Facebook’s Earnings Report Card
Facebook Inc (NASDAQ:FB) could not lift investor hopes by leaving the full year outlook unclear.
Although the Company had posted a modestly better than expected revenue growth and ad margins growth but the pressure that the social networking site faces from the increased mobile usage and a positively related decrease in mobile revenue still lingers.
FB had reported revenue of $1.18 billion in the second quarter which has grown 32.3% yoy with the revenue from advertising increasing 27.8% yoy on an increased ad pricing growth of 9% yoy. Ad pricing growth was much better than analyst expectations on the ramp in Sponsored Stories and News Feed ads, which drove higher conversion.
But, worrisome was the Company’s total ad growth of 18% yoy which was below the expected growth. Ad impressions continued to grow more slowly than users, largely due to increasing Facebook usage on mobile devices. An inability to monetize increasing mobile usage is causing revenue concerns among analysts. Also, it has been observed that the total user engagement and growth has declined in the six months as compared to the last year.
R&D expense in the quarter were 13.5% of the total revenue increasing 150% yoy and is expected to increase in the coming periods as the Company invests more to increase its mobile revenues. Total operating income has declined 282.6% from the year ago period to ($743) million which was due to the incurring of $1.106 billion of stock based compensation.
Adjusted net income was $295 million or $0.12 per diluted share and Free Cash Flow at the end of the quarter was ($223) million.
Worldwide Total Monthly Active Users for the quarter were 955 million growing only 29.2% yoy while Worldwide Mobile Monthly Active Users increased 67.1% yoy to 543 million. Payments & Other Fee Revenue per MAU increased 24.9% yoy to $0.20 while Total Revenue per MAU increased 2.4% to $1.24.