Facebook's Slide Deck Explaining Its So-So Second Quarter

By Alexis C. Madrigal

Facebook gave its first earnings report to Wall Street today, and the numbers were just OK. Here's how the company explains what happened.

It's not easy being a public company. Every bump and divot in the road gets recorded in the price of your company's shares. Today, Facebook reported that it had a decent second quarter, growing revenue 32 percent year over year to $1.18 billion including advertising revenue of $992 million. Those numbers slightly beat Wall Street's official expectations, which were clearly not actually Wall Street's only expectations.

In trading on Thursday, Facebook shares fell 8.5 percent and in after-hours trading, they've plummeted another 10 percent as I write this.

Facebook's no longer being given the kind of high-growth premium that they were before. Now that some real numbers are on the table, investors are starting to wonder whether Zuckerberg and Company can deliver the kind of revenue growth that they want to see.

Slide four in the deck above has got to be a little bit scary, too. The high-revenue users are in Europe and the United States , but if you look at daily user growth in those countries, you see something like a plateau. Facebook makes $590 million off its 186 million monthly North American users and only $113 million off its 268 million users outside of North America, Europe, and Asia. You can see the ARPU numbers on slide 8, and what's got to be particularly disturbing for investors is that the trend is only mildly upwards.

Same goes for mobile growth, which you see on slide five. It's good to have 543 million mobile users, but it's hard to make money off of them.

On the bright side, Facebook's got 955 million users, $10 billion in cash on hand and is still worth more than $50 billion. So there's that.

This article available online at:

http://www.theatlantic.com/technology/archive/2012/07/facebooks-slide-deck-explaining-its-so-so-second-quarter/260388/