Travelzoo 2014 Annual Report Download - page 54

19
If we incur losses from our operations in the future, these losses may not have any recognizable tax benefit. We expect
that this would have a material negative impact on our net income and cash flows. Any of these developments could result in a
significant decrease in the trading price of our common stock. In addition to uncertainty about our ability to generate net
income from our foreign operations and expand our international market position, there are certain risks inherent in doing
business internationally, including:
• trade barriers and changes in trade regulations;
• difficulties in developing, staffing and simultaneously managing foreign operations as a result of distance,
language and cultural differences;
• stringent local labor laws and regulations;
• currency exchange rate fluctuations;
• risks related to government regulation; and
• potentially adverse tax consequences.
We may not be able to continue developing awareness of our brand names.
We believe that continuing to build awareness of the Travelzoo and Fly.com brand names is critical to achieving
widespread acceptance of our business. Brand recognition is a key differentiating factor among providers of online advertising
opportunities, and we believe it could become more important as competition in our industry increases. In order to maintain and
build brand awareness, we must succeed in our marketing efforts. If we fail to successfully promote and maintain our brands,
incur significant expenses in promoting our brands and fail to generate a corresponding increase in revenue as a result of our
branding efforts, or encounter legal obstacles which prevent our continued use of our brand names, our business could be
materially adversely affected.
If we fail to retain our existing members or acquire new members, our revenue and business will be harmed.
We spent $7.8 million, $5.5 million and $5.4 million on online marketing initiatives relating to member acquisition for
years ended December 31, 2014, 2013 and 2012 and expect to continue to spend significant amounts to acquire additional
members. We must continue to retain and acquire members in order to maintain or increase revenue. We cannot assure you that
the revenue from members we acquire will ultimately exceed the cost of acquiring new members. If members do not perceive
our offers to be of high value and quality or if we fail to introduce new and more relevant deals, we may not be able to acquire
or retain members. If we reduce our member acquisition costs, we cannot assure you that this will not adversely impact our
ability to acquire new members. If we are unable to acquire new members who purchase our deals directly or indirectly in
numbers sufficient to grow our business, or if members cease to purchase our deals directly or indirectly through our
advertisers, the revenue we generate may decrease and our operating results will be adversely affected. If the level of usage by
our member base declines or does not grow as expected, we may suffer a decline in member growth or revenue. A significant
decrease in the level of usage or member growth would have an adverse effect on our business, financial condition and results
of operations. In addition, a shift of our audience to mobile devices and social media channels without corresponding updates
of our offerings or marketing activities to address this audience could result in lower revenues.