Enom 2012 Annual Report Download - page 30

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25
If we do not effectively manage our growth, our operating performance will suffer and we may lose consumers, advertisers,
customers and freelance creative professionals.
We have experienced rapid growth in our operations since our founding in 2006, and we may experience continued growth
in our business, both through internal growth and potential acquisitions. For example, our employee headcount grew from
approximately 500 to over 700 from December 31, 2009 to December 31, 2012. This overall growth has placed, and will
continue to place, significant demands on our management and our operational and financial infrastructure. In particular,
continued growth may make it more difficult for us to accomplish the following:
• successfully scale our technology and infrastructure to support a larger business;
• continue to grow our platform at scale and distribute through our new and existing properties while successfully
monetizing our content;
• maintain our standing with key advertisers as well as Internet search companies and our network of customer
websites;
• maintain our customer service standards;
• develop and improve our operational, financial and management controls and maintain adequate reporting systems and
procedures;
• acquire and integrate websites and other businesses;
• successfully expand our footprint in our existing areas of consumer interest and enter new areas of consumer interest;
and
• respond effectively to competition and potential negative effects of competition on profit margins.
In addition, our personnel, systems, procedures and controls may be inadequate to support our current and future
operations. The improvements required to manage our growth will require us to make significant expenditures, expand, train
and manage our employee base and allocate valuable management resources. If we fail to effectively manage our growth, our
operating performance will suffer and we may lose our advertisers, customers and key personnel.
If we do not continue to innovate and provide products and services that are useful to our customers, we may not remain
competitive, and our revenue and operating results could suffer.
Our success depends on our ability to innovate and provide products and services useful to our customers in both our
Content & Media and Registrar service offerings. Our competitors are constantly developing innovations in content creation
and distribution as well as in domain name registration and related services, such as web hosting, email and website creation
solutions. As a result, we must continue to invest significant resources in product development in order to maintain and enhance
our existing products and services and introduce new products and services that deliver a sufficient return on investment and
that our customers can easily and effectively use. If we are unable to provide quality products and services, we may lose
consumers, advertisers, customers and freelance creative professionals, and our revenue and operating results would suffer. Our
operating results would also suffer if our innovations are not responsive to the needs of our customers and our advertisers, are
not appropriately timed with market opportunities or are not effectively brought to market.
Our industry is undergoing rapid change, and our business model is also evolving, which makes it difficult to evaluate our
current business and future prospects.
We derive a significant portion of our revenue from the sale of advertising on the Internet, which is an evolving industry
that has undergone rapid and dramatic changes in industry standards, consumer and customer demands and advertising trends.
In addition, our business model is also evolving and is distinct from many other companies in our industry, and it may not lead
to long-term growth or success. For example, the ways in which online advertisements are delivered are rapidly changing and
an increasing percentage of advertisements are being delivered through social media websites and platforms as opposed to
traditional portals or content websites. If advertisers determine that their yields on such social media sites significantly outstrip
their return on other types of websites, such as our owned and operated websites, our business and operating results could be
adversely impacted. We need to continually evolve our services and the way we deliver them in order to keep up with such
changes to remain relevant to our customers, and we may not be able to do so quickly, cost-effectively or at all.