Facebook has grown significantly since its IPO, but it still generates much less quarterly revenue and profit than Google. In the fourth quarter of 2012, Google's revenue was over 7 times higher than Facebook's and its net income was over 40 times greater. For Facebook to narrow this gap, it will need to continue growing its user base and find better ways to generate advertising revenue from its existing users.

1. IS FACEBOOK
THE NEXT
GOOGLE?
A financial analysis
March 2013

2. IS FB THE NEXT GOOG?
• Since going public, Facebook has remained in the spotlight
when it comes to their financials
• Many analysts have hypothesized if Facebook could become the
next Google, implying soaring revenues and profits
• Now that FB has been public for almost a year, I thought I would
see how their financials stack up

3. QUARTERLY REVENUE (IN MILLIONS)
$16,000.00
$14,000.00
$12,000.00
$10,000.00
FB Revenue
$8,000.00
Goog Revenue
$6,000.00
$4,000.00
$2,000.00
$-
2011-12 2012-03 2012-06 2012-09 2012-12
Data Source: MorningStar.com

4. REVENUE LONGSHOT
• Although it appears to be slowly increasing, Facebook remains
far behind Google when it comes to quarterly revenue
• Google generated 734% more revenue in Q4 than Facebook
But what about profits…

5. QUARTERLY PROFITS (IN MILLIONS)
$3,000.00
$2,500.00
$2,000.00
$1,500.00 FB Net income
Goog Net Income
$1,000.00
$500.00
$-
2011-12 2012-03 2012-06 2012-09 2012-12
$(500.00)
Data Source: MorningStar.com

6. PROFITS ARE ALSO GREATLY
UNBALANCED
• From a profitability perspective, the companies are further apart
• Google generated 4409% more net income than Facbeook in Q4
Image source: http://updates.clltopics.org/2273-site-news-june-19th-workshop-columbia-maryland

7. IN SUMMARY
• Despite being similar in size, Facebook is unable to come close
to Google in terms of revenue or profit
• Q4 Revenue: Google $13.2B – Facebook $1.6B
• Q4 Net Income: Google $2.9B – Facebook $64mm
• To narrow the gap they will have to continue adding users, but
more importantly find out how to more efficiently advertise to
their existing users
• Facebook Exchange could be a step in the right
direction, but we’ll see how much volume it can generate