Carbonite 2011 Annual Report Download - page 24

Table of Contents
Our business may be significantly impacted by a change in the economy, including any resulting effect on consumer spending.
Our business may be affected by changes in the economy generally, including any resulting effect on consumer spending. Our services are
discretionary purchases, and our customers may reduce their discretionary spending on our services during an economic downturn. Although we have
not yet experienced a material reduction in subscription renewals, we may experience such a reduction in the future, especially in the event of a
prolonged recessionary period. Conversely, media prices may increase in a period of economic growth, which could significantly increase our marketing
and advertising expenses. As a result, our business, financial condition, and operating results may be significantly affected by changes in the economy
generally.
We face many risks associated with our plans to expand internationally, which could harm our business, financial condition, and operating results.
We anticipate that our efforts to expand internationally will entail the marketing and advertising of our services and brand and the development of
localized websites. We do not have substantial experience in selling our solutions in international markets or in conforming to the local cultures,
standards, or policies necessary to successfully compete in those markets, and we must invest significant resources in order to do so. We may not
succeed in these efforts or achieve our customer acquisition or other goals. For some international markets, customer preferences and buying behaviors
may be different, and we may use business or pricing models that are different from our traditional subscription model to provide online backup and
related services to customers. Our revenue from new foreign markets may not exceed the costs of establishing, marketing, and maintaining our
international offerings, and therefore may not be profitable on a sustained basis, if at all.
In addition, conducting international operations subjects us to new risks that we have not generally faced in the U.S. These risks include:
Operating in international markets also requires significant management attention and financial resources. The investment and additional resources
required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability.
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localization of our solutions, including translation into foreign languages and adaptation for local practices and regulatory requirements;
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lack of experience in other geographic markets;
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strong local competitors;
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cost and burden of complying with, lack of familiarity with, and unexpected changes in foreign legal and regulatory requirements, including
consumer and data privacy laws;
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difficulties in managing and staffing international operations;
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fluctuations in currency exchange rates or restrictions on foreign currency;
• potentially adverse tax consequences, including the complexities of transfer pricing, foreign value added or other tax systems, double
taxation and restrictions and/or taxes on the repatriation of earnings;
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dependence on third parties, including channel partners with whom we do not have extensive experience;
• compliance with the Foreign Corrupt Practices Act, economic sanction laws and regulations, export controls, and other U.S. laws and
regulations regarding international business operations;
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increased financial accounting and reporting burdens and complexities;
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political, social, and economic instability abroad, terrorist attacks, and security concerns in general; and
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reduced or varied protection for intellectual property rights in some countries.