Fueled by surge in ad sales Facebook India doubles profits to Rs 136 Cr in FY20

Facebook India has managed to achieve a significant leap in its topline during FY20 with its collections crossing Rs 1,000 crore milestone with comfortable margins. While its costs have grown by more than one-third, Facebook India has managed to more than double its profits during the fiscal ended in March 2020.

The growth was propelled by the jump in advertising income. Overall revenue from operations grew by 36.2% to Rs 1,215.6 crore in FY20 from Rs 892.5 crore during FY19.

Income generated through the sale of ad space on Facebook group platforms in India shot up by 97.2% to Rs 520.5 crore from Rs 264 crore in FY19. The fact that Facebook India’s revenue share from ads has increased from 29.6% in FY19 to nearly 43% in FY20 within a single fiscal year is representative of how industry-wide marketing budgets are moving towards digital. 

The gross value of ad space sold in India stood at nearly Rs 6,612.7 crore during FY20 which was procured from Facebook Ireland.

The company still makes the majority of its revenues through the provision of IT-related business processes to its parent Facebook Inc. Such incomes grew by 10.6% to Rs 695.1 crore in FY20 from Rs 628.5 crore earned for the same in FY19.

Further, non-operating incomes have also swelled up 62X but it’s mostly due to reversal of provision for doubtful debts worth Rs 58.7 crore during the last fiscal.

The Menlo Park-based company has invested significantly in India after the introduction of new data localisation norms which it had initially resisted. The company invested Rs 256.8 crore in the purchase of equipment and right to use assets during FY20.

Similarly, Facebook has increased its talent pool in India across the board as reflected in the 63.3% jump in employee benefit expenses which grew to Rs 299.3 crore in FY20 from Rs 183.3 crore in FY19.

Moving deeper on the expense sheet we see the company has recorded depreciation of Rs 183 crore during FY20, a jump of 72.6% as compared to Rs 106 crore recorded in FY19 and disposed of the amortised equipment for Rs 22.05 crore. Repair costs for networking equipment also went by 48% to Rs 60.4 crore during the same period.

Facebook India spent Rs 147.6 crore on account of outsourcing consultancy services, up by 21.2% as compared to Rs 121.8 crore spent on the same during FY19. Another Rs 30.1 crore were spent on legal expenses in FY20 which shot up by 92% this year.

Facebook spent considerable cash on increasing its visibility across advertising mediums from television to digital platforms throughout last year. Its advertising and promotion expenditure grew by 7% to Rs 128.4 crore in FY20.

Payment Gateway charges amounting to Rs 43.2 crore pushed the total expenditure incurred by Facebook India to Rs 1,045.7 crore in FY20, growing by 34.1% from expenses of Rs 779.75 crore in FY19.

Even with the surge in the scale of operations, the Mark Zuckerberg-led company has posted a healthy addition to annual profits which grew 2.08X to Rs 135.8 crore during FY20 from Rs 65.33 crore in FY19. Importantly EBITDA margins improved by 1158 BPS during the same period to 37.55% in FY20.