Pandora 2016 Annual Report Download - page 38

affect the popularity or growth in use of the internet, including laws limiting network neutrality, could decrease listener demand
for our service offerings and increase our cost of doing business. Future regulations, or changes in laws and regulations or their
existing interpretations or applications, could also hinder our operational flexibility, raise compliance costs and result in
additional historical or future liabilities for us, resulting in adverse impacts on our business and our operating results.
Our operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall short of
expectations.
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Our revenue and operating results could vary significantly from quarter to quarter and year to year due to a variety of
factors, many of which are outside our control. As a result, comparing our operating results on a period-to-period basis may not
be meaningful. In addition to other risk factors discussed in this “Risk Factors” section, factors that may contribute to the
variability of our quarterly and annual results include:
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• costs associated with pursuing licenses or other commercial arrangements;
• costs associated with defending any litigation, including intellectual property infringement litigation, and any
associated judgments or settlements;
• our ability to pursue, and the timing of, entry into new geographic or content markets or other strategic initiatives and,
if pursued, our management of these initiatives;
• the impact of general economic and competitive conditions on our revenue and expenses; and
• changes in government regulation affecting our business.
Seasonal variations in listener and advertising behavior may also cause fluctuations in our financial results. We expect to
experience some effects of seasonal trends in listener behavior due to higher advertising sales during the fourth quarter of each
year due to greater advertiser demand during the holiday season and lower advertising sales in the first quarter of the following
year. Expenditures by advertisers tend to be cyclical and discretionary in nature, reflecting overall economic conditions, the
economic prospects of specific advertisers or industries, budgeting constraints and buying patterns and a variety of other
factors, many of which are outside our control. In addition, we expect to experience increased usage during the fourth quarter
of each year due to the holiday season, and in the first quarter of each year due to increased use of media-streaming devices
received as gifts during the holiday season.
If we are unable to implement and maintain effective internal control over financial reporting in the future, the accuracy
and timeliness of our financial reporting may be adversely affected.
Pursuant to Section€404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on
our internal control over financial reporting. The report contains, among other matters, an assessment of the effectiveness of our
internal control over financial reporting as of year-end, including a statement as to whether or not our internal control over
financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over
financial reporting identified by management.
While we have determined that our internal control over financial reporting was effective as of December€31, 2015, as
indicated in “Controls and Procedures--Management’s Report on Internal Control over Financial Reporting”, we must continue
to monitor and assess our internal control over financial reporting. Additionally, Ticketfly, our subsidiary, must implement
internal control over financial reporting that complies with Section 404 of the Sarbanes-Oxley Act of 2002 by the end of 2016.
Any material weaknesses in Ticketfly’s internal control over financial reporting that remain uncorrected at year-end must be
identified in our management’s report on our internal controls over financial reporting. If our management identifies one or
more material weaknesses in our internal control over financial reporting and such weakness remains uncorrected at year-end,
we will be unable to assert that such internal control is effective at year-end. If we are unable to assert that our internal control
over financial reporting is effective at year-end, or if our independent registered public accounting firm is unable to express an
opinion on the effectiveness of our internal controls or concludes that we have a material weakness in our internal controls, we
could lose investor confidence in the accuracy and completeness of our financial reports, which could have a material adverse
effect on our business and the price of our common stock.
We may require additional capital to pursue our business objectives and respond to business opportunities, challenges or
unforeseen circumstances. If capital is not available to us, our business, operating results and financial condition may be
harmed.
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