Facebook: Is More Upside Possible?

Facebook (FB) announced fourth quarter ended December 31, 2015 total revenue of $5.84 billion, up 52 percent year-over-year from $3.85 billion during the same period last year.

Facebook declared fourth quarter of 2015 non-GAAP net income of $2.27 billion or $0.79 per diluted share, up 49 percent year-over-year from $1.52 billion of net income or $0.54 per diluted share in fourth quarter of 2014.

The global social networking major reported continued year-over-year expansion in both its top and bottom lines primarily driven by notably growing new customer base for Facebook and its rising popularity, driving greater top line growth from the company’s advertising segment.

Facebook has illustrated continuous year-over-year growth in both its top and bottom lines mainly allowed by significant increase in Facebook users sequentially and year-over-year with healthy revenue streams from its advertising business segment.

Strong growth across the board   

Facebook has continued to grow its quarter-over-quarter daily active users and mobile daily active users with DAUs on an average recorded at 1.04 billion in December 2015 and growing 17% year-over-year.
Mobile DAUs grew 25% year-over-year to 934 million on an average during December 2015.

The year-over-year expansion in new customers using Facebook daily has resulted in notable continued growth in the company’s top line being further contributed by several of its key business segments including, advertising.

Similarly, monthly active users (MAUs) till December 31, 2015 were recorded at 1.59 billion, up 14% year-over-year and mobile MAUs for the period grew 21% year-over-year to 1.44 billion which signifies the rising customer popularity for the key social networking site across the globe and thus, driving impressive company’s top line growth while delivering attractive shareholder returns.

Facebook is continuing to invest strategically in impressively catering to its expanding community, developing its business, and linking the world which has again led to year-over-year growth in the company’s mobile-only monthly active users, driving superior margins for Facebook.

The continuous healthy growths in each of the company’s monthly active users (MAUs), mobile monthly active users (mobile MAUs) and mobile-only monthly active users (mobile-only MAUs) highlights the company’s superior operational strategy, targeted towards expanding its ever-growing user community while increasingly attracting the key investors to invest into the company by offering improved shareholder returns through timely share repurchases and dividends.

Both, the consolidated company’s revenue and advertising revenue continued to grow significantly and somewhat uniformly across the globe with visible improvements in user engagements across the geographies of Europe, US & Canada and Asia-Pacific.

Impressive moves  

Facebook’s Average Revenue per User (ARPU) continued to grow both for advertising, payments and other fees operating segments with ongoing decline in company expenditures as a percentage of revenue and driven by spending reductions through payback of intangibles, share-related compensation in addition to payroll tax expenditures linked with share-related compensation and several other controlled expenses.

The social networking company is successfully enhancing its advertising and total year-over-year top line growth by user geography along with increasingly expanding Average Revenue per User (ARPU), particularly driven by exploding popularity for Facebook across the globe and posing tough competition to other such sites including, Google Talk, Twitter and Skype.

Facebook has continued to make notable year-over-year improvements in capital investments through strategic investments in purchase of equipment and property along with planned capital expenditures for acquisition of equipment and property under capital rents.


Overall, the investors are advised to purchase equity in Facebook, Inc. considering the company’s solid short and longer term growth prospects being significantly supported by strong financial position with notable total cash of $18.43 billion against smaller total debt position of just $315.00 million, encouraging the company to make future growth investments while returning a majority of the invested capital to its key stakeholders. The profit margin of 20.57% seems impressive. The PEG ratio of 1.15 indicate healthy company growth and comparable to the industry’s growth average of 1.00.
Published on Mar 31, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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