The social networking firm Facebook yesterday released its first financial results after its much-publicized IPO. It reported a US$157 million in the quarter, a significant loss compared to the same period of reporting last year.
On the announcement of the financial results, the company’s shares dropped below US$24.
Commenting on the results, Facebook’s chief executive Mark Zuckerberg said the company’s goal is to enable every person to stay connected and every product they use to get a great social experience.
“That’s why we’re so focused on investing in our priorities of mobile, platform and social ads to help people have these experiences with their friends,” he said.
In the first quarter of operating since its IPO, it also reported an alarming decrease in revenue growth and a huge increase in costs.
Here are some of the highlights from the company’s financial results:
Second Quarter 2012 Operational Highlights
*Monthly active users (MAUs) were 955 million as of June 30, 2012, an increase of 29 percent year-over-year;
*Daily active users (DAUs) were 552 million on average for June 2012, an increase of 32 percent year-over-year;
*Mobile MAUs were 543 million as of June 30, 2012, an increase of 67 percent year-over-year.
Recent Business Highlights:
Product
*Facebook launched several new mobile products, including: a new Facebook Camera app for iPhone, an improved version of the mobile messenger app for both iOS and Android, and several updates to the Facebook Android app.
*Launched global App Center where users can discover relevant apps for mobile and Web.
*Apple announced plans for a deep Facebook integration throughout the next version of Apple’s iOS and OSX.
Advertising
*Expanded the rollout of Sponsored Stories in News Feed and enabled advertisers to buy Sponsored Stories in mobile News Feed.
*Facebook now has independent ROI data from more than 60 advertising campaigns using a variety of third-party methodologies like panels and marketing mix models. The results show that 70 percent of campaigns resulted in a return on ad spend of 3x or better, and 49 percent of campaigns showed a return on ad spend of 5x or better.
Corporate
*Announced proposed acquisition of Instagram, a popular photo-sharing app.
*Entered into a definitive agreement with Yahoo! to settle all pending patent claims between the companies and deepen the companies’ current business partnership.
*Began serving users from our new data center in Forest City, N.C.
*Announced that Sheryl Sandberg, chief operating officer at Facebook, joined the company’s board of directors.
Second Quarter 2012 Financial Highlights:
Revenue — Revenue for the second quarter totaled $1.18 billion, an increase of 32 percent, compared with US$895 million in the second quarter of 2011.
*Revenue from advertising was US$992 million, representing 84 percent of total revenue and a 28 percent increase from the same quarter last year.
*Payments and other fees revenue for the second quarter was US$192 million.
Costs and expenses — Second quarter costs and expenses were US$1.93 billion, an increase of 295 percent from the second quarter of 2011, driven primarily by share-based compensation expense.
As previously noted in the company’s initial public offering prospectus, share-based compensation expense related to pre-2011 restricted stock units (RSUs) was not recognized in advance of the initial public offering, and as a result of the initial public offering during the second quarter, the company recognized US$1.3 billion of share-based compensation and related payroll tax expenses.
Income (loss) from operations — For the second quarter, GAAP loss from operations was US$743 million, compared to income from operations of US$407 million for the second quarter of 2011.
Excluding share-based compensation and related payroll tax expenses, non-GAAP income from operations for the second quarter was US$515 million, compared to US$477 million for the second quarter of 2011.
Operating margin — GAAP operating margin was negative 63 percent for the second quarter of 2012, compared to 45 percent for the second quarter of 2011.
Excluding share-based compensation and related payroll tax expenses, non-GAAP operating margin was 43 percent for the second quarter of 2012, compared to 53 percent for the second quarter of 2011.
Income tax provision — The GAAP income tax benefit for the second quarter was US$608 million, representing a 79 percent effective tax rate. The company reported an income tax benefit as a result of the pre-tax loss in the second quarter.
Excluding share-based compensation expense and related payroll tax expenses, the non-GAAP effective tax rate would have been approximately 40 percent.
Net income (loss) — GAAP net loss for the second quarter was US$157 million, compared to net income of US$240 million for the second quarter of 2011. GAAP EPS for second quarter of 2012 was US$0.08, largely reflecting the effect of the accounting treatment of pre-2011 RSUs, as previously noted in the company’s initial public offering prospectus.
Excluding share-based compensation and related payroll tax expenses, non-GAAP net income was $295 million or US$0.12 per share, compared to US$285 million and US$0.12 per share for the same quarter in the prior year.
Capital expenditures — Capital expenditures for the quarter were US$413 million, a 213 percent year-over-year increase. Additionally, US$52 million of equipment was procured or financed through capital leases during the second quarter of 2012.
Cash and marketable securities — Cash and marketable securities grew to $10.2 billion, which includes $6.8 billion in net proceeds from our initial public offering.
