By Brian Womack - Apr 24, 2012 4:22 AM GMT+0700
Facebook Inc. (FB), the social network planning an initial public offering, said first-quarter profit fell 12 percent as operating costs almost doubled.
Net income fell to $205 million in the three months through March, Menlo Park, California-based Facebook said in a regulatory filing. Sales climbed 45 percent to $1.06 billion, a slowdown from 55 percent in the December period.
Facebook in Hong Kong on February 2, 2012. Photographer: Aaron Tam/AFP/Getty Images
April 23 (Bloomberg) -- Facebook Inc. said it will list its shares on Nasdaq OMX Group Inc.’s U.S. exchange, according to a regulatory filing. (Source: Bloomberg)
Expenses surged to $677 million, reflecting higher costs of helping marketers reach Facebook’s growing user base, which swelled by one-third to 901 million last quarter. New tools aimed at wringing more money from advertisers will probably have greater impact later this year, EMarketer Inc. said.
“This was a transition quarter for Facebook,” Debra Aho Williamson, an analyst at EMarketer, said in an e-mailed statement. New ad services and increased emphasis on mobile users “will likely have a more significant impact on the company’s revenues later in the year,” she wrote.
Facebook unveiled a new metric that showed monthly revenue per user climbed 6 percent to $1.21. The company valued its shares at $30.89 apiece at the end of January, up from $29.73 at the end of last year.
Facebook, which plans to raise $5 billion in the largest- ever Internet initial public offering, also disclosed new information about recent acquisitions. To finance the $1 billion purchase of Instagram, announced April 9, Facebook used 23 million shares and $300 million in cash.
Revenue from Advertisers
Chief Executive Officer Mark Zuckerberg is rolling out new advertising services to step up competition with Google Inc. (GOOG) and Yahoo! Inc. (YHOO) and generate higher sales from the advertisers eager to reach Facebook’s user base. During the first quarter, Facebook said it would add mobile advertising along with new ads to reach users when they log off the company’s website.
Facebook may seek an IPO valuation of $75 billion to $100 billion, people with knowledge of the matter have said.
Facebook said 82 percent of its revenue came from advertising last quarter, down from 83 percent in the preceding period. The company also derived less revenue from gaming company Zynga Inc. (ZNGA), which contributed 11 percent of the total in the quarter, down from 13 percent a year earlier.
The number of daily active users rose to 526 million, an increase of 41 percent from a year earlier. Facebook’s employee base rose 46 percent to 3,539 from a year earlier.
“Our costs are growing quickly, which could harm our business and profitability,” the company said in the filing. “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, and as we hire additional employees.”
The company said it plans to list on the Nasdaq Global Select Market under the symbol “FB,” according to the regulatory filing.
Sales had risen 55 percent to $1.13 billion in the fourth quarter, and net income had climbed 20 percent.
To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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