Shutterfly 2013 Annual Report Download - page 19

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• a significant increase in returns and credits, beyond our estimated allowances, for customers
who are not satisfied with our products;
• our ability to achieve the expected benefits of strategic partnerships or the loss of any such
partnership;
• declines or disruptions to the travel industry;
• variations in weather, particularly heavy rain and snow which tend to depress travel and
picture taking;
• the timing of holidays and the duration of the holiday shopping season;
• our ability to address increased shipping delays caused by our third party shippers’ inability to
handle the ever increasing number of consumers ordering goods online, particularly during
the holiday shopping season;
• volatility in our stock price, which may lead to higher stock-based compensation expense;
• consumer preferences for digital photography services;
• improvements to the quality, cost and convenience of desktop printing of digital pictures and
products; and
• global and geopolitical events with indirect economic effects such as pandemic disease,
hurricane and other natural disasters, war, threat of war or terrorist actions.
Based on the factors cited above, we believe that quarter-to-quarter comparisons of our operating
results are not a good indication of our future performance. It is possible that in one or more future
quarters, our operating results may be below the expectations of public market analysts and investors. In
that event, the trading price of our common stock may decline.
We have incurred operating losses in the past and may not be able to sustain profitability in the future.
We have periodically experienced operating losses since our inception in 1999. In particular, we make
investments in our business that generally result in operating losses in each of the first three quarters of
our fiscal year. This typically has enabled us to generate the majority of our net revenue during the fourth
quarter and to achieve profitability for the full fiscal year. If we are unable to produce our products and
provide our services at commercially reasonable costs, if consumer demand decreases and revenues decline
or if our expenses exceed our expectations, we may not be able to achieve, sustain or increase profitability
on a quarterly or annual basis.
We face many risks, uncertainties, expenses and difficulties relating to increasing our market share and growing our
business.
To address the risks and uncertainties of increasing our market share and growing our business, we
must do the following:
• maintain and increase the size of our customer base;
17