Facebook 2012 Annual Report Page 27

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 acquisition 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 will decline in the future.

We believe that our rates of user and revenue growth will decline over time. For example, our revenue grew

37% from 2011 to 2012, 88% from 2010 to 2011 and 154% from 2009 year to 2010. Historically, our user
growth has been a primary driver of growth in our revenue. While our periodic rates of growth may be flat or
increase from time to time, 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 higher market penetration rates. 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.

Providing our products to our users 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,
as we develop and implement new product features that require more computing infrastructure. 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 our global infrastructure in order to provide our products rapidly and reliably to all users
around the world, including in countries where we do not expect significant short-term monetization. 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 continue to grow faster than our revenue over
time. Our expenses may be greater than we anticipate, 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.