Facebook IPO shines light on revenue, user growth

SEC filing shows 88% revenue growth from 2010 to 2011 and importance of Zynga

Now that Facebook has filed papers for its initial public offering (IPO) with the Securities and Exchange Commission (SEC), the public is getting its first glimpse at the social network's dramatic user and revenue growth.

Facebook financials

(dollar figures in millions)

  2009 2010 2011
Revenue $777 $1,974 $3,711
R&D $ 87 $  144 $  388
R&D pct of rev 11.2% 7.3% 10.5%
Net income $229 $606 $1,000
Profit margin 29.5% 30.7% 26.9%
Source: Facebook IPO initial filing. (Infographic: Sharon Machlis)

In documents filed Wednesday afternoon, the company, which is expected to be valued at upwards of $100 billion, noted that it has a preliminary goal of raising $5 billion in its IPO. With the IPO set for May, the company has not yet announced its stock pricing.

The filing, however, offers details on the company's revenue, its user base and exactly how much one gaming company contributes to the social network's bottom line.

Facebook reported annual revenue of $3.7 billion in 2011. That's up 88% from $1.9 billion in revenue in 2010.

And that wasn't the company's only growth period. Facebook went from $153 million in revenue in 2007 to $272 million in 2008, according to the filing. It took a big leap in 2009, when it had $777 million in revenue. And that led to the $1.9 billion figure for 2010, a 154% growth rate compare to the previous year.

So where did some of that revenue come from?

Well, Facebook can thank all of those users who play Farmville.

The company noted that Zynga, the social gaming developer behind popular games like FarmVille, CityVille and Texas HoldEm Poker, accounted for 12% of Facebook's total revenue last year.

However, Facebook cautioned that this kind of dramatic growth can't be maintained long term.

"We believe that our rates of user and revenue growth will decline over time," the company said. "Historically, our user growth has been a primary driver of growth in our revenue. Our user growth and revenue growth rates will inevitably slow as we achieve higher market penetration rates, as our revenue increases to higher levels, and as we experience increased competition."

Facebook worldwide users
Source: Facebook IPO filing. (Infographic: Sharon Machlis)

Dan Olds, an analyst with The Gabriel Consulting Group, said that while Facebook's revenue growth is bound to slow, what it's done so far is pretty impressive.

"Facebook has a massive revenue growth rate at more than 120% compound annual growth rate, which is amazing," he said. "This is a major reason why they've been successful at attracting large investors when they were still a private company."

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