TripAdvisor 2012 Annual Report Download - page 29

Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results.
We have a culture that encourages employees to quickly develop and release new and improved products,
which may at times result in unintended consequences or decisions that are poorly received by users or
advertisers. Our culture also prioritizes user engagement, or website “stickiness,” over short-term financial
results. We have taken actions in the past and may continue to make product decisions going forward that have
the effect of reducing our short-term revenue or profitability if we believe that the decisions benefit the aggregate
user experience and/or conversion rates and CPC pricing, and will thereby improve our financial performance
over the long-term. The short-term reductions in revenue or profitability could be more severe than we anticipate.
These decisions may not produce the long-term benefits that we expect, in which case our user growth and
engagement, our relationships with users and advertisers, and our business and results of operations could be
harmed. For example, if our hotel metasearch product is not embraced by our users or advertising partners, our
business and financial results could be adversely affected.
We may not be able to successfully expand into the vacation rental marketplace.
We offer vacation rental services through our U.S.-based FlipKey and U.K.-based Holiday Lettings
businesses, as well through various partnerships. The online vacation rental market is relatively new and is
rapidly evolving, and limited data is currently available regarding the market and industry. Our vacation rental
services may not succeed, and, even if successful, our revenues may not increase. These new services could also
increase our operating costs. Furthermore, a larger competitor exists in the vacation rental space, with
significantly more users and listed properties, and new competitors with significant financial resources are
continually emerging. If property owners and managers do not perceive the benefits of marketing their properties
online or marketing their properties with several intermediaries, then the market for our services may not develop
as expected, or it may develop more slowly than expected, either of which would slow the growth of our business
and revenues.
Growth in use of TripAdvisor through our smartphone products as a substitute for use on personal computers
and tablets may negatively affect our revenue and financial results.
We anticipate that the rate of growth in smartphone and tablet users will continue to exceed the growth rate
of our overall users for the foreseeable future, in part due to our focus on developing smartphone and tablet
products to encourage usage of TripAdvisor. Although the substantial majority of smartphone users also access
and engage with our websites on personal computers and/or tablets, where we display advertising, our users
could decide to increasingly access our products primarily through smartphone devices. We do not currently
display graphic advertising on smartphones and our smartphone monetizing strategies are still developing. If
users continue to increasingly access our smartphone products as a substitute for access through personal
computers and/or tablets, and if we are unable to successfully improve monetization strategies for our
smartphone users, our revenue and financial results may be negatively affected.
We may be subject to claims that we violated intellectual property rights of others, which claims are extremely
costly to defend and could require us to pay significant damages and limit our ability to operate.
Companies in the Internet and technology industries, and other patent and trademark holders seeking to
profit from royalties in connection with grants of licenses, own large numbers of patents, copyrights, trademarks
and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of
intellectual property rights. We have received in the past, and may in the future receive, notices that claim we
have misappropriated or misused other parties’ intellectual property rights. There may be intellectual property
rights held by others, including patents, copyrighted works and/or trademarks, which cover significant aspects of
our technologies or content. Any intellectual property claim against us, regardless of merit, could be time
consuming and expensive to settle or litigate and could divert management’s attention and other resources. These
claims also could subject us to significant liability for damages and could result in our having to stop using
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