of Default”):
|
(a)
|
A Party shall be in breach of this 2015 Agreement and such breach shall continue for a period of fifteen (15) calendar days after the date of receipt of written notice from the non-defaulting Party specifying such breach, if the breach is not cured during the 15 day notice period;
|
(b)
|
A Party shall make an assignment for the benefit of creditors, file a petition under any federal or state bankruptcy or insolvency code, law, or statute, be adjudicated insolvent or bankrupt or petition for an order for similar relief, petition or apply to any tribunal for the appointment of any receiver or any trustee or as a debtor in possession of such Party or any part of its property or shall commence any proceeding related to such Party under any reorganization, arrangement, readjustment of debt, dissolution or liquidation act, code, law, or statute of any jurisdiction, whether nor or hereafter in effect, or there shall be commenced against such Party any of the foregoing proceedings; or
|
(c)
|
A material breach by IBG under the Logistics Agreement constitutes a default of this 2015 Agreement by IHH.
|
12.
|
Limitation on Liability
.
EXCEPT FOR A BREACH OF CONFIDENTIALITY SECTION 14 INVOLVING IHH’S INTENTIONAL AND WILLFUL DISCLOSURE OF CHEGG CUSTOMER NAMES AND/OR CHEGG CUSTOMER CONTACT INFORMATION TO A THIRD PARTY FOR MATERIAL FINANCIAL GAIN
,
IN NO EVENT WILL ANY PARTY OR THEIR RESPECTIVE AFFILIATES,SUPPLIERS OR LICENSORS BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS 2015 AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INDIRECT, SPECIAL, PUNITIVE, INCIDENTAL OR CONSQUENTIAL DAMAGES, EVEN IF FORESEEABLE.
|
13.
|
Disclaimers.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT IN SECTION 19(d), EACH PARTY AND ITS RESPECTIVE AGENTS AND LICENSORS HEREBY DISCLAIM ANY AND ALL REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY SUBJECT MATTER OF TIS AGREEMENT,
|
14.
|
Confidentiality.
(a) During the term of this 2015 Agreement, each Party (a “Disclosing Party”) may provide the other Party (a “Receiving Party”) with Confidential Information. For purposes of this Agreement, “Confidential Information” shall mean the terms of this 2015 Agreement, the financial and transaction data arising from a Qualifying Transaction, the details of the Chegg Order, inventory data, business and marketing plans and business processes, customer contact information, and any other information which under the circumstances, a person exercising reasonable business judgment would understand to be confidential or proprietary. “Confidential Information” shall not include information (i) which is or becomes publicly available without fault by the Receiving Party, (ii) was or is rightfully acquired by the Receiving Party from a source other than the Disclosing Party, (iii) that is independently developed by Receiving Party without reference to the Disclosing Party’s Confidential Information, or (iv) was known to the Receiving Party prior to the date of the disclosure by the Disclosing Party. Receiving Party shall only use the Confidential Information for the purposes contemplated hereunder. Receiving Party will not disclose such information to any third party without the prior written consent of Disclosing Party. Each Party will take the same precautions it takes to protect the confidentiality of such information as are employed to protect its own confidential information of a similar nature, but in no case shall such protections be less than the standard of reasonable care for such information in the industry. At termination of this Agreement, upon Disclosing Party’s request, Receiving Party shall return to Disclosing Party all Disclosing Party’s Confidential Information in its possession, including, without limitation, all copies and extracts thereof, or shall purge any Confidential Information in its data base maintained for this Agreement except as may be reasonably necessary for historical record keeping purposes. Notwithstanding the foregoing, Receiving Party may disclose Confidential Information (i) to any third-party to the limited extent necessary to exercise its rights or obligations of confidentiality and non-use at least as restricted as the duties applicable to the Receiving Party hereunder, (ii) as may be required by the Securities and Exchange Commission (“SEC”) provided however, that in such event the parties agree that Chegg shall file a confidential treatment request with respect thereto and that IHH shall have the right to participate in the drafting of, and any discussions or meetings with the SEC with respect to, any such request,
(iii) as required by law or any judicial or governmental rule, regulation or requirement, provided that the Receiving Party will, unless prohibited by law or court order, provide Disclosing Party with notice of such disclosure or (iv) to the limited extent necessary to carry out its obligations under this 2015 Agreement
.
|
15.
|
Independent Contractors
.
