Facebook 2014 Annual Report Download - page 12

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Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should consider carefully the
risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-
K, including our consolidated
financial statements and related notes. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that
we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the
following risks actually occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected.
In that event, the trading price of our Class A common stock could decline, and you could lose part or all of your investment.
Risks Related to Our Business and Industry
If we fail to retain existing users or add new users, or if our users decrease their level of engagement with our products, our revenue, financial
results, and business may be significantly harmed.
The size of our user base and our users' level of engagement are critical to our success. Our financial performance has been and will continue to
be significantly determined by our success in adding, retaining, and engaging active users. We anticipate that our active user growth rate will continue to
decline over time as the size of our active user base increases, and as we achieve higher market penetration rates. If people do not perceive our products
to be useful, reliable, and trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their
engagement. A number of other social networking companies that achieved early popularity have since seen their active user bases or levels of
engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our active user base or
engagement levels. Our user engagement patterns have changed over time, and user engagement can be difficult to measure, particularly as users
continue to engage increasingly via mobile devices and as we introduce new and different products and services. Any number of factors could
potentially negatively affect user retention, growth, and engagement, including if:
9
Item 1A.
Risk Factors
•
users increasingly engage with other products or services;
•
we fail to introduce new products or services that users find engaging or if we introduce new products or services that are not favorably
received;
•
users feel that their Facebook experience is diminished as a result of the decisions we make with respect to the frequency, prominence, and
size of ads that we display, or the quality of the ads displayed;
•
users have difficulty installing, updating, or otherwise accessing our products on mobile devices as a result of actions by us or third parties
that we rely on to distribute our products and deliver our services;
•
user behavior on any of our products changes, including decreases in the quality and frequency of content shared on our products and
services;
•
we are unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating
systems and networks, and that achieve a high level of market acceptance;
•
there are decreases in user sentiment about the quality or usefulness of our products or concerns related to privacy and sharing, safety,
security, or other factors;
•
we are unable to manage and prioritize information to ensure users are presented with content that is interesting, useful, and relevant to
them;
•
users adopt new technologies where our products may be displaced in favor of other products or services, or may not be featured or
otherwise available;
•
there are adverse changes in our products that are mandated by legislation, regulatory authorities, or litigation, including settlements or
consent decrees;
•
technical or other problems prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience,
such as security breaches or failure to prevent or limit spam or similar content;
•
we adopt policies or procedures related to areas such as sharing or user data that are perceived negatively by our users or the general
public;
• we elect to focus our user growth and engagement efforts more on longer-
term initiatives, or if initiatives designed to attract and retain
users and engagement are unsuccessful or discontinued, whether as a result of actions by us, third