NEWS FROM SAN FRANCISCO: Facebook’s financial performance is stronger than previously believed, as the Internet social network’s explosive growth in users and advertisers boosted 2009 revenue to as much as $800 million, according to two sources familiar with the situation.
The company also earned a solid net profit, in the tens of millions of dollars last year, one of the sources said.
That growth in profit and revenue underscores how Facebook is increasingly making money off its 6-year-old service, which ranks as the world’s largest Web social network with nearly half a billion users.
That sort of performance is likely to whet the appetites of investors keen for a public share float, despite the company’s insistence that an IPO is not a near-term priority.
Palo Alto, California-based Facebook, the booming social networking site dreamed up by Mark Zuckerberg and his buddies in a Harvard dorm room in 2004, is privately held and has released only very limited nuggets of financial information.
The 2009 results are significantly higher than some of the figures that Facebook had suggested earlier in 2009, as well as analysts’ estimates that have appeared in various media reports.
Last July, Facebook board member Marc Andreessen told Reuters the company was on track to surpass $500 million in annual revenue for 2009. And in September, Facebook said that it had become free cash flow positive, meaning that the company was generating enough cash to cover its operating expenses as well as its capital spending needs.
Estimates in various media reports had previously pegged the company’s 2009 revenue at $550 million to $700 million.
The two sources said revenue in 2009 was in fact $700 million to $800 million.
“They are downplaying their performance,” one source said, adding that 2009 revenue was more than double the previous year’s total. “There’s no upside in getting people’s expectations high, it’s always better to go low.”
If Facebook eventually seeks to go public, unveiling financial figures above expectations could help bolster investor interest.
Facebook declined to comment.