Facebook Q3: Ad revenue at $13.54 billion, up 33% Y-O-Y

As user growth stalls, Facebook now bets big on stories and videos, believes ads will follow as it is the future

by exchange4media Staff
Published - Oct 31, 2018 8:55 AM Updated: Oct 31, 2018 8:55 AM
mark zuckerberg

Facebook’s Q3 revenue is $13.73 billion, up 33% Y-O-Y from $10.33 billion. Of this, $13.54 billion is from the advertising pie, which also witnessed a 33% Y-O-Y growth.

Analysts had expected earnings of $1.46 per share on revenue of $13.77 billion, according to FactSet.

Facebook increased its profits 9 percent Y-O-Y, reporting $5.14 billion in net income.

Facebook had 2.27 billion monthly users at the end of the quarter, below the 2.29 billion analysts were expecting. Facebook attributed the reduced total to a change in the way it calculates users. The company’s user base was still up 10 per cent from 2.07 billion monthly users a year ago.

Daily active users (DAUs) were 1.49 billion on average for September 2018, an increase of 9% Y-O-Y, but that number just missed expectations of 1.5 billion daily active users in the quarter.

Most of Facebook’s growth is coming outside the U.S. and Europe. Facebook remained flat at 185 daily users in North America, and lost 1 million daily active users in Europe, possibly due to GDPR coming into play.

Mobile advertising revenue represented approximately 92% of advertising revenue for the third quarter of 2018, up from approximately 88% of advertising revenue in the third quarter of 2017.

"Our community and business continue to grow quickly, and now more than 2 billion people use at least one of our services every day," said Mark Zuckerberg, Facebook founder and CEO. "We're building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well."

Facebook earlier this year said revenue growth rates would decline in the third and fourth quarters, sending shares plummeting 19 percent. It was the biggest one-day plunge in history, and the shares not only haven't recovered, they've since fallen further amid a broader decline in tech stocksZuckerberg said, “It’s been an important year, (but) it’s been a tough year.”

Commenting on cyber-attacks like the one in September that exposed the personal data of more than 50 million of its users, he said Facebook has “a long road ahead” to ensure it can prevent the kinds of attacks. While Facebook has done “a lot” to build up its security systems, Zuckerberg said it would likely be about a year before the company has the level of security it wants in place.

Betting Big On Video and Stories:

Zuckerberg used Tuesday’s call to lay out the changing landscape of social networking. He specifically called out video as both an opportunity and a challenge for the company, openly admitting that it was still playing catch-up to some of its competitors.

“We are well behind YouTube,” he said. Zuckerberg said that Facebook in the past had to limit the amount of video it was serving to people on the newsfeed to make sure 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, but 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,” he said, while adding: “Video is a critical part of the future. It will end up being a large part of our business as well.”

Zuckerberg also highlighted Stories, which Facebook has added to everything from Instagram to Messenger as well as its core app, as a key initiative to remain relevant to consumers. “People now share more than 1 billion Stories every day.” Zuckerberg said. “I think that this is the future.”

However, he admitted that Stories haven’t been a success for Stories everywhere. “Our effort to start shifting Facebook from Newsfeed first to Stories first hasn’t been as smooth as I had hoped.” He also once again cautioned that Stories may not monetize as well as the Newsfeed for some time to come.

Still, Zuckerberg reiterated that the company is betting on Stories as the next big thing: “In the not-too-distant future, people will be sharing more into Stories than into Feeds.”

 

 

 

 

 

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