Once again investors underestimated the size of Facebook’s business — the company posted a huge beat over expectations on revenues and earnings per share in its Q4 announcement:
- Revenues: $US2.59 billion, up 63%.
- Earnings per share: 31 cents.
- Monthly active users: 1.23 billion, up 16%.
- Mobile monthly active users: 945 million, up 39%.
- Mobile ad revenue was 53% of total revenue.
- Net income: $US523 million, up from $US64 million.
- Revenue for the full year 2013 was $US7.87 billion, an increase of 55% year-over-year.
That’s a huge beat on the top and bottom lines, and shares went up immediately more than 9% in after-hours trading.
This time, Facebook’s billowing mobile ad revenues were the factor. Mobile ad sales rose to 53% of revenues from 49% in the previous quarter.
Facebook is basically a mobile company right now — a majority of its revenues come from mobile, not from the desktop product. And the vast majority of its mobile active users are mobile users.
It’s not the first time Facebook has posted bigger numbers than Wall Street expected. It happens pretty regularly — that’s probably a function of the fact that Facebook’s ad business remains poorly understood among investors. (And, to be fair, it’s quite a complicated business with a variety of revenue bearing products that can be used in dozens of different ways.) Facebook has more than 1 million advertisers in total.
Here is the overall revenue breakdown:
Here is a breakdown of Facebook’s ad revenue, per BII:
Here’s the overall user growth:
And here’s the user growth breakdown, again from BII:
“It was a great end to the year for Facebook,” said CEO Mark Zuckerberg. “We’re looking forward to our next decade and to helping connect the rest of the world.”
Refresh this page or click here for updates as we go along.
Here is what analysts were expecting prior to the call:
- Revenues: $US2.33 billion
- Earnings per share: 27 cents.
The background to the call:
Investors will be especially sensitive to whether CEO Mark Zuckerberg, COO Sheryl Sandberg or CFO David Ebersman mention the word “teens” on the call. Last quarter, Ebersman said Facebook had seen a slight, non-significant decline in teen usage, and it immediately wiped 15% off the value of the stock.
We’re also looking for news of Facebook’s acquisition strategy. Facebook failed to acquire Snapchat and DeepMind recently — so we know it’s in the market for new companies but it has problems pulling the trigger at the right price.
Other than that, Facebook is entering an era of tough comparables. 2013 was a heck of a year for Facebook, and now it faces big, big numbers to beat, not just in terms of revenues but monthly active user growth and mobile user growth.
Growth, in fact, is always the major issue looming behind everything with Facebook — hence the teen angst.
Disclosure: The author sold Facebook stock a couple of days before the Q4 financials were disclosed.