Dependence on internet search engine providers

Bondora's customer acquisition, marketing and returning-customer relationship management strategies are partly dependent on search engines such as Google, Bing and others, which direct significant amounts of traffic to Bondora's desktop and mobile websites via organic ranking and paid search advertising. Competitors' paid search activities may result in their sites receiving higher paid search results, significantly increasing the cost of such advertising. Bondora's paid search activities may not produce -and, in the past, have not always produced- the desired results. Internet search engines frequently revise their methodologies, which could adversely affect Bondora's organic rankings or paid search results, leading to a decline in new-customer growth or existing-customer retention. In addition, search engines could implement policies that limit the ability of consumer finance companies such as Bondora to advertise its services and products, which could preclude them from having links to their sites appear in favorable locations or any location in organic rankings or paid search results when consumers search for certain terms.

Bondora's online marketing efforts are also vulnerable to actions by third parties, such as "œspam link attacks", often referred to as "œblack hat tactics", that can adversely impact its search results. Bondora's websites have experienced meaningful fluctuations in organic rankings and paid search results in the past, and similar fluctuations are expected in future. Any reduction in the number of consumers directed to their desktop and mobile sites may have a material adverse effect on their business, financial condition, operational results or prospects, or cash flow.

Bondora Group has seven years of experience working with search engines and in online marketing. Aside from its online marketing efforts, Bondora Group generates 40% of prospective borrower traffic from television advertising and 20% from internal marketing campaigns. There are also certain online marketing channels, including Facebook, that Bondora is not currently using but may tap in future. Bondora does not operate in the payday lending market, which appears to be more exposed to the aforementioned risk.

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