For purposes of this Agreement, Chegg shall be considered an independent contractor of IHH with respect to renting the IHH Inventory. Unless otherwise permitted in writing, neither Party is authorized to, and neither Party shall make, any representations, warranties or guarantees to customers or potential customers regarding the other Party’s services or products in a manner that states or implies that such representation, warranty or guarantee is being made on behalf of the other Party.
|
16.
|
Remedies
.
Upon the occurrence of any Event of Default, all undisputed sums due under this Agreement at the time of the Event of Default shall be due and payable, and the parties shall be entitled to the additional remedies set forth below:
|
(a)
|
The parties acknowledge that if either Party fails, or threatens to fail, to comply with its obligations under Section 14 of this 2015 Agreement, the other Party may suffer irreparable harm for which there may be no adequate remedy at law. Accordingly, if either Party fails to comply with such obligations, then, in addition to its other remedies, the other Party shall be entitled immediately to seek injunctive relief or any other appropriate equitable remedy.
|
(b)
|
The rights, powers, and remedies under this 2015 Agreement shall be in addition to all rights, powers and remedies by virtue of any statute or rule of law, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently. Any waiver, forbearance or failure or delay in exercising any right, power, or remedy shall not preclude the further exercise thereof, and every right, power, or remedy of the non-defaulting Party shall continue in full force and effect.
|
17.
|
Indemnification
. Notwithstanding any other terms of this 2015 Agreement, each Party agrees to defend, indemnify and hold the other Party harmless from and against all third party claims (and all damages awarded to third parties, third party liabilities, costs and expenses, including, without limitation, reasonable attorneys’ fees) arising from or related to: (i) its breach of this 2015 Agreement, (ii) its violation of any applicable law or regulation, or (iii) its negligence. The Indemnifying Party agrees to use counsel reasonably satisfactory to the Indemnified Party to defend each indemnified claim. A Party’s obligation to indemnify the other under this paragraph shall arise only if the Indemnified Party provides the Indemnifying Party prompt notice of any claim that might lead to a claim for indemnification and the indemnified Party provides at its own expense all reasonable assistance for the defense of any claim. The Indemnified Party may engage its own counsel at its own expense with respect to any indemnified matter. The Indemnifying Party may not consent to the entry of any judgment or enter into any settlement of a claim without either (i) the prior written consent of the Indemnified Party, which may not be unreasonably withheld, or (ii) tendering to the Indemnified Party the amount that would have been paid for such judgment or settlement in exchange for a release from the Indemnified Party with respect to the claim so the Indemnified Party may conduct its defense on its own terms. For the avoidance of doubt, notwithstanding any provision in this 2015 Agreement to the contrary, Chegg’s failure to collect, file returns and remit sales taxes as provided herein will be deemed an Event of Default subject to indemnification of IHH under this Section which indemnified amount shall include any related interest and penalties.
|
18.
|
Assignment/UCC filing
.
|
(a)
|
In the event that Chegg is unable to collect or recover the costs of damaged or non-returned IHH Inventory from its Consumers, Chegg agrees to assign all rights of collection and recovery it has under the Rental Agreement to IHH and provide any information reasonably requested by IHH to enable IHH to pursue recovery of such costs and/or Inventory.
|
(b)
|
To the extent Chegg acquires, or is deemed to have, any interest in and to the IHH Inventory, Chegg hereby grants to IHH a security interest in and to all IHH Inventory and IHH shall have the right to file the UCC financing statement set forth in
Exhibit A
with the appropriate offices or agencies of the applicable states. IHH will reasonably cooperate with Chegg in good faith with any intercreditor agreements/acknowledgements reasonably requested by Chegg and/or its future secured lenders, provided such do not diminish IHH’s right, title, or interest in the IHH Inventory.
|
19.
|
Miscellaneous.
|
(a)
|
All notices, requests, consent and other communications under this 2015 Agreement shall be sent to the address identified on the execution page. Such notices shall be deemed to have been given: (a) when delivered if delivered personally or by messenger; (b) on the day after mailing if sent by pre-paid overnight delivery service which maintains records of the time, place and recipient of the delivery; (c) on the third day after mailing, when mailed by registered or certified United States mail, postage prepaid, return receipt requested; or (d) upon receipt of a confirmed transmission, including PDF, if sent via email, in all cases addressed to the Party for whom it is intended at the address set forth below or to such other address as a Party shall have designated by notice in writing to the other Party in the manner provided by this Section 19(a).
