Facebook ends quarter in the negative, but made $6.8 billion in cash from IPO
Popular social network Facebook posted its second quarter financial results on Thursday afternoon, revealing a net loss of income for the site at the end of its first quarter as a publicly traded company, but also revealed the huge amount of cash earned from its initial public offering.
Facebook showed a net loss of $157 million, a significant decline against its total income last year, which was $240 million, but this came after a hugely improved revenue flow.
The company's overall revenue was significantly higher at $1.18 billion against last year's $895 million, representing a 32% gain. Advertising revenue, the critical element in Facebook's profitability, was $992 million, showing an increase of 28% over last year.
Facebook's filing notes that 70% of advertising campaigns resulted in triple returns on ad spend or better, and 49% of campaigns showed a quintuple or better return.
The choice to highlight these ROI figures was certainly made in light of Zynga's recently declining revenue, and the pre-IPO complaints from General Motors that Facebook's ads do not yield strong enough returns to be worthwhile.
Facebook's Chief Operating Officer Sheryl Sandberg said Facebook will keep focusing on its mobile products to convince the buying market that it has a viable advertising model, and that Facebook ads work for both big corporations and small businesses.
The declining income was a result of vastly increased expenses, which totaled $1.93 billion. This was actually an increase of 295% from the same quarter last year, which was driven primarily by share-based compensation expense.
"As previously noted in the company's initial public offering prospectus, share-based compensation expense related to pre-2011 restricted stock units (RSUs) was not recognized in advance of the initial public offering, and as a result of the initial public offering during the second quarter, the company recognized $1.3 billion of share-based compensation and related payroll tax expenses," the company's filing said.
All told, the company ended the quarter with $10.2 billion in cash and securities, of which $6.8 billion came from the IPO.