Facebook reports revenue slide

Facebook has reported its first quarter on quarter revenue dip in two years, with net income falling slightly to $205 million as costs nearly doubled to $677 million.

Marketing and sales spend was up from $68 million to $159 million, while research and development costs were up from $57 million to $153 million.

Facebook has attributed the Q1 decline on seasonal advertising trends. The fall in profits comes ahead of the company’s plans to go public in the biggest ever internet IPO.

“It was a faster slowdown than we would have guessed,” said Brian Wieser, an analyst with Pivotal Research Group. “No matter how you slice it, for a company that is perceived as growing so rapidly, to slow so much on whatever basis – sequentially or annually – it will be somewhat concerning to investors if faced with a lofty valuation.”

Facebook also disclosed that it has agreed to pay Instagram $200 million if the company’s recent deal to buy the photo-sharing site does not go through. The social network paid $300 million in cash for Instagram, along with 23 million shares of Class B common stock.

The number of active monthly users on Facebook increased to 901 million, up from 678 million the previous year. Of these, 488 million used Facebook mobile products.

Read the full Reuters article here.