Facebook: an investment for the future

1. Facebook: an investment for the future IDEAS4TOMORROW.com 08/05/2012

2. A quick growth (1/2) A con&nuous worldwide growth of the number of users Facebook was launched in 2007 A quick growth of the number of users A worldwide phenomenon Millions of monthly acNve users Millions of monthly acNve users 1 000 180 901 153 160 800 140 680 120 600 100 431 80 400 60 44 43 38 197 40 30 200 24 23 20 0 0 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Launched in the USA Facebook is now available in 78 languages. IDEAS4TOMORROW.com

3. A quick growth (2/2) spending lots of &me on Facebook, then genera&ng an exponen&al turnover Users are spending lots of Nme on Facebook An explosion of the annual turnover Comparison between Nme spent on Facebook and Google Turnover (m$) 1200 1090 6 000 +45% 5 380 Facebook 1000 850 Google 5 000 800 4 000 +100% 3 710 600 3 000 400 299 226 1 855 2 000 +139% 200 777 30% 0 1 000 of Millions of users Millions of minutes spent margin In Europe, 12% of the Nme spent on the web is on 0 2009 2010 2011 2012* Facebook In France, users spent 4h45 per month on Facebook * Forecast based on Q1 2012 turnover Facebooks current turnover is 4,70 $ per user IDEAS4TOMORROW.com

4. A start of diversicaNon Facebook reduced by 13% its reliance on adver&sing Facebooks non adverNsing-based revenues are increasing EvoluNon of the turnover split 2009 2010 2011 2% 3% 5% 12% AdverNsing 95% 85% 98% Zynga (video-game) $777m $1,855m $3,710m Other 96% of Googles revenues are sNll based on adverNsing. Facebook is open to applicaNons which can provide it some revenues (e.g. Zynga a social network-based video game) Facebook allows brands to open their own store on the website (ASOS, Groupon, Pizza Hut UK) IDEAS4TOMORROW.com

5. A latent potenNal of growth The number of users might keep increasing In developed countries, Dierence between Internet and Facebook penetraNon rate remains high 79% 81% 83% 85% 78% 49% 47% 48% 37% 28% 95 12 44 26 23 In emerging countries, Both Internet and Facebook penetraNon rates are very low Facebook is not yet available in few main emerging countries: 41% 18% China : 460 million of Internet users 19% 8% 9% 4% Japan : 104 million of Internet users Russia : 70 million of Internet users 41 47 - Million of Internet users Facebook penetraNon rate Internet penetraNon rate which are not on Facebook IDEAS4TOMORROW.com

6. Development of social graph A new organiza&on of the Internet Facebook introduced the concept of social graph where users are linked together because of friendship The next step is the interest graph were users are linked together because they share common interests Based on the interest graph, Facebook aims to - ease the organizaNon of the Internet - opNmize the content browsing on the Internet Google has already started to display the contents published on its own social network Google+ directly on its search engine Internet is facing with a major turn in the way users are browsing it, and Facebook introduced this revoluOon IDEAS4TOMORROW.com

7. Mobile is the key growth engine (1/2) Mobiles are the main technological devices Worldwide, the mobile phones are more spread In 2011, mobile devices sales than Internet access overtook PC sales UK 84,8% Million of devices sold 133,1% 551 Fra 77,5% nce 99,2% 63 Ger 82,5% ma 127,7% Chi 34,4% na 72,0% 351 Ind 9,1% 29 one 104,8% Indi 7,8% 488 112 a 80,5% Bra 40,7% zil 116,4% Can 81,4% 210 ada 73,3% USA 79,3% 92,8% Mobile penetraNon rate Internet penetraNon rate Mobile devices PC Smartphone Pad Notebooks Desktops Netbooks 50,4% of US consumers are using smartphones (Q1 2012) IDEAS4TOMORROW.com

