Facebook’s IPO filing 2/1 aims to raise $5 billion in what could be the largest-ever Internet IPO. The initial public stock offering values the social-networking giant at $75 billion to $100 billion and may make 1,000 millionaires out of its 3,250 employees.
In the IPO, which details the 8-year-old company’s financials for the first time ever, Facebook said it rang up $3.7 billion in revenue and a $1 billion profit last year. That’s nearly double the $1.97 billion in revenue it registered in 2010. The company boasts 845 million members, nearly half of them mobile users.
The stock offering, ticketed for May, will make CEO and founder Mark Zuckerberg a very rich man. With 28.4% of Facebook shares, his personal worth would be a staggering $24 billion. Zuckerberg, who had total 2011 compensation of $1.49 million, will opt for a $1 salary in 2013.
Sheryl Sandberg, Facebook COO, got paid $30.87 million last year, making her the most highly compensated employee at the company in 2011. That disclosure, including in Facebook’s S-1 filing with the SEC on Wednesday, further outlines that Sandberg got $295,833 in salary plus a bonus of $85,133 and stock awards worth $30,491,613. That trumps the $1.49 million that CEO Mark Zuckerberg received. His compensation included a salary of $483,333 plus a $220,500 bonus and “other compensation” worth $783,529. The bulk of that figure was related to “personal use of aircraft chartered in connection with his comprehensive security program for his family and friends. Another $90,850 of that amount was for “costs related to estate and financial planning.”
Facebook’s offering also laid out some of the risks to its business: It views Google, Twitter and Microsoft, which has a financial stake in Facebook, as its chief rivals. It warns potential investors that Google, for example, could integrate its Chrome Internet browser, its Android operating system or its search engine into its Google+ social site — a move that could put Facebook at a disadvantage.
It also noted that it has been harder to monetize mobile ads than with the regular PC/laptop version, saying increases in mobile viewership could adversely affect ad revenue because it doesn’t currently generate “meaningful revenue” there.
Once Facebook stock starts trading under the symbol FB, which could happen as soon as May, the onus is on the company to ramp up revenue to maintain its lofty valuation. Facebook’s fortunes hinge on advertising, which accounted for 85% of its revenue last year, or about $3.15 billion. Social-games company Zynga accounted for 12% of revenue. Google raked in $37.9 billion last year, 96% from ads.
The good news is Facebook commands a 28% chunk of the U.S. online-display ad market, up from 21% a year ago, says market researcher ComScore. Its closest competitor, Yahoo, had 11% of the display-ad market, up slightly from 10.9% in 2010.
The bad news is that Facebook ad sales worldwide are slackening. They grew 104% in 2011 but are expected to climb just 52% to $5.8 billion this year and only 21% to $7 billion next year, according to eMarketer.
RBR-TVBR observation: Facebook is not as effective for advertisers as paid search on Google, Yahoo, as consumers on Google are more intent on shopping. On Facebook, people are more social, looking at photos of friends, etc. Facebook is, however, a part of just about every corporate website and advertisement out there. The sell is a bit different for FB—it’s more about increasing awareness and excitement about a product or service. But with this deep integration, FB should be able to fine-tune how it places ads for clients to generate more call to action.