Facebook Finances Exposed For First Time

The launch of Facebook's initial public offering has provided the first glimpse of the financial and operational details behind the world's biggest social networking site.

On Wednesday, Facebook filed the necessary paperwork to become a public company, seeking to raise $5bn (£3.1bn) in the largest floatation ever by an internet company on Wall Street.

The California-based website, launched eight years ago by Mark Zuckerberg from his Harvard University dorm room, reported net income of $668m (£422m) last year, up from $372m (£235m) the previous year.

Total revenue nearly doubled to $3.7bn (£2.3bn) in 2011, with most of it coming from targeted advertising gleaned from personal information shared by the hundreds of millions of users of the platform.

Kathleen Smith, an IPO investment adviser at Renaissance Capital, said: "The company is more profitable than we had expected."

Online game developers Zynga accounted for 12% of Facebook's revenue, with the advertising and virtual coins bought to play the games contributing $445m (£281m) to the 2011 balance sheet.

The IPO filing revealed that Facebook is the leading social network in all but six countries, notably China and Russia. It has over 845 million users including 483 million who log in daily.

Facebook's total value is estimated as much as $100bn (£63bn), putting it on a par with McDonald's, but behind Apple and Google.

Mr Zuckerberg, whose net worth has been estimated at $17.5bn (£11bn) by Forbes magazine, is the largest individual shareholder in Facebook and controls 57% of voting shares, according to the IPO paperwork.

But he was not the highest paid.

Sheryl Sandberg, who was lured away from Google four years ago to serve as Facebook's chief operating officer, made more than $30.5m (£19.2m) last year while vice president of engineering Mark Schroepfer pulled in $24.7 million (£15.6m).

Mr Zuckerberg's total package was $1.49 million (£940,000).

Facebook shares are not expected to begin trading for several months, but the excitement immediately sent stocks up.

Michael Gartenberg, a technology analyst at Gartner, said: "It's hard to think of an IPO in recent memory - even going back to Google and before that maybe to the Netscape IPO or the Yahoo IPO - to see this type of frenzy."

He did not expect the stock market debut to have much of an impact on the average user, but said the extra cash would allow the firm to grow and give it a new edge on competitors.

"Facebook going public doesn't have that much implication for the vast majority of Facebook users unless they plan on buying shares - when they can finally get their hands on them," Gartenberg said.

"Google didn't change for users for the most part when it became public," he said. "It grew. It expanded out to other services."

Facebook said it will list on Wall Street as "FB" but did not set a date for when it would begin trading or specify whether it would be on the Nasdaq Stock Market or the New York Stock Exchange.

In a letter accompanying the IPO filing with the US Securities and Exchange Commission (SEC), Mr Zuckerberg, who was just 19 when he founded the network, outlined what he said were the core values of Facebook and said it "was not originally created to be a company".

The Facebook chief executive wrote: "It was built to accomplish a social mission - to make the world more open and connected."