Facebook Bags Greater Revenue, Lower Profit During Q1 2012

It has been revealed through the details divulged to Securities and Exchange Commission by Facebook, that the social network had a very handsome growth of 45 percent in overall revenue during the first quarter. With this growth, the overall revenue of Facebook tipped $1.06 billion. However, it seems that the company’s profits have fell.

Whereas Facebook was able to register a greater revenue during Q1, the profits didn’t rise at the same rate. In fact, the net income of the company has been going lower and lower, falling from $302 million in 2011 to $205 million this quarter.

However, this is understandable in the light of the face that millions more are flocking to Facebook every few days and the social network is experiencing a significant growth. So the more users Facebook has, the less it would be able to earn per user. There are also what Facebook claims ‘seasonal trends.’ The average revenue per user (ARPU) fell below normal in the last quarter of 2010 too, according to Facebook. So the company believes it is just a temporary phase.

However, a decrease in Facebook’s profits can also be accounted for through the fact that the social network has been doling out massive amounts in expanding its infrastructure, adding more employees, buying Instagram and a lot more. However, the mobile platform is what can rejuvenate Facebook and can bring in massive profits, given the pace at which it is growing. But Facebook still seems unable to decipher a way of making money out of this massive traffic.


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