Facebook is cash-flow positive

Popular social networking site making money and now serving 300 million users

Financial trends and news by Chris Caceres
September 15, 2009 | Comments (4)
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Facebook, the extremely popular social networking site, announced today it is cash-flow positive, at the TC50 conference in San Francisco. Along with the major announcement that it's finally making money, Facebook also shared it is now serving 300 million people across the world. 

Mark Zuckerberg, CEO of Facebook said on its blog, "Earlier this year, we said we expected to be cash flow positive sometime in 2010, and I'm pleased to share that we achieved this milestone last quarter.  This is important to us because it sets Facebook up to be a strong independent service for the long term."

Facebook, received $200 million in funding from Digital Sky Technologies back in May of this year.  It was thought this money would be used to pay for some of the high costs Facebook faces, like allowing its users to upload photos and videos, thus expensive server costs. 

Facebook has also been working hard to keep up with emerging services like Twitter which are focused on the 'real-time Web,' basically live updates and micro-blogs.  To keep up with these popular trends, Facebook launched a 'lite' version of its site as well as @Twitter tagging functionality, for tagging friends via micro blogging across the site, a basic tool Twitter has had for a while now.  

Zuckerberg said, "We'll continue building new and better things to make connecting with the people you care about as easy and rewarding as possible."

Let's remember, cash flow positive doesn't mean the company is profitable, they are finally bringing in more cash than they are spending.  

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John Smith, on September 15, 2009

First of all, how positive is facebook's "cash flow"? "This is important to us because it sets Facebook up to be a strong independent service for the long term," said someone who received $200MM few months ago from foreign investor.

Ronny Kerr, on September 15, 2009

This is probably some of the biggest news to come from the social media circles in awhile. Now, if they could just answer, not only Emil's question, but also the question as to how much longer investors have to wait to hear the word "profitable."

Lorenzo Carver
Lorenzo Carver, on September 15, 2009

@Emil and Ronny, it's important to keep in mind that "profitability" is a function of many estimates. Think of all the financial institutions that were "profitable" prior to the financial collapse, and then suddenly dependent on government assistance to survive. Cash flow, on the other hand, is a far more tangible metric involving fewer guesses by management. In fact, if you are given a choice between a firm that's showing accounting "profits" and one that's generating "free cash flow", all things being equal you want the one with the cash flow (so long as the cash flow is growing).

Lorenzo Carver
Lorenzo Carver, on September 15, 2009

BTW, great article Chris.

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