Facebook Amends IPO S-1...

Facebook has just filed a sixth amendment to its S-1 filing to IPO in order to provide more transparency about how the shift of its user base from the web to mobile is causing it to show fewer ads per user, which could hurt revenue in the long term. Facebook also granted about $796 million in restricted stock units to employees less than a week ago. I’ve excerpted the significant changes and embedded the whole S-1 below. Specifically, Facebook is warning investors that daily active user count is rising faster than the number of ads the site is showing, which it predicts will lead to a lower average revenue per user. As we noted when Facebook originally filed , it hasn’t proven its ability to monetize mobile yet. It now has Sponsored Stories ads running in the mobile news feed, but it can’t show nearly as many ads in this format as it does on the web, where it often shows four to seven ads per page, though less prominently in the sidebar. By injecting ads directly into the news feed , Facebook is meddling with one of the most addictive features of the site. If it shows too many ads, users could become less prone to frequent return visits, and might spend less time browsing the feed. The company must walk the tightrope, testing to see how many in-feed ads it can get away with . While on the web it can keep ad presence in the news feed conservative, on mobile this is it’s only real revenue driver. Facebook may have to slowly ramp up the frequency of mobile feed ads in order to acclimate its users. Unlike other free mobile apps that plaster banner ads over content or force users through interstitials, Facebook is trying to pioneer a less obtrusive way to monetize mobile through ads. Unfortunately,  investors may be weary of weathering the process with their money on the line. Here’s the important changes to the S-1, in bold: Page 14: “We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.” Page 17: “Based upon our experience in the second quarter of 2012 to date, the trend we saw in the first quarter of DAUs increasing more rapidly than the increase in number of ads delivered has continued. We believe this trend is driven in part by increased usage of Facebook on mobile devices where we have only recently begun showing an immaterial number of sponsored stories in News Feed, and in part due to certain pages having fewer ads per page as a result of product decisions. For additional information on factors that may affect these matters, see “Risk Factors—Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results” and “Risk Factors—Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results.” Page 78, regarding the RSUS: “On May 3, 2012, we granted an aggregate of 25,257,815 RSUs. We will determine the fair value of these grants during the second quarter. If the fair value of our Class A common stock was $31.50, the midpoint of the price range set forth on the cover page of this prospectus, the aggregate grant date fair value would be approximately $796 million.” The RSUS grant will serve as a reward for hard-working employees, and could be worth a ton if Facebook’s stock price pops and holders wait to sell them. It could also encourage employees to stick around after the IPO if they’re set to vest over a long period of time. Kim-Mai Cutler has deeper analysis about what this RSUS grant means. I’ve learned that analysts at Facebook’s first IPO roadshow events have been especially concerned about how Facebook’s ad business will be impacted by the shift to mobile. Adding additional transparency to its S-1 is Facebook’s attempt to be up front critics. By showing it recognizes the problem rather than sweeping it under the rug, investors could be more confident the company will come up with a solution. View this document on Scribd [Image Credit: WatBlog ]

EA Shares Slip 9% In Af...

