7 things we learned from Facebook’s Q4 results

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While everyone was dissecting BlackBerry’s rebrand and attempted phoenix-rising-from-the ashes moment, Facebook announced its financial results for the fourth quarter of 2012.

This was a particularly important quarterly report, because it also provides a full picture of how the social network did in 2012, the year it went public. Overall things seem to be fairly solid at the Menlo Park company. It brought in revenues of US$1.59-billion for the quarter, up from US$1.31-billion in the same quarter and higher than the US$1.43-billion analysts were expecting.

Facebook Q4

Outside of revenue figures however, the results also included some facts about Facebook that show where it’s heading as a social network and a business. We’ve outlined a few of the most interesting ones for your edification.

1. Facebook’s mobile strategy is winning

The Q4 announcement contained a couple of clues that Facebook is winning when it comes to mobile. For one, more people now access the social network on a daily basis via mobile than desktop. Mobile monthly active users meanwhile were 680-million as of 31 December 2012, an increase of 57% year-over-year. That’s a fairly significant slice of the 1.06-billion people Facebook claims access it on a monthly basis.

There was also Mark Zuckerberg’s assertion that 2012 was the year Facebook took mobile seriously. “In 2012, we connected over a billion people and became a mobile company,” he said.

2. Mobile is also making it money

All those mobile users mean that it’s becoming a serious revenue stream for the social network. Mobile revenue represented approximately 23% of advertising revenue for the fourth quarter of 2012, up from approximately 14% of advertising revenue in the third quarter.

3. Advertising is important. Very important

Look, advertising always has been and always will be Facebook’s main source of revenue. That’s the nature of a free service. It’s good to get a fresh perspective on just how important it is though. Revenue from advertising was US$1.33-billion, representing 84% of total revenue and a 41% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 43%.

4. It costs billions of dollars to run Facebook

A service that caters to as many users as Facebook does, can’t run on a few PCs, a cheap server and the prayers of its employees. The social networking giant’s operating costs for the fourth quarter of 2012 were US$1.06-billion, an increase of 82% from the fourth quarter of 2011 and nearly 63% of the revenue it generated. Things get slightly better when you exclude share-based compensation (a fair whack was paid out after its IPO) and related payroll tax expenses. Then costs and expenses go down to US$849-million, an increase of 67% year on year. Still, you try an imagine what it’s like dealing with those numbers without feeling a little dizzy.

5. It’s not exactly short of cash

As of 31 December 2012, says Facebook, cash and marketable securities were US$9.63-billion. It’s still nowhere near as big as Apple’s US$137.1-billion horde but it’s also not exactly something to be sneezed at.

6. You wouldn’t want to pay its taxes

Facebook’s income tax provision for the fourth quarter was US$441-million, representing an 87% effective tax rate. Not exactly chump change right?

7. You do want to be its estate agent/ equipment salesperson

Facebook spent US$198-million on property and equipment in the fourth quarter of 2012. Additionally, US$89-million of equipment was procured or financed through capital leases during the fourth quarter of 2012. Look, we know that the commissions from those sales aren’t going to individuals. Still, it’s nice to dream.



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