NEW YORK (AP) — Facebook is reporting stronger-than-expected revenue in the social media company's first earnings report since its rocky initial public offering two months ago.
But investors weren't impressed and after a brief spike, its stock tumbled nearly 9 percent in after-hours trading.
Facebook Inc. said Thursday that it booked a net loss of $157 million, or 8 cents per share in the April-June period, mainly due to stock compensation expenses following its IPO. That compares with earnings of $240 million, or 11 cents per share, in the second quarter a year ago.
Revenue grew 32 percent to $1.18 billion from $895 million a year ago.
Adjusted earnings of $295 million, or 12 cents per share, matched Wall Street's expectations.
Analysts, on average had expected slightly lower revenue of $1.16 billion, according to FactSet.
The results come two months after Facebook's stock landed with a thud on its first trading day, on May 18. The day began with glitches with the Nasdaq stock market that delayed trading by half an hour. It didn't get much better from there. Despite months of hoopla that had investors thinking it would soar, the stock closed just 23 cents above its $38 IPO price. It has not reached that level since then.
Though as its first public report, Facebook had a lot riding on this quarter, Wall Street's expectations were muted, which could be a reason for the stock price decline.
Facebook had effectively warned investors before its IPO that Wall Street's expectations were too high. In a filing issued a week before its IPO, Facebook said its mobile users are growing at a faster pace than the number of ads on its mobile platform.
Analysts took that as a sign that their estimates were out of whack and many of them reduced their estimates for Facebook's projected revenue and earnings.
That said, Facebook didn't start showing ads on its mobile app until this spring. While it's true that it was late to the game — after all, its mobile user base is growing fast — it doesn't mean it won't be able to in the future.
Overall, Facebook said its revenue from advertising totaled $992 million, representing 84 percent of total revenue and a 28 percent increase from the same quarter last year. It did not say what percentage was from mobile.
Facebook said it had 955 million active monthly users as of June 30, up 29 percent from a year earlier.
Facebook's stock fell $2.38, or 8.9 percent to $24.47 in after-hours trading.
Thanks for the shout out, @sherylsandberg - very excited to be here at @Yahoo!
— marissamayer (@marissamayer) July 26, 2012
| @ shibanijoshi : Even Facebook can't make an earnings call fun, unfortunately for us... |
Sheryl Sandberg of Facebook, from conference call: "Local businesses are not very tech savvy."
— Matthew Keys (@ProducerMatthew) July 26, 2012
Oh God, is Zuck wearing a hoodie?? Twitter is inconclusive... [sigh]
-- Dino Grandoni
Instagram deal still hasn't closed yet. Zuck says no integration until that happens.
This phone-or-no-phone question is interesting and all, but what I find interesting is that Zuckerberg actually answered a question on the call.
-- Mark Gongloff
Zuck's denial of a Facebook Phone contradicts a rumor peddled by Bloomberg News JUST TODAY.
Guy on the Facebook call just pronounced scenario "scen-AHHR-io." He was not British.
— Kevin Roose (@kevinroose) July 26, 2012
Zuck says it wouldn't make sense to develop a Facebook phone. Take THAT, rumor mill.
-- Catharine Smith
Facebook executives don't give forecast in prepared remarks
— Emily Chang (@emilychangtv) July 26, 2012
Forecasts are something Apple does but Google's doesn't do. So, at least there's precedent in tech for withholding predictions.
Zuck says Facebook is the most-used app on any mobile platform. Too bad it is also one of the most unpleasant apps to use.
-- Catharine Smith
According to Forbes, Zuck's net worth just dropped about $2 billion.
Despite meeting analysts’ expectations and posting profits of $0.12 a share on $1.18 per share in revenue, Facebook was unable to appease the markets, which have been relatively bearish on social media companies this week. On Wednesday, social gaming company Zynga, which missed analysts’ estimates in its second quarter earnings call, watched as its stock fell more than 35% in after hours trading.
Sheryl Sandberg congratulates Marissa Mayer for her new job at Yahoo.
From conference call: Facebook now has just under 4,000 employees, an increase of 50% from last year.
— Matthew Keys (@ProducerMatthew) July 26, 2012
This partially explains the spike in "General & Administrative" spending during this past quarter.
First analyst to say "Great quarter, guys" enters the Analyst Hall of Shame.
Nope, the first question is about monetization and expanded distribution agreements.
So, awesome, then.
Sheryl's ad return detail is good stuff. Don't get that sort of detail from others. $FB
— Peter Eavis (@petereavis) July 26, 2012
Facebook's stock fell 8.5 percent during the regular session Thursday, then dropped further in extended trading after the company reported quarterly earnings for the first time as a public company.
Sandberg says Sponsored Stories and News Feed are going to save Facebook, gives some details on return on ads.
Wahh, replies the stock price, now 11 percent down.
After 10 minutes, she hands the call off to the CFO David Ebersman.
-- Mark Gongloff
Sandberg says Sponsored Stories (i.e. ads) rake in more than $1 million a day, about half of that is from mobile users.
Mark Zuckerberg: People sharing 1 billion piece of content each day using Open Graph
— Matthew Keys (@ProducerMatthew) July 26, 2012
Zuckerberg wraps up by talking about how Facebook just loves itself a good challenge, and it's going to spend lots of money to wrestle that challenge to the ground!
"We're working hard to staff up ... to make progress against these goals."
And with that, the stock, which had rallied a tiny bit on the sweet sound of Zuck's voice, is back down 10 percent.
Sheryl Sandberg has taken over the call now.
-- Mark Gongloff
WSJ is reporting that Facebook had 955 million users in the second quarter. That's up from 739 million in the same time period last year.
Zuck is talking about what a big opportunity mobile is for Facebook. He says mobile users are 20 percent more active than other users.
Now if they can just figure out how to make money on all that activity, they'll be all set.
-- Mark Gongloff
That this is BREAKING NEWS says something about Facebook.
-- Mark Gongloff
Facebook's first public quarter results show signs that it's chasing growth through higher spending: wapo.st/MMgHYr
— The Washington Post (@washingtonpost) July 26, 2012
Look at the chart and spike in R&D spending (Facebook Phone?!), from AllThingsD.
Facebook had 3,976 employees at the end of the first half, up 49 percent from a year ago.
Via AllThingsD, here's the slide pack for Facebook's earnings. Enjoy its PowerPointy goodness if you wish, but it does not answer the burning question: Will Zuckerberg be on the call (T-10 minutes)?
External Facebook PR flack from Brunswick just called to make sure I have "everything I need." She also called me "dude." #thanks #dude
— Sam Gustin (@samgustin) July 26, 2012
Facebook now sinking more than 10%, abt to pierce $24. As release hit, up 6%. Classic case of... getting to the end of a press release. $FB
— Kayla Tausche (@kaylatausche) July 26, 2012
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AP | By BARBARA ORTUTAY Posted: 07/26/2012 4:20 pm Updated: 07/26/2012 4:49 pm