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Facebook turns in a great set of results

Facebook reported strong Q2 results yesterday, bucking the trend in what has generally been a disappointing earnings season for large companies. For many people, Facebook is the company they love to hate, I suspect because of privacy concerns. That dislike often manifests itself in criticism of the company’s business model and long term prospects. Whilst the company is still falling short of the heights it set for itself in last year’s IPO these results show that the business is in rude health.

Screen Shot 2013-07-25 at 10.12.51This slide from their investor presentation is perhaps the most telling. DAUs continue to grow fast. Note also the table at the bottom which shows that DAUs are growing faster than MAUs, telling us that engagement is increasing (see Nir Eyal’s post for more on why this metric is important).

Other highlights are:

  • Mobile revenues are now growing very fast  (up 75% from last quarter, incredible at this scale) and are projected to overtake desktop revenues this year
  • News feed ads are working well on desktop and mobile leading to increased ARPU – now $1.60 on average, $4.37 in the US and $1.87 in Europe
  • Engagement is increasing with younger cohorts as well as on average
  • At 31% GAAP operating margins are remain strong (GAAP margins are after share based compensation)

The only big weaknesss I see is the need to open their platform on mobile.

  • Richard Kelly

    I think if Facebook were to be more transparent with their privacy issue, they COULD become more respectable among other potential users. I know of people who don’t use Facebook because of its privacy issue, however prefer Twitter to keep in touch with the internet crowd. Becoming more transparent could interest those Twitter users.

    HOWEVER (and this is a BIG however) if Facebook were to become more transparent, would we like what we discover? After all, you need to ‘file a request’ to receive a copy of your data.[1]

    There was a story published a while back in Wired UK about Max Schrems, an Austrian Law student, who fought Facebook for records of his data. [2] He received 1,200 pages of data organized into 57 categories. This apparently included data which Max Schrems did not even provide Facebook with. The simple fact Mr Schrems needed to fight is the issue. No one should NEED to fight for their data. It should be a mutual process. A fast process, if that.

    But even then Facebook’s Q2 results is evidence that not everyone cares about how their data is used. Not everyone has the passion to fight which Max Schrems has. And I think Facebook knows this.

    If your a millennial and aren’t on Facebook, chances are, your on Twitter. There’s always going to be a great divide between these two social networks and I think Facebook has created that divide.

    But I do strongly agree with you Nic. Their weakness is opening their platform on mobile. Their ‘Home’ app took a hammering via reviews. The concept idea is there, but it wasn’t executed very well. Definitely needs work!!

    [1] Source: Facebook Help Centre
    (Link: https://www.facebook.com/help/226281544049399)

    [2] Source: Wired UK Magazine, Decemeber 2012 issue, pages 45 & 46 – “Privacy Versus Facebook”.

  • http://www.theequitykicker.com brisbourne

    If you judge people by their actions rather than what they say it seems that most don’t care too much about privacy.

  • Richard Kelly

    The more worrying issue is why are people saying negative comments in the first place. Of course there’s always going to be someone who won’t agree with whatever you do. But it’s hard to ignore a vast crowd.

    I find it almost ironic that most people express their negativity about Facebook via a Facebook Status update.

    “Actions speak louder than words” – J. Pym, 1628. Also quoted by many wise mothers.

  • http://www.theequitykicker.com brisbourne

    :)

    you are right though – it is worrying that so many people complain

  • Richard Kelly

    It’s healthy to have competition. It’s not so healthy when the competition is the very crowd your trying to attract.

    I got a smile out of you so I’m happy. Your always words of wisdom Nic :)