Facebook’s S-1  

Facebook has finally released its S-1. Read it here. They made $1bn in net profit on $3.7bn revenue last year. Pretty spectacular. As a whole, the filing paints Facebook as a very healthy, growing company.

Here are some interesting facts I jotted down as I read the document:

On Zynga:

We currently generate significant revenue as a result of our relationship with Zynga, and, if we are unable to successfully maintain this relationship, our financial results could be harmed.

In 2011, Zynga accounted for approximately 12% of our revenue, which amount was comprised of revenue derived from payments processing fees related to Zynga’s sales of virtual goods and from direct advertising purchased by Zynga. Additionally, Zynga’s apps generate a significant number of pages on which we display ads from other advertisers. If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected.

Huge employee growth rate:

At the end of 2011, we had 3,200 full-time employees, an increase of 50% from the year prior.

A ton of users:

As of December 31, 2011, we had 845 million MAUs, an increase of 39% from December 31, 2010.

From Mark Zuckerberg’s letter, an unusual stance on profitability:

We’re going public for our employees and our investors. We made a commitment to them when we gave them equity that we’d work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment. As we become a public company, we’re making a similar commitment to our new investors and we will work just as hard to fulfill it. […]

Simply put: we don’t build services to make money; we make money to build better services. […]

And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.

From the “Our Size and Scale” section, lots and lots and lots of likes and photos:

Our users generated an average of 2.7 billion Likes and Comments per day during the three months ended December 31, 2011. Since users Like and Comment on content they find interesting, we believe that the number of Likes and Comments provides some insight into how engaging users find the content available to them on Facebook and through our Platform developers.

In the “Competition” section, they point out Google+ in addition to all of Google’s other niche social networks:

We face significant competition in almost every aspect of our business, including from companies such as Google, Microsoft, and Twitter, which offer a variety of Internet products, services, content, and online advertising offerings, as well as from mobile companies and smaller Internet companies that offer products and services that may compete with specific Facebook features. We also face competition from traditional and online media businesses for a share of advertisers’ budgets and in the development of the tools and systems for managing and optimizing advertising campaigns. We compete broadly with Google’s social networking offerings, including Google+, which it has integrated with certain of its products, including search and Android. In addition, we compete with other, largely regional, social networks that have strong positions in particular countries, including Cyworld in Korea, Mixi in Japan, Orkut (owned by Google) in Brazil and India, and vKontakte in Russia. As we introduce new products, as our existing products evolve, or as other companies introduce new products and services, we may become subject to additional competition.

Mark Zuckerberg receives a $500,000 salary, and made a $220,500 bonus for the first half of 2011. However, beginning in January 2013, his salary will drop to $1.

He is also authorized to use a private aircraft by the board of directors:

Our compensation committee has also authorized our CEO and COO to use private aircraft for business purposes. This practice maximizes such executives’ productive time and ensures their quick availability. In addition, Mr. Zuckerberg may use private aircraft for personal purposes in connection with his comprehensive security program. On certain occasions, Mr. Zuckerberg may be accompanied by family members or others when using private aircraft.

Mike Schroepfer, Facebook’s VP of Engineering, made $24,727,128 last year.

Mark Zuckerberg has 120,000,000 un-exercised options from 2005. He is apparently going to sell shares in the IPO to satisfy tax obligations related to exercising those options.

Facebook spent $50 million dollars last year purchasing patents.


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