Shutterfly 2011 Annual Report Download - page 14

Our quarterly financial results may fluctuate, which may lead to volatility in our stock price.
Our future revenues and operating results may vary significantly from quarter-to-
quarter due to a number of factors, many of which are
difficult for us to predict and control. Factors that could cause our quarterly operating results to fluctuate include:
Based on the factors cited above, we believe that quarter-to-
quarter comparisons of our operating results are not a good indication of our
future performance. It is possible that in one or more future quarters, our operating results may be below the expectations of public market
analysts and investors. In that event, the trading price of our common stock may decline.
We have incurred operating losses in the past and may not be able to sustain profitability in the future.
We have periodically experienced operating losses since our inception in 1999. In particular, we make investments in our business that
generally result in operating losses in each of the first three quarters of our fiscal year. This typically has enabled us to generate the majority of
our net revenue during the fourth quarter and to achieve profitability for the full fiscal year. If we are unable to produce our products and provide
our services at commercially reasonable costs, if customer demand and revenues decline or if our expenses exceed our expectations, we may not
be able to achieve, sustain or increase profitability on a quarterly or annual basis.
We face many risks, uncertainties, expenses and difficulties relating to increasing our market share and growing our business.
To address the risks and uncertainties of increasing our market share and growing our business, we must do the following:
Table of Contents
●
general economic conditions, including recession and slow economic growth in the U.S. and worldwide and higher inflation, as
well as those economic conditions specific to the Internet and e
-
commerce industries;
●
demand for our products and services, including seasonal demand;
●
our pricing and marketing strategies and those of our competitors;
●
our ability to attract visitors to our website and convert those visitors into customers;
●
our ability to retain customers and encourage repeat purchases;
●
our ability to sustain our profit margins, and our ability to diversify our product offerings, promote our new products and services
and sell to consumers photo
-
based products such as photo books, calendars and cards;
●
the costs of customer acquisition;
●
our ability to manage our production and fulfillment operations;
●
the costs to produce our prints and photo
-
based products and merchandise and to provide our services;
●
the costs of expanding or enhancing our technology or website;
●
a significant increase in returns and credits, beyond our estimated allowances, for customers who are not satisfied with our
products;
●
declines or disruptions to the travel industry;
●
variations in weather, particularly heavy rain and snow which tend to depress travel and picture taking;
●
the timing of holidays;
●
volatility in our stock price, which may lead to higher stock
-
based compensation expense;
●
consumer preferences for digital photography services;
●
improvements to the quality, cost and convenience of desktop printing of digital pictures and products; and
●
global and geopolitical events with indirect economic effects such as pandemic disease, war, threat of war or terrorist actions.
●
maintain and increase the size of our customer base;
11