With a monstrous userbase close to two billion users, you’ll amazed to know that Facebook is still going strong and showing signs of further growth. The social media behemoth has yet again posted a phenomenal quarterly report and beat Wall Street expectations by a long shot. Facebook has also reiterated the importance of video as a stepping stone towards its future growth as one of its primary sources of revenue is expected to shrink next year.

For the third quarter, the company posted an earning of $1.08 per shares coupled with revenue of $7.01 billion. This accounts for a 56 percent increase in revenue on the back of 89 percent increase in earnings-per-share as compared to the same quarter last year. Facebook has also surpassed analyst estimates, who predicted an earning of $.97 per share on revenue of $6.92 billion in this quarter.


But, the news of a bombastic third quarter earning call is coupled with an unfortunate development that Facebook’s chief financial officer David Wehner shared during a conference call with the investors. We’re all aware of the fact that the company had been going head-to-head with search giant Google in terms of ad publishing and revenue. But Wehner now reports that the company is now reaching its maximum ad load, so it won’t be able to expand the scope of the number of ads it shows to the users.

Ever since the breakout of social media and communication in this internet-frenzy age, Facebook has counted its enormous user base, their engagement(time spent on the platform) and ad revenue as key drivers for growth. Thus, Wehner continues to mention the grim expectations for the coming quarter and says,

We expect to see ad revenue growth rates come down meaningfully. We expect revenue growth rates will decline as we lap strong quarters.

Though the ad revenue is maxing out and is expected to taper off the next quarter, this one saw tremendous growth. As seen above, the company posted ad revenue to the north of $6.8 billion. Mobile advertising revenue represented 84 percent of the total ad revenue, which is similar to last quarter but up 78 percent from Q3’15. This is another sign which directly points to the ad revenue stagnating around these figures.

Wehner also continues to add that Facebook till date continues to see good opportunities to grow time spent. It also sees enormous opportunities to grow users and advertiser demand — while still trying to add new avenues to display these ads.

User Growth and Profits

Well, enough of the bleak revenue figures for the next quarter, let’s take a look at the scintillating growth in user base, profits and engagement time. Facebook today showed everyone that it still has the potential for scalability. It has managed to add another 70 million monthly active users(MAUs)  to its userbase, which now amounts to 1.79 billion. This is a 16 percent year-over-year increase from 1.55 billion in Q3’15.

Continuing with the monthly user count, Facebook details its 5.7 percent increase in mobile MAUs to 1.66 billion from 1.57 billion last quarter. The daily active user(DAU) count also rose from 1.13 billion last quarter to 1.18 billion, up 17% year-over-year. The company is now also boasting about another milestone as it has now signed up over a billion mobile-only users. This means that Facebook needn’t worry about Snapchat or any other social network (ahem..Twitter!) stealing away their users and engagement away from the platform.


In addition, Facebook also posted an opertaing profit of $2.38 billion as compared to the $2.05 billion last quarter. This jump in incoming cash is 16 percent as compared to the previous quarter, and a whopping 160 percent when seen on an yearly basis. The company is currently also sitting on cash, cash equivalents and marketable securities worth $26.14 billion as the capital expenditiures amount to a meager $1.10 billion.

Facebook might have posted quarterly earnings beyond expectations but it still needs to work on the censorship and community guidelines of the platform. The company has come under fire for its news and trending topics pratices related to fake news stories and unneccessary censorship more than once in the past couple of months. The company has recently introduced a major change to its community guidelines, where it will allow ‘news-worthy’ graphic posts and images to live on the platform. It, however, still requires a lot of data and work to be successfully implemented.

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