|
(b)
|
Neither Party shall have any right or ability to assign, transfer, or sublicense any obligations or benefit under this 2015 Agreement without the written consent of the other Party (and any such attempt shall be void), provided, however, IHH shall have the right to assign this 2015 Agreement to one of its affiliates without any such consent. This 2015 Agreement will be binding on and inure to the benefit of Chegg and IHH and their respective permitted successors and permitted assigns.
|
(c)
|
The parties further agree that if any portion of this 2015 Agreement is illegal or unenforceable, such portion(s) shall be limited or excluded from this 2015 Agreement to the minimum extent required and the balance of this 2015 Agreement shall remain in full force and effect and enforceable.
|
(d)
|
Each Party represents and warrants that it is (i) duly organized, validly existing and in good standing, (ii) it has the requisite right, power and authority to enter into this 2015 Agreement, (iii) it has all the necessary right and licenses to perform the obligations contained herein, and (iv) that it and its suppliers and agents, will comply with all applicable laws and regulations.
|
(e)
|
The Parties agree that this 2015 Agreement shall be governed by the laws of the State of Delaware without regard to the conflict of the law’s provisions thereof. Each Party shall comply with all laws, rules and regulations applicable to the performance of its obligations
|
(f)
|
No Party shall be liable for delay in performance of nonperformance of any term or condition of this 2015 Agreement directly or indirectly resulting from a force majeure event, including, without limitation, fire, explosion, accident, flood, labor trouble or stoppage, terrorism, civil unrest, war or military hostilities, criminal acts of third parties, or acts of God, and any delivery date shall be extended to the extent of any delay resulting from any force majeure event, provided that an event of force majeure shall not delay or relieve a Party of its payment obligations hereunder.
|
(g)
|
No delay or omission by any Party to exercise any right or power occurring upon any noncompliance or default by any other Party with respect to any of the terms of this 2015 Agreement shall impair any such right or power or be construed to be a waiver thereof. A waiver by any of the Parties hereto of any of the covenants, conditions, or agreements to be performed by any other Party shall not be construed to be a waiver of any succeeding breach thereof or of any covenant, condition, or agreement herein contained.
|
(h)
|
This 2015 Agreement, the 2014 Logistics Agreement (as amended herein), and the Confidential Appendix attached hereto constitute the entire agreement between the parties and supersedes any and all purchase orders, prior agreements, arrangements or understandings related to the subject matter hereof and can only be modified or waived by a subsequent written agreement signed by the appropriate Parties.
|
(i)
|
This 2015 Agreement and the Logistics Amendment may be executed in counterparts and/or by electronic signature (including in pdf form) and if so executed shall be equally binding as an original copy of this Agreement executed in ink by the Parties.
|
ACCEPTED AND AGREED:
|
|
|
|
|
|
CHEGG, INC.
|
|
INGRAM HOSTING HOLDINGS INC.
|
|
|
|
By: /S/ Andrew J. Brown
|
|
By: /S/ Brian K. Dauphin
|
Name:
Andrew J. Brown
|
|
Name: Brian K. Dauphin
|
Title:
CFO
|
|
Title: Senior Vice President, Finance
|
|
|
|
|
|
|
Address:
|
|
Address:
|
3990 Freedom Cir.
|
|
14 Ingram Boulevard
|
Santa Clara, CA 95054
|
|
La Vergne, TN 37086
|
Attn: Legal Dept.
|
|
Attn: Brian Dauphin, Sr. Vice President, Finance
|
|
|
|
|
|
|
|
|
With respect to Section 4 only:
|
|
|
|
|
|
INGRAM BOOK GROUP INC.
|
|
|
|
|
|
By: /S/ Brian K. Dauphin
|
|
|
Name: Brian K. Dauphin
|
|
|
Title: Chief Financial Officer
|
|
|
|
|
|
|
|
|
Address:
|
|
|
14 Ingram Boulevard
|
|
|
La Vergne, TN 37086
|
|
|
Attn: Brian Dauphin, Chief Financial Officer
|
1.
|
Logistics Section, Target for Shipping: a target of delivering [***] on-time delivery to students each term, with 2-day ground shipping possible for [***] of students and within
[***]
for [***] of students. Rental Catalog Sourcing, Amounts to be sourced by Chegg and reimbursed by IHH: up to [***] of textbook inventory from May-December 2015, up to [***] in inventory in 2016, up to [***] in inventory in 2017, up to [***] of inventory in 2018, and up to [***] of inventory in 2019 for the rental catalog of the relationship.
