Shutterfly 2012 Annual Report Download - page 19

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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 decreases 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:
• maintain and increase the size of our customer base;
• maintain and enhance our brands;
• enhance and expand our products and services;
• maintain and grow our websites and customer operations;
• successfully execute our business and marketing strategy;
• continue to develop and upgrade our technology and information processing systems;
• continue to enhance our service to meet the needs of a changing market;
• provide superior customer service;
• respond to competitive developments; and
• attract, integrate, retain and motivate qualified personnel.
We may be unable to accomplish one or more of these requirements, which could cause our business to
suffer. Accomplishing one or more of these requirements might be very expensive, which could harm our
financial results.
If we are not able to reliably meet our data storage and management requirements, customer satisfaction and our
reputation could be harmed.
As a part of our current business model, we offer our customers free unlimited online storage and
sharing of photographs and, as a result, must store and manage many petabytes of data. This policy results
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