Shutterfly 2014 Annual Report Download - page 20

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• global and geopolitical events with indirect economic effects such as pandemic disease,
hurricane and other natural disasters, war, threat of war or terrorist actions. For example, we
have significant engineering resources in Haifa, Israel and any military actions in that part of
the world may impact those resources.
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 consumer 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 a high quality customer experience, including superior customer service and timely
product deliveries;
• 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.
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