5 ms·

Pre: - still 30% off highs Numbers: - 4Q EPS $2.38, Est. $2.18 - 4Q Rev. $16.91B, Est. $16.39B - 4Q Mobile Ad Rev. as % Ad Rev. 93% - Mobile represents 93%

Pre: - still 30% off highs Numbers: - 4Q EPS $2.38, Est. $2.18 - 4Q Rev. $16.91B, Est. $16.39B - 4Q Mobile Ad Rev. as % Ad Rev. 93% - Mobile represents 93% of ad revenue. Mark doesn't get enough credit for his big switch to mobile, - Cost of revenue up 74 percent year over year - Operating costs went up by 60%, Note this is more than their growth rate, really the only concerning thing from a good quarter - Annual capex is $13.9 billion, pretty close to what Microsoft spends - CFO is talking about phasing out Facebook only numbers and just disclosing total numbers(Insta, WhatsApp, and FB rolled into one) - Users: - 4Q MAU 2.32B, Est. 2.32B - 4Q DAU 1.52B, Est. 1.51B - DAU up in Europe for first time in 2-3 quarters, Flat in North America - instagram stories has 500M DAU Misc: - Headcount was 35,587 at year end. Increase of 42% for the year!! - shares back up to Oct levels, - turns out the markets like companies who can mint money and both users and advertisers just don't care at all about facebooks scandals - https://investor.fb.com/files/doc_financials/2018/Q4/Q4-2018-Earnings-Presentation.pdf https://investor.fb.com/files/doc_financials/2018/Q4/Q4-2018... - more after hours trading than alot of stocks get during the entire day - Zuckerberg saying that messaging growing faster than any other area. It will become more central to the social experience on Facebook's apps.

LocalPCGuy 8y ago
Operating costs going up makes sense if FB is hiring in order to attempt to address many of the issues that were highlighted throughout the year. I'd venture to say they will continue to grow this year, I think I just heard them mention that during the call.
panabee 8y ago
thanks for this and other breakdowns. what was the primary driver for operating costs rising so much?
- dawhizkid 8y ago
  probably headcount
- echevil 8y ago
  They probably need higher compensation to attract engineers at this point and their existing engineers are probably leaving the company at higher rate. They also need to hire a lot more people to tackle whatever issues they are trying to solve
- pianom4n 8y ago
  building lots of datacenters
- porpoisely 8y ago
  I'm guessing most of increase are the "moderators/censors" the media and political groups pressured them to hire. The same thing happened with google a couple of years ago when they were forced to hire thousands of people to moderate/censor content.
zepearl 8y ago
Do you think that this chart of historical DAU (Daily Active Users) is correct? https://www.statista.com/statistics/346167/facebook-global-dau/ https://www.statista.com/statistics/346167/facebook-global-d... Looks too stable to me (especially taking into account the scandals). What's the definition of DAU anyway? E.g. if I used it on 2 days in a row, e.g. yesterday and today, and then do nothing, am I counted as a DAU or not for that quarter? Or maybe I have to be active for at least 50% of the total days of the quarter? Etc... . Thx
- chollida1 8y ago
  Yes, I assume its correct, though to be clear, I have absolutely no way to validate it. This quote from an analyst is one reason why I believe the user numbers. > "It's hard to get people to stop using something they love. People love using these products, and there's these massive attacks that news outlets continue to heap on them, but consumers like these platforms and advertisers follow eyeballs. Most of Facebook's advertisers have no other place to go with a return on investment this good. This is clear proof."
  - zepearl 8y ago
    Thx In the meanwhile I found this (2015) about MAU: https://www.adweek.com/digital/monthly-active-users-definition-revised/ https://www.adweek.com/digital/monthly-active-users-definiti... >>We define a monthly active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, or used our Messenger app (and is also a registered Facebook user), in the last 30 days as of the date of measurement. I suppose that DAU is the same, but of course daily. Still, the chart looks too nice to me => personally, I always automatically mistrust any chart that looks that nice/regular.
    - cm2012 8y ago
      Things tend to smooth out at high volumes.
      - 8y ago
ham_sandwich 8y ago
Always mind boggling to see those margins on that sort of volume. It’s no question FB is one of the greatest money-printing machines ever built. Where does the growth come next though? Do they need to diversify their revenue streams away from advertising? Do they just start paying out dividends or can they really reinvest earnings at a sufficient return to satisfy shareholders?
- adventured 8y ago
  Facebook's forward growth is going to come from persistently leveraging the userbase with a continued, gradual slowdown in growth. They don't need to diversify their revenue stream, they're growing sales at 30% and are larger than Oracle. Their social monopoly is going to make it very difficult for them to do meaningful acquisitions freely (unless they're well outside social). They couldn't easily buy the next YouTube, WhatsApp or Instagram at this point due to anti-trust concerns. They did selectively start buying back shares recently as a form of capital return. I'd expect that to continue to the extent the stock remains modestly priced versus the business growth rate. If all they do is keep on the same path, they easily get from here to $100+ billion in sales by doing nothing special beyond what they're already doing. Plus ~$35 billion in profit to go with it. A mere 6% average sales growth per year for the next ten years gets them to $100b in sales. More likely, they get there in fiscal 2022 without much trouble.
  - jjeaff 8y ago
    That's assuming that anyone considers "social media" a monopoly category. Are they a social media company, or an online ad company? Which would give them several legitimate competitors. Or maybe they are just an advertising company, which makes them a medium sized fish in an ocean of advertising companies.
- tossaccount123 8y ago
  >Where does the growth come next though I'm amazed they haven't taken a crack at Google with a search engine in their app. Imagine how valuable combining Facebook's data with the user intent of search? A lot of users would never leave the facebook app on their phone if they could get a search engine that's halfway decent. It seems like they are leaving a ton of money on the table as it stands If its too much to develop their own maybe they could team up with Bing or something?
djsumdog 8y ago
How many of the lost users were part of the Facebook account purge?
why_only_15 8y ago
On page 9 of the PDF it shows expenses, and it lists marketing and sales as taking as much money as Research and Development, which sounds crazy to me. Facebook seems to spend an outrageous amount of money on programmers, I assume all of which goes to R&D. Do they also have this massive sales org I wasn't aware of? Where is this cost coming from?