|
3.
|
The revenue share and payment structure for JIT Sale and Partner Buyback are as follows:
|
4.
|
Logistics and Warehouse Services Fees
:
|
Service
|
% of total units
|
% of total shipments
|
1 Day Air
|
[***]
|
[***]
|
2 Day Air
|
[***]
|
[***]
|
3 Day Air
|
[***]
|
[***]
|
Ground
|
[***]
|
[***]
|
|
[***]
|
[***]
|
5.
|
In the event of early termination [***]
|
Purchase Date
|
Payment Structure
|
Payment Terms
|
May 1 - Dec. 31, 2015
|
[***]
|
[***]
|
Jan 1. - Dec. 31, 2016
|
[***]
|
[***]
|
Jan 1. - Dec. 31, 2017
|
[***]
|
[***]
|
Jan 1., 2018 onward
|
[***]
|
[***]
|
Description
|
Unit of Measure
|
Fee Per Unit of Measure
|
How Billed
|
[***] boxes
|
[***]
|
[***]
|
[***]
|
[***] boxes
[***]
|
[***]
|
[***]
|
[***]
|
Inserts [***]*
|
[***]
|
[***]
|
[***]
|
Inserts [***]*
(less than 0.5 lb.)
|
[***]
|
[***]
|
[***]
|
Inserts [***]*
(0.5 to 0.99 lb.)**
|
[***]
|
[***]
|
[***]
|
Inserts [***]*
(1.0 to 1.5 lb.)
|
[***]
|
[***]
|
[***]
|
Inserts [***]
(> 1.5 lb.)
|
[***]
|
[***]
|
[***]
|
Kitting
[***]
|
[***]
|
[***]
|
[***]
|
Kitting
[***]
|
[***]
|
[***]
|
[***]
|
Disassembling kits
|
[***]
|
[***]
|
[***]
|
Insert Preparation
(if required)
|
[***]
|
[***]
|
[***]
|
Other Special Projects
(as quoted)
|
[***]
|
[***]
|
[***]
|
•
|
Total volume of inserts cannot exceed [***]W x [***]L x [***]H footprint.
|
•
|
The following items cannot be shipped:
|
◦
|
Aerosols
|
◦
|
Alcohol
|
◦
|
Cigarettes/Smokeless tobacco products
|
◦
|
Fresh food or perishables
|
◦
|
Glass or fragile items.
|
◦
|
Nail polish
|
◦
|
Perfume
|
•
|
Liquids must be protected from leakage during transit.
|
•
|
Must be able to withstand extreme temperatures.
|
•
|
Each insert should have a unique scan-able (and compliant) barcode on the outside of the package.
|
•
|
Must be delivered in bulk quantities that can be easily distributed to packing stations, with minimal effort to break down to the individual items. (Any additional preparation required will be billed on a workorder at the [***] rate.)
|
•
|
Maximum of [***] active insert items at each IBG facility. (Note that kits are considered as a single item, regardless of the number of items contained in the kit.)
|
•
|
Inserts must be setup a minimum of [***] prior to [***] peak periods. (Items requiring additional preparation may require a longer lead time.)
|
ACCEPTED AND AGREED:
|
|
|
|
|
|
CHEGG, INC.
|
|
INGRAM HOSTING HOLDINGS LLC
|
|
|
|
By:
/S/ ANDREW BROWN
|
|
By:
/S/ BRIAN K. DAUPHIN
|
Name: Andrew Brown
|
|
Name: Brian K. Dauphin
|
Title: Chief Financial Officer
|
|
Title: Senior Vice President, Finance
|
|
|
|
|
|
|
Address:
|
|
Address:
|
3990 Freedom Cir.
|
|
One Ingram Boulevard
|
Santa Clara, CA 95054
|
|
La Vergne, TN 37086
|
Attn: Andrew Brown, Chief Financial Officer
|
|
Attn: Shawn Everson, Sr. Vice President
|
1.
|
The following is added immediately after subsection (iv) of the “Fees; Payment Terms” section under the “Fee Schedule” heading in Section 6 of the Confidential Appendix with respect to additional payments:
|
2.
