Zuckerberg talks Facebook financials: Making money, but paying for growth
Facebook chief executive Mark Zuckerberg apparently told his employees about the company’s financial state in some detail during a company meeting yesterday, Kara Swisher reports.
The numbers aren’t particularly surprising and if anything highlight the company’s stated plans to build out its operations and get a lot bigger — and hopefully profitable — before looking for an exit strategy.
Facebook revenues in 2007 will end at $150 million (incidentally, the amount many people thought Facebook should sell itself for, a few years ago), and is breaking even. Zuckerberg projects 2008 revenues to more than double to between $300 million and $350 million.
The ads that Microsoft sells on Facebook, per the two companies’ strategic partnership, have been monetizing well and have been steadily rising since they started working together. This is apparently in contrast with Google’s efforts to make money from selling ads on Myspace. (More here.)
However, Facebook plans to spend more than $200 million on capital expenditures (servers, etc….) in 2008, as well as more than double the workforce from around 450 now to more than 1000.
This means the company will be operating at negative cash flow in 2008, according to these numbers. The company will make $50 million in earnings from 2007, before taxes, interest, depreciation and amortization. Known as EBITDA, a calculation used to judge a company’s operationing efficiency, among other things. Subtract capital expenditures from EBITDA
Zuckerberg reportedly said yesterday that he “did not care about maintaining EBITDA anyway,” according to Swisher’s article. Which makes sense if you’re trying to grow fast, and you have $300 million in recent investments to pay for the infrastructure required to grow.
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About the Author, Eric Eldon
Eric currently covers digital media technology and business news, especially what's happening on social networks and their platforms. He also writes and edits stories about venture capital, and lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a startup called Writewith, that was building editorial software for newspapers and other groups of writers. The startup didn't work out, but he learned a lot.
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