Go Daddy 2015 Annual Report Download - page 34

Table of Contents
In addition, we may not be able to adjust spending in a timely manner to compensate for any unexpected bookings shortfall, and any significant shortfall in
bookings relative to planned expenditures could negatively impact our business and results of operations.
Our failure to properly register or maintain our customers’ domain names could subject us to additional expenses, claims of loss or negative publicity that
could have a material adverse effect on our business.
System and process failures related to our domain name registration product may result in inaccurate and incomplete information in our domain name
database. Despite testing, system and process failures may remain undetected or unknown, which could result in compromised customer data, loss of or delay in
revenues, failure to achieve market acceptance, injury to our reputation or increased product costs, any of which could harm our business. Furthermore, the
requirements for securing and renewing domain names vary from registry to registry and are subject to change. We cannot guarantee we will be able to readily
adopt and comply with the various registry requirements. Our failure or inability to properly register or maintain our customers’ domain names, even if we are not
at fault, might result in significant expenses and subject us to claims of loss or to negative publicity, which could harm our business, brand and operating results.
We rely heavily on the reliability, security and performance of our internally developed systems and operations. Any difficulties in maintaining these systems
may result in damage to our brand, service interruptions, decreased customer service or increased expenditures.
The reliability and continuous availability of the software, hardware and workflow processes underlying our internal systems, networks and infrastructure and
the ability to deliver our products are critical to our business, and any interruptions resulting in our inability to timely deliver our products or Customer Care, or
materially impacting the efficiency or cost with which we provide our products and Customer Care, would harm our brand, profitability and ability to conduct
business. In addition, many of the software and other systems we currently use will need to be enhanced over time or replaced with equivalent commercial
products or services, which may not be available on commercially reasonable terms or at all. Enhancing or replacing our systems, networks or infrastructure could
entail considerable effort and expense. If we fail to develop and execute reliable policies, procedures and tools to operate our systems, networks or infrastructure,
we could face a substantial decrease in workflow efficiency and increased costs, as well as a decline in our revenue.
We rely on a limited number of data centers to deliver most of our products. If we are unable to renew our data center agreements on favorable terms, or at all,
our operating margins and profitability could be adversely affected and our business could be harmed.
We own one of our data centers and lease our remaining data center capacity from wholesale providers. We occupy our leased data center capacity pursuant
to co-location service agreements with third-party data center facilities, which have built and maintain the co-located data centers for us and other parties. We
currently serve all our customers from our GoDaddy-owned, Arizona-based data center as well as six domestic and two international co-located data center
facilities located in Arizona, California, Virginia, the Netherlands and Singapore. Although we own the servers in these co-located data centers and engineer and
architect the systems upon which our platforms run, we do not control the operation of these facilities, and we depend on the operators of these facilities to ensure
their proper security and maintenance.
Despite precautions taken at our data centers, these facilities may be vulnerable to damage or interruption from break-ins, computer viruses, DDOS or other
cyber-attacks, acts of terrorism, vandalism or sabotage, power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes and similar
events. The occurrence of any of these events or other unanticipated problems at these facilities could result in loss of data (including personal or payment card
information), lengthy interruptions in the availability of our services and harm to our reputation and brand. While we have disaster recovery arrangements in place,
they have only been tested in very limited circumstances and not during any large-scale or prolonged disasters or similar events.
The terms of our existing co-located data center agreements vary in length and expire on various dates through 2026 . Only some of our agreements with our
co-located data centers provide us with options to renew under negotiated terms. We also have agreements with other critical infrastructure vendors who provide
all of our facilities, including our data centers, with bandwidth, fiber optics and electrical power. None of these infrastructure vendors are under any obligation to
continue to provide these services after the expiration of their respective agreements with us, nor are they obligated to renew the terms of those agreements.
29