8. Mobile is the key growth engine (2/2) Facebook developed few ini&a&ves to improve mobile experience During the Q1 2012, 500 million of users were connected through mobile applicaNons Facebook developed mobile applicaNons on most famous OS (Androd, iOS) In Africa, Orange launched a special access to Facebook for non-smartphone users Based on USSD technology Payment per cession Simplied prole For the Nme being, Facebook gets no revenues from mobile users (no adverNsing on the mobile applicaNons) But, Facebook planed to launch sponsored post on its mobile applicaNons to improve adverNsing display on mobile devices Recently, Facebook bought Instagram and Glancee which were successful mobile applicaNons To ensure revenues growth, Facebook will have to moneOze its mobile audience IDEAS4TOMORROW.com

9. DiversicaNon of revenues To keep growing Facebook has to nd new sources of income Facebook got into partnerships New opportuniNes to moneNze the audience to opNmize content sharing Music Facebook might take a percent of the revenues generated through its website on the applicaOon connected to it (its already the case with Zynga) Video Facebook is working on developing the adverOsing on mobile applicaOons Video on demand Facebook plans to develop its own currency (the F-money) which could be used both on its website and through the Internet Newspaper To sustain its growth, Facebook is improving its current growth engines and developing new ways to moneOze its audience IDEAS4TOMORROW.com

10. A huge data base Facebook collected more data than a website has ever done With 900 million users, Facebook has a lots of data based on: - Personal informaNon (pictures, videos, ) - Users behaviors (likes, localizaNons, exchanges, ) Facebook developed Social Ad instead of Googles on-words based adverNsing Social Ad is based on the analysis of personal data This analysis renes customers targeNng Facebook developed a wide range of Ad products - Normal Ad displayed on the website - Premium Ad displays your rends like (which is more expensive) Facebook would be able to improve its product development based on its customers need Facebook has an advantage as data collecOon and analysis becomes the key of the Internet evoluOon IDEAS4TOMORROW.com

11. A strong compeNNon The Internet is becoming more and more social The Worlds Internet leader Worldwide segmented social is pushing its own social network networks are thriving Professional Google has more than 1 billion users Photography sharing (Instagram) In June 2011, Google launched its own social network Google+ Micro-blogging (Twi`er) Google+ is based on circles interacOon +90 million users (Q1 2012) In China, RenRen has +200 million users Google plans to use the Google+ contents to (96,2% are Chinese) enrich its search engine results Facebook is facing with both a big compeOtor and numerous small actors IDEAS4TOMORROW.com

12. Analysis of the IPO valuaNon Facebooks IPO is over the benchmark Facebook is supposed to be valuated between $77 billion and $96 billion Facebooks IPO valuaNon raNo is - between 15x and 19x its turnover - between $85 and $106 per user EvoluNon of the stock prices of the last Benchmark of 3 tech companies introduced Internet companies Google is the famous Internet leader Groupon : -50% (since nov. 2011) Amazon is the most famous entertainment Zynga : -18% (since dec. 2011) contents seller LinkedIn : +10% (since may 2011) Apple : the most famous technological devices maker => Bencharmk is roughly 5x the turnover IDEAS4TOMORROW.com

13. SensiNvity table Evolu&on of the turnover per user Based on a raNo of 5x the incomes Depending on the evoluNon of the number of users Depending on the evoluNon of the valuaNon (vs. $80 billion of IPOs price) Evolu&on of the number of users Evolu&on of the valua&on Whithout any change in the number of users and the valuaOon, Facebook has to increase its turnover per user by 5 Omes to be in the benchmark IDEAS4TOMORROW.com

14. Bibliography Wikipedia Orange Actu Legaro.fr Latribune.fr Lexpress.fr LeMonde.fr Challenges Rfrences.be The Economist Financial Times Le Journal du Net Techcrunch CheckFacebook The Next Web INSEE Etude Canalys Rapport de ZenithOp&media Inside Facebook ParisTech Review Google Public Data Perspec&ve.Usherbrooke IDEAS4TOMORROW.com

15. www.Ideas4Tomorrow.com

Facebook: an investment for the future

Technology

key growth

mobile applicanons

quick growth

nme spent

interest graph

social graph

spending lots

mobile