Adobe 2014 Annual Report Download - page 26

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• the negotiation of large, complex, enterprise-wide contracts, as often required by our and our customers’ business and
legal representatives;
• the need for our customers to obtain requisition approvals from various decision makers within their organizations;
and
• customer budget constraints, economic conditions and unplanned administrative delays.
We spend substantial time and expense on our sales efforts without any assurance that potential customers will ultimately
purchase our solutions. As we target our sales efforts at larger enterprise customers, these trends are expected to continue.
Additionally, our enterprise sales pattern has historically been uneven, where a higher percentage of a quarter’s total sales occur
during the final weeks of each quarter, which is common in our industry. Our long sales cycle for these products makes it difficult
to predict when a given sales cycle will close.
Catastrophic events may disrupt our business.
We are a highly automated business and rely on our network infrastructure and enterprise applications, internal technology
systems and our website for our development, marketing, operational, support, hosted services and sales activities. In addition,
some of our businesses rely on third-party hosted services, and we do not control the operation of third-party data center facilities
serving our customers from around the world, which increases our vulnerability. A disruption, infiltration or failure of these systems
or third-party hosted services in the event of a major earthquake, fire, flood, power loss, telecommunications failure, software or
hardware malfunctions, cyber-attack, war, terrorist attack or other catastrophic event could cause system interruptions, reputational
harm, loss of intellectual property, delays in our product development, lengthy interruptions in our services, breaches of data
security and loss of critical data. Any of these events could prevent us from fulfilling our customers’ orders. Our corporate
headquarters, a significant portion of our research and development activities, certain of our data centers and certain other critical
business operations are located in the San Francisco Bay Area, and additional facilities where we conduct significant operations
are located in the Salt Lake Valley Area, both of which are near major earthquake faults. We have developed certain disaster
recovery plans and backup systems to reduce the potentially adverse effect of such events, but a catastrophic event that results in
the destruction or disruption of any of our data centers or our critical business or information technology systems could severely
affect our ability to conduct normal business operations and, as a result, our future operating results could be adversely affected.
Net revenue, margin or earnings shortfalls or the volatility of the market generally may cause the market price of our stock to
decline.
The market price for our common stock has in the past experienced significant fluctuations and may fluctuate significantly
in the future. A number of factors may affect the market price for our common stock, including:
• shortfalls in our revenue, margins, earnings, the number of paid Creative Cloud subscribers, ARR, bookings within our
Adobe Marketing Cloud business or other key performance metrics;
• changes in estimates or recommendations by securities analysts;
• the announcement of new products, product enhancements or service introductions by us or our competitors;
• the loss of a large customer or our inability to increase sales to existing customers or attract new customers;
• variations in our or our competitors’ results of operations, changes in the competitive landscape generally and
developments in our industry; and
• unusual events such as significant acquisitions, divestitures, litigation, general socio-economic, regulatory, political or
market conditions and other factors, including factors unrelated to our operating performance.
We are subject to risks associated with compliance with laws and regulations globally which may harm our business.
We are a global company subject to varied and complex laws, regulations and customs domestically and internationally.
These laws and regulations relate to a number of aspects of our business, including trade protection, import and export control,
data and transaction processing security, payment card industry data security standards, records management, user-generated
content hosted on websites we operate, privacy practices, corporate governance, employee and third-party complaints, gift policies,
conflicts of interest, employment and labor relations laws, securities regulations and other regulatory requirements affecting trade
and investment. The application of these laws and regulations to our business is often unclear and may at times conflict. Compliance
with these laws and regulations may involve significant costs or require changes in our business practices that result in reduced
revenue and profitability. Non-compliance could also result in fines, damages, criminal sanctions against us, our officers or our