Did Wall Street Get Facebook's Q4 Estimates Wrong Because Of These 2 Errors?
Q4 2012 revenue of $1.59 billion today , well above Wall Street analysts' expectations of $1.53 billion.
Why did the experts get it wrong?
It's a legitimate question because, with some simple back-of-the-envelope math and a couple of phone calls, Business Insider predicted Facebook revenue would come in well above $1.53 billion before the earnings were released.The answer seems to be twofold:
1. Analysts may have under-counted the seasonality of
2. There was an accounting quirk in Facebook's Q4 numbers, giving it a revenue boost: Facebook said today, "As planned, in the fourth quarter of 2012 the company recognized revenue from four months of Payments transactions for accounting reasons detailed in our Form 10-Q filed on October 24, 2012. Adjusting for the $66 million of revenue in the extra month of December, Payments and other fees revenue would have been essentially flat year-over-year."
In the event, Q4 payments were $256 million and ad revenue was $1.33 billion.
Here's a chart showing the ad revenue growth only: