First Ever Facebook Earnings Statement Falls Short
The days of buzz and excitement over the flotation of Facebook seem a long time ago. Since floating on Nasdaq, shares have slumped over concerns about how the company will make money, particularly from its mobile users.
So the first ever earnings report issued by Facebook was both eagerly anticipated and crucially important in setting the tone for what was to come. Unfortunately for Facebook, the event came and went with something of a whimper.
Lets get the good news out of the way first though. When they floated they revealed that they had a touch over 900 million active users. The Q2 report revealed that this has now grown to 955 million users, with 543 million of those being active mobile users. That's a 29% growth over last year, with mobile growth coming in at 67%.
Of course, having so many users accessing the site via their mobiles provides its own problems, as Facebook themselves revealed recently when they said how hard they were finding it to monetize this traffic. The company announced this week that they will open an engineering facility in London to focus purely on mobile. The market, however, is still to be convinced by their progress.
In the three months to June revenues were 32% higher than a year earlier, at $1.18 billion, much as expected. Against that, the company made a loss of $157m, largely because of a huge rise in share-based compensation costs. And Facebook gave no guidance to its future prospects.
Social gaming is the 2nd largest source of revenue after advertising, and that offered no respite with news yesterday that earnings at Zynga had slumped dramatically in their latest earnings statement. Facebook stock slumped 8% on that news, and unfortunately the earnings statement has done little to give the stock a shot in the arm.