Key information on revenue is on page 50. 85% of revenue comes from ads, which grew 69% Y/Y mostly driven by user growth (39% Y/Y) and showing a bunch more ads starting Q4 2010:
2011 Compared to 2010.
Revenue in 2011 increased $1,737 million, or 88% compared to 2010. The increase was due primarily to a 69% increase in advertising revenue to $3,154 million. Advertising revenue grew due to a 42% increase in thenumber of ads delivered and an 18% increase in the average price per ad delivered. The increase in ads delivered was driven primarily by user growth. The number of ads delivered was also affected by many other factors including product changes that significantly increased the number of ads on many Facebook pages beginning in the fourth quarter of 2010, partially offset byan increase in usage of our mobile products, where we do not show ads, and by various product changes implemented in 2011that in aggregate modestly reduced the number of ads on certain pages. The increase in average price per ad delivered was affected by factors including improvements in our ability to deliver more relevant ads to users and product changes that contributed to higher user interaction with the ads by increasing their relative prominence.
The key information is on page 54-55: Why the massive jump in Q4 2011 revenue over Q3? It looks like there is a seasonality factor, but their explanation only covers Q4 2010, to Q4 2011.
This is going to be a super volatile stock. If there Q1 2012 revenue is flat QoQ, this is probably a $50B company, if it is up 15%, then this is probably a $100B company.
The key information is on page 54-55: Why the massive jump in Q4 2011 revenue over Q3? It looks like there is a seasonality factor, but their explanation only covers Q4 2010, to Q4 2011.
This is going to be a super volatile stock. If the Q1 2012 revenue is flat QoQ, this is probably a $50B company, if it is up 15%, then this is probably a $100B company.
I was actually most curious to see if they had developed a source of revenue other than ads. It seems like the answer to that is mostly no, although they are working on payments.
I agree that ads revenue growth will be key for them in the short term. The Q4 2011 vs 2010 growth was 44% and it seems like perhaps the growth rate is slowing down.
Given that Google has made a ton of huge bets but doesn't make a dime outside of advertising, it is hard to think Facebook will move the needle with an alternative revenue stream. Even if they hit a Groupon sized home run with an alternative revenue stream, it only moves the valuation by 10-20%.
I think on balance mobile is not really an opportunity. They are losing the game revenue to the mobile/tablet platforms and in-app mobile monetization is a minimal opportunity for a task based application.
I don't use facebook, but can you explain what it means to be working on payments? I thought that was just their taking a 30% cut on game payments on their platform. That kind of margin doesn't exist for more general "payments".
Even with all my negativity, I am still cautiously bullish on Facebook. They are only making 50 cents/month per active user. I see no reason they can't double that.
2011 Compared to 2010. Revenue in 2011 increased $1,737 million, or 88% compared to 2010. The increase was due primarily to a 69% increase in advertising revenue to $3,154 million. Advertising revenue grew due to a 42% increase in thenumber of ads delivered and an 18% increase in the average price per ad delivered. The increase in ads delivered was driven primarily by user growth. The number of ads delivered was also affected by many other factors including product changes that significantly increased the number of ads on many Facebook pages beginning in the fourth quarter of 2010, partially offset byan increase in usage of our mobile products, where we do not show ads, and by various product changes implemented in 2011that in aggregate modestly reduced the number of ads on certain pages. The increase in average price per ad delivered was affected by factors including improvements in our ability to deliver more relevant ads to users and product changes that contributed to higher user interaction with the ads by increasing their relative prominence.