Facebook India FY17 revenue nearly doubles, profit growth slows

By Anirban Ghoshal

  • 14 Dec 2017
Credit: Pexels

Mark Zuckerberg-led social network Facebook Inc.'s India arm almost doubled its revenue for the year through March 2017 but its profit growth slowed due to higher expenses.

Facebook India Online Services Pvt. Ltd posted a 93% jump in revenue for 2016-17 to Rs 341.8 crore from Rs 177 crore the year before, show its filings with the Registrar of Companies. Net profit climbed 31% to Rs 40.7 crore from Rs 31 crore.

In 2015-16, the company's revenue had grown 43% from Rs 123 crore in 2014-15 while profit had expanded at a far faster pace of 94% from the year-earlier number of Rs 16 crore.

The slowdown in profit growth is a result of higher expenses. The company's total expenditure nearly doubled to Rs 285.5 crore from Rs 147.5 crore.

Staff costs rose 73% to Rs 89.6 crore. Promotional expenses soared 148% to Rs 42 crore from Rs 17 crore while legal expenses surged 127% to Rs 42.5 crore from Rs 18.7 crore.

The rise in legal and promotional costs could be attributed to the company's renewed efforts to restore its brand image after the imbroglio related to its Free Basics service, which ran into regulatory hurdles after criticism it violated net neutrality principles, and promotion of new products or partnerships.

An email query to a spokesperson for Facebook India didn't elicit any response till the time of filing this article. However, a person in the know of things said that the additional promotional expenses can be attributed to a new strategy developed by former India managing director Umang Bedi.

"Bedi had started partner marketing budgets in order to boost India growth by asking partners to promote Facebook and its products," the person told VCCircle.

Bedi resigned as the MD of Facebook India in October.

India is Facebook's second-largest market, after the US, with around 217 million monthly active users.

Facebook had 2.07 billion monthly active users globally as of 30 September, an increase of 16% from the year before.

In November, Facebook Inc reported a 47% increase in total revenue (excluding costs and expenses) for the third quarter of 2017 and a 79% rise in net income. Mobile advertising revenue represented about 88% of ad revenue, up from 84% a year earlier. The company had 23,165 employees globally at the end of September, an increase of 47% year-over-year.