www.techcrunch.com/2008/01/31/facebook-finances-leaked -> www.techcrunch.com/2008/01/31/facebook-finances-leaked/
reporting details from an all-hands meeting the Facebook founder held on Thursday for employees that had an open dial-in number, in which he revealed the following financial metrics for the still-private company: 2007 Revenues: $150 million 2008 Revenues: $300 to $350 million (projected) 2007 Headcount: 450 2008 Headcount: 1,000 (projected) 2008 Capital Expenditures: $200 million (ie, servers) 2008 EBITDA: $50 million 2008 Cash Flow (EBITDA - CapEx): negative 150 million.
What jumps out of their finances is that they have expanded their headcount so fast and continue to do so without yet having the business to back it up. They obviously need to squeeze every penny out of their visitors to justify 15 billion level+ valuations come 2009.
January 31st, 2008 at 9:48 pm Countdown to reading the reasons why Facebook is the exception this time, why they don't need to make money to be worth $15bln, etc... Also just as a rule of thumb, Facebook is not worth $15bln until the company is sold for that or a serious amount of stock is sold at that valuation. Until then, it was valued at $15bln for a few specific transactions, like MS getting the ad gig.
January 31st, 2008 at 10:00 pm today while checking facebook on my iphone (iphone app doesn't display any ads) i was thinking to myself, "how the hell does facebook make any money?"
January 31st, 2008 at 10:25 pm Talk about having the rug pulled under their feet, it looks like a bubble is growing and Facebook has to be careful not to burst it. This news will be syndicated by more blogs later and the buzz will ever increase. However, I feel it'll get people to think about how they valuate Facebook. It hurts, not helps Facebook's cause to go public in 2009.
January 31st, 2008 at 10:34 pm plenty of companies have gone public before turning a profit. amazon comes to mind, and netsuite just went public despite having never turned a profit.
January 31st, 2008 at 10:56 pm The numbers reflect a more-realistic (versus-dreamy) financial outlook by Mark and rest of the management. Projected revenue growth is a result of the natural growth and optimization without taking into account any foreseen breakthrough in social networks monetization, which is the current case. If Facebook wants to do a successful IPO sometime in 2009, they have to put more money and work into monetization research, trying their best to come up with their own version of the Google-Ads business model.
January 31st, 2008 at 11:01 pm @jimbo - heh i'm not saying they'll be able to pull it off, just saying that making a profit is not a prerequisite of going public. and to answer your other question, facebook sells awkward animatronics. but as soon as they find a problem for their solution, they'll be rolling in cash.
January 31st, 2008 at 11:18 pm Facebook got its lofty valuation based on the promise of Beacon which has to date been a flop. Slowing overall advertising growth in 08, increasing headcount & expenditures, and a fatigued audience is going to make 08 the year that FB begins to wither.
January 31st, 2008 at 11:24 pm I thought there was a company named Leaked' (Facebook Finances Leaked) that they were investinging in, until I reread it as the page loaded.
January 31st, 2008 at 11:48 pm Propably they leaked this info, as of the reason I cannot say. Maybe the idea was to give the market public something to chew on, besides air & expectations.
January 31st, 2008 at 11:54 pm I have a facebook account and I just don't see what all the rage is about it. I think linkedin has a much better service and generates less spam type invites. I agree with everyone else on this board about "the leak."
January 31st, 2008 at 11:55 pm @27, not just servers, it's capital expenditure, including productivity tools for the projected 1000 employees, and intellectual capital manufacturing plants (office buildings), and so on.
February 1st, 2008 at 12:08 am I truly believe the revenues are overestimated. After the rise in 2007, the fall of Facebook in 2008, accelerated by the coming crisis of the advertising market in the US?
February 1st, 2008 at 12:31 am If I remember the last NWS earnings call correctly, I think Murdoch/Chernin projected more gross profit from MySpace in 2007 than Facebook's top line.
February 1st, 2008 at 12:31 am FB is like one property of Google/Yahoo, why do they need 1000+ people to do one site which basically generate all contents by its users? This looks like they want to pump up the fat before get acquired, quite a common strategy for startups.
February 1st, 2008 at 12:41 am How about adding some value for us and slicing and dicing, dividing financial metrics by operational ones, member/traffic/growth ones, etc.
February 1st, 2008 at 12:58 am The figures sound deliberately leaked'. The revenue sounds like it includes some of the investment money given by MS, which it shouldn't have. The start ups that I know of are very, very tight lipped about their actual revenues & profits and especially burn rate, and like to discuss about projections instead of actual numbers. When a start up does something fishy like this, it is a red flag, and a big one given the money invested in the company already.
February 1st, 2008 at 12:59 am I don't think facebook will die, but it may go stale like myspace. And I'm skeptical that they'll be able to maintain their headcount. Also, they better figure out how to monetize fast or function with a reduced headcount.
February 1st, 2008 at 1:49 am Is nothing confidential anymore. Employees who leak documents should be fired and made to pay for the potential losses. I am sick of leaks appearing on sites like Techcrunch and no one calling it out. What would Arrington do if his company confidential plans appeared on the web. Swisher should be made to reveal her sources and that person sacked from FB.
February 1st, 2008 at 1:53 am can't think of any legitimate reason why a company like facebook should host a call in with its employees and discuss figures like this.
February 1st, 2008 at 5:16 am When Microsoft acquired Hotmail, they paid $400M - approximately $40 per user - and Hotmail was not profitable. Companies looking to invest in / acquire a company like Facebook are not necessarily concerned with current revenues, rather future potential exploitable value of their user base. Public valuations can be based on 2 elements: a factor on earnings; Facebook could benefit from perceived value when they go to IPO, and that's what many of these public co's live by. even Google has an outrageous price/earnings ratio of 45-50.
every software/web based company has some ridiculous p/e ratio. even apple is only at 30 now and I believe and was around 60 or something only a couple years ago before iPod/macbook popularity.
February 1st, 2008 at 7:44 am STEVE: That is why OpenID and DataPortablity is a bad idea.. "rather future potential exploitable value of their user base. " WHERES THE VALUE OF ANY COMPANY IF ALL THE DATA IS ACCESSIBLE FREE OF CHARGE?
February 1st, 2008 at 8:13 am They are hiring an executive chef, they have puzzles you have to email to some mysterious email you have to figure out using a calculator.
February 1st, 2008 at 8:38 am facebook has developed many and good applications, that they have taken it to be a complete SB. I imagine that to develop it needs them many programmers and Web masters.
February 1st, 2008 at 8:53 am The MSFT bid for Yahoo today was 637x revenue. FB's higher growth would likely fetch them more, just giving some baseline perspective.
February 1st, 2008 at 9:02 am what would be interesting to know is Microsofts loss for the guarantee revenue to FB. For example- they are guaranteeing roughly $100m per year to FB but what is the true value of the FB traffic. I have the feeling it's far far less- close to 1/4th that. It's tough to validate a buisiness that is building revenue off of non-substantial cash flow.
February 1st, 2008 at 9:38 am This info along with the confession by Google yesterday on lower than expected revenue from social networking advertising does not bode well for Facebook (or any other social networking sites) current valuation of $15B. I predict a rapid descent to val...
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