Facebook is still growing. They’re now at 300 million members—you know, roughly the population of the US. But unlike the US, Facebook has also entered the world of “free cash flow positive.”
In his post announcing the milestones, CEO Mark Zuckerberg says that they’d hoped to reach cash positive sometime next year—but, happily, they made enough to cover their operating expenses starting last quarter.
It’s been a while since we’ve heard financial news from Facebook—and the last reports weren’t so good. Almost a year ago, many were speculating whether Facebook was headed for financial ruin, and their ad rates had fallen. And less than six months ago, there were some reports that Facebook was snubbing a $4B valuation despite needing the cash the sale would have given them. (A far cry from $15B, eh?)
Up to this point, it seemed that Facebook was struggling to monetize itself enough to cover its costs. But according to Zuckerberg, their finances are better than fine. One recent effort that may have helped (but, let’s be honest, is so new that it probably hasn’t made a whole lot of money yet) was opening the gift shop to developers. Inside Facebook notes a few other potentially contributing efforts:
What’s driving Facebook’s revenue growth? A combination of revenue streams: Facebook’s self-service ad business has been very strong lately, it continues to invest heavily in brand advertising efforts, and it also continues to release many experimental expansions to its virtual goods and virtual currency business, Facebook Credits. The company is also still deriving revenue from its advertising deal with Microsoft, signed when Microsoft invested in Facebook in 2007.
If Facebook is a microcosm of the Internet, and they make money off serving ads that lead to other parts of their site (driving up time onsite and possible ad rates), perhaps this is a good sign for the Internet at large.
What do you think? Is Facebook’s cash positive status a sign of a turn around? Or are clever new monetization strategies keeping Facebook ahead of the curve?
