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Facebook’s net profit grew 197% to $1.5B backed by ad growth

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Facebook posted a net profit of $1.51 billion for the quarter ended March 31, 2016. Net profit was $509 million in the same quarter last year, a staggering growth of 196.66%. Facebook’s net profit was primarily boosted by its ad revenues which grew 57% y-o-y to $5.2 billion from $3.3 billion in the same period last year. Some takeaways from Facebook’s earnings and call with analysts.

60 billion messages & other numbers:

Facebook owned Messenger and WhatsApp have been used to send around 60 billion messages every day. 1.65 billion people use Facebook every month and 1.09 billion people use it every day. According to Facebook founder and CEO Mark Zuckerberg, “in recent weeks, we’re also consistently seeing more than 1 billion people using Facebook on mobile every day.”

“Today, people around the world spend on average more than 50 minutes a day using Facebook, Instagram, and Messenger, and that doesn’t even include WhatsApp yet. More than 3 million businesses are using our advertising products every month,” he added.

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.

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Facebook will invest heavily in video:

Zuckerberg added that the company is continuing to invest in video. He said “We’re at the beginning of a golden age of online video. Video isn’t just a single kind of content. We think it’s a medium that allows people to interact in a lot of new ways. So that’s why in addition to normal Internet video, we’re also focusing on more interactive video experiences like Live and 360 video. I’m a big Game of Thrones fan, and the other week HBO and our Oculus team came out with a 360 video of the opening sequence of the show. And it’s now the most watched 360 video on Facebook in any 24-hour period, with more than 12 million total views.”

Virtual reality is for early adopters:

Facebook recently started shipping out Oculus Rift. The company claims there are currently around 50 games and apps built exclusively for the Rift. “And again, this is very early, and we don’t expect VR to take off as a mainstream success right away. I really want to emphasize that. Most Rift early adopters are gamers and developers. But eventually, we believe that VR is going to be the next big computing platform, and we’re making the investments necessary to lead the way there. Gear VR started shipping late last year, and the response so far has been great. There are now hundreds of apps built specifically for Gear, and people have watched more than 2 million hours of video on it,” Zuckerberg said.

Free Basics & Internet.org:

Facebook is building the TIP project and other connectivity projects under Internet.org to make it cheaper to operate mobile networks. Free Basics is still alive and kicking in other parts of the world. “Free Basics, which helps people access tools for education, health information, and communication for free, now features more than 600 services, and it has brought more than 25 million people online. That makes it one of the most successful connectivity initiatives in the world,” said Zuckerberg.

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Type C shares:

Facebook’s board of directors has approved a proposal for the reclassification of our capital stock that would involve the creation of a new class of publicly listed non-voting Class C capital stock. This will effectively create a non-voting Class C shares, that would have the same economic rights as the Class A and Class B shares. With this move, Zuckerberg can donate his stocks without losing voting rights in the company.

***

Financials and operating metrics

Daily active users (DAUs) – DAUs were 1.09 billion on average for March 2016, an increase of 16% year-over-year.

Mobile DAUs – Mobile DAUs were 989 million on average for March 2016, an increase of 24% year-over-year.

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Monthly active users (MAUs) – MAUs were 1.65 billion as of March 31, 2016, an increase of 15% year-over-year.

Mobile MAUs – Mobile MAUs were 1.51 billion as of March 31, 2016, an increase of 21% year-over-year.

– Mobile advertising revenue represented approximately 82% of advertising revenue for the first quarter of 2016, up from 73% of advertising revenue in the first quarter of 2015.

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