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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

5 cornerstones of a strong digital culture

Creating a strong company culture may sound like a daunting task, but it’s actually pretty straightforward. In fact, company culture is created in exactly the same fashion as a religion or democracy. Behaviours created from the organisation’s inception are reinforced over time by leadership, attracting like-minded people and eventually reaching critical mass to become an accepted ‘truth’.

Anthony Stevens

Founder and CEO, Digital Asset Ventures

Should you rebuild your company’s tech stack in blockchain?

The question I get asked most regularly these days is: ‘Do I need to rebuild my company’s systems on Blockchain?’ And the answer, every time, is ‘No, you’re asking the wrong question’.

Michelle O'Keeffe

CEO, Engaging.io

Customer value proposition: Getting the brand promise to your customers right

Throughout my career, I have witnessed a litany of brand names that profess to have a unique customer value proposition (CVP). In reality, however, they’ve had little more than a ‘value proposition’: A simple list of benefits applied to a general audience.

Ric Navarro

Global director of marketing and communications, Norman, Disney & Young

RE: Sales and marketing SLAs, often the choke point isn't the teams but them getting the data into the tools they want to use with the da...

Ed Fry

Why sales and marketing alignment is more important than ever

Read more

Amazing article Mitchell. I really enjoyed the read. Chatbots will be critical in the future evolution of banking and financial services ...

Giridhar Prathap Reddy

7 businesses successfully implementing chatbots

Read more

Thank you for the good and very helpful information. It is very interesting. I love all the things you share and see your beautiful creat...

รัตนาวดี ภูมิวรรณ

Former eHarmony marketing chief joins telco startup

Read more

Colin Kaepernick, not Mike Kapernick.

thisisw

Zenith's innovation leader: Mid-digital age not benefitting media, brands or consumers

Read more

AGA KHAN HOSPITAL is in need of kidney donors for the sum of 2 crore, Contact us today if you want to sell your kidney for money, and thi...

Sebastian Friedrich

Mindshare gets behind blockchain advertising alliance

Read more

Latest Podcast

More podcasts

Sign in