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Highlights from Facebook’s Earnings Report

Facebook on tablet

Earnings season is here, and it’s teeing up to be a very interesting one to say the least.  On Tuesday the 30th, Facebook Inc. (NASDAQ:FB) had their 3rd quarter earnings conference call, going over some important figures for the previous months.  The overall theme of the earnings report shows a decrease in revenue growth and operating margin.  One the bright side, Facebook seems to be adapting well to the new market trends as they focused heavily on their ‘Story’ and other video-based features, suggesting it will become increasingly popular over the next year.

Operating expenses are up, but so is Earnings Per Share

Facebook is costing more to operate, about 53% more than it did this time last year.  Although it is costing more to operate, they are still managing to report higher EPS than this time last year.  EPS for Q3 2017 was $1.59.  This quarter that figure is up 11% to $1.76.

Revenue growth slowing while Operating Margin shrinking

The company reported revenue growth at only 33% year over year for the quarter, which is lower than the 42% year over year growth they saw last quarter.  Additionally, the company’s operating margin has shrunk from 50% in Q3 of 2017 to 42% in Q3 of 2018.

Although revenue growth has been declining, they have still been ‘growing.’  Revenues for the quarter are up $3.4 billion year over year.

Active users still growing, but Stagnant in US

Facebook’s platform ultimately relies on the growth of their number of active users.  The more users the platform has, the more marketable potential there is.  This quarter, Facebook reported a 10% year over year increase to 2.27 billion monthly active users.  Daily active users are also up 9% with 1.49 billion users on the platform each day.  User growth came primarily from Asia-Pacific region, while growth in US-users stagnated and EU-users decreased.

Recently, highlighted by the 2016 election, Facebook has begun to address the issue of fake and spam accounts on their platform.  In the beginning of this year, VP Guy Rosen mentioned that the company had disabled about 583 million fake accounts.

Although the company is deleting fake accounts, it does not seem to have much effect on the growth of their platforms legitimate users.  All-in-all, deleting spam and fake accounts could prove to be beneficial to the social media long-term by providing a cleaner platform.

Earnings Season happens 4 times a year!  Don’t miss out on the next explosive growth season.

Learn how to trade earnings with our eBook and Earnings Calendar here.

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