Shutterfly 2015 Annual Report Download - page 21

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• our ability to address increased shipping delays caused by our third party shippers’ inability to
handle the ever increasing number of consumers ordering goods online, particularly during the
holiday shopping season;
• 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, 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 sequential 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 revenues 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 and reputation;
• enhance and expand our products and services;
• maintain and grow our websites, mobile applications and customer operations;
• successfully execute our business and marketing strategies;
• continue to develop and upgrade our technology and information processing systems;
• continue to enhance and update our services to meet the needs of changing markets and consumer
preferences;
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