Etsy 2015 Annual Report Download - page 28

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and abroad. For example, our headcount has grown from 251 employees on December 31, 2011 to819 employees on December 31, 2015. The growth of our
business places significant demands on our management team and pressure to expand our operational and financial infrastructure. As we continue to grow,
our operating expenses will increase. If we do not manage our growth effectively, the increases in our operating expenses could outpace any increases in our
revenue and our business could be harmed.
Continued growth could also pose other challenges, such as the need to develop and improve our operational, financial and management controls and to
enhance our reporting systems and procedures. For example, over the past several years we have been implementing and refining an enterprise resource
planning, or ERP, system to enhance a variety of important functions such as invoicing, accounts receivable, accounts payable, foreign currency translation,
financial consolidation and internal and external financial and management reporting matters. ERP system implementations are complex, long-term projects
that involve substantial expenditures. To fully realize the benefits of our ERP system we have made and may continue to make changes to our business and
financial processes. Our business may be harmed if our ERP system does not function as expected or does not result in the expected benefits.
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We have acquired a number of other businesses in the past and may acquire additional businesses or technologies in the future. For example, in April 2014
we acquired Jarvis Labs, Inc. (d/b/a Grand St.) and in June 2014 we acquired Incubart SAS (d/b/a A Little Market). Acquisitions may divert management’s
time and focus from operating our business. Acquisitions also may require us to spend a substantial portion of our available cash, incur debt or other
liabilities, amortize expenses related to intangible assets or incur write-offs of goodwill or other assets. In addition, integrating an acquired business or
technology is risky. Completed and future acquisitions may result in unforeseen operational difficulties and expenditures associated with:
• incorporating new businesses and technologies into our infrastructure;
• consolidating operational and administrative functions;
• coordinating outreach to our community;
• maintaining morale and culture and retaining and integrating key employees;
• maintaining or developing controls, procedures and policies (including effective internal control over financial reporting and disclosure controls and
procedures); and
• assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations,
commercial disputes, taxes and other matters.
Moreover, we may not benefit from our acquisitions as we expect, or in the time frame we expect. We also may issue additional equity securities in
connection with an acquisition, which could cause dilution to our stockholders. Finally, acquisitions could be viewed negatively by analysts, investors or
the members of our community.
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Etsy sellers and Etsy buyers rely on access to the Internet or mobile networks to access our marketplace. Internet service providers may choose to disrupt or
degrade access to our platform or increase the cost of such access. Mobile network operators or operating system providers could block or place onerous
restrictions on the ability to download and use our mobile apps.
Internet service providers or mobile network operators could also attempt to charge us for providing access to our platform. In 2015, rules approved by the
Federal Communications Commission went into effect that prohibit Internet service providers from charging content providers higher rates in order to deliver
their content over certain “fast traffic” lanes; however, the rules are subject to pending legal challenges and if they are overturned, our business could be
adversely impacted. Outside of the United States, government regulation of the Internet, including the idea of network neutrality, may be developing or non-
existent. As a result, we could face discriminatory or anti-competitive practices that could impede both our and Etsy sellers’ growth prospects, increase our
costs and harm our business.
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