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Facebook reported its Q1 earnings on Wednesday afternoon, beating expectations on the top and bottom lines.
The stock surged nearly 9% after-hours.
Here are the most important numbers:
Earnings per share:$0.77 vs. $0.62 expected.Revenue: $5.38 billion vs. $5.25 billion expected, and up 52% year-over-year. Ad revenue is up 57% year-over-year.Monthly active users: 1.65 billion vs. 1.62 billion expected.Daily active users:1.09 billion on average for March 2016. This quarter, 66% of Facebook’s monthly active users (MAU) were daily active users, which is up from 65% during the same period last year.
Along with strong growth across the board on those key numbers, Facebook also once again proved that its mobile business is thriving. It had 1.51 billion mobile MAUs, up 21% year-over-year, and the company made 82% of its advertising revenue from mobile this quarter, versus 73% at this time last year.
There are 894 million monthly active users who check Facebook only on their smartphones, not on a PC. On the company’s earnings call, CEO Mark Zuckerberg said that people spend on average more than 50 minutes a day across its suite of apps, excluding WhatsApp. In regards to WhatsApp, he also said that it plans to focus on “growth and engagement” instead of diving into sponsored posts like Messenger has.
Outside of ad revenues, Facebook makes a small amount of money from payments and other fees: $181 million this quarter, which is down 20% year-over-year – the company has previously attributed this decline to a drop in revenue from gaming apps.
The company is also proposing a new class of nonvoting stock to make sure that Zuckerberg retains majority control:
If the proposal is approved, we intend to issue two shares of Class C capital stock as a one-time stock dividend in respect of each outstanding share of our Class A and Class B common stock. This proposal is designed to create a capital structure that will, among other things, allow us to remain focused on Mr. Zuckerberg’s long-term vision for our company and encourage Mr. Zuckerberg to remain in an active leadership role at Facebook.
Here are the other important numbers:
Total costs and expenses were $3.37 billion, up 29% year-over-year, and capital expenditures were $1.13 billion.Free cash flow for the first quarter of 2016was $1.85 billion.Facebook has 13,600 employees, up 35% from the same time last year.Most of Facebook’s revenue comes from North America and Europe with about only 24% ($1.3 billion) coming from Asia-Pacific and the rest of the world. But those areas account for 66% of its monthly active users. The average revenue per user in those regions is still tiny, compared to in the US: $1.56 and $0.91, respectively, versus $12.43 and $3.98 in the US and Europe.
Here’s a look at where Facebook’s revenue comes from geographically:
Here are the highlights from the company’s call:
Zuckerberg started out by discussing the company’s proposed new stock structure. He recalled how having founder control protected Facebook from selling in the early days and allowed it to buy Instagram. With the new structure, he’ll be able to keep all of his power while still giving away $1 billion in shares per year.
Video was also a hot topic on the call. Facebook COO Sheryl Sandberg said that people are sharing and creating three times as much more video on the social network year-over-year, and that they’re watching 40% more on Instagram in the last six months.
More generally, we also learned that Facebook’s average price per ad increased 5% and impressions increased 50%.
Although the company has started rolling out ads on Messenger, it doesn’t plan on doing the same for its other chat app, WhatsApp, just yet.