by Tom Taulli | January 29, 2014 7:07 pm
So far this year, earnings have been dicey for tech giants such as IBM (IBM), Apple (AAPL) and Yahoo! (YHOO), but it looks like Facebook (FB) has bucked the trend. Following news of the Q4 Facebook earnings report, FB stock is up about 12% in after-hours trading.
Revenues jumped by 63% to $2.59 billion, and Facebook earnings came to 31 cents per share of FB stock, compared to 17 cents a year ago.
Analysts were only expecting revenues of $2.33 billion and earnings of 27 cents per share.
The main driver was mobile, which accounted for more than half of advertising revenues for the first time ever — at 53%, up from a 23% share in the Q4 2012.
Meanwhile, Facebook’s mobile user metrics also surged forward. Mobile monthly active users (MAUs) hit 945 million by the end of last year, up 39% from 680 million MAUs. Mobile daily active users also soared, by 49% to 556 million.
On the Facebook earnings call, Sheryl Sandberg went into detail on how FB has become a mobile monetization machine. She talked about some of the key drivers, such as the increase in mobile user engagement, the impact from Black Friday and the addition of new brands.
But the real core of the FB stock success story is Facebook’s use of rich data to to personalize ads. Sandberg said the average return on news feed ads is an incredible 8x. Given this, it’s hard to argue that Facebook hasn’t become technological royalty in mobile.
Meanwhile, the figures included in the report don’t include Instagram, plus Sandberg also mentioned that FB is working hard to build ad products for small businesses. In other words, while Facebook is having a lot of success with monetization, it’s not running out of new avenues.
On the other side, FB has been mindful about trying not to disrupt the user experience, engaging in extensive testing of its features, like it did with autoplay video ads.
There were a few shortcomings in the Facebook earnings report. For one, Facebook provided no new details regarding teen usage — a big point of contention that helped shake FB stock earlier in the month.
Also, growth continues to be meager in North America and Europe. For instance, daily active users grew 4% in Europe and just 2% in North America. These areas are simply saturated.
However, to find more growth, Facebook has been moving more aggressively in Asia. During the past four quarters, MAUs went from 319 milion to 368 million, despite having to go against tough rivals like Line (and again, the numbers do not count the base from Instagram). Meanwhile, DAUs improved 6%.
In the FB press release, Facebook CEO Mark Zuckerberg said, “We’re looking forward to our next decade and to helping connect the rest of the world.”
And Zuckerberg should have his eyes on the rest of the world. It’s the likeliest place Facebook will find its next big push.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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