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Facebook shows some profit ahead of time

business Updated: Sep 16, 2009 23:50 IST

Reuters
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Social networking site Facebook on Tuesday said it has become free cash flow positive ahead of schedule. The milestone means that Facebook is now generating enough cash to cover its operating expenses as well as the capital spending to maintain the technology powering its fast-growing service.

The world's largest social networking site also said it now has 300 million users. Analysts said this shows the financial viability of Facebook, which has faced questions about its underlying business model, despite its popularity.

"It's certainly meaningful to show that this is absolutely the real deal," said Broadpoint Amtech analyst Ben Schachter. "They are executing. People are spending money on the site."

Facebook chief executive Mark Zuckerberg said in a blog post on the company site on Tuesday that Facebook reached its goal of being free cash flow positive in its most recently ended quarter. The company had previously projected reaching the target sometime in 2010.

"This is important to us because it sets Facebook up to be a strong independent service for the long term," said Zuckerberg in the blog post.

Facebook spokesperson Larry Yu said the free cash flow metric does not include any cash from private investment. In May, Facebook announced a $200 million investment from Russian investment firm Digital Sky Technologies in a deal that valued the company's preferred shares at $10 billion.

Facebook did not provide any other financial details on Tuesday. The company has previously said its revenue was on track to grow 70 per cent this year.