Groupon 2011 Annual Report Download - page 30

successful. If we fail to promote and maintain the "Groupon" brand, or if we incur excessive expenses in this effort, our business, operating results and financial
condition will be materially and adversely affected. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brand
may become increasingly difficult and expensive. Maintaining and enhancing our brand will depend largely on our ability to be a group buying leader and to
continue to provide reliable, trustworthy and high quality deals, which we may not do successfully.
We receive a high degree of media coverage around the world. Unfavorable publicity or consumer perception of our websites, applications, practices or
service offerings, or the offerings of our merchant partners, could adversely affect our reputation, resulting in difficulties in recruiting, decreased revenue and a
negative impact on the number of merchant partners we feature and the size of our customer base, the loyalty of our customers and the number and variety of
deals we offer each day. As a result, our business, financial condition and results of operations could be materially and adversely affected.
Acquisitions, joint ventures and strategic investments could result in operating difficulties, dilution and other harmful consequences.
We expect to continue to evaluate and consider a wide array of potential strategic transactions, including acquisitions and dispositions of businesses,
joint ventures, technologies, services, products and other assets and strategic investments. W may not realize the anticipated benefits of any or all of our
acquisitions, or we may not realize them in the time frame expected. In addition, the integration of an acquisition could divert management's time and the
company's resources. If we pay for an acquisition in cash, it would reduce our cash available for operations or cause us to incur debt, and if we pay with our
stock it could be dilutive to our stockholders.
Our business may be subject to seasonal sales fluctuations which could result in volatility or have an adverse effect on the market price of our common
stock.
Our business, like that of our merchant partners, may be subject to some degree of sales seasonality. As the growth of our business stabilizes, these seasonal
fluctuations may become more evident. Seasonality may cause our working capital cash flow requirements to vary from quarter to quarter depending on the
variability in the volume and timing of sales. These factors, among other things, make forecasting more difficult and may adversely affect our ability to manage
working capital and to predict financial results accurately, which could adversely affect the market price of our common stock.
We depend on the continued growth of online commerce.
The business of selling goods and services over the Internet, particularly through coupons, is dynamic and relatively new. Concerns about fraud, privacy and
other problems may discourage additional consumers and merchants from adopting the Internet as a medium of commerce. In countries such as the U.S.,
Germany, the United Kingdom, France and Japan, where our services and online commerce generally have been available for some time and the level of market
penetration of our services is high, acquiring new customers for our services may be more difficult and costly than it has been in the past. In order to expand our
customer base, we must appeal to and acquire customers who historically have used traditional means of commerce to purchase goods and services and may
prefer Internet analogues to our offerings, such as the retailer's own website. If these customers prove to be less active than our earlier customers, or we are
unable to gain efficiencies in our operating costs, including our cost of acquiring new customers, our business could be adversely impacted.
Our business is subject to interruptions, delays or failures resulting from earthquakes, other natural catastrophic events or terrorism.
Our services, operations and the data centers from which we provide our services are vulnerable to damage or interruption from earthquakes, fires, floods,
power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-
ins and similar events. A significant natural disaster, such as an
earthquake, fire or flood, could have a material adverse impact on our business, financial condition and results of operations and our insurance coverage may be
insufficient to compensate us for losses that may occur. Acts of terrorism could cause disruptions to the Internet, our business or the economy as a whole. We
may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting areas where data centers upon which we rely are
located, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Such disruptions could negatively impact our
ability to run our websites, which could harm our business.
Our results of operations may be negatively impacted by investments we make as we enter new product and service categories.
We have offered Groupons in over 190 different types of businesses, services and activities that fall into six broad categories. We intend to continue to
invest in the development of our existing categories and to expand into new categories. We may make substantial investments in such new categories in
anticipation of future revenue. We may also face greater competition in specific categories from Internet sites that are more focused on such categories. If the
launch of a new category requires investments greater than we expect, if we are unable to generate sufficient merchant partner offers which are of high quality,
value and variety or if
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