Reduction in Rate of Facebook growth and Revenue

Facebook has warned investors to expect slower revenue growth in the near future. This is because the era of Facebook’s nonstop growth has come to an end. The social networking giant revealed as part of its Q3 earnings results that its number of daily active users has been flat in the U.S. for all of 2018. Also, it continues to lose users in Europe. Mark Zuckerberg described serious challenges ahead after a year of scandals, falling share prices and executive departures.

In the third quarter earnings reports, they revealed:

  • Number of daily active users in US and Canada: 185 million.
  • Number of European users: Dropped from 279 million to 278 million.

Revenue

Revenue Reduction?

Facebook generated around $13.73 billion in revenue during the third quarter. It was $10.33 billion during the same quarter a year ago. Net income for the quarter came in at $5.14 billion. They earned $4.71 billion in Q3 of 2017. Diluted earnings per share came in at $1.76, compared to $1.59 the year before. Analysts had expected earnings of $1.46 per share on revenue of $13.77 billion.

It’s no longer growing in the markets in which it makes the most revenue per user. But despite that, that the company continues to grow its digital advertising business at an astonishing rate. It’s no longer growing in the markets in which it makes the most revenue per user.

Overall, the company continues to grow due to international expansion. The expansion is 9 percent year over year to its daily active user base for a total of 1.47 billion people.

Mark Zuckerberg said that” We may be close to saturated in developed countries”.

Facebook’s revenue in three months ending in September was 33 percent higher than at the same time last year. Down from 42 percent in the three months ending in June, and slightly below Wall Street’s expectations.


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More Information

Facebook blamed foreign exchange headwings for $159 million in Q3. It was the difference between its miss and a beat on revenue. Mobile accounted for 92 percent of Facebook’s ad revenue, up from 91 percent last quarter. So, when you think of the social network, be sure you’re not thinking of a desktop website.

Zuckerberg said that Facebook in the past had to limit the amount of video it was serving to people on the newsfeed. So that it wouldn’t adversely impact social interaction. He painted Facebook Watch as well as Instagram’s IGTV as effort to launch video services that don’t replace social interactions. He also said that video wasn’t necessarily the revenue driver that some had assumed it would be.

Video monetizes significantly less well per minute than users interacting in feed. Video is a critical part of the future. It will end up being a large part of our business as well.”

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Vaibhav Tyagi

Vaibhav Tyagi

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