Facebook Q2 2014 results: Strong Latam growth despite low revenues per user
What: The social net experienced an increase in revenues of 61 percent in the second quarter of 2014 vs the same period in 2013, generating a profit of US $791 million, mostly based on the strength of its online ads sales and its' overseas revenues.
Why it matters: Facebook’s user growth is almost entirely in Latin America, Asia and other emerging markets. Still, North American users are by far the most lucrative in terms of revenue per user.
“We had a good quarter” said Facebook CEO Mark Zuckerberg on his company’s second quarter earnings announcement. Facebook is already getting 55 per cent of its revenue overseas, and the growth in those markets is larger than in the U.S. The social networking service has attracted 1.1 billion users in foreign markets versus 200 million in the U.S. and Canada.
Earnings came in at 42 cents per share vs. the consensus estimate of 32 cents, and revenues came in at US $2.9 billion vs. the consensus estimate of US $2.8 billion. So , the social net experienced an increase of 61 percent in revenues, generating a profit of US $791 million, mostly based on the strength of its online ads sales.
Facebook’s daily active users increased 19% year-over-year to 829 million. Monthly active users increased 14% year-over-year to 1.3 billion. Revenue for the second quarter increased by 61% year-over-year and revenue from advertising increased by 67%.Mobile advertising revenue increased to 62% total revenues, up from 41% in the second quarter of 2013.And best of all, margins improved: GAAP operating margin rose to 48% in the second quarter of 2014 — up from 31% in the second quarter of 2013.
Almost all of Facebook users, who contributed to these results, came mostly from outside the U.S. and Europe. Facebook’s user growth is almost entirely in Latin America, Asia and other emerging markets, where revenues per user are much lower. Over the years, FB has added about 5 million new users in the developed world . Although Facebook is doing a better job of monetizing these emerging market users, North American users are still by far the most lucrative in terms of revenue per user, generating more than double the revenue of European users and almost six times the revenue of Asian users. A gap that is getting wider.
Facebook’s user growth comes almost entirely from Latin America, Asia and other emerging markets.
The company secured an average of US $6.44 per user in the U.S. and Canada during the second quarter compared to just US $2.84 per user in Europe, US $1.08 per user in Asia and US $0, 86 cents per user in the rest of the world.This means the social net continue perceiving revenue from North American users or starts to better monetize their emerging-market customers like Latin America.
The U.S. population accounts for less than 5 per cent of the world's roughly 7.2 billion people and with incremental growth coming from international markets in a near future, we will see how the social net giant sperforms against the non "U.S. demographic".