By Adam Fraser
Another very strong set of quarterly results from Facebook. The juggernaut powers on based on pretty almost any metric you can look at.
If you want to dive into detail, you can find the detailed financials, investor presentation and management conference call. For those without the time to digest all of this, here are 10 key soundbites from the results:
- Monthly active users reached 2.07bn from 2.01bn last quarter (3.3% growth) and 1.78bn a year earlier (15.9% growth).
- Daily active users hit 1.37bn from 1.32bn last quarter (3.2% growth) and 1.18bn a year earlier (16.0% growth).
- The CFO confirmed expenses will rise faster than revenue next year based on an increased focus on security. A fascinating quote from Mark Zuckerberg: “I want to be clear about what our priority is: protecting our community is more important than maximizing our profits”.
- Facebook has more than 6m advertisers, while Instagram has more than 2m.
- Video continues to increase its importance as a medium. Instagram Stories and WhatsApp Status each have more than 300m daily active users.
- Total revenue was $10.3bn (exceeding market expectations) versus $9.3bn in the prior quarter (a material 11% increase) and $7.0bn a year earlier (47.3% growth) – generating a net profit of $4.7bn (reminder – in a single quarter!).
- Facebook has reasonably balanced global spread with just under 50% of revenue coming from USA and Canada, a ratio that has remained reasonably consistent over the past 4 quarters.
- Average revenue per user increased by over 7% in one quarter, hitting $5.07 from $4.73 last quarter and $4.01 a year ago; note revenue per user is significantly higher in the USA/Canada ($19.38) compared to Europe ($21.20) and the Rest of World ($1.59).
- Facebook ended the quarter with a cool $38bn in cash – enough to buy Twitter and Snapchat!
- Some interesting random stats: Instagram has over 500m daily actives, Live videos generate 10x the number of interactions and comments as other videos, 20 million businesses are communicating with customers through Messenger, more than 550 million people are using Marketplace and Buy-and-Sell groups on Facebook to connect with other people for transactions.
Note that, mobile usage of Facebook has now become so prevalent Facebook no longer separately discloses mobile users. When it did, the number of users accessing via a mobile device was consistently over 90%.
With revenue growth, user growth, strong margins and consistent cash-flow, this is another powerful set of quarterly results.
Possible clouds on the horizon? Ad revenue is 98% of total revenue hence there is no diversity in income types. If ad blocking technology ever penetrated Facebook’s walled garden, this clearly would be a massive threat to Facebook’s earnings. There have even been recent signs of the cat and mouse arms race with ad blockers escalating.
Secondly, fake accounts (and fake news). As part of Senate enquiries in the USA, Facebook has been forced to admit that approximately 270 million (12%) of its user accounts are fake. Twitter has previously estimated that around 5% of its accounts are fake, hence this number exceeded previous expectations of fake account penetration on Facebook.
Privacy stoushes reuse of consumer data always loom large but never seem to bite.
For now, the blue skies remain.