Shortly after the close of trading, Facebook released its second quarter earnings results, reporting revenues of $1.184 billion, up 32 percent from $895 million during the same period last year. The company’s non-GAAP (generally accepted accounting principles) income was $515 million, good enough for a net income of $295 million, and earnings per share (EPS) of $0.12.
However, the company’s GAAP numbers were significantly worse, owing to the massive $1.3 billion stock-based compensation charge related to its IPO. Taking that into account, Facebook reported a loss of $743 million for the quarter, and a $157 million hit to net income. Using GAAP accounting measures, EPS was a loss of $0.08.
It is also interesting to note Facebook’s Non-GAPP operating margin was 43 percent — down 10 percent year-over-year — something Facebook alluded to in the press release that accompanied today’s numbers, quoting founder and CEO Mark Zuckerberg as saying the company was very ”focused on investing in our priorities of mobile, platform and social ads.” The company has significantly expanded its team around the world and put new efforts into marketing and sales. Below is a look at Facebook’s expenses as a percentage of revenue, which shows where Facebook has begun investing.
As for revenue, Facebook took in $992 million from advertising and $192 million from payments and other fees. Advertising was 84 percent of total revenue and a 28 percent increase from the same quarter last year.
The company also announced it had 955 million monthly active users as of June 30, and an average of 552 million daily active users in June. Mobile MAUs were 543 million as of June 30, an increase of 67 percent year-over-year.
Facebook announced its first earnings results as a publicly traded company today, but despite reporting numbers right in line with analysts’ predictions, shares have fallen by more than 11 percent in after-hours trading to $23.84. Facebook’s shares also took a hit before today’s announcement, dropping 8.5 percent to $26.84 before the markets closed.
COMMENTARY: It does not surprise me that Facebook's share price has declined by 11% even though the social giant met analyst forecasts. I think main street investors expected even higher revenues, not just matching analyst expectations. Facebook is facing numerous challenges:
- Monetizing its growing mobile users.
- Adding more big brand advertisers.
- Worldwide user growth has peaked in the U.S. and showing signs of slowing down internationally.
- Facing a growing decline in Zynga gamers and share of game revenues.
- Madison Avenue advertisers are questioning Facebooks revenue model and effectiveness in generating a measurable ROI.
- Softening in advertising revenues due to the debt crisis and prolonged recession in the Eurozone.
- The perception by many investors that Facebook maybe over-valued due to its high price-earnings ratio of 85.92.
- The excitement over Facebook has run its course.
- The perception that Facebook's boyish CEO Mark Zuckerberg may not be up to the challenge of leading the company through troubled waters.
Its not one single thing that caused today's sharp drop in Facebook's stock price. It's the combination of all of the above factors.
Courtesy of an article dated July 26, 2012 appearing in Inside Facebook and an article dated July 26, 2012 appearing in Inside Facebook and an article dated July 26, 2012 appearing in Inside Facebook
Comments