Go Daddy 2015 Annual Report Download - page 23

Table of Contents
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including those described below. The risks and uncertainties described
below are not the only ones we face. Additional risks and uncertainties we are unaware of, or we currently believe are not material, may also become important
factors affecting us. If any of the following risks occur, our business, financial condition, operating results and prospects could be materially and adversely
affected. In that event, the price of our Class A common stock could decline.
Risks Related to Our Business
If we are unable to attract and retain customers and increase sales to new and existing customers, our business and operating results would be harmed.
Our success depends on our ability to attract and retain customers and increase sales to new and existing customers. We derive a substantial portion of our
revenue from domains and our hosting and presence products. The rate at which new and existing customers purchase and renew subscriptions to our products
depends on a number of factors, including those outside of our control. Although our total customers and revenue have grown rapidly in recent periods, we cannot
be assured that we will achieve similar growth rates in future periods. In future periods, our total customers and revenue could decline or grow more slowly than
we expect. Our sales could fluctuate or decline as a result of lower demand for domain names, websites and related products, declines in our customers’ level of
satisfaction with our products and our Customer Care, the timeliness and success of product enhancements and introductions by us and those of our competitors,
the pricing offered by us and our competitors, the frequency and severity of any system outages, breaches and technological change. Our revenue has grown
historically due in large part to sustained customer growth rates and strong renewal sales of subscriptions to our domain name registration and hosting and presence
products. Our future success depends in part on maintaining strong renewal sales. Our costs associated with renewal sales are substantially lower than costs
associated with generating revenue from new customers and costs associated with generating sales of additional products to existing customers. Therefore, a
reduction in renewals, even if offset by an increase in other revenue, would reduce our operating margins in the near term. Any failure by us to continue to attract
new customers or maintain strong renewal sales could have a material adverse effect on our business, growth prospects and operating results. In addition, we also
offer business application products such as personalized email accounts and recently expanded our product offerings to include a wider array of these products. If
we are unable to increase sales of these additional products to new and existing customers, our growth prospects may be harmed.
If we do not successfully develop and market products that anticipate or respond promptly to the needs of our customers, our business and operating results
may suffer.
The markets in which we compete are characterized by constant change and innovation, and we expect them to continue to evolve rapidly. Our historical
success has been based on our ability to identify and anticipate customer needs and design products providing small businesses and ventures with the tools they
need to create, manage and augment their digital identity. To the extent we are not able to continue to identify challenges faced by small businesses and ventures
and provide products responding in a timely and effective manner to their evolving needs, our business, operating results and financial condition will be adversely
affected.
The process of developing new technology is complex and uncertain. If we fail to accurately predict customers’ changing needs or emerging technological
trends, or if we fail to achieve the benefits expected from our investments in technology (including investments in our internal development efforts, acquisitions or
partner programs), our business could be harmed. We must continue to commit significant resources to develop our technology in order to maintain our
competitive position, and these commitments will be made without knowing whether such investments will result in products the market will accept. Our new
products or product enhancements could fail to attain meaningful market acceptance for many reasons, including:
• delays in releasing new products or product enhancements, or those of companies we may acquire, to the market;
•our failure to accurately predict market demand or customer preferences;
• defects, errors or failures in product design or performance;
• negative publicity about product performance or effectiveness;
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