Support.com 2014 Annual Report Download - page 12

Table of Contents
• Pricing levels and structures in the market for technology support services;
• Our ability to successfully monetize customers who receive free versions of our consumer software;
• Usage rates on the subscriptions we offer;
• The rate of expansion of our offerings and our investments therein;
• Changes in the markets for computers and other technology devices relating to unit volume, pricing and other factors, including changes driven by declines in sales of personal computers and the growing
popularity of tablets, and other mobile devices and the introduction of new devices into the connected home;
• Our ability to adapt to our customers’ needs in a market space defined by frequent technological change;
• The amount and timing of operating costs and capital expenditures in our business;
• Diversion of management’s attention from other business concerns and disruption of our ongoing business activities as a result of acquisitions or divestitures by us;
• Costs related to the defense and settlement of litigation which can also have an additional adverse impact on us because of negative publicity, diversion of management resources and other factors;
• Potential losses on investments, or other losses from financial instruments we may hold that are exposed to market risk; and
• The exercise of judgment by our management in making accounting decisions in accordance with our accounting policies.
Our inability to meet future financial performance targets that we announce or that are published by research analysts could cause the market price of our common stock to decline.
From time to time, we provide guidance related to our future financial performance. In addition, financial analysts may publish their own expectations of our future financial performance. Because our quarterly
revenue and our operating results fluctuate and are difficult to predict, future financial performance is difficult to predict. We have in the past failed to meet our guidance for a particular period or analyst expectations
for our guidance for future periods and our stock price has declined. Generally, the market prices of technology companies have been extremely volatile. Stock prices of many technology companies have often
fluctuated in a manner unrelated or disproportionate to the operating performance of such companies. In the past, following periods of market volatility, stockholders have often initiated securities class action litigation
relating to the stock trading and price volatility of the technology company in question. Any securities litigation we may become involved in could result in our incurring substantial defense costs and diverting resources
and the attention of management from our business.
Because a small number of partners have historically accounted for, and for the foreseeable future will account for, the substantial majority of our revenue, under-performance of specific programs or
loss of certain partners or programs could decrease our revenue substantially.
For the three months ended December 31, 2014, Comcast (67%) and the combined Office Depot and OfficeMax organization (15%) accounted for 10% or more of our total revenue. For the twelve months
ended December 31, 2014, Comcast (64%) and the combined Office Depot and OfficeMax organization (16%) accounted for 10% or more of our total revenue. The loss of these or other significant relationships, the
change of the terms or terminations of our arrangements with any of these firms, the reduction or discontinuance of programs with any of these firms, or the failure of any of these firms to achieve their targets could
adversely affect our business. Generally, the agreements with our partners do not require them to conduct any minimum amount of business with us, and therefore they have decided in the past and could decide at
any time in the future to reduce or eliminate their programs or the use of our services in such programs. They may also enter into multi-sourcing arrangements with other vendors for services previously provided
exclusively by us. Further, we may not successfully obtain new partners or customers. There is also the risk that, once established, our programs with these and other partners may take longer than we expect to
produce revenue or may not produce revenue at all, and the revenue produced may not be profitable if the costs of performing under the program are greater than anticipated or the program terminates before up-
front investments can be recouped. One or more of our key partners may also choose not to renew their relationship with us, discontinue certain programs, offer them only on a limited basis or devote insufficient time
and attention to promoting them to their customers. Some of our key partners may prefer not to work with us if we also partner with their competitors. If any of these key partners merge with one of their competitors
(as occurred with Office Depot and OfficeMax in 2013), all of these risks could be exacerbated.
Each of these risks could reduce our sales and have a material adverse effect on our operating results. Further risks associated with the loss or decline in a significant partner are detailed in “Our failure to
establish and expand successful partnerships to sell our services and products would harm our operating results” below.
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