Facebook blames revenue dip on ‘seasonal factors’ ahead of flotation

SOCIAL network Facebook has posted its first fall in revenues for two years as seasonal factors took their toll on advertising, sparking concern among some analysts ahead of its record-breaking stock market listing.

Revenues fell 6 per cent to $1.1 billion (£662 million) in the three months to 31 March, but rose 45 per cent year-on-year.

Facebook, led by chief executive and founder Mark Zuckerberg, said the seasonal dip in advertising had always occurred in the first quarter of its financial year but had been “masked” in previous years by the firm’s rapid growth.

Profits fell to $205m from $233m as the company pumped cash into hiring more staff, with its headcount growing by 1,100 to 3,539 in the past year.

Analysts said that the fall in advertising revenues had been bigger than expected and warned that Facebook could have a tough time meeting high market expectations for its initial public offering (IPO) next month.

Jonathan Jackson, head of equities at Killik & Co, said: “As Facebook enters the final weeks before its landmark IPO, not all of the arrows are pointing up.

“The social network’s expenses are mounting, as it builds data centres and hires engineers to run a network for its more than 900 million users.”

The company aims to raise at least $5bn in its stock market flotation to fuel growth, valuing the business at about $100bn and making it the largest internet IPO in history.

Facebook said it had 901 million monthly active users as at 31 March, up from 845 million as of the end of 2011.