Facebook 2013 Annual Report Download - page 21

19
• our ability to continue to scale monetization through our mobile products;
• our ability to maintain or increase Payments and other fees revenue;
• the diversification and growth of revenue sources beyond advertising and Payments;
• the development and introduction of new products or services by us or our competitors;
• increases in marketing, sales, and other operating expenses that we may incur to grow and expand our operations and
to remain competitive;
• our ability to maintain gross margins and operating margins;
• costs related to the acquisitions of businesses, talent, technologies or intellectual property, including potentially significant
amortization costs;
• our ability to obtain equipment and components for our data centers and other technical infrastructure in a timely and
cost-effective manner;
• system failures, which could prevent us from serving ads for any period of time, or breaches of security or privacy, and
the costs associated with remediating any such failures or breaches;
• inaccessibility of Facebook due to third-party actions;
• share-based compensation expense;
• adverse litigation judgments, settlements, or other litigation-related costs;
• changes in the legislative or regulatory environment, including with respect to privacy, or enforcement by government
regulators, including fines, orders, or consent decrees;
• the overall tax rate for our business, which may be affected by the financial results of our international subsidiaries;
• fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in
foreign currencies;
• fluctuations in the market values of our portfolio investments and in interest rates;
• changes in U.S. generally accepted accounting principles; and
• changes in global business or macroeconomic conditions.
We expect our rates of growth may decline in the future.
We believe that our rates of user and revenue growth may decline over time. While we have recently experienced increased
revenue growth compared to prior periods, we expect that our user growth and revenue growth rates will decline over time as the size
of our active user base increases and as we achieve greater market penetration. For example, our MAUs grew 16% from December
31, 2012 to 2013, 25% from December 31, 2011 to 2012 and 39% from 2010 to 2011. Historically, our user growth has been a primary
driver of growth in our revenue. As our growth rates decline, investors' perceptions of our business may be adversely affected and the
trading price of our Class A common stock could decline.
Our costs are continuing to grow, which could harm our business and profitability.
Operating our business is costly and we expect our expenses to continue to increase in the future as we broaden our user base,
as users increase the number of connections and amount of data they share with us, and as we develop and implement new products.
Historically, our costs have increased each year due to these factors and we expect to continue to incur increasing costs, in particular
for servers, storage, power, and data centers, to support our anticipated future growth. We expect to continue to invest in these and
other efforts to operate and expand our business around the world, including in countries and/or projects where we may not have a
clear path to monetization, such as our commitment to the Internet.org initiative to increase global Internet access. In addition, our
costs may increase as we hire additional employees, particularly as a result of the significant competition that we face to attract and
retain technical talent. Our expenses may grow faster than our revenue and may be greater than we anticipate in a particular period
or over time, and our investments may not be successful. In addition, we may increase marketing, sales, and other operating expenses
in order to grow and expand our operations and to remain competitive. Increases in our costs may adversely affect our business and
profitability.