Facebook turns in a great set of results

By July 25, 2013 5 Comments

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.