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Facebook Q1 2012: $1.058 Billion Revenue; 51M Indian Users; Instagram Deal Breakdown

Social networking giant Facebook has filed a fourth amendment to its S-1 filing, including the company’s first quarter results and other related information. Here’s a look at some of the highlights:

Revenues: According to the updated S-1 filing, Facebook recorded $1.058 billion in revenue in Q1 2012, up by 44.7% from $731 million revenue in Q1 2011, but down by 6.5% from $1.131 billion in Q4 2011. The net income stood at $205 million, down 12.01% from $233 million in Q1 2011 and down 32.11% from $302 million in Q4 2011. Facebook also noted that the decline in the rate of growth in its revenues. Revenues grew by 154% during 2009 to 2010, which dipped to 88% during 2010 to 2011, and further dipped to 45% from Q1 2011 to Q1 2012.

User Metrics: Facebook has 901 million monthly active users (MAUs) as of March 31, 2012, an increase of 33% as compared to 680 million monthly active users (MAUs) as of March 31, 2011. It has 526 million daily active users (DAUs) on average in March 2012, an increase of 41% as compared to 372 million daily active users (DAUs) in March 2011. Facebook defines an MAU (monthly active user) as a registered Facebook user who logged in and visited Facebook through its website or a mobile device, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website that is integrated with Facebook, in the last 30 days as of the date of measurement.

More than 125 billion friend connections were present on Facebook as of March 31, 2012, up from 100 billion friend connections as of December 31, 2011. Facebook users had generated an average of 3.2 billion likes and comments per day and had uploaded 300 million photos per day as of March 31, 2012, up from 2.7 billion likes and comments per day and 250 million photos per day as of December 31, 2011.

Mobile Usage: Around 488 million MAUs used Facebook mobile products as of March 2012. Out of this, around 83 million mobile MAUs accessed Facebook solely through mobile apps or their mobile website as of March 31, 2012 and the remaining 405 million mobile MAUs accessed Facebook from both personal computers and mobile devices during this period.

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User base across geographies: Facebook had 51 million MAUs in India as of March 31, 2012, a 10.87% increase from 46 million MAUs in December 31, 2011 and a 107% increase from March 2011. It had 169 million MAUs in the United States as of March 31, 2012, a 15% increase from the same period in 2011, and 45 million MAUs in Brazil as of March 31, 2012, a 180% increase from the same period in 2011. Facebook stated that it had penetration rates of approximately 60% in countries such as India, the United Kingdom and the United States. In Chile, Turkey, and Venezuela it estimates that it has penetration rates of greater than 85% of Internet users; in countries such as Brazil and Germany, it says that penetration rates are approximately 30-40%;  in countries such as Japan, Russia, and South Korea it estimates that it has penetration rates of 20% or lower; and in China, where Facebook access is restricted, it has near 0% penetration. Interestingly, Facebook had earlier claimed that India has a penetration level of 20-30% on par with Brazil and Germany.

Revenue from Zynga: Facebook derived 15% of its revenues from Zynga in Q1 2012, a 4% decrease from 19% in 2011. While Zynga directly accounted for 11% of the total revenues through its sale of virtual goods and direct advertising from Zynga, remaining 4% revenues came from third parties ads shown on pages generated by Zynga apps.

Revenue from Advertising: Facebook generated $872 million through advertising, a 37% increase from $637 million in Q1 2011. In addition, Facebook recorded 35% increase in the number of ads delivered, which was driven primarily by growth in the number of MAUs and DAUs as reported earlier. Average ad price remained the same for Q1 2012 since the increase in the average price per ad in United States and Canada region was offset by a decline in the average price per ad in Europe region and an increased percentage of ads being delivered in the Asia and Rest of World geographies where the average price per ad is relatively lower. However, Facebook noted that the average price per ad in Asia and rest of world is growing on a year-over-year basis.

Advertising accounted for 82% of Facebook’s total revenues in Q1 2012 as compared to 87% in Q1 2011. In 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of Facebook’s revenue.

Payments: In July 2011, Facebook Payments became mandatory for all game developers accepting payments on the Facebook Platform with a few exceptions. Therefore, when users purchase virtual and digital goods from Facebook Platform developers using Facebook’s Payments infrastructure, Facebook receives a portion of the transaction value as its fees. Revenues through these payments and other fees increased to $186 million in Q1 2012, a 98% increase from $94 million in Q1 2011, and accounted for 18% of Facebook’s total revenues in Q1 2012, as compared to 13% in Q1 2011.

Instagram Acquisition: Earlier this month, Facebook had acquired Instagram for $1 billion in a cash and shares deal. Facebook revealed that it has paid Instagram approximately 23 million shares of common stock (priced at $30.89 per share as of Jan 31, 2012) valued at $710 million and $300 million cash, bringing the total amount to $1.010 billion. The deal is expected to close in the second quarter of 2012 and the company reiterated its plans to maintain Instagram’s products as independent mobile apps to enhance their photo related product offerings. Another significant thing worth noting here is that Facebook will have to pay an additional $200 million termination fee to Instagram if the government authorities prevent the completion of this acquisition or if either party terminates the agreement after December 10, 2012.

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Microsoft Patent Agreeement: In order to combat Yahoo’s patent infringement lawsuit, Facebook has entered into a definitive agreement with Microsoft under which Facebook will pay $550 million to acquire 650 social networking related patents from Microsoft which had recently agreed to acquire 925 patents from AOL Inc for $1.056 billion. Facebook will grant Microsoft a license to these 650 AOL patents along with patent applications that Facebook acquires. In addition to 650 patents, Facebook will also get a license to the remaining 275 patents that Microsoft will own. Facebook general counsel Ted Ullyot stated that the company acquired these patents to build an intellectual property portfolio and protect its interests in the long term.


– The Lowdown – The Facebook IPO; 46M Monthly Active Users From India In Dec 2011
The Lowdown: Facebook Buys Instagram For $1 Billion; What Next?

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