LocalPCGuy 8y ago

Operating costs going up makes sense if FB is hiring in order to attempt to address many of the issues that were highlighted throughout the year. I'd venture to say they will continue to grow this year, I think I just heard them mention that during the call.

panabee 8y ago

thanks for this and other breakdowns. what was the primary driver for operating costs rising so much?

dawhizkid 8y ago
probably headcount
echevil 8y ago
They probably need higher compensation to attract engineers at this point and their existing engineers are probably leaving the company at higher rate. They also need to hire a lot more people to tackle whatever issues they are trying to solve
pianom4n 8y ago
building lots of datacenters
porpoisely 8y ago
I'm guessing most of increase are the "moderators/censors" the media and political groups pressured them to hire. The same thing happened with google a couple of years ago when they were forced to hire thousands of people to moderate/censor content.

zepearl 8y ago

Do you think that this chart of historical DAU (Daily Active Users) is correct? https://www.statista.com/statistics/346167/facebook-global-dau/ https://www.statista.com/statistics/346167/facebook-global-d... Looks too stable to me (especially taking into account the scandals). What's the definition of DAU anyway? E.g. if I used it on 2 days in a row, e.g. yesterday and today, and then do nothing, am I counted as a DAU or not for that quarter? Or maybe I have to be active for at least 50% of the total days of the quarter? Etc... . Thx

chollida1 8y ago
Yes, I assume its correct, though to be clear, I have absolutely no way to validate it. This quote from an analyst is one reason why I believe the user numbers. > "It's hard to get people to stop using something they love. People love using these products, and there's these massive attacks that news outlets continue to heap on them, but consumers like these platforms and advertisers follow eyeballs. Most of Facebook's advertisers have no other place to go with a return on investment this good. This is clear proof."
- zepearl 8y ago
  Thx In the meanwhile I found this (2015) about MAU: https://www.adweek.com/digital/monthly-active-users-definition-revised/ https://www.adweek.com/digital/monthly-active-users-definiti... >>We define a monthly active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, or used our Messenger app (and is also a registered Facebook user), in the last 30 days as of the date of measurement. I suppose that DAU is the same, but of course daily. Still, the chart looks too nice to me => personally, I always automatically mistrust any chart that looks that nice/regular.
  - cm2012 8y ago
    Things tend to smooth out at high volumes.
    - 8y ago

ham_sandwich 8y ago

Always mind boggling to see those margins on that sort of volume. It’s no question FB is one of the greatest money-printing machines ever built. Where does the growth come next though? Do they need to diversify their revenue streams away from advertising? Do they just start paying out dividends or can they really reinvest earnings at a sufficient return to satisfy shareholders?

adventured 8y ago
Facebook's forward growth is going to come from persistently leveraging the userbase with a continued, gradual slowdown in growth. They don't need to diversify their revenue stream, they're growing sales at 30% and are larger than Oracle. Their social monopoly is going to make it very difficult for them to do meaningful acquisitions freely (unless they're well outside social). They couldn't easily buy the next YouTube, WhatsApp or Instagram at this point due to anti-trust concerns. They did selectively start buying back shares recently as a form of capital return. I'd expect that to continue to the extent the stock remains modestly priced versus the business growth rate. If all they do is keep on the same path, they easily get from here to $100+ billion in sales by doing nothing special beyond what they're already doing. Plus ~$35 billion in profit to go with it. A mere 6% average sales growth per year for the next ten years gets them to $100b in sales. More likely, they get there in fiscal 2022 without much trouble.
- jjeaff 8y ago
  That's assuming that anyone considers "social media" a monopoly category. Are they a social media company, or an online ad company? Which would give them several legitimate competitors. Or maybe they are just an advertising company, which makes them a medium sized fish in an ocean of advertising companies.
tossaccount123 8y ago
>Where does the growth come next though I'm amazed they haven't taken a crack at Google with a search engine in their app. Imagine how valuable combining Facebook's data with the user intent of search? A lot of users would never leave the facebook app on their phone if they could get a search engine that's halfway decent. It seems like they are leaving a ton of money on the table as it stands If its too much to develop their own maybe they could team up with Bing or something?

djsumdog 8y ago

How many of the lost users were part of the Facebook account purge?

why_only_15 8y ago

On page 9 of the PDF it shows expenses, and it lists marketing and sales as taking as much money as Research and Development, which sounds crazy to me. Facebook seems to spend an outrageous amount of money on programmers, I assume all of which goes to R&D. Do they also have this massive sales org I wasn't aware of? Where is this cost coming from?