Carbonite 2011 Annual Report Download - page 14

Table of Contents
and other expenses to attract and retain customers in response to competitive pressures, either of which could have a material adverse effect on our
revenue and operating results.
Our limited operating history makes it difficult to evaluate our current business and future prospects.
We have been in existence since 2005, and our revenue has grown rapidly from $8.2 million in 2008 to $60.5 million in 2011, representing a
compound annual growth rate of 95% over that period. We do not expect that this growth rate will continue in future periods and you should not rely on
the revenue growth of any prior quarterly or annual periods as an indication of our future performance. In addition, because we recognize revenue from
customers over the terms of their subscriptions, a large portion of our revenue for each quarter reflects deferred revenue from subscriptions entered into
during previous quarters, and downturns or upturns in subscription sales or renewals may not be reflected in our operating results until later periods. We
may not achieve sufficient revenue to achieve or maintain positive cash flow from operations or profitability, and our limited operating history may
make it difficult for you to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and
difficulties frequently experienced by growing companies in rapidly changing industries, including increasing expenses as we continue to grow our
business. If we do not manage these risks successfully, our business will be harmed. If our future growth fails to meet investor or analyst expectations, it
could have a negative effect on our stock price. If our growth rate were to decline significantly or become negative, it could adversely affect our
financial condition and operating results.
A decline in demand for our solutions or for online backup solutions in general could cause our revenue to decline.
We derive, and expect to continue to derive, substantially all of our revenue from the sale of our online backup solutions, a relatively new and
rapidly changing market. As a result, widespread acceptance and use of online backup solutions is critical to our future growth and success. If the market
for online backup solutions fails to grow or grows more slowly than we currently anticipate, demand for our solutions could be negatively affected.
Changes in customer preferences for online backup solutions may have a disproportionately greater impact on us than if we offered multiple
products and services. The market for online backup solutions is subject to rapidly changing customer demand and trends in preferences. Some of the
potential factors that could affect interest in and demand for online backup solutions include:
In addition, substantially all of our revenue is currently derived from customers in the U.S. Consequently, a decrease of interest in and demand for
online backup solutions in the U.S. could have a disproportionately greater impact on us than if our geographic mix of revenue was less concentrated.
If we are unable to attract new customers to our solutions on a cost
-effective basis, our revenue and operating results would be adversely affected.
We generate substantially all of our revenue from the sale of subscriptions to our solutions. In order to grow, we must continue to attract a large
number of customers on a cost-effective basis, many of whom have not previously used online backup solutions. We use and periodically adjust a
diverse mix of advertising and
11
•
awareness of our brand and the online backup solutions category generally;
•
the appeal and reliability of our solutions;
•
the price, performance, features, and availability of products and services that compete with ours;
•
public concern regarding privacy and data security;
•
our ability to maintain high levels of customer satisfaction; and
•
the rate of growth in online solutions generally.