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84% of Facebook’s Q3 2016 revenues came from mobile ads


Facebook posted a net profit of $3.1 billion for the quarter ended September 2016, showing a 114% year-over-year growth from profits of $1.4 billion in the same quarter last year. Net income grew 166% YOY with $2.3 billion from $896 million in the corresponding 2015 quarter. Note that Facebook’s net profit was $2.05 billion in the previous quarter. For the September ended quarter, the company’s ad revenues were $6.8 billion, a 59% year-over-year change from $4.2 billion in the same quarter last year.

Operating metrics:
– Daily active users (DAUs) – 1.18 billion for September 2016, an increase of 17% YOY
– Mobile DAUs – 1.09 billion for September 2016, an increase of 22% YOY
– Monthly active users (MAUs) – 1.79 billion as of 30 September 2016, an increase of 16% YOY
– Mobile MAUs – 1.66 billion as of 30 September 2016, an increase of 20% YOY


– Mobile advertising revenue represented 84% of advertising revenue for the third quarter of 2016, up from approximately 78% of advertising revenue in the third quarter of 2015.
– Capital expenditures were $1.10 billion.
– Cash, cash equivalents and marketable securities were $26.14 billion at the end of this quarter.

Video first focus

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Mark Zuckerberg, the founder and CEO of Facebook said that 1.8 billion people were using Facebook monthly and 1.2 billion people daily. He added that total revenues were growing 56% YOY to $7 billion and ad revenues were up 59% to $6.8 billion. The company will continue focusing on video and Zuckerberg said that since May, the number of people using Facebook Live has grown 4x. “Soon, we believe a camera will be the main way that we share. We’re already testing this in our main Facebook app with a version that has a camera directly just one swipe away from News Feed with creative effects for your photos and videos,” Zuckerberg added.

Other highlights:
– Instagram Stories (launched in August) has a 100 million DAUs
– Instagram Explore also has 100 million DAUs
– Instagram has 500 million MAUs and over 300 million DAUs
– Over 40 teams in Facebook and 25% of its engineers are using artificial intelligence to power its services
– Facebook will invest $250 million in virtual reality content on top of investments that it has already made
– Facebook is testing new camera and video features for Messenger
– In the Summer 2016 Olympics, over 270 million people created 1.5 billion “interactions”
– From January to September 2016, 109 million US users created 5.3 billion posts, comments, likes and shares related to the US election. Facebook claims that it helped 2 million people register to vote, some of whom were first time voters.
– Messenger has 33,000 bots
– Facebook Workplace has over 1,000 organizations including Starbucks, Royal Bank of Scotland and Danone
– 40 million people connected through Internet.org

Sandberg: Cheaper to have a business presence on Facebook and Instagram

Facebook’s COO Sheryl Sandberg said that the company had over 4 million active advertisers and over 500,000 active advertisers on Instagram. She added that over 3 million businesses had posted a Facebook video in October 2016, and this included organic posts and ads.

Answering a question about adoption on business pages, Sandberg said, “And the reason we think people are so active (on Facebook pages and Instagram business profiles) is, it’s just really expensive and hard to have your own mobile site or your own, even, Web page. 35% of small businesses in the US, which is the most developed market to opt-in, in many cases don’t even have a Web page of any kind. And it’s cheaper and easier to build a Web page than it is to build a mobile app and get distribution or downloads. And so what’s happening is that people are really using the Facebook business pages, and increasingly the Instagram business profiles, as their mobile presence. And we think that’s what’s working. And then we’re working hard to build products that work in-store visits and then use simplified ad products that convert them over to advertising.”

Other highlights:
– In Q2, over 60 million businesses used free Facebook Pages monthly and 1.5 million businesses are using the Instagram equivalent ‘Business Profiles’ monthly.
– Over 85% of Facebook business pages are active on mobile
– Facebook partnered with Nielsen, Datalogix, Visual IQ and Marketshare for analytics

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APAC and North America fastest growing regions

Facebook’s CFO Dave Wehner said, “Asia Pacific and North America were our fastest growing regions with ad revenue growth rates of 64% and 62%, respectively. Ad revenue grew at a rate of 50% or more in all regions in Q3. Mobile ad revenue was $5.7 billion, up 70% and representing approximately 84% of total ad revenue.”

On adblocking:

Wehner said that desktop revenue grew 18%, higher than its growth rates in recent quarters based on the company’s “effort to limit the impact of adblockers on advertising served via web browsers.”

Other highlights:
– Average price per ad increased 6% in Q3 2016, and total ad impressions increased 50% both driven by mix shift towards mobile where Facebook shows “higher priced” feeds ads.
– Payments and Other fees revenues were down 3% to $195 million as there was a decline in users spending more time time on their PCs. This revenue is generated from games played on PCs.
– Capex was $3.2 billion, up 76%, by investing in data centres, servers, office buildings and network infrastructure. The company recently broke ground on its 7th data centre in New Mexico, US, which will be live in late 2018.
– $2.5 billion free cash flow generation, and by the quarter end, the company had $26.1 billion in cash and investments.
– Facebook hired 1,200 people in Q3 and had 15,700 employees at the end of September quarter.

Download: Results | Analysts call

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Written By

I'm a MediaNama alumna from 2015-16 (remember TinyOwl?) now back to cover e-services like food and grocery delivery, app based transport and policies, platforms and media in India.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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