Facebook Users Up, Revenue and Profits Down

Michael Convente April 23, 2012 0
Facebook Users Up, Revenue and Profits Down

Facebook, which is preparing for its IPO sometime this spring, released financial data for Q1 2012 today, and the numbers may be a bit concerning for potential investors.  Even though revenue increased to $1.06 billion for the first quarter of 2012 (which would put the company on pace for a record $4.24 billion for all of 2012), net income actually dropped 12% to $205 million, compared to $233 million in Q1 2011.  If these numbers stay flat for the entire year, 2012 profits will total $820 million, $180 million below 2011’s total of exactly $1 billion.  According to the company, advertising revenues are usually lower in the first quarter than in other quarters, so improved revenue growth over the remainder of the year should be in play.

Profits are obviously always welcome in business, but of concern for potential investors is report that Facebook actually increased their user base the past quarter, which now totals over 900 million.  Facebook did add over 1,000 employees to its payroll during the past twelve months, and their total spending has increased 200% during the last year, compared to a 45% increase in revenue.  Still, Facebook is going to have to keep increasing revenue and profits to justify their estimated $100 billion IPO that will be arriving shortly.

Do you think that Facebook is a good investment, either long-term or short-term (or maybe both)?  Let us know in the comments!

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