|
The following is added to the end of the “Fees; Payment Terms” section under the “Fee Schedule” heading in Section 6 of the Confidential Appendix with respect to additional payments:
|
3.
|
The following is added to Section 7, Risk Sharing, of the Confidential Appendix.
|
Tranche type
|
Cumulative Base (Original) and Adjusted (Revised) [***] as % of [***]
|
[***]
|
[***]
|
[***]
|
[***]
|
Base Assumptions
|
|||
Average Acquisition Price per Unit
|
[***]
|
|
|
Logistics Cost per Rental Turn
|
[***]
|
|
|
|
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.
|
The last row of the table in Section 8 of the Confidential Appendix is hereby deleted and replaced with the following:
|
Purchase Date
|
Payment Structure
|
Payment Terms
|
Jan 1, 2018 onward
|
[***]
|
[***]
|
5.
|
Insurance for Chegg Partner Inventory: The definition of "Chegg Inventory" per ‘Definitions’ in Section 1 of the 2015 Inventory Purchase and Consignment Agreement is amended as follows:
|
6.
|
The following is added to Section 2(h) of the 2015 Agreement:
|
7.
|
The attached Best Practices Addendum, effective February 28, 2017, is hereby incorporated into and becomes a part of the 2015 Agreement.
|
8.
|
Except as explicitly set forth herein, the 2015 Agreement remains unchanged and in full force and effect.
|
9.
|
This Amendment is (i) governed by the laws of the State of Delaware without regard to its conflicts of laws provisions, and (ii) may be executed in counterparts and/or by electronic signature (including in pdf form) and if so executed shall be equally binding as an original copy of this Amendment executed in ink by both parties.
|
ACCEPTED AND AGREED:
|
|
|
|
|
|
CHEGG, INC.
|
|
INGRAM HOSTING HOLDINGS LLC
|
|
|
|
By:
/S/ NATHAN T. SCHULTZ
|
|
By:
/S/ BRIAN K. DAUPHIN
|
Name: Nathan T. Schultz
|
|
Name: Brian K. Dauphin
|
Title: CLO
|
|
Title: Senior Vice President, Finance
|
|
|
|
|
|
|
Address:
|
|
Address:
|
3990 Freedom Cir.
|
|
14 Ingram Boulevard
|
Santa Clara, CA 95054
|
|
La Vergne, TN 37086
|
Attn: Legal
|
|
Dept. Attn: Brian Dauphin, Sr. Vice President, Finance
|
|
|
|
|
|
INGRAM BOOK GROUP LLC
|
|
|
|
|
|
By:
/S/ BRIAN K. DAUPHIN
|
|
|
Name: Brian K. Dauphin
|
|
|
Title: Chief Financial Officer
|
|
|
|
|
|
Address:
|
|
|
14 Ingram Boulevard
|
|
|
La Vergne, TN 37086
|
|
|
Attn: Brian Dauphin, Chief Financial Officer
|
1.
|
Best Practices Responsibility Allocation
. The Parties acknowledge and agree that the following chart sets forth the requirements and related contingencies (if any) of Chegg and IBG for each identified section of the Best Practices and certain provisions of the Settlement Agreement:
|
BP Section #
|
BEST PRACTICES REQUIREMENT
|
Responsible Party(ies)
|
Contingencies
|
1
|
TD shall maintain Anti-Counterfeit Culture.
|
[***]
|
[***]
|
2
|
TD will provide annual affirmation to EPEG of their adoption and implementation of Best Practices.
|
[***]
|
[***]
|
4 a
|
TD will require its suppliers to affirm in writing or with valid electronic acknowledgment that the textbooks they sell to TD are authentic and lawfully acquired.
|
[***]
|
[***]
|
4 b
|
TD will require suppliers to provide accurate identifying information.
|
[***]
|
[***]
|
4 c
|
TD will employ a verification process to confirm that the Identifying Information of the affirming supplier is accurate and updated regularly.
|
[***]
|
[***]
|
5
|
When TD acquires textbooks described as “new,” TD shall require at the time of acquisition that the supplier identify the source of such books, including the name and physical address, from which it obtained the textbooks. unless the order contains less than 10 books of the same title or if the price is equal to or greater than 90% of list price.
|
[***]
|
[***]
|
5
|
When TD acquires textbooks described as “used’ but which upon inspection, are actually new, TD shall promptly require the supplier to identify the source of the books, including the name and physical address unless the order contains less than 10 books of the same title or if the price is equal to or greater than 90% of list price.
