Facebook Earnings Q1 2015: US$3.54 bn Revenue, Mobile Ad Sales Key
What: Facebook, the world’s No. 1 social network, just reported its first quarter earnings with revenue of US$3.54 billion on non-GAAP earnings per share (EPS) of $0.42, missing analyst expectations of US$3.56 billion in revenue but beat expectations of US$0.40 EPS.
Why it matters: Facebook’s financial performance on mobile was very strong. Actually, Mobile ad sales were key to the final result as mobile sales accounted for 73% of its total revenue, up from 59% a year earlier.
Facebook, Inc. has reported financial results for the quarter ended March 31, 2015, with revenue of US$3.54 billion on non-GAAP earnings per share (EPS) of $0.42, missing analyst expectations of US$3.56 billion in revenue but beating expectations of US$0.40 EPS. Mobile ad sales were key to Facebook’s 2015 performance. For the quarter, mobile sales accounted for 73% of its total revenue, up from 59% a year earlier. In the fourth quarter, mobile ads had accounted for 69% of revenues.
The social net attributes missed revenues to fluctuating foreign exchange figures, including the weakening euro versus the dollar, saying Facebook would have made US $188 million more in revenue this quarter and and beat estimates if it weren´t for this.
First Quarter 2015 Financial Summary
|Three Months Ended March 31|
|In millions, except percentages and per share amounts||2015||2014|
|Revenue||$ 3,543||$ 2,502|
|Income from Operations|
|Non-GAAP*||$ 1,840||$ 1,415|
|GAAP||26 %||43 %|
|Non-GAAP*||52 %||57 %|
|Non-GAAP*||$ 1,189||$ 926|
|Diluted Earnings per Share (EPS)|
|GAAP||$ 0.18||$ 0.25|
|Non-GAAP*||$ 0.42||$ 0.35|
* Non-GAAP financial measures exclude amortization of intangible assets, share-based compensation and related payroll tax expenses. Non-GAAP net income and EPS also exclude the income tax effects of these non-GAAP adjustments. Non-GAAP information for the three months ended March 31, 2014 has been updated to exclude amortization of intangible assets to conform to our current period presentation. See the table below titled "Reconciliation of Non-GAAP Results to Nearest GAAP Measures."
First Quarter 2015 Financial Highlights
Revenue for the first quarter of 2015 totaled US$3.54 billion. That means a year over year increase of 42%, compared with US$2.50 billion in the first quarter of 2014. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 49%.
- Revenue from advertising was US$3.32 billion, a 46% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 55%.
- Mobile advertising revenue represented approximately 73% of advertising revenue for the first quarter of 2015, up from approximately 59% of advertising revenue in the first quarter of 2014.
- Payments and other fees revenue was US$226 million, a 5% decrease from the same quarter last year.
- Daily active users (DAUs) were 936 million on average for March 2015, an increase of 17% year-over-year.
- Mobile DAUs were 798 million on average for March 2015, an increase of 31% year-over-year.
- Monthly active users (MAUs) were 1.44 billion as of March 31, 2015, an increase of 13% year-over-year.
- Mobile MAUs were 1.25 billion as of March 31, 2015, an increase of 24% year-over-year.
Facebook reached 1.25 billion mobile monthly users (up 5%), and 798 million daily mobile users (up 7.1%). Eventhough mobile monthly growth rate fall from last quarter 6.2%, daily mobile user growth rate grew from 5.97% last quarter.
Facebook also reported 1.44 billion monthly active users, up 13% year over year, and 1.25 billion monthly mobile active users, up 24% from a year earlier. It also reported 936 million daily active users, up 17 percent from this time in 2014, and 798 million mobile daily active users. That was an increase of 31 percent from the first quarter of 2014.
581 million users now only access Facebook from mobile, up more than 10% QOQ, showing Facebook’s continued growth in developing nations where desktop and laptop computers are less common.
- Ad revenue
Ad revenue was of US$3.32 billion in the first quarter . Out of that total, Mobile accounts for 73% , up from 69% last quarter. The social net’s daily video views grew to 4 billion, up from 3 billion in January. Facebook has a great potential to grow ad revenue through video as the more organic video views Facebook gets, the more paid video ads it can slide into News Feed. Europe and Rest Of World regions were in general terms responsible for the ad revenue decline by 11%.
- Revenue Per User Decline
Facebook showed a significantly decline on average revenue per user (ARPU), particularly in the Rest Of World region (this includes developing countries). Ad ARPU in the Rest Of World declined by 15.2% this quarter from US$0.92 to US$0.78, falling even lower than in Q3 2014.
Facebook spent 29.9% of its revenue, tht is US $1.06 billion, on research and development, and of that, US$566 million, or 53.3% on share-based compensation expenses. This means the company spent a lot on acquiring and hiring during 2015 first quarter. During the first quarter of 2014, it spent just US$181 million on similar expenses.GAAP costs and expenses for the first quarter of 2015 were us$2.61 billion, an increase of 83% from the first quarter of 2014. Non-GAAP costs and expenses were us$1.70 billion in the first quarter of 2015, up 57% compared to us$1.09 billion for the first quarter of 2014.GAAP income from operations for the first quarter of 2015 was us$933 million, a 13% decrease compared to US$1.08 billionfor the first quarter of 2014. Non-GAAP income from operations for the first quarter of 2015 was US$1.84 billion, up 30% compared to US$1.42 billion for the first quarter of 2014.
With a 42% year over year revenue increase on 17% daily user growth, overall, Facebook's earnings were successful in general terms."This was a strong start to the year.We continue to focus on serving our community and connecting the world," said Mark Zuckerberg, Facebook founder and CEO.