Facebook – Hits One Billion Users But Revenue Worries Remain: Cashflow

Facebook hits 1 billion users – but what about revenue?

By Michelle Hammond
Friday, 05 October 2012

More than one billion people now use Facebook each month, it’s been confirmed, but concerns remain around the site’s revenue.


Facebook chief Mark Zuckerberg, who made the announcement on the site, said helping one billion people connect is “amazing, humbling and by far the thing I am most proud of”.


“I am committed to working every day to make Facebook better for you, and hopefully together one day we will be able to connect the rest of the world too,” he said.


Facebook reached one billion monthly active users – including 600 million mobile users – on September 14, Zuckerberg said.


Statistics show Australia was an early adopter of Facebook, listed as the top country for the site in 2006 and again in 2007.


In recent years, Facebook has made a massive push into countries such as Brazil, India, Indonesia and Mexico, while the uptake in Africa has also been noted.


But according to the company, as many as 83 million profiles on the site may not be legitimate. These include duplicate accounts, pages for pets and those designed to send spam.


In its quarterly filing with the US Securities and Exchange Commission, Facebook said around 8.7% of its accounts are questionable.


Meanwhile, concerns remain about whether Facebook can leverage its massive user base for advertising and other revenues. In 2011, revenue for the site was approximately $3.7 billion.


According to industry tracker eMarketer, Facebook will claim a 14.4% share of the $US15 billion online display advertising market, while Google will take a slightly larger share (15.4%).


However, only $US72.7 million of Facebook’s revenue is tipped to come from advertisements on mobile devices, while Google is expected to raise more than $US1 billion in that area.


The news comes after social gaming giant Zynga released its preliminary financial results for the third quarter of 2012, lowering its outlook for the year.


Zynga, which is best known for Facebook games such as FarmVille and Zynga Poker, expects to report revenue in the range of $300 million to $305 million, although full Q3 results won’t be released until later this month.


In contrast, Zynga reported revenue of $306.8 million for Q3 2011, up 80% from Q3 2010.


Zynga is also lowering its outlook for full year 2012 to reflect preliminary third quarter results and revised expectations for the remainder of 2012.


The change in outlook is primarily due to reduced expectations for certain web games, including The Ville, and delays in launching several new games.


“The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction,” chief Mark Pincus said in a statement.


“We’re addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalising our product R&D pipeline to reflect our strategic priorities,”


“At the same time, we are continuing to invest in our mobile business where we have one of the strongest positions in the industry.”


“These actions support our strategy to transition from being a first-party web game developer to a multiplatform game network.”


According to Pincus, the company remains optimistic about the opportunity for social gaming.


“When we offer our players highly engaging content, they respond… We now offer three of the top five most popular mobile games in the US in terms of time spent,” he said.

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