|
[***]
|
[***]
|
6
|
TD shall maintain a database of all titles it has previously identified as counterfeit, as well as suppliers who have previously provided counterfeit textbooks to TD.
|
[***]
|
[***]
|
6
|
TD shall exercise greater caution with respect to known counterfeit titles and suppliers who have previously provided counterfeit textbooks.
|
[***]
|
[***]
|
7
|
TD shall have qualified and trained personnel inspect incoming inventory to determine, as best as they can, if the inventory is counterfeit.
|
[***]
|
[***]
|
7 a
|
TD shall inspect all textbooks with a title that is known by TD to have been counterfeited previously.
|
[***]
|
[***]
|
7 b
|
TD shall inspect new textbooks (including textbooks described as “used” but which are actually new) that are sold in quantities of five or more at a price that is less than 90% of the publisher’s net price.
|
[***]
|
[***]
|
7 c
|
TD shall inspect all textbooks with a title that is included on a list of recent releases provided by EPEG.
|
[***]
|
[***]
|
7 d
|
TD shall inspect all textbook titles sold in quantities of five or more by a supplier that has previously provided TD with a counterfeit textbook, unless such supplier either (i) has sold more than 50,000 textbooks to TD in the prior 12 months and less than 1% of the textbooks supplied have been identified as counterfeit, or (ii) is a Best Practice Distributor.
|
[***]
|
[***]
|
7 e
|
TD shall inspect all textbooks sold in quantities of ten or more per title contained in a shipment that includes a counterfeit textbook.
|
[***]
|
[***]
|
7 f
|
TD shall inspect any inventory that to its knowledge, shipped directly or indirectly from outside the United States.
|
[***]
|
[***]
|
7 g
|
TD shall inspect textbooks of poor quality or that have traits known by TD to be consistent with counterfeit textbooks.
|
[***]
|
[***]
|
7 (last paragraph)
|
Other than for textbooks that TD sources directly from a publisher or a Best Practice Distributor, TD shall perform systematic random inspections on incoming textbooks.
|
[***]
|
[***]
|
8
|
Inspections shall be conducted by trained personnel who compare the incoming inventory to a legitimate exemplar from the publisher unless a textbook is rejected as counterfeit without the need for a comparison.
|
[***]
|
[***]
|
8
|
In the event, that TD does not have a legitimate exemplar available to it, it may purchase one from the relevant publisher, or alternatively, submit the incoming textbook to the publisher or their designated review agent to determine if the textbook is counterfeit.
|
[***]
|
[***]
|
9
|
Upon inspection, if a textbook appears to be counterfeit, TD will promptly notify the applicable publisher by email (in the form set forth on Exhibit A) and ship the textbook or an exemplar from the shipment to the publisher.
|
[***]
|
[***]
|
9
|
If TD sends an exemplar of a larger shipment to the publisher, TD will quarantine the remaining portions of the shipment of the same ISBN, as well as any textbooks that are new or appear to be new, and will not distribute such portions until the publisher has made a determination of legitimacy.
|
[***]
|
[***]
|
10
|
In the event TD determines or is informed that it has sold, rented or otherwise distributed a counterfeit book, it shall promptly notify the respective publisher and immediately take steps, in an effort, to mitigate the harm. Among other things, this means that TD shall immediately notify any entity to whom it sold five or more copies of the counterfeit textbook and request that such buyer return the counterfeit textbooks, which at the publisher’s discretion and direction, TD will ship to the applicable publisher (at the publisher’s expense) or destroy (at TD’s expense). If the buyer refuses to cooperate, TD will promptly advise the publisher of such.
|
[***]
|
[***]
|
11
|
TD will employ an inventory management system that allows TD to track the source of each particular textbook that it purchases, sells or maintains in its inventory. The inventory management system will include, at a minimum, marking or coding each text book with a unique identifier that allows TD to determine (1) who provided the textbook to TD, (2) the date it was received, and (3) the purchase price. TD will maintain the records for at least five (5) years from the date of purchase.
|
[***]
|
[***]
|
12
|
When shipping a potentially counterfeit textbook to a publisher or their reviewing agent, the textbooks should include a filled out copy of Exhibit B [***]. When shipping a counterfeit textbook to a publisher, TD will provide notice by email to the publisher in advance of sending the shipment that will include all the information set forth on Exhibit C, as well as information concerning the shipment (number of textbooks, tracking information, etc.).
