Report: Facebook numbers exceed expectations ahead of IPO

Demand for advertising on Facebook is soaring, according to digital marketing company

Facebook earnings are growing faster than previously expected, and are on track to exceed US$2 billion this year, according to a Wall Street Journal report.

While Facebook officially says little about its revenue, its most visible revenue-generating sources are advertising and the cut its gets from the sale of virtual goods using its Credits currency. The largest chunk, by far, comes from advertising. In 2009, over 85 percent of Facebook's revenue came from advertising, according to an estimate by Business Insider.

Facebook advertising has seen a tremendous momentum throughout the last several quarters, and demand is soaring, according to a report from Efficient Frontier, a company that helps make digital ad campaigns more efficient. Today, advertisers want "to take advantage of the full capabilities in the Facebook Marketplace to engage with their fans and promote their brands," Efficient Frontier said. That helped increase the cost per click by 40 percent in the first quarter of the year, compared to the last three months of 2010.

Increased demand and higher costs for its advertising is good news for Facebook's bottom line. The company is now on track to exceed $2 billion in earnings before interest, taxes, depreciation and amortization in 2011, according to The Wall Street Journal. That is above the numbers from Facebook that circulated several months ago when Goldman Sachs Group and Russian investment firm Digital Sky Technologies invested in the company, it wrote.

The company is also laying the groundwork to further boost its revenue. Last week, Facebook launched the Deals on Facebook service in Atlanta, Austin, Dallas, San Diego and San Francisco. The service allows users to find discounts on local activities. Also, starting July 1, Facebook will require all social game developers on the Canvas platform to process payments through Credits, from which the company gets a 30 percent cut.

Revenue and sales growth will be key metrics when the company eventually decides to go public, an event that may take place as early as spring of next year, according to The Wall Street Journal. The lack of financial information from Facebook has led to great speculation about the company's value. However, people with insights into the company's recent finances said they thought Facebook was growing at a pace that justifies a valuation of $100 billion or more when it goes public, according to The Wall Street Journal.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesInternet-based applications and servicessocial networkingfinancial resultssocial mediainternetFacebook

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Mikael Ricknäs

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?