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Facebook makes 4 times more profit per employee than Google

Facebook makes 4 times more profit per employee than Google
August 08
15:10 2017

May dominate the online advertising market, but when it comes to making cold hard cash, the social network has an edge over the search giant.

That’s according to analysis conducted by Recode, which looked at net income and revenue per employee during the June ending quarter and found that Facebook is making a lot more per employee than its rival. As of the end of the second quarter, Facebook had 20,658 employees, up 43% from last year’s second quarter. The company made $188,498 in profit per employee on revenue that Recode found was close to a $500,000 per employee. In the year-ago second quarter, it had profit of $157,503 per employee.

Google, in comparison, had profit of $46,610 per employee during the second quarter, reported Recode. Meanwhile, Twitter (TWTR

), the embattled microblogging company, lost around $36,000 per employee during its second quarter. It doesn’t help that Twitter’s monthly active user count of 328 million in the second quarter was unchanged from the previous three-month period. (See also: Why Facebook’s Value Is Best Among FAANGs)

Recode attributed Facebook’s efficiency to the fact that software technology doesn’t require as much human intervention as a company that creates a physical product. The company’s ability to generate a lot of profit per employee shouldn’t come as too much of a surprise given the strong showing the company had in the second quarter. It had revenue of $9.32 billion and earnings of $1.32 a share, which was higher than the Wall Street consensus. Mobile ad revenue also surpassed Wall Street forecasts, coming in at $8 billion compared to the $7.68 billion expected. It also said expenses during the year will increase at a slower rate than previously expected. Facebook is targeting a 40% to 45% rise in costs instead of a range of 40% to 50%. (See also: Facebook Short Interest Is at a Record Low)

While the majority of Wall Street is even more bullish on the company’s prospects in light of its quarterly results, Pivotal Research is taking the contrarian view and slapped a sell rating on the stock late last month. The way Pivotal’s Brian Wieser sees it, Facebook faces an impending saturation of the digital ad sector in which big corporations will more closely scrutinize their marketing budgets. “With every passing year, digital advertising is closer to a point where the market is saturated,” wrote Wieser in a recent research report.

 

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