Being a listed company, Facebook has to release a lot of detailed information about its performance. Even better, detailed results updates come every quarter, so these represent a great opportunity to look behind the headlines and really understand how the business is tracking.
The 3 month period to 30 June 2015 was another strong quarter for the world’s biggest social network. If you don’t have time to plough through all of the details, here are 10 key takeaways from the results:
- User growth powered on: Daily Active Users are now 968m (936m last quarter, 829m a year ago) and Monthly Active Users are 1.49bn (1.41bn last quarter, 1.32bn a year ago). Note Facebook is truly a global platform with only 17% of Daily Active Users coming from the USA and Canada
- Mobile increasingly dominates usage: 87.2% of Daily Active Users check via a mobile (85.3% last quarter,78.9% a year ago) and 88.2% of Monthly Active Users check via a mobile (86.6% last quarter, 81.2% a year ago)
- The financial performance reflects the user growth – revenue in the quarter was an astounding $4.042bn (yes billion), 14.1% higher than the prior quarter and an incredible 38.9% higher than a year ago
- Facebook one day may morph into a big data business but for now this is pure play media – 95% of its revenue comes from straight advertising
- At its enormous scale, average rev/user comes in at a measly sounding $2.76/user – noting some significant regional variations here (USA and Canada customers generated $9.30/user). Food for thought for those that have said they would prefer to pay a monthly fee to use Facebook rather than having to ‘sell’ their private data in exchange for a free service
- Contrasting Twitter in particular, Facebook is an extremely profitable business with operating margins of 31% and net profit of $719m for the quarter
- Facebook is also a cash machine – generating $1.3bn in free cash flow for the quarter (providing it funds to continually invest in R&D – it spent $549m in capex for this quarter alone)
- The management commentary around the results re-affirmed the importance of video, but also implied that search is coming more into the company’s strategic thinking – Mark Zuckerberg confirmed the site now processes 1.5bn searches per day and has indexed more than 2 trillion posts
- Progress continues to be made on the 2 longer term strategic goals Facebook has established; internet.org which aims to connect everyone in the world to the internet has already provided a free basic service to a billion people in 17 countries and Oculus Rift – the virtual reality play – will ship to consumers in early 2016
- Facebook’s early experiment with “Buy” buttons appears to be generating encouraging results. As COO Sheryl Sandberg told analysts. “We’re excited by what we see in the e-commerce vertical, and we’re going to continue to invest in growing that vertical as part of our ads business.”
I have written previously that a long term achilles heel for Facebook could be its approach to privacy and personal data. One day consumers may push back on mass. But for now, the juggernaut powers on. As David Wehner, Facebook’s CFO, told CNBC after the earnings came out. “The quarter was a great quarter almost any way you look at it,”.
Hard to disagree.