Facebook Inc. said its revenue declined sequentially in the first quarter, the weakest top-line performance by the world's largest social media network since at least 2010.
"It was bound to happen. You are going to see a slowdown," said Anupam Palit, an analyst at GreenCrest Capital LLC, noting that it is harder to double revenue when the base is larger.
But he also said Facebook has not worked out how to make more money in some international markets where it is growing the fastest, such as Brazil, India and the Philippines.
"They have not cracked international markets yet, while others like Google do very well internationally," Mr. Palit added.
Facebook, which is preparing for an initial public offering that could value it at up to $100-billion (U.S.), said spending roughly doubled over the past 12 months, outpacing the 45 per cent revenue increase during the period.
Net income slid 12 per cent to $205-million in the quarter, from $233-million a year earlier at the company, which is aggressively expanding and adding employees.
Facebook said in an updated filing with the U.S. Securities and Exchange Commission on Monday that its advertising business, which accounts for the bulk of its revenue, typically slows down in the first three months of the year. The rapid advertising growth may have "partially masked" such trends to date, and seasonal impacts may be more pronounced in the future, it noted.
Revenue, which totalled $1.06-billion in the three months ended March 31, declined 6 per cent from the fourth quarter.
Apart from slowing growth, Facebook is also grappling with other issues. Yahoo Inc. is suing it for patent infringement even as the social networking company tries to beef up its intellectual property arsenal. On Monday, it said it would pay $550-million for hundreds of patents from Microsoft Corp.
Facebook also disclosed in the filing that it has agreed to pay Instagram $200-million if the company's recent deal to buy the photo-sharing start-up for $1-billion does not go through.
Facebook said its total number of monthly active users surpassed 900 million in the first quarter.
Facebook added more than 1,000 employees in the year ended in March, taking its head count to 3,539.