After a string of disappointing earning calls with Alphabet, Apple, and Twitter — all missing analysts estimates, we finally have an exception — Facebook, amassing 1.65 Billion users and beating analyst revenue estimates by a significant margin.
In its first quarter earnings report, Facebook reported a revenue of $5.38 billion, earning 77 cents per share thereby shattering investor estimates of about 62 cents per share on $5.26 billion in revenue.
Revenues increased 52% from $3.54 billion during the same period last year. Net profit, on the other hand, almost jumped three times from $512 million, or 18 cents a share during Q1 2015 to $1.51 billion, or 52 cents a share in this quarter.
For the sake of reference, Facebook approximately added 12 times as many users as Twitter which added 5 million users this quarter.
Mobile users also increased from 823 million in last quarter to 894 million with total monthly mobile users reaching 1.51 billion, thereby accounting for almost 91% of the total users of the Facebook.
A much better metric of the popularity of Facebook would be the number of users spending time daily on the social network. That number, Daily Active Users(DAUs), witnessed an even stronger growth by reaching 1.09 billion compared to 1.04 billion in Q4 2015.
And these numbers are just from Facebook. Facebook also boasts of 900 million users on Messenger, 400 million on Instagram, and over 1 billion Whatsapp users.
Highlighting the importance of the same, Mark Zuckerberg said during the investor call, “Today, people around the world spend on average more than 50 minutes a day using Facebook, Instagram, and Messenger…and that doesn’t count WhatsApp.”
The direct impact of such huge user numbers is obviously on the advertising revenues and Facebook did not disappoint on that front as well.
Facebook witnessed a year-over-year increase of 57% in advertising revenues recording $5.2 billion and again beating Wall Street expectations of $5.02 billion.
What is even more important is that mobile advertising accounted for 82% of this number which was an increase from 73% during the same period last year.
The average revenue per user also increased from $2.50 last year to $3.32 this year. However, one area of concern in this segment was Rest of the World region where average revenue per user fell to $0.91 from $1.10 in last quarter as well as from $0.94 in Q3.
This indicates that despite being ahead of its contemporaries in monetising the developing world market, Facebook may still be lagging behind in effective monetization compared to the rate of user growth in these countries.
An important announcement was also made by Facebook during the earnings call as it proposed the creation of a new class of nonvoting shares or Class C shares.
This proposal is designed to create a capital structure that will, among other things, allow us to remain focused on Mr. Zuckerberg’s long-term vision for our company and encourage Mr. Zuckerberg to remain in an active leadership role at Facebook,
said the company in its earnings report.
These shares would have the same economic rights as the other shares but without any voting rights. This will allow Mark Zuckerberg to sell some of his shares without diluting his control over the company.