EA shares slipped 9.5 percent in after-hours trading to $13.70 as the company said it expected losses of 40 to 45 cents a share for the next quarter. It said it expects to make $4.1 billion for the year and will lose 16 to 36 cents a share, on a non-GAAP basis. Another piece of data that might have dragged down performance were subscriber numbers for Star Wars: The Old Republic, the title that was going to going to help it take market share away from World of Warcraft. EA said it had 1.3 million active subscribers, compared to the 1.7 million subscriber estimate analysts like Lazard’s Atul Bagga had anticipated. On the positive side, EA beat earnings estimates for the quarter ending in March with $977 million in total net revenue on a non-GAAP basis. Analysts had expected net revenue of $959.6 million or 17 cents a share. One other positive is that digital revenue continues to creep up as a share of EA’s overall earnings as the company transitions away from selling games like packaged, consumer goods. Digital revenue was nearly double was it was a year ago at $419 million. “Digital growth drove our margins in fiscal 12 and we project this trend will continue in fiscal 13,” said  Ken Barker, the interim chief financial officer, in a statement. “We saw more than 20 percent non-GAAP diluted EPS growth in fiscal 12, and are guiding to more than 30 percent growth in fiscal 13 based on the midpoint of our guidance.” Mobile revenue was also up to $87 million from $70 million a year ago, according to generally accepted accounting principles. Non-smartphone handheld devices basically negligible now with PlayStation and Nintendo at $6 and $5 million for the quarter respectively. Here’s the release. We’ll be updating as we go: REDWOOD CITY, Calif.–(BUSINESS WIRE)– Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its fourth fiscal quarter and fiscal year ended March 31, 2012. “We are proud to report a strong quarter and a fiscal year highlighted with $1.2 billion of digital revenue,” said Chief Executive Officer John Riccitiello. “In the coming year, we break away from the pack, with a very different profile than the traditional game companies and capabilities that none of our new digital competitors can match.” “Digital growth drove our margins in fiscal 12 and we project this trend will continue in fiscal 13,” said Interim Chief Financial Officer Ken Barker. “We saw more than 20 percent non-GAAP diluted EPS growth in fiscal 12, and are guiding to more than 30 percent growth in fiscal 13 based on the midpoint of our guidance.” Selected Operating Highlights and Metrics: *On a non-GAAP basis Strong results driven by the successful launches of Mass Effect™ 3, FIFA Street 4, SSX™ and Kingdoms of Amalur: Reckoning™. FIFA 12 established the best year in franchise history – with downloads and micro-transactions totaling $108 million*. FIFA Ultimate Team — a pure digital companion to recent FIFA titles was the second best-selling EA offering in the UK in fiscal 12. Battlefield 3™ had a record year, establishing itself as one of EA’s premier game services and in the process successfully took share in the growing First-Person-Shooter market. Battlefield 3 players are still deeply engaged — 6.3 million MAUs in March. New content downloads available in May and June. Q4 full-game downloads were up 76 percent* year-over-year, contributing $60 million* in the quarter, driven in part by Mass Effect 3 and STAR WARS®: The Old Republic™. STAR WARS®: The Old Republic™ active subscribers are 1.3 million. Two new content packs — Legacy and Allies, available in Q1. EA’s Play4Free brands are generating an average of nearly $2 million* per week. Several more EA brands will be introduced in the Play4Free portal in fiscal 13. EA shattered its goal for digital revenue growth — generating more than $1.2 billion* in fiscal 12 for a 47 percent year-over-year growth, and driving operating margin to 10%. Another 40 percent increase in digital non-GAAP revenue and continued operating margin expansion is forecasted for fiscal 13. EA’s Origin™ platform for games and services has registered 11 million players and generated approximately $150 million* in just ten months. EA’s Nucleus database has registered 220 million consumers. Casual game leader PopCap™ — acquired by EA in August — is growing on mobile and social platforms with new games like Solitaire Blitz™ and Lucky Gem Casino™. A new version of Bejeweled™ is EA’s top grossing game on the Apple® App StoreSM. EA repurchased 27.7 million shares for $529 million through March 31, 2012, and as of the call, the $600 million share repurchase program has been completed. In fiscal 13, EA will invest $80 million in development of games for Gen4 console systems. Q4 and Full-Year FY12 Financial Highlights: For the quarter, non-GAAP net revenue of $977 million was slightly ahead of our guidance of $925 million to $975 million. Non-GAAP diluted earnings per share of $0.17 was in line with our guidance of $0.10 to $0.20. Non-GAAP net revenue in Q4 fiscal 2012 was slightly lower as compared to Q4 fiscal 2011 due to a reduction in the number of package goods titles in the quarter.

Unified Hires Googler B...

Unified , a company offering tools to help agencies and brands manage their social advertising campaigns, has lured someone from Google to run it sales team. Specifically, it’s announcing the hiring of Brian Murphy as its new vice president of sales. His past experience includes leading Google’s ad sales to the financial industry, overseeing AdMob’s East Coast advertising team, and managing international sales at DoubleClick. When I met with co-founder and CEO Sheldon Owen a couple of months ago, one of his points of pride was the fact that Unified executives come from the enterprise technology industry, not just from the ad world — but hiring Murphy should help build the company’s connections on the ad side. In its announcement blog post, Unified says Murphy “will help top brands and their agencies change the way they use social media advertising.” (Beyond selling its own social advertising products, the company tries to train its customers on best practices through a program called Unified University .)

Rovio’s Big Year: Angry...

