Facebook shuts up critics with impressive Q3 financials

Despite a few slow quarters and many damning predictions, Facebook's future looks bright again based on its accelerated growth on multiple fronts during the third quarter.

Credit: REUTERS/Valentin Flauraud
Credit: REUTERS/Valentin Flauraud

If Facebook peaked in popularity and is losing momentum, the company sure is good at hiding it. While there's been ample debate during the past few years about how quickly Facebook could decline, this theme of impending doom doesn't jive with the company's latest growth numbers.

Roughly two years ago, Facebook warned investors that teens were visiting the site slightly less frequently, and many analysts projected a gloomy outlook as a result. Last year, a group of researchers at Princeton University predicted the site would be all but dead by 2017, and even President Barack Obama said young people "don't use Facebook anymore."

Around the same time, iStrategy Labs released a study that suggested a 25 percent decline in teen Facebook use during the previous three years and concluded the company would ultimately decline in value as a result. GlobalWebIndex also said teen use slid dramatically during the same period.

Facebook fought off these potential areas of concern with an impressive turnaround in the third quarter of 2015, and it reported accelerated growth in mobile ad revenue, its user base (monthly and daily active users) and the ratio of users who access the site only via mobile devices. Daily active users (DAU) topped 1 billion for the first time during the period while mobile Facebook DAUs reached 894 million.

facebookq32015 daus Facebook

The company now has a monthly active user (MAU) base of 1.55 billion, up 14 percent from 1.35 billion in in the third quarter of 2014, and daily video views doubled during the past six months to 8 billion. As a point of comparison, the company also added more users in the United States and Canada alone (4 million) than Twitter added globally during the same quarter.

fb q3 2015 Facebook

Facebook also mostly turned the tide on the declining teen use. "The reality is that teens may not be spending as much time on it as they were before, but I think very few teens are actually abandoning Facebook altogether," says Jan Dawson, chief analyst and founder of tech research firm Jackdaw. "They probably still count as monthly active users and most of them are still on there probably daily."

Bulk of Facebook growth outside of U.S., Canada and Europe

Dawson says most of Facebook's recent growth came from regions where only a small minority of the population uses the service, such as Asia. Company-led initiatives including Internet.org, a collaborative effort with other major technology firms to bring affordable Internet access to "every person on earth," help Facebook grow in the regions where it has the most untapped opportunity, according to Dawson. The company is also developing new ways for people to engage with Facebook in addition to the core Facebook experience, he adds.

Facebook growth really started to accelerate about a year ago in Asia, and it has increased ever since, according to Facebook's most recent numbers. Meanwhile, the rest of the world, including the United States and Canada, also saw growth during the last couple of quarters. The company's year-over-year growth in MAUs declined through 2013 and 2014, but it started to again accelerate at the beginning of 2015.

facebookq32015 usergrowth Jackdaw

"[Facebook] is really just expanding access to the Internet and in the process making people Facebook users at the same time," says Dawson. "A big part of the growth is coming from these regions where people are coming online for the first time and Facebook's capturing them very early in their online lives."

Facebook makes major gains, but …

Facebook saw accelerated growth in many important areas, but the company is not infallible.

For example, its operating margins dropped to 32 percent, from a high of 48 percent 15 months ago. Desktop ad revenue is down 8 percent year-over-year. And while average revenue per user (ARPU) grew at an impressive clip in the United States and Canada, the company's ARPU didn't fare quite so well in other global regions.

"There's this increasing disparity in ARPUs in the United States and Canada versus the rest of the world," says Dawson. The company sees annual ARPU of around $40 per user in the United States and Canada, while most of the rest of the world is in the $5 to $15 range, according to Dawson.

facebookq32015arpu Jackdaw

"Even in Europe it's far lower," Dawson says. "So there is this question of can they continue to grow ARPUs in the rest of the world or are they just going to start to stagnate at much lower levels, and what does that mean for their long-term growth?"

While Facebook no longer suffers from the same challenges as in years passed, the company still faces pressure to show sustained growth. Facebook's numbers are trending upward again as of late, but a few bad quarters could dramatically change the company's outlook. For now, however, the company is firing on all cylinders, with stock at an all-time high and a market cap of more than $302 billion.

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

If creative, media and technology were bedfellows

It’s become crystal clear that if you’re going to be successful in the ever-shifting marketing landscape, you need to be able to change direction, and fast. Fluidity and agility are key, and that’s why having technology, media and creative playing on the same team is going to be crucial for the successful marketer or agency.

Jason Dooris

CEO and founder, Atomic 212

Why 2017 will herald a resurgence of values-based marketing

It doesn’t take long for predictions to become predictable: The rise and rise of Facebook; advancements in analytics; the normalisation of chatbots; personalisation, programmatic, automation, authenticity… The prediction that’s missing from these lists is that in 2017 we will witness a resurgence of values-based marketing.

Jacqueline Burns

Founder, Market Expertise

Why customer experience driven growth is set to take off

Our overall brand perceptions are invariably shaped by our experiences. And loyal customer relationships can be severed in moments by a negative service interaction.

loved the Qantas airline and hyundai one

Furqan Bin Rizwan

10 examples of virtual reality marketing in action

Read more

Someone needs a swift kick up the bum for such an idiotic idea.

random

​Why a degree is no longer enough to get you hired as a skilled marketer

Read more

The frequent flyer programs are the new profit machines for airlines all over the world, as they have morphed to be mass marketing machin...

Steve@iFLYflat

Velocity frequent flyers program strong performer in mixed half-year for Virgin

Read more

Hi Jennifer, thanks for sharing these info regarding the digital marketing trends.I've created a related video to this topic, would you m...

Fabio Carry

Predictions: 17 digital marketing trends for 2017

Read more

Great news. Marketing automation can be very useful for companies at various stages of development. With so many tools out there it's bet...

Ben

How HBF rolled out marketing automation in eight months

Read more

Latest Podcast

More podcasts

Sign in