Spending sinks profit as Facebook prepares for IPO

Facebook’s operating expenses have outpaced its 45 per cent revenue increase for the three months ending March 31st, resulting in a quarter-to-quarter decline that surprised and disappointed Wall Street.

The social network giant, which is gearing up for one of the biggest internet company IPOs in history, revealed its first quarter-on-quarter sales drop since 2010.

Revenue was recorded at $1.06 billion, about 6 per cent below what was managed in the three months ending December 31st.

Year-on-year profits declined too, down 12 per cent to $205 million.

Facebook blamed post-Christmas declines in advertising spend for the dip.

The social network now boasts 900 million monthly active users, the company revealed in an updated SEC file. In the past year its headcount has jumped by about 1,100 employees (3,500) to in the past 12 months.

Facebook is preparing to raise at least $5 billion for its IPO, speculated to value the network at as much as $100 billion.