We all know what a wild success the Angry Birds franchise has been for Rovio , with the best-selling mobile games spawning cookbooks, toys and much more besides. Today the company revealed just what kind of an impact that has had on its bottom line for its really Big Year . The company today issued a statement that noted that the company made $106.3 million (€75.4m) in revenue in 2011, with earnings before tax at $67.6 million (€48m) — with 30 percent of that coming from its merchandising and licensing activities. Monthly active users of the app are now at 200 million, with 648 million games downloaded in total. I’m not totally sure — I’m still hunting — but it looks like this might be the first time ever that Rovio has put out annual results like this. It might be because it is looking for some more transparency in the lead up to an IPO. It’s something that has been informally discussed in the press before, with the Mighty Eagle, Peter Vesterbacka, in December telling Reuters that an IPO could come in 2013 on the Hong Kong exchange. Today, Vesterbacka formally told me that there are “no further comments” on IPO plans. The $106.2 million revenue figure/200M MAUs are nothing short of an enormous leap for Rovio. In 2010, it reported  revenues of $7 million from the period from July to December. GiordanoContestabile from PopCap estimates that Rovio made $10 million in total in 2010. The company announced in March 2011 a Series A investment of $42 million from Accel and Atomico, and at that time it had “only” 40 million monthly active users. Angry Birds first went live on iOS in December 2009. Of $106.3 million in revenue, $32 million is coming from what Rovio calls Consumer Products, which includes both merchandising and licensing. Rovio says that it now has 200 licensing partners developing new products and services. The company looks like it will be putting the gas on doing more of that in the future, even as it launches new games, perhaps beyond the Angry Birds brand: “The strong growth in revenue clearly demonstrates the popularity of the Angry Birds brand.” Mikael Hed, Rovio CEO said in a statement. “The heavy investments made in 2011 to all business areas will be seen in future products. To ensure continuous success we need to be creative and stay focused on entertaining our millions of fans by continuously developing new and innovative products and services.” The company also ramped up its headcount about tenfold: it now has 224 employees compared to just 28 at the start of 2011. Release below ROVIO ENTERTAINMENT REPORTS 2011 FINANCIAL RESULTS 07.05.2012 Helsinki, Finland  –  Rovio Entertainment Ltd , the world’s leading provider of mobile entertainment and creator of the Angry Birds franchise, today had the pleasure of announcing the financial results for the full calendar year of 2011. Total revenue amounted to €75.4 million ($106,3 million) driven by strong growth in game download activity and consumer product sales. Earnings before tax were €48,0 million ($67.6 million) or 64% of total revenue in 2011. “The strong growth in revenue clearly demonstrates the popularity of the Angry Birds brand.” Mikael Hed, Rovio CEO said. “The heavy investments made in 2011 to all business areas will be seen in future products. To ensure continuous success we need to be creative and stay focused on entertaining our millions of fans by continuously developing new and innovative products and services.” The Angry Birds franchise fuels Rovio’s performance The financial outcome of 2011 is very positive for Rovio.  Rovio’s different business areas, Games, Advertising, and Consumer Products, are fully rolled out and generated both revenue and profit. The Consumer Products business area, which includes both Merchandising and Licensing income, generated revenues that represent a about 30% of total revenue in 2011. The company was working together with more than 200 licensing partners on developing new products and services within the Angry Birds franchise. Rovio’s game offerings in 2011 consisted of three games, all based on the Angry Birds characters: Angry Birds, Angry Birds Seasons, and Angry Birds Rio. The games are available as both free and paid versions on all popular mobile and connected devices. The total number of game downloads reached 648 million by the end of year 2011 and the total number of active monthly users, across all platforms, reached 200 million. The number of employees grew from 28 to 224 during the year 2011. Market and business development expectations Future sales will to a large extent depend on the launch schedules and success of new games and initiatives in 2012. As sales of new devices remain the main driver for mobile game downloads, Rovio expects business to continue to grow accordingly. “We are very optimistic about 2012 due to significant investments in product development, cutting-edge branding, brand protection and corporate infrastructure,“ Mikael Hed said. Notes: - Currency exchange rates EUR/USD is based on 2011 median of 1,41. - Rovio Entertainment Oy´s financial figures have been prepared in accordance with Finnish Accounting Standards (FAS).

Harris: 20% Of US Consu...

Mobile devices, by some estimates , will become a replacement for your wallet in the future, with NFC, dongles and sophisticated apps helping you buy things and manage the rest of your financial life, and with companies like Visa getting in on the action and  eBay/PayPal expecting $8 billion in mobile transactions this year . But in reality, when it comes to using a mobile to buy something, most of us are not. A poll from Harris Interactive, commissioned by the location-based shopping alert provider Placecast , found that only one in five people — 20 percent — of adult mobile owners have used their devices in the last year to purchase goods and services, whether that is at a point of sale or via a mobile app or site. As for how many consumers actually wanted purchasing functionality in their devices, 62 percent said it was “not at all important.” Harris’ numbers, which are based on a poll of nearly 2,000 users, take into account both smartphone and regular phone owners, and are doubtless skewed by the fact that low-end device owners are being considered here as well. Research from  Nielsen  on mobile commerce found much higher numbers when considering owners of smartphones and tablets. In Q1 2012, 79 percent of smartphone and tablet owners used their devices for “shopping-related” activities. But even in Nielsen’s case, only 29 percent of smartphone owners had actually used their devices to purchase something. As you would expect, Harris found that mobile-commerce activities are more popular among smartphone owners than among those with feature phones. It found that 34 percent of smartphone owners had purchased items with their mobile devices, compared to just 11 percent of feature phone owners. That was apparent in other aspects of mobile commerce as well — for example, 50 percent of smartphone users said they’d used GPS or a mapping app (the most popular “m-commerce”-related activity, according to the poll) to find the location of a business; that number dropped to only 11 percent on more basic devices. Part of this might be due to the lack of features in feature phones, but it also indicates that progress will only come when more people are using smartphones. For feature phone users, the most popular activity was browsing the websites of retailers on their mobile devices. This, however, was only done by 13 percent of responding consumers.