Tucows 2014 Annual Report Download - page 21

We have presence in the hosted messaging and email market, which is a volatile business.
Factors that are likely to contribute to fluctuations in our operating results from provisioning hosted email
services include:
• the demand for outsourced email services;
• our ability to attract and retain customers and provide customer satisfaction;
• the ability to upgrade, develop and maintain our systems and infrastructure and to effectively respond to the
rapid technological changes in the email market;
• the budgeting and payment cycles of our existing and potential customers;
• the amount and timing of operating costs and capital expenditures relating to expansion of the email service;
and
• the introduction of new or enhanced services by competitors.
In order to succeed in the hosted email business, our email product must remain competitive. We believe that
some of the competitive factors affecting the market for hosted email services include:
• breadth of platform features and functionality of our offering and the sophistication and innovation of our
competitors;
• scalability, reliability, performance and ease of expansion and upgrade;
• ease of integration with customers’ existing systems; and
• flexibility to enable customers to manage certain aspects of their systems and leverage outsourced services in
other cases when resources, costs and time to market reasons favor an outsourced offering.
We believe competition will continue to be strong and further increase as our market attracts new competition,
current competitors aggressively pursue customers, increase the sophistication of their offerings and as new participants
enter the market. Many of our current and potential competitors have longer operating histories, larger customer bases,
greater brand recognition in the business and greater financial, marketing and other resources than we do. Any delay in
our development and delivery of new services or enhancement of existing services would allow our competitors
additional time to improve their product offerings and provide time for new competition to develop and market
messaging services. Increased competition could result in pricing pressures, reduced operating margins and loss of market
share, any of which could cause our financial results to decline.
If we are unable to maintain our relationships with our customers our revenue may decline.
Our network of resellers is our principal source for distributing services. We also rely on our resellers to market,
promote and sell our services. Our ability to increase revenues in the future will depend significantly on our ability to
maintain our reseller network, to sell more services through existing resellers and to develop our relationships with
existing resellers by providing customer and sales support and additional products. Resellers have no obligations to
distribute our services and may stop doing so at any time. If we are not able to maintain our relationships with resellers,
our ability to distribute our services will be harmed, and our revenue may decline.
Disputes over registration of domain names, the activities of our reseller’s customers or the content of their websites
could subject us to liability and could negatively affect the public’s perception of our corporate image.
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