Facebook revenues jump 33% despite no user growth in US and Europe
Social media giant Facebook has reported a 33% year-on-year jump in revenues despite user numbers in North America and European stagnating.
In North America, the key Daily Average User figure remained at 185m – a level unchanged for a year – while in Europe it dropped for the second successive quarter to 278m.
Overall however, user numbers increased to 1.495bn, up from 1.368bn a year earlier while the company reported global revenues had risen to $US13.7bn, up 33% from the same period last year.
Much of the revenue and profit growth were due to Facebook’s mobile advertising business, representing around 92% of the company’s $13.5bn advertising revenue – up from approximately 88% a year earlier.
Despite the revenue jump, profits were only up 9% to $US5.1bn on the back of a 45% jump in headcount since Q3 2017 with 33,000 staff now with the company.
Asia-Pacific, including Australia, was the bright spot for the company’s user growth with 561m Average Daily Users, up 17.9% from 476m the year before.
Facebook’s stagnant user numbers in Europe and North America continue the toughest year in the social media giant’s 14 year history which started with revelations research firm Cambridge Analytica had harvested the personal data of 87m users, and continued with accusations the company has mishandled online bullying and harassment, which saw the service tumble down consumer trust rankings.
Earlier this month, the company appointed former UK deputy Prime Minister, Nick Clegg, as global head of communications in an effort to head off attempts in Europe and North America to tighten regulation and taxation of the global online tech platforms.
In its earnings update, the company reported its effective global tax rate was 13%, essentially unchanged from the previous quarter but up from the 10% at the same time last year.
However, Average Revenue Per User (ARPU) figures indicate Facebook may be facing a deeper problem with its stagnant North American and European numbers.
While global ARPUs rose to $6.09, from $5.07 the year before, North American users are by far the biggest cash cows in attracting $27.61 per user – up from $21.20 a year earlier – while Europeans the next most lucrative users with $8.82 per head.
The markets showing the fastest user growth, Asia-Pacific and the Rest of the World, only earn $2.67 and $1.82 respectively. While that may indicate opportunities to grow ARPU in those markets, the stagnant user numbers in its richest markets mean the company will have to find ways to further grow revenue per user.
Founder Mark Zuckerberg flagged further investment in video, commerce and messaging for that growth, saying: “Our community and business continue to grow quickly, and now more than 2 billion people use at least one of our services every day.
“We’re building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well.”
The stock market was happy with the results, with Facebook’s shares gaining 2.91% for the day to finish $146.22.