|
[***]
|
[***]
|
13
|
Under no circumstance will TD return a known counterfeit or suspected counterfeit textbook to one of its suppliers or to a customer. TD understands that the respective publishers may require those items as evidence in a lawsuit and thus they need to be preserved.
|
[***]
|
[***]
|
14
|
TD will not intentionally remove or alter from any textbooks any known devices, markings, or other tools used by the publishers to track or identify legitimate copies of their textbooks. Nor shall TD encourage, induce support, or aid other to do so.
|
[***]
|
[***]
|
15
|
TD will reasonably cooperate with the publishers as they take targeted action to enforce against counterfeits. This includes providing information, documents and sample inventory with respect to recently identified counterfeit titles and sellers that are the subject of publisher enforcement efforts.
|
[***]
|
[***]
|
16
|
Upon request from EPEG and no more than once per year, unless there is a good faith belief that it is needed more frequently, TD shall allow EPEG, at a mutually agreed date and time, to audit its compliance with these Best Practices. Also, if a publisher has a good faith belief that TD has distributed counterfeit books subsequent to any prior audit, it may conduct an audit of TD’s inventory (including the records of that inventory supplied by TD), either by title or supplier, or randomly, in an attempt to identify counterfeits and/or supplier of counterfeits.
|
[***]
|
[***]
|
17
|
TD will designate one person within its organization to be responsible for overseeing compliance with these Best Practices. Within 14 days of naming such person or their successor, TD shall identify the person to EPEG for purposes of communications.
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.
|
Best Practices Costs
.
|
a.
|
Inspections
. [***]. Such invoice shall include a report listing the items flagged for inspection by Chegg and the items flagged as suspect by IBG. [***] Non-routine audit costs not contemplated above, including but not limited to publisher audits, will be shared equally by the Parties
|
b.
|
Storage of quarantined textbooks
. [***]
|
c.
|
[***]
|
3.
|
Indemnification
. Each of IBG and Chegg agree to indemnify, defend and hold the other harmless from and against any and all losses, liabilities, damages, and third party claims (and all damages awarded to third parties,
|
4.
|
Dispute Resolution
. Subject to the terms of this Section 4, prior to any party filing suit against another party for an alleged breach of this Addendum, the party that intends to file suit must first provide written notice of the alleged breach and the basis for such allegation. Following such notice, the relevant parties shall negotiate in good faith in an attempt to resolve the dispute. If the dispute is not resolved within fifteen (15) days from the date of the notice, the party that provided the notice may initiate an expedited mediation using JAMS. The mediation session must occur within 30 days of initiating the proceeding with JAMS, unless the relevant parties agree otherwise. In the event that the dispute is not resolved through such mediation, the relevant parties are permitted to file suit in court.
|
Name of Subsidiary
|
Jurisdiction of Incorporation or Organization
|
Cramster Inc.
|
California
|
Cramster Holding Corp.
|
California
|
InstaEDU Inc.
|
Delaware
|
Internships.com, LLC
|
Delaware
|
Chegg India Private Limited
|
India
|
Good Ascent Corporation Limited
|
Hong Kong
|
Beijing Zichi Information Technology Co., Ltd.
|
China WOFE
|
Beijing Kairen Information Technology Co., Ltd.
|
China ICP
|
Chegg M.E. Ltd.
|
Israel
|
Imagine Easy Solutions, LLC
|
Delaware
|
Imagine Easy Technology Solutions GmbH
|
Germany
|
1.
|
I have reviewed this
Annual
Report on Form
10-K
of Chegg, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ D
AN
R
OSENSWEIG
|
Dan Rosensweig
|
President, Chief Executive Officer and Chairman
|
(Principal Executive Officer)
|
1.
|
I have reviewed this
Annual
Report on Form
10-K
of Chegg, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ A
NDREW
B
ROWN
|
Andrew Brown
|
Chief Financial Officer
|
(Principal Financial Officer)
|
(1)
|
The Report, to which this certification is attached as Exhibit 32.01, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
/S/
D
AN
R
OSENSWEIG
|
|
/S/
A
NDREW
B
ROWN
|
Dan Rosensweig
|
|
Andrew Brown
|
President, Chief Executive Officer and Chairman
|
|
Chief Financial Officer
|