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Facebook net profit soars 122% to $1.56B on the back of ads


Facebook posted a net profit of $1.56 billion for the quarter ended December 31, 2015. Net profit was $701 million in the same quarter last year, a staggering growth of 122.82%. Facebook’s net profit was primarily boosted by its ad revenues which grew 57% y-o-y to $5.64 billion from $3.59 billion in the same period last year. Some takeaways from Facebook’s earnings and call with analysts.

Facebook is monetizing Instagram

Facebook began monetizing its photo sharing app Instagram. The company said that Instagram had crossed 400 million users last quarter. Chief operating officer Sheryl Sandberg said that 98 out of Facebook’s 100 top advertisers have advertised on Instagram in Q4.

However, chief financial officer Dave Wehner clarified that though Instagram did contribute to total revenues, the growth in ad revenue was primarily driven by Facebook. “We’re certainly very pleased with the performance of Instagram and it certainly made a contribution this quarter. But make no mistake, Facebook, core Facebook is really driving the top-line,” Wehner added.

WhatsApp has crossed 1 billion active users

CEO Mark Zuckerberg revealed that messaging service WhatsApp crossed 1 billion active users at the end of the year. In September 2015, WhatsApp said that it has 900 million monthly active users with India as its largest market. Earlier this month, WhatsApp said it would be dropping its annual subscription fees and test new revenue models that will allow users to communicate with businesses and organizations they want.

Wehner also added that in 2016, Facebook will giving out stock-based compensation to the tune of almost $1.6 billion to WhatsApp.”We expect our 2016 stock-based compensation to be in the range of $3.1 billion to $3.3 billion, approximately half of which is related to our prior acquisitions, most notably WhatsApp,” Wehner said.

Facebook acquired WhatsApp for $19 billion in 2014. The deal said that WhatsApp would get $4 billion in cash and $12 billion in Facebook stock. The agreement also provided for an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that would vest over four years subsequent to closing.

Video consumption growing

Zuckerberg added that the company is continuing to invest in video. He added that 100 million hours of video are watched daily on Facebook. Zuckerberg also said that Facebook is testing out new methods for discovery of videos. “We’ve been testing new experiences like suggested videos which enables people to discover more videos they might be interested in. We’re also exploring ways to give people a dedicated place on Facebook for when they just want to watch videos,” he added.

Sandberg, answering an analyst question, also said that video ads were the most important thing for consumer engagement. “We have 500 million people watching video a day. And the fact that so much video is being consumed on our platform gives us room for an ads business to grow because we want the formats to match,” she added.

Artificial intelligence

Speaking on long term goals, Zuckerberg explained the company’s plans on Artificial Intelligence (AI). Zuckerberg added that Facebook recently built a prototype AI system that combines language and vision comprehension. “You can show it an image that it’s never seen before and it can answer questions about that image,” he explained. “We’ve even used AI to help blind people experience their friends’ photos and news feed by describing the theme,” Zuckerberg added.

Facebook also made software and its AI hardware platform open source.


Financials and operating metrics

Daily active users (DAUs) – DAUs were 1.04 billion on average for December 2015, an increase of 17% year-over-year.

Mobile DAUs – Mobile DAUs were 934 million on average for December 2015, an increase of 25% year-over-year.

– Monthly active users (MAUs) – MAUs were 1.59 billion as of December 31, 2015, an increase of 14% year-over-year.

Mobile MAUs – Mobile MAUs were 1.44 billion as of December 31, 2015, an increase of 21% year-over-year.

– Facebook reported total Asia revenues of $846 million for the quarter, up 19.32% from $709 million in the previous quarter. The region now represents 14.48% of Facebook’s total revenues which was at $5.84 billion for the quarter.

– Ad revenues jumped 57% year-on-year to $5.64 billion in the third quarter. Asia-Pacific ad revenues stood at $832 million, up 19,88% from the previous quarter. The region now represents 14.76% of the the total ad revenues.

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