updated 05:10 pm EDT, Mon April 23, 2012
Social giant closing in on a billion users
Facebook just released a new S1 for the first quarter of 2012, showing a drop in profits and operating income. The filing also revealed the total number of active monthly users, as well as the full costs of the social giant's acquisition of image sharing service Instagram.
Facebook saw $1.06 billion in revenues, up 45 percent from the first quarter of 2011, but own from $1.131 billion during Q4 2011. Net income totaled $205 million, down from $233 million for the same quarter in 2011, and down from $302 million in the last quarter of 2011.
The declines in profit and revenue can, to some extent, be attributed to sizable increases in marketing and sale and R&D, which saw $91 million and $96 million increases in spending over a year ago, respectively. Facebook also purchased popular image sharing service Instagram for $1 billion. This deal was comprised of $300 million in cash and 23 million shares. Facebook representatives stated the company's plan of maintaining Instagram as a separate suite of mobile apps.
The disclosure also revealed that the social network is up to 900 million monthly active users, noting that the total, while impressive, signals that the network is approaching market saturation. Facebook representatives expect growth rates for both revenues and user base to decline steadily in the coming years, and they noted that such declines may have a negative impact on both investor perceptions of Facebook's health and the market price of the company's Class A common stock.
The filing comes as Facebook is approaching its much-anticipated initial public offering. The company filed for an IPO with the goal of raising $5 billion in funding, and some estimate the company's worth at $100 billion. [via Business Insider]