Facebook’s Q1 Growth Concerns Show Up Before IPO (FB, MSFT, AOL, ZNGA)

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Facebook’s IPO is probably coming in the middle of May, and now we have more data on Facebook’s earnings and its internal metrics from its amended S-1 filing today from the Securities and Exchange Commission.  Today market the fourth amendment.

For the first quarter of 2012, Facebook generated revenues of $1.06 billion versus $731 million a year earlier.  Net income was $205 million versus $233 million, but net income attributable to shareholders was listed as $137 million versus $153 million.

Investors need to know one thing here… Facebook just saw its first sequential decline in revenues as the fourth quarter of 2011 had combined revenues of $1.131 billion.  The order going backwards each quarter was $954 million, $895 million, $731 million (first flat reading), $731 million, $467 million, $431 million, and $345 million.

The company’s cash and cash equivalents at the end of the March quarter came to $3.91 billion. Keep in mind that this is pre-spending for the patents and for the $1 billion Instagram purchase (broken out as $300 million in cash and 23 million shares). That is also before tallying up the $550 million to Microsoft Corporation (NASDAQ: MSFT) for what looks to be some of the former AOL Inc. (NYSE: AOL) patents.

ARPU (average revenue per user) was $1.21 in the first quarter on a global basis but it needs to be noted that half of the company’s revenues are derived from users in the U.S. and in Canada.  Revenue from advertising was down to 82% of sales from 85% of sales a year ago.

The company’s lower income is on higher spending for operations and it intents to grow its headcount for the foreseeable future.

The new breakdown of users is 901 million monthly active users.

Zynga, Inc. (NASDAQ: ZNGA) matters here per the Facebook disclosure: “In 2011 and the first quarter of 2012, we estimate that up to 19% and 15% of our revenue, respectively, was derived from Payments processing fees from Zynga, direct advertising from Zynga, and revenue from third parties for ads shown on pages generated by Zynga apps. If Zynga does not maintain its level of engagement with our users or if we are unable to successfully maintain our relationship with Zynga, our financial results could be harmed.”

Facebook remains one of our TOP 17 IPOs TO WATCH IN 2012.