Facebook Inc. (NASDAQ:FB), the largest and recently beleaguered social network, continues to stack revenues and users amidst backlash. The privacy abuse and data mishandling fiasco didn’t hurt Facebook’s money machine and the business rose stoically as the company reported strong earnings in Q1 2018.
At least two facts to put things in perspective should be – this partly compliments the social network’s resilience after unabated turbulence including the torrid congressional testimony centred around founder and CEO Mark Zuckerberg. And more importantly, it’s a little too early to see the impact of Cambridge Analytica files on Facebook’s business as the scandal surfaced late in the first quarter.
After easily smashing Wall Street expectations, the epitome of social media successfully managed to rake in $11.97 billion in revenue, that’s a whopping 49% YoY growth. Interestingly, in last three months, Facebook added about 48 million daily active users (DAUs) to reach 1.45 billion, up 3.43% from Q4 2017. Facebook had total 2.20 billion MAUs at the end of March-quarter, showing a 13% YoY increase. The company bounced back from the last quarter’s decline in the number of daily active users in the US and Canada, saying it has 185 million users there, up 1 million from Q4 2017.
Facebook’s annual revenue leapt 49% beating analysts’ estimates. The social network reported a strong 63% YoY rise in net income and clocked almost $5 billion, or $1.69 per share, 25% higher than the estimated $1.35. Shares traded up nearly 7% in after-hours trading. Evidently, the recent problems didn’t paralyze Facebook’s growth.
In the fourth quarter of last year, the quarterly earning of Facebook was recorded $12.97 billion and MAUs grew by 14% from year-ago quarter to 2.13 billion. The monthly active users have shown a positive growth this quarter, Facebook has added 67 million monthly active users this quarter to reach 2.20 billion, with a QoQ growth of 3.14%, slightly higher than last quarter’s 2.75% growth. Also, the quarterly revenue declined from Q4 2017, yet the profit increased from $4.27 billion to $5 billion. Video content and mobile ad business have given a greater push to sales growth. Even Twitter has followed the similar path.
Selling personalized ads in the form of video content that appears in News feeds has proved to be lucrative enough for Facebook. Mobile made up of 91% of total ad revenue this quarter, up from 89% in Q4 2017. The average revenue per users (ARPU) has reached $5.53, a 30.7% YoY increase. Facebook’s headcount increased from over 25,105 in Q4 2017 to 27,742 employees in this quarter, up 48% YoY.
Google and Facebook together rule the internet advertising business worldwide. The social network is expected to take nearly 18% share of the total global digital ad revenue, while Google will take nearly 32% share in 2018, according to eMarketer.
CEO Mark Zuckerberg opened up the earnings call by discussing the recent troubles Facebook has been going through, including fake news and “app developers and data privacy“. He said that the company will “make sure those tools are used for good“. Chief Operating Officer Sheryl Sandberg said, ” we have always built privacy into our ads“.
Facebook’s new policies and the new European data privacy rules, which are supposed to take effect from 25th May, would help to prevent privacy violations.
Updates from the earnings call :
- Users have shifted from feed reading to story watching, that’s why Facebook has invested heavily in new ad formats, particularly video, on its other platforms like Messenger and Instagram.
- The Internet.org has helped 100 million people connect to the internet, up from 40 million in Nov 2016.
- WhatsApp status stories have become immensely popular, clocking close to 300 million daily users, equal to Instagram stories.
- Zuckerberg looks forward to Facebook having a major role in virtual and augmented reality, which are the computing platforms of future.
- Zuckerberg said that 200 million people are in “meaningful groups” now, up from 100 million last year.