Q2-2015: Facebook Ad revenue up 43%

BENGALURU: The Mark Zuckerberg led Facebook, Inc (Facebook) reported a 43 percent increase in advertisement revenue in the quarter ended June 30, 2005 (Q2-2015, current quarter) at US$ 3287 million (94.7 percent of Total Revenue or TR) as compared to the US$ 2676 million (92 percent of TR) in Q2-2014 and a 15.3 percent increase as compared to the US$ 4420 million (93.6 percent of TR) in Q1-2015. As is obvious, advertising revenue, which in any case formed the biggest component of TR is increasing its share of TR even more. Facebook offered fresh evidence of its allure to deep-pocketed big brands, as it and Google Inc., increasingly take the lion’s share of the fast-growing mobile advertising market says a Wall Street Journal report. (http://www.wsj.com/articles/facebook-revenue-rises-39-1438200350). Please refer to Fig A below. Facebook_Fig_A TR in the current quarter improved by 38.9 percent to US$ 4042 million as compared to the US$ 2910 million in the corresponding year ago quarter and increased 14 percent as compared to the US$ 3546 million in Q1-2015, which had seen q-o-q revenues dip. A digression here – over the past few years, Facebook revenues (led by Ad revenue) trend to dip in the first quarter of the year. This could potentially lead to advertisers asking for, and with a higher chance of Facebook accepting/offering discounts in the first quarter of each year. For the six month period ended June 30, 2015 (6M-2015, YTD), TR increased 40.2 percent to US$ 7586 million as compared to the US$ 5412 million in 6M-2015. Ad revenue in 6M-2015 was up 45 percent to US$ 7147 million (94.2 percent of TR) as compared to the US$ 4941 million (91.3 percent of TR)in the corresponding year ago period. Mobile Ad revenue share has been increasing in Facebook’s Ad and TR. Mobile Ad revenue represented approximately 76 percent of advertising revenue for Q2-2015, up from approximately 62 percent of advertising revenue in Q2-2014 and approximately 73 percent in the immediate trailing quarter. Please refer to Fig B below.Facebook_Fig_B User Data Daily active users (DAUs) – DAUs were 96.8 million on average for June 2015, an increase of 17 percent y-o-y. Mobile DAUs – Mobile DAUs were 84.4 million on average for June 2015, an increase of 29 percent y-o-y. Monthly active users (MAUs) – MAUs were 1.49 billion as of June 30, 2015, an increase of 13 percent y-o-y. Mobile MAUs – Mobile MAUs were 1.31 billion as of June 30, 2015, an increase of 23 percent y-o-y. “This was another strong quarter for our community,” said Facebook founder and CEO Zuckerberg,. “Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services. Users now spend more than 46 minutes a day on average on Facebook and its other properties, including Facebook Messenger and photo-sharing app Instagram.” The company’s income however did not keep up with the growth in revenue. Operating Income declined 8.4 percent to US$ 1273 million (31.5 percent margin) as compared to the US$ 1390 million (47.8 percent margin) in Q2-2014, but improved 36.34 percent q-o-q from US$ 933 million (26.3 percent margin) in the immediate trailing quarter. Net income in the current quarter also declined 9.1 percent to US$ 719 million (17.8 percent) as compared to the US$ 791 million (27.2 percent margin) in Q2-2014, but improved by 40.4 percent as compared to the US$ 512 million in the immediate trailing quarter. Please refer to Fig C below. Facebook_Fig_C