Tucows 2012 Annual Report Download - page 23

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18
Adverse conditions in the U.S. and international economies could impact our results of operations.
Unfavorable general economic conditions, such as a recession or economic slowdown in the United States or in
one or more of our other major markets, could negatively affect the affordability of and demand for some of our products
and services. The recent national and global economic downturn resulted in, among other things, a decline in overall
consumer and corporate spending. Consumer spending patterns are difficult to predict and are sensitive to the general
economic climate, the consumers’ level of disposable income, consumer debt and overall consumer confidence.
Although the economy has shown signs of stabilization, there is no guarantee as to when or if overall consumer and
corporate spending will return to pre-recession levels. Our services may be considered discretionary on the part of many
of our current and potential customers and be dependent upon levels of consumer spending. As a result, resellers and
consumers considering whether to purchase our services may be influenced by macroeconomic factors that affect
consumer spending such as unemployment, continuing increases in fuel costs, conditions in the residential real estate and
mortgage markets and access to credit.
To the extent conditions in the economy remain uncertain or deteriorate, our business could be impacted as
customers choose to leave our services, to reduce their service level or to stop purchasing our services. In addition, our
efforts to attract new customers may be adversely affected. The current economic conditions may also adversely impact
our key vendors. In uncertain and adverse economic conditions, decreased consumer spending is likely to result in a
variety of negative effects such as reduction in revenues, increased costs, lower gross margin percentages, increased
allowances for doubtful accounts and write-offs of accounts receivable, and recognition of impairments of assets,
including goodwill and other intangible assets. Uncertainty and adverse economic conditions may also lead to a
decreased ability to collect payment for our services due primarily to a decline in the ability of our business customers to
use or access credit, including through credit cards, which is how most of our customers pay for our services. We also
expect to continue to experience volatility in foreign exchange rates, which could negatively impact the amount of
expenses we incur and the net assets we record in future periods. If any of the above risks are realized, we may
experience a material adverse effect on our business, financial condition and results of operations.
Our quarterly and annual operating results may fluctuate and our future revenues and profitability are uncertain.
Our quarterly and annual operating results may fluctuate significantly in the future as a result of a variety of
factors, many of which are outside of our control. Our quarterly and annual operating results may be adversely affected
by a wide variety of factors, including:
• our ability to maintain revenue growth at current levels or anticipate a decline in revenue from any of ou
services;
• our ability to identify and develop new technologies or services and to commercialize those technologies into
new services in a timely manner;
• the mix of our services sold during the quarter or year;
• our ability to make appropriate decisions which will position us to achieve further growth;
• concentrated capital expenditures in any particular period to support our growth or for other reasons;
• changes in our pricing policies or those of our competitors, changes in domain name fees charged to us b
y
Internet registries or ICANN, or other competitive pressures on selling prices;
• our ability to identify, hire, train, motivate and retain highly qualified personnel, and to achieve targeted
productivity levels;
• market acceptance of Internet services generally and of new and enhanced versions of our services in
particular;
• our ability to establish and maintain a competitive advantage;