By Adam Fraser
Another strong set of quarterly results from Facebook. The 800lb gorilla of the social media sector powers on based on almost any operating metric you can look at. However, with privacy and data stoushes increasingly evident, coupled with daily users actually dropping in the USA, it’s clearly not all plain sailing at the top.
If you want to dive into the details, here are the detailed financials, investor presentation and management conference call. For those without the time to review all of the details, here are 10 key sound bites from the results:
- Monthly active users reached 2.13bn from 2.07bn last quarter (2.4% growth) and 1.86bn a year earlier (14.5% growth).
- Daily active users hit 1.40bn from 1.37bn last quarter (2.4% growth – the slowest rate since Facebook listed) and 1.23bn a year earlier (14.2% growth).
- A fascinating quote from Mark Zuckerberg on a change in the algorithm: “Already last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent. In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term.”
- Consistent with its commitment announced last quarter, Facebook now has over 14,000 people working across community ops, online ops, and security efforts – almost double where they were a year ago.
- Facebook expect ‘Stories’ to eventually overtake ‘posts’ in feeds, as the most common way that people share across all social apps. Noting WhatsApp and Instagram are the #1 and #2 most-used Stories products in the world (Snapchat take note).
- Total revenue was $12.9bn (exceeding market expectations) versus $10.3bn in the prior quarter (a massive 25.6% quarterly increase) and $8.8bn a year earlier (47.3% growth) – generating a net profit of $4.3bn (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 20% in one quarter, hitting $6.18 from $5.07 last quarter and $4.83 a year ago; note revenue per user is significantly higher in the USA/Canada ($26.76) compared to Europe ($8.86) and the Rest of World ($1.86).
- Facebook ended the quarter with a cool $42bn in cash – almost enough to buy Twitter and Snapchat!
- Some interesting random stats: WhatsApp now has over 1.5 billion users, Instagram has over 2m advertisers and 25m businesses active on the platform, 6m advertisers and 70m businesses use Facebook, mobile-first video was 50% of Facebook’s video ad revenue this quarter, compared to 41% last quarter.
Note, mobile usage of Facebook has now become so prevalent Facebook no longer separately discloses mobile users – whilst it did, the number of users accessing via a mobile device was consistently over 90%.
With revenue growth, user growth, strong margins and consistent cashflow, this is another powerful set of quarterly results.
Possible clouds on the horizon? Ad revenue remains over 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, and despite its size, Facebook remains a one trick pony in terms of types of income.
Fake accounts, political interference and privacy stoushes reuse of consumer data always loom large but never seem to bite (despite the best efforts of some famous people).
The rate of growth inevitably slows at the scale Facebook finds itself, but for now, the cash cow continues to produce.