Travelzoo 2013 Annual Report Download - page 47

12
Risks Related to Our Financial Condition and Business Model
We cannot assure you that we will be profitable.
In the years ended December 31, 2013, 2012 and 2011, we incurred a net loss of $5.0 million and generated a net income
of $18.2 million and $3.3 million, respectively. Although we were profitable in 2012 and 2011, there is no assurance that we
will continue to be profitable in the future. We forecast our future expense levels based on our operating plans and our
estimates of future revenues. We may find it necessary to significantly accelerate expenditures relating to our sales and
marketing efforts or otherwise increase our financial commitment to creating and maintaining brand awareness among Internet
users and advertisers. If our revenues grow at a slower rate than we anticipate, or if our spending levels exceed our expectations
or cannot be adjusted to reflect slower revenue growth, we may not generate sufficient revenues to be profitable. Any of these
developments could result in a significant decrease in the trading price of our common stock.
Fluctuations in our operating results may negatively impact our stock price.
Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors that could
affect our revenues or our expenses in any particular period. You should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of future performance. Factors that may affect our quarterly results include:
• mismatches between resource allocation and client demand due to difficulties in predicting client demand in a
new market;
• changes in general economic conditions that could affect marketing efforts generally and online marketing
efforts in particular;
• the magnitude and timing of marketing initiatives, including our acquisition of new subscribers and our
expansion efforts in other regions;
• the introduction, development, timing, competitive pricing and market acceptance of our products and
services and those of our competitors;
• our ability to attract and retain key personnel;
• our ability to manage our planned growth;
• our ability to attract users to our websites, which may be adversely affected by the audience shift to mobile
devices;
• technical difficulties or system downtime affecting the Internet generally or the operation of our products and
services specifically;
• payments which we may make to previous stockholders of Travelzoo.com Corporation who failed to submit
requests for shares in Travelzoo Inc. within the required time period, or escheat claims related to shares not
issued in the Company’s merger with Travelzoo.com Corporation; and
• volatility of our operating results in new markets.
We may significantly increase our operating expenses related to advertising campaigns for the Travelzoo and Fly.com
brands, as well as our planned launch of our hotel booking platform, for a certain period if we see a unique opportunity for a
brand marketing campaign, if we find it necessary to respond to increased brand marketing by a competitor, or if we decide to
accelerate our acquisition of new subscribers.
If revenues fall below our expectations in any quarter and we are unable to quickly reduce our operating expenses in
response, our operating results would be lower than expected and our stock price may fall.