Enom 2012 Annual Report Download - page 28

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We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make
it difficult to predict our future performance.
Our revenue and operating results could vary significantly from quarter-to-quarter and year-to-year and may fail to match
our past performance because of a variety of factors, many of which are outside of our control. In particular, our operating
expenses are fixed and variable and, to the extent variable, less flexible to manage period-to-period, especially in the short-
term. For example, our ability to manage our expenses in the near term period-to-period is affected by our sales and marketing
expenses to refer traffic to or promote our owned and operated websites, generally a variable expense which can be managed
based on operating performance in the near term. This expense has historically represented a relatively small percentage of our
operating expenses. In addition, comparing our operating results on a period-to-period basis may not be meaningful. In addition
to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results
include:
• lower than anticipated levels of traffic to our owned and operated websites and to our customers' websites;
• our ability to generate revenue from traffic to our owned and operated websites and to our network of customer
websites;
• failure of our content to generate sufficient or expected revenue during its estimated useful life to recover its
unamortized creation costs, which may result in increased amortization expenses associated with, among other things,
a decrease in the estimated useful life of our content, an impairment charge associated with our existing content, or
expensing future content acquisition costs as incurred;
• creation of content in the future that may have a shorter estimated useful life as compared to our current portfolio of
content, or which we license exclusively to third parties for periods that are less than the estimated useful life of our
existing content, which may result in, among other things, increased content amortization expenses or the expensing of
future content acquisition costs as incurred;
• our ability to continue to create and develop content and content formats that attract users to our owned and operated
websites and to our network of customer websites that distribute our content;
• our ability to expand our existing distribution network to include emerging and alternative channels, including
complementary social media platforms such as Facebook, Google+ and Twitter, dedicated applications for mobile
platforms such as the iPhone, Blackberry and Android operating systems, and new types of devices used to access the
Internet such as tablet computers;
• changing consumption patterns of internet content to mobile devices such as smart-phones and tablets, which may
generate lower advertising yields compared to historic advertising yields on desktop or laptop devices;
• changes in internet advertising purchasing patterns by advertisers from direct advertising sales to more automated
advertising solutions;
• our ability to identify acquisition targets and successfully integrate acquired businesses into our operations;
• our ability to attract and retain sufficient qualified and experienced freelance creative professionals to generate content
formats on a scale sufficient to grow our business, as we continue to evolve the formats of content that we produce;
• our ability to effectively manage our freelance creative professionals, direct advertising sales force, in-house personnel
and operations;
• a reduction in the number of domain names under management or in the rate at which this number grows, due to slow
growth or contraction in our markets, lower renewal rates or other factors;
• reductions in the percentage of our domain name registration customers who purchase additional services from us;
• timing of and revenue recognition for large sales transactions such as significant new contracts for branded
advertising;
• the mix of services sold in a particular period between our Registrar and our Content & Media service offerings;