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Facebook Hits 300M, Says Now Making Real Money

Facebook revenue
Facebook has reached a pair of significant milestones in the social networking giant's ongoing growth, suggesting that the maturing company is getting better at turning its surging popularity into a viable business.

By traffic count, Facebook announced that it had signed up its 300 millionth user sometime earlier this week, just two months after it hit the 250 million mark.

Facebook accompanied that bit of news with the announcement that that it had become cash-flow positive in the second quarter.

While it earned more money than it spent, that doesn't necessarily mean that Facebook is a profitable company, however. Conventional accounting factors in non-cash items to determine the value of net income, which is generally seen as the measure of profitability. Facebook has said that it has enjoyed several successive quarters of profitability by the measure of EBITDA, a non-GAAP accounting metric of earnings before interest, taxes, depreciation and amortization.

Profitability aside, Facebook hit its cash-flow target ahead of schedule. Earlier this year, the company had said it hoped to see a positive cash flow in 2010.

"This is important to us because it sets Facebook up to be a strong independent service for the long term," Facebook CEO Mark Zuckerberg wrote in a post to the company blog.

Facebook's revenue comes primarily in the form of advertising and the quirky but increasingly popular practice of the sale of virtual goods.

In advertising, Facebook has become one of the leading destinations for marketers looking to tap into the social networking phenomenon. Social networks now account for more than 20 percent of all display ads served up on U.S. Web sites, according to online metrics firm comScore. Of those, Facebook accounts for nearly half, trailing only rival MySpace in total impressions.

Facebook has also become something of a testbed for experiments in brand-building in the social media sector. TGI Friday's, for instance, is currently running a promotion where "Woody," the restaurant's "self-proclaimed No. 1 fan," is racing to collect 1 million fans on his Facebook page, promising to give each one a coupon for a sandwich if he reaches his target by Sept. 30.

In the earlier iteration of the promotion, Woody reached his initial goal of 500,000 fans, each of whom has a coupon heading his way.

By sheer volume, Facebook is sporting enviable traffic numbers. Both comScore and Nielsen now rank the site in the top five most-visited Web sites in the United States.

In July, Nielsen ranked it at No. 4, behind only Google, Microsoft and Yahoo. comScore pegged it at No. 5, with AOL beating it out to take the fourth spot. comScore also had the second and third spots reversed from Nielsen's tally, ranking Yahoo ahead of Microsoft in total unique U.S. visitors.

But Nielsen provided another metric that is important to advertisers. In July, U.S. visitors spent an average of five hours and 12 minutes on Facebook. In Nielsen's list of the top 10 most trafficked sites, Yahoo was a distant second with an average visitor time of three hours and 22 minutes.