WebEx 2002 Annual Report Download - page 23

Factors outside our control include:
ⳮour distribution partners’ degree of success in distributing our services to end-users;
ⳮthe announcement, introduction and market acceptance of new or enhanced services or products by our
competitors;
ⳮchanges in offerings or pricing policies of our competitors; and
ⳮthe growth rate of the market for web communications services.
Factors within our control include:
ⳮour ability to develop, enhance and maintain our web communications network in a timely manner;
ⳮthe mix of services we offer;
ⳮour ability to attract and retain customers;
ⳮthe amount and timing of operating costs and capital expenditures relating to expansion of our business
and network infrastructure;
ⳮthe announcement, introduction and market acceptance of new or enhanced services or products by us;
and
ⳮchanges in our pricing policies, such as converting customers from subscription-based pricing to pay-
per-use pricing, or vice versa.
If any of these factors impact our business in a particular period, our operating results may be below market
expectations, in which case the market price of our common stock would likely decline. Also, factors such as the
growth rate of the market for our services, our ability to maintain and enhance our network services and platform,
and our competitors’ success could impact our longer-term financial performance by reducing demand for our
services.
We expect that our operating expenses will continue to increase, and if our revenue does not correspondingly
increase, our business and operating results will suffer.
We expect to continue to spend substantial financial and other resources on developing and introducing new
services, and expanding our sales and marketing organization and network infrastructure. We base our expense
levels in part on our expectations of future revenue levels. If our revenue for a particular quarter is lower than we
expect, we may be unable to reduce proportionately our operating expenses for that quarter, in which case our
operating results for that quarter would be adversely affected.
Our customers do not have long-term obligations to purchase our services; therefore, our revenue and
operating results could decline if our customers do not continue to use our services.
Our customers do not have long-term obligations to purchase services from us. Most of our subscription
agreements have an initial term of three months. Although automatically renewed unless terminated, our
contracts can be terminated on thirty days notice at the end of the initial term or any renewal term. Over 95% of
our customers have agreements with initial terms of three to twelve months. In calendar 2002, over 95% of the
contracts entered into were renewed beyond their initial term. We terminate customers who fail to pay for our
services. In 2002, we terminated approximately 250 customers who had failed to pay for our services on a timely
basis. We anticipate that termination of non-paying customers will continue for the foreseeable future. In
addition, some customers may voluntarily discontinue use of our services for a variety of reasons including the
failure of the customer’s employees to learn about and use our services, the failure of the services to meet the
customer’s expectations or requirements, financial difficulties experienced by the customer, or the customer’s
decision to use services or products offered by a competitor. We may not obtain a sufficient amount of business
to compensate for any customers that we may lose. The loss of existing customers or our failure to obtain
additional customers would harm our business and operating results.
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