Facebook‘s stock is up about 15% year lớn date & 18% in the last year following solid results in the first three quarters, negatively impacted by the company’s expectations that revenue growth will likely come down meaningfully going forward. Facebook’s stock was also negatively impacted by the uncovering of several bugs in the company’s page views, instant article views and video views data.

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In terms of financial performance & engagement metrics, the company significantly outperformed expectations in the first nine months of 2016. Facebook registered 56% growth in revenue to lớn about $19 billion in the first nine months of 2016 over the same period last year, driven by solid growth in advertising. Operating income more than doubled khổng lồ about $7.9 billion & the company’s operating margin improved from 30% in the first nine months of năm ngoái to almost 42% in the first nine months of 2016. This helped Facebook post extraordinary 172% year over year earnings growth in the period khổng lồ $2.07 a share. In this note, we discuss Facebook’s performance in the last eleven months and its areas of potential growth for the near future.

Advertising Revenue Growth: Advertising revenue, Facebook’s primary source of revenue, grew 60% to lớn over $18.2 billion in the first nine months of 2016 driven by growth in sản phẩm điện thoại ad revenues across geographies. Thiết bị di động ad revenues contributed 83% of total advertising revenues, up from 76% in the same period last year. Mobile ad revenues grew both because of an increase in frequency of ads shown in News Feed and the price per ad. The average price per ad increased 7% & total ad impressions rose 50% in the first nine months of năm 2016 over the same period last year. Facebook’s management stated in its third quarter earnings điện thoại tư vấn that advertising growth is likely khổng lồ come down meaningfully in 2017 because the company is going khổng lồ focus on keeping ad impressions at sustainable levels. Therefore, the next wave of ad revenue growth is expected to lớn come from price per ad and subscriber growth.

Monthly Active Users: There was 16% year over year growth in Facebook’s monthly active users (MAUs) to 1.79 billion at the kết thúc of September 2016. This translates into an average of 1.72 billion users accessing Facebook at least once every month for the first nine months of this year. Khổng lồ put this in perspective, this means that about 23% of the world’s population logs in to lớn Facebook on a monthly basis. This ratio varies from about 62% in the U.S. And Canada khổng lồ 12% in the Asia-Pacific region. Facebook’s monthly active user base remained strong across all platforms, including Instagram, WhatsApp & Messenger. At the end of September 2016, the number of MAUs on Instagram, WhatsApp and Messenger were 500+ million, 1+ billion & 1+ billion, respectively.

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Free Cash Flow Growth: One of the impressive things about Facebook’s business model is its ability lớn increase free cash flows faster than its đứng top line. Despite a 76% increase in capital investments over the same period in 2015, Facebook’s free cash flows increased 66% year over year in the first three quarters of 2016. This should help the company continue khổng lồ make investments into newer areas such as its internet.org venture, virtual reality, augmented reality and artificial intelligence.

Areas Of Potential Growth

International Markets: 87% of Facebook’s users are outside North America but they contribute less than 50% of the company’s total revenues. If we exclude the relatively mature European market, 68% of Facebook’s users in Asia-Pacific và rest of the world contribute just 26% of the company’s revenues. This can also be gauged from the fact that the average revenue per user in the Rest of the World region was only $1.21 in Q3 năm nhâm thìn compared khổng lồ $15.65 in North America. This presents a huge opportunity of growth for the social truyền thông media giant và this metric is bound to lớn improve going forward, as internet connectivity and điện thoại cảm ứng usage increases in these regions & digital sale gains acceptance over traditional advertising channels.

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