Facebook Inc (FB): Another Strong Quarter

For the third quarter, Facebook Inc (NASDAQ:FB) posted “significantly” better than expected profits and revenues, according to SterneAgee analysts Arvind Bhatia and Brett Strauser. Apart from posting better profits and revenues, the important factor was the higher than expected mobile user engagement and revenue, believe analysts.

Facebook Inc (FB): Another Strong Quarter

Numbers well above the estimates

Facebook Inc (NASDAQ:FB) reported revenue of $2.016 billion, which beat the analysts’ estimate of $1.87 billion and the consensus estimate of $1.91 billion. For the quarter, EBITDA came in at $1.261 billion, again beating analysts’ estimate of $961 million. Monthly average users (MAUs) were recorded at 1.19 billion, well above the consensus estimate of 1.2 billion. Daily average users (DAUs) of 728 million were marginally below the consensus estimate of 737 million.

For the third quarter, revenues from mobile advertising came in at $882 million, which was an increase of 35% on a sequential basis. Mobile revenues exceeded the analyst’s estimate of $754 million and the consensus estimate of $803 million, which were up 15% and 23% sequentially.

Facebook enjoys flexibility

Facebook Inc (NASDAQ:FB) posted Desktop ad revenue of $918 million, which was a decline of 2% year on year, and was higher than the analyst’s estimate of $887 million (a decline of 5% year on year). Desktop ad revenue was marginally above the consensus estimate of $913 million, a decline of 2% year on year.  Analysts are of the opinion that Facebook has the flexibility to choose whether a given ad should be displayed on the desktop or on a smaller screen. Also, analysts believe “the mix and growth rate of desktop versus mobile ads will likely fluctuate a lot quarter to quarter and so the best measure of success is the overall advertising revenue.”

Growth in advertising revenues increasing

Total advertising revenue for Facebook Inc (NASDAQ:FB) was recorded at $1.80 billion, up 66% year on year. Revenues beat analysts’ estimate of $1.641 billion, up 51% year on year and 3% sequentially, and also the consensus estimate of $1.71 billion, up 58% year on year. Increase in the advertising revenue was better than the second quarter where the revenues were up 61% year on year. Analysts note that growth in advertising revenue and adjusted EBITDA have now accelerated for 5 consecutive quarters.

For the quarter, payments revenue for Facebook Inc (NASDAQ:FB) improved by 24% year on year to $218 million, which was below the analyst’s estimate of $224 million, up 27% year on year, and beat the consensus estimate of $210 million, up 19% year on year.

SterneAgee analysts have a Buy rating on Facebook with a price target of $58.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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