Facebook explains Instagram acquisition, reveals usage stats in SEC amendment

Posted on April 24th, 2012. Written by Rico.

In a filing with the US Securities and Exchange Commission (SEC), Facebook revealed plans to keep recent acquisition Instagram “independent”. The social network had amended its Form S-1 to reflect its pending purchase of the photo-sharing service.

“We plan to maintain Instagram’s products as independent mobile applications to enhance our photos product offerings and to enable users to increase their levels of mobile engagement and photo sharing,” the document said. Facebook hopes that the acquisition will make its services more appealing and relevant for smartphone, tablet, and other mobile device users. Instagram became popular by letting users easily apply artistic filters to the photos they take, and easily share the results with others.

A Form S-1 is used by American companies to register with the SEC, usually in preparation for raising capital by selling stocks to the public (an IPO). The filing is a legal requirement designed to help potential investors make decisions about the company’s viability and long-term prospects, and is thus publicly available through the SEC website.

But what’s more interesting is the authoritative information revealed about Facebook’s operations. As summarized by local social media expert Marck Rimorin:

• Monthly active users now 901 million, up from 680 million in 2011 (up 24.53%)
• Daily active users now 526 million, up from 372 million in 2011 (up 29.27%)
• Monthly mobile users: 488 million
• Daily stats: 300 million photos, 3.2 billion Likes and Comments, 125 billion new friendships
• Q1 2012 revenue: $1.058 billion, from $731 billion in 2011 (for perspective: San Miguel Corporation’s net income in 2011 is more or less 11.9 billion pesos. That’s roughly $279 million USD.)
• If every fan was money and all things held equal, one fan = USD 1.55

The document also reveals some of Facebook’s future plans. Again summary by Rimorin:

1. Facebook believes that they’re not effectively monetizing mobile as FB stands. Their initial business model did not address this possibility hence buying Instagram.
2. Growing user engagement = growing demands in display advertising and content. Since much of what’s on Instagram is “earned,” they jumped on the opportunity to support the project as part of their network.
3. Facebook will continue buying things in the future.

Facebook announced its acquisition of Instagram last April 12, 2012, “for approximately 23 million shares of our common stock and $300 million in cash”. The deal is final pending approval by government regulators, and should push through by the second quarter of this year.