Classmates.com 2010 Annual Report Download - page 23

Table of Contents
efforts are not successful, or such new initiatives, products, services, or features are not accepted by consumers or commercially successful, our
key metrics and financial results could be materially and adversely impacted.
We may be unable to maintain or grow our advertising revenues. Reduced advertising revenues may reduce our profits.
Advertising revenues are a key component of our revenues and profitability. Factors that have caused, or may cause in the future, our
advertising revenues to fluctuate include, without limitation, the effect of, changes to, or terminations of key advertising relationships, changes in
applicable laws, regulations or business practices, including those related to behavioral or targeted advertising and user privacy, changes in
business models, changes in the online advertising market, changes in the economy, advertisers' budgeting and buying patterns, competition,
changes in the number of active accounts or consumers purchasing our products and services, changes in our advertising inventory, and changes
in usage of our services. Decreases in our advertising revenues are likely to adversely impact our profitability.
Our advertising revenues have in the past declined, and may in the future decline, when compared to prior periods. Advertising revenues
generated by our Communications segment generally have been declining primarily as a result of the decrease in our dial-up Internet access pay
accounts. In addition, prior to 2010, our Content & Media and FTD segments collectively derived significant advertising revenues from domestic
post-transaction sales agreements. Post-transaction sales involve the online presentation of a third-party offer immediately following the point
where a consumer has purchased our subscription services or floral products, as applicable. Although we expect to offer our members and
customers services or products at the end of our registration or sale processes, including third-party offers as well as our own offers, we do not
expect the revenues from such offers to be significant. Any or all of the above factors have caused, and could continue to cause, our advertising
revenues and profits to significantly decline in the future.
Changes in exchange rates could adversely affect comparisons of our operating results.
We transact business in different foreign currencies and may be exposed to financial market risk resulting from fluctuations in foreign
currency exchange rates, including the British Pound, the Euro, the Indian Rupee, and the Canadian Dollar. Revenues and expenses in foreign
currencies translate into higher or lower revenues and expenses in U.S. Dollars as the U.S. Dollar weakens or strengthens against such other
currencies. Substantially all of the revenues of our foreign subsidiaries are received, and substantially all expenses are incurred, in currencies
other than the U.S. Dollar, which increases or decreases the related U.S. Dollar-reported revenues and expenses depending on the trend in
currency exchange rates. Certain of our key business metrics, such as the FTD segment's average order value, are similarly affected by such
currency fluctuations. Changes in global economic conditions, market factors, and governmental actions, among other factors, can affect the
value of these currencies in relation to the U.S. Dollar. A strengthening of the U.S. Dollar compared to these currencies and, in particular, to the
British Pound and the Euro, has had, and in future periods could have, an adverse effect on the comparisons of our revenues and operating
income against prior periods. We cannot accurately predict the impact of future foreign currency exchange rate fluctuations on our operating
results, and such fluctuations could negatively impact the comparisons of such results against prior periods.
Our marketing efforts may not be successful, which could increase our costs and adversely impact our key metrics and financial results.
We spend significant resources marketing our brands, products and services. We rely on relationships with a wide variety of third parties,
including Internet search providers, Internet
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