The mystery is over: We now know whether or not Facebook is actually making money. In its first-ever earnings report released today, the social networking giant reported a net profit of $0.12 earnings per share on quarterly revenues of $1.18 billion. The earnings report matched Wall Street’s expectations of $0.12 earnings per share and revenues of $1.15 billion. Advertising revenue accounted for $992 million of the company’s total revenues. Facebook’s share price dropped by more than 11% in after-hours trading immediately following the news, dipping below $24.
A major reason for the drop was that Facebook only made money on the quarter after excluding the negative impact of pre-2011 restricted stock unit compensation. Without that adjustment the company would have posted a net loss of $157 million or $0.08 per share. Facebook may also have spooked investors with its large increases in capital expenditures, as the company spentÂ $413 million on CAPEX on the quarter, a year-over-year increase of 213%. What’s more, the company reported a GAAP operating loss of $743 million versus a GAAP operating income ofÂ $407 million in Q2 2011, which could make investors concerned about the long-term sustainability of Facebook’s current trajectory.