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After a week of whispering and wondering, it’s a “thumbs up” for Facebook’s third quarter results (NASDAQ:FB) which were released just after the Nasdaq closed today, exceeding Wall Street expectations and the company’s own projections in every area. The irony is that Facebook’s share price is trending lower in after-hours trading.
Shares in Facebook have been increasing in value for the past week, largely in anticipation of this quarterly report. Shares opened last Wednesday, 22 October, just below 78.50 and continued to increase modestly over the week, closing yesterday at 80.28. There was barely a noticeable change this morning as it opened at 80.25. When the market closed at 4:00 pm EDT, shares were still hanging below the 81.00 mark at 80.77, down 0.61% on the day.
The amazing part of the story is that, two and a half hours later, FB has dropped nearly 10% to 72.89 per share. I thing Mark Zuckerberg was hoping for a few more “Likes” than investors seem to be posting post the posting of these results.
Billionaire investor, Kevin O’Leary, observed on CNBC that “This was a really good quarter, with management hitting everyone of the metrics they had articulated.” Visiting the matter of online advertising, O’Leary said that there are only two real players in that arena: Google (NASDAQ:GOOG) and Facebook.
How about that advertising revenue?
Facebook’s primary source of revenue is from advertising. If you want to demonstrate progress, you should demonstrate excellence in your number one revenue source. Facebook did exactly that with a 64% increase in revenue derived from advertising to $2.96 billion, contributing 90.1% of the company’s overall revenue.
Is it just me?
My memory isn’t what it used to be – and it’s never been that good even at the best of times, but I seem to recall a plethora of pre-IPO pessimists predicting a problematic future for Facebook because of its extraordinary dependence on advertising revenue. I think I’m going to take some time to go back and research those comments. Then I’m going to make a list of the analysts and columnists I can count on for ridiculous prognostications.
Or is it Facebook?
Let’s take a look at how Zuckerberg and friends performed overall.
- Total revenue from operations was $3.2 billion, up from $2.0 billion year on year.
- Net income nearly double from $425 million in 2013 to $806 million in this quarter.
- Net income YTD is more than double to first nine months of 2013, coming in at $2.24 billion, up from $977 million.
- EPS was $0.30, a 76% increase over last year’s $0.17.
It’s more than just the financials
Something has to be driving that income. That something is users. Once an entity available to only a few university students, Facebook now boasts 864 million daily active users, 703 million are on mobile devices. Those numbers are for the month of September and represent increases of 19% and 39%, respectively.
Monthly active users now number 1.35 billion people, an increase of 14% over the previous third quarter. Monthly active mobile users reached 1.12 billion, itself a 29% increase.
These facts help us to realize the magnitude of change, not only in Facebook, but in our culture as a whole.
I’m giving Facebook’s report a big thumbs up. Now where is that “Like” button? Now let’s see what happens tomorrow.
