Etsy 2015 Annual Report Download - page 35

Download and view the complete annual report

Please find page 35 of the 2015 Etsy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 126

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126


• litigation or other claims against us;
• the performance of the equity markets in general and in our industry;
• the operating performance of other similar companies;
• changes in legal requirements relating to our business; and
• any other factors discussed in this report.
In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the price of our common stock could
decline for reasons unrelated to our business, results of operations or financial condition. Stock prices of many technology companies have historically been
highly volatile. Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation.
For example, as described further in "Note 14Commitments and ContingenciesLegal Proceedings" in the Notes to Consolidated Financial Statements,
three purported securities class action lawsuits have been filed naming Etsy and certain of our officers and/or directors as defendants. We may experience
more such litigation following future periods of volatility or declines in our stock price. Any securities litigation, could result in substantial costs and divert
our management’s attention and resources, which could adversely affect our business.


The trading market for our common stock depends in part on the research and reports that analysts publish about our business. We do not have any control
over these analysts. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our
business, the price of our common stock would likely decline. If few analysts cover us, demand for our common stock could decrease and our common stock
price and trading volume may decline. Similar results may occur if one or more of these analysts stop covering us in the future or fail to publish reports on us
regularly.

We have never declared or paid any cash dividends on our capital stock. We currently anticipate that we will retain future earnings for the operation and
expansion of our business and do not anticipate declaring any dividends in the foreseeable future. In addition, our ability to pay cash dividends on our
capital stock is restricted by the terms of our credit facility. As a result, stockholders will not receive dividends or other distributions and may only receive a
return on their investment if the trading price of our common stock increases.


Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the price of
our common stock and could impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that sales may
have on the prevailing price of our common stock.
All of our executive officers and directors and certain major holders of our capital stock entered into lock-up agreements with the underwriters of our initial
public offering that restrict these stockholders’ ability to transfer a portion of their shares of our common stock for a period of 360 days following our initial
public offering. Approximately 21.9 million shares are still subject to lock-up agreements and will become eligible for sale on April 10, 2016.
These shares will be able to be freely sold in the public market upon issuance to the extent permitted by any applicable vesting requirements and the lock-up
agreements described above. Sales of stock by these stockholders could adversely affect the trading price of our common stock.
Additionally, certain holders of shares of our common stock have registration rights. Registration of these shares under the Securities Act would result in the
shares becoming freely tradable without restriction under the Securities Act, except for shares
31