Google 2007 Annual Report Download - page 33

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we fail to convince these companies to spend a portion of their advertising budgets with us, or if our existing advertisers
reduce the amount they spend on our programs, our operating results would be harmed.
We expect our revenue growth rate to decline and anticipate downward pressure on our operating margin in the
future.
We expect that our revenue growth rate will decline over time and anticipate that there will be downward pressure on
our operating margin. We believe our revenue growth rate will generally decline as a result of increasing competition and
the inevitable decline in growth rates as our revenues increase to higher levels. We believe our operating margin will
experience downward pressure as a result of increasing competition and increased expenditures for many aspects of our
business. Our operating margin will also experience downward pressure if a greater percentage of our revenues comes
from ads placed on our Google Network members’ sites compared to revenues generated through ads placed on our own
sites or if we spend a proportionately larger amount to promote the distribution of certain products, including Google
Toolbar. The margin on revenue we generate from our Google Network members is significantly less than the margin on
revenue we generate from advertising on our web sites. Additionally, the margin we earn on revenue generated from our
Google Network members could decrease in the future if we pay an even larger percentage of advertising fees to our
Google Network members.
Our operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall
short of expectations.
Our operating results may fluctuate as a result of a number of factors, many outside of our control. As a result,
comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past
results as an indication of our future performance. Our quarterly, year-to-date and annual expenses as a percentage of our
revenues may differ significantly from our historical or projected rates. Our operating results in future quarters may fall
below expectations. Any of these events could cause our stock price to fall. Each of the risk factors listed in this Item 1A
and the following factors may affect our operating results:
• Our ability to continue to attract users to our web sites.
• Our ability to monetize (or generate revenue from) traffic on our web sites and our Google Network members’
web sites.
• Our ability to attract advertisers to our AdWords program.
• Our ability to attract web sites to our AdSense program.
• The mix in our revenues between those generated on our web sites and those generated through our Google
Network.
• The amount and timing of operating costs and capital expenditures related to the maintenance and expansion of
our businesses, operations and infrastructure.
• Our focus on long-term goals over short-term results.
• The results of our investments in risky projects.
• Our ability to keep our web sites operational at a reasonable cost and without service interruptions.
• Our ability to achieve revenue goals for partners to whom we guarantee minimum payments or pay distribution
fees.
• Our ability to generate revenue from services in which we have invested considerable time and resources, such as
YouTube, Gmail, orkut and Google Checkout.
Because our business is changing and evolving, our historical operating results may not be useful to you in predicting
our future operating results. In addition, advertising spending has historically been cyclical in nature, reflecting overall
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