Adobe 2015 Annual Report Download - page 26

Table of Contents
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Certain of our enterprise offerings have extended and complex sales cycles.
Sales cycles for some of our enterprise offerings, including our Adobe Marketing Cloud Solutions and ETLAs in our Digital
Media business, are multi-phased and complex. The complexity in these sales cycles is due to a number of factors, including:
• the need for our sales representatives to educate customers about the use and benefit of our large-scale deployments of
our products and services, including technical capabilities, security features, potential cost savings and return on
investment;
• the desire of large and medium size organizations to undertake significant evaluation processes to determine their
technology requirements prior to making information technology expenditures;
• the need for our representatives to spend a significant amount of time assisting potential customers in their testing and
evaluation of our products and services;
• 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 and could
have a greater impact on our results of operations. 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
extended sales cycle for these products and services 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, tsunami or other weather event, 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 or could negatively impact a country or region in which we sell our products, which could in turn decrease that country’s
or region’s demand for our products. 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. 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.
Climate change may have a long-term impact on our business.
Access to clean water and reliable energy in the communities where we conduct our business, whether for our offices or
for our vendors, is a priority. Our major sites in California and India are vulnerable to prolonged droughts due to climate change.
While we seek to partner with organizations that mitigate their business risks associated with climate change, we recognize that
there are inherent risks wherever business is conducted. In the event of a natural disaster that disrupts business due to limited
access to these resources, Adobe has the potential to experience losses to our business, time required to recover, and added costs
to resume operations.
Additionally, climate change may pose regulatory and environmental challenges that affect where we locate our
offices, who we partner with, and how we deliver products and services to our customers.