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How Worried Should Investors Be About Facebook's Slow Q2 User Growth?
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Shares of Facebook sank after the company reported lower-than-expected earnings and revenue results in the second quarter. Investors were also likely upset to see some of Facebook’s user figures.
Facebook saw its revenues climb by 42% to hit $13.23 billion, which actually fell below our Zacks Consensus Estimate of $13.43 billion. Meanwhile, the social media firm saw its adjusted quarterly earnings come in one cent below our $1.74 per share estimate.
Q2 User Growth
Aside from these top and bottom line misses, the company also failed to surpass our NFM consensus estimates for both Daily Active and Monthly Active User growth. Facebook reported that its DAUs hit 1.47 billion, which marked an 11% surge from the year-ago period. Investors should note that this just missed our 1.48 billion estimate.
Facebook’s MAU’s climbed by the exact same 11% to close the quarter at 2.23 billion, which fell below our 2.25 billion NFM estimate. But investors need to know a bit more to gain a complete picture of Facebook’s user growth.
The Bad
Facebook closed the second quarter with 185 million DAUs in the U.S. and Canada, which marked roughly 1% growth from the prior-year period. Investors might also be nervous to note that the company saw no sequential growth. At 241 million, the firm’s MAU’s were also flat from Q1 and up only 2% from the year-ago quarter. This North American slow down is a trend that helps show just how saturated the market is in the U.S. and Canada.
Moving on, FB saw its DAU totals in Europe fall from 282 million in Q1 to 279 million, which also marked less than a 3% year-over-year climb. Facebook also saw a sequential decline in terms of Monthly Active Users in the region, slipping from 377 million to 376 million. But the firm was able to expand its European user base by roughly 4% from 360 million in the second quarter of 2017.
The Good
Luckily for Facebook and investors the company was able to post strong user growth in its Asia-Pacific region. Facebook saw its DAU totals climb by 20% from 453 million to hit 546 million—which did fall roughly 4 million users short of our NFM estimate. The firm’s MAUs climbed by roughly 18% to reach 894 million.
Lastly, Facebook closed the quarter with 461 million DAUs in the “Rest of World,” which represented a 10% surge, but fell short of our NFM estimate of 468. This region also saw its MAUs climb at a similar pace from the year-ago quarter to hit 723 million.
Bottom Line
The continued slow down in the U.S. and Canada along with Europe might have been somewhat offset by Facebook’s growth everywhere else. However, investors should note that although the U.S., Canada, and Europe account for roughly 28% of Facebook’s total Monthly Active User base, these regions generated 72% of FB’s total Q2 revenues.
This is something that investors will have to pay close attention to going forward as its core money-making markets experience less and less growth. Investors can take some solace in the fact that Facebook’s photo-sharing app Instagram recently hit 1 billion MAUs on its own, topping Twitter and Snapchat’s (SNAP - Free Report) combined user totals.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
How Worried Should Investors Be About Facebook's Slow Q2 User Growth?
Shares of Facebook sank after the company reported lower-than-expected earnings and revenue results in the second quarter. Investors were also likely upset to see some of Facebook’s user figures.
Facebook saw its revenues climb by 42% to hit $13.23 billion, which actually fell below our Zacks Consensus Estimate of $13.43 billion. Meanwhile, the social media firm saw its adjusted quarterly earnings come in one cent below our $1.74 per share estimate.
Q2 User Growth
Aside from these top and bottom line misses, the company also failed to surpass our NFM consensus estimates for both Daily Active and Monthly Active User growth. Facebook reported that its DAUs hit 1.47 billion, which marked an 11% surge from the year-ago period. Investors should note that this just missed our 1.48 billion estimate.
Facebook’s MAU’s climbed by the exact same 11% to close the quarter at 2.23 billion, which fell below our 2.25 billion NFM estimate. But investors need to know a bit more to gain a complete picture of Facebook’s user growth.
The Bad
Facebook closed the second quarter with 185 million DAUs in the U.S. and Canada, which marked roughly 1% growth from the prior-year period. Investors might also be nervous to note that the company saw no sequential growth. At 241 million, the firm’s MAU’s were also flat from Q1 and up only 2% from the year-ago quarter. This North American slow down is a trend that helps show just how saturated the market is in the U.S. and Canada.
Moving on, FB saw its DAU totals in Europe fall from 282 million in Q1 to 279 million, which also marked less than a 3% year-over-year climb. Facebook also saw a sequential decline in terms of Monthly Active Users in the region, slipping from 377 million to 376 million. But the firm was able to expand its European user base by roughly 4% from 360 million in the second quarter of 2017.
The Good
Luckily for Facebook and investors the company was able to post strong user growth in its Asia-Pacific region. Facebook saw its DAU totals climb by 20% from 453 million to hit 546 million—which did fall roughly 4 million users short of our NFM estimate. The firm’s MAUs climbed by roughly 18% to reach 894 million.
Lastly, Facebook closed the quarter with 461 million DAUs in the “Rest of World,” which represented a 10% surge, but fell short of our NFM estimate of 468. This region also saw its MAUs climb at a similar pace from the year-ago quarter to hit 723 million.
Bottom Line
The continued slow down in the U.S. and Canada along with Europe might have been somewhat offset by Facebook’s growth everywhere else. However, investors should note that although the U.S., Canada, and Europe account for roughly 28% of Facebook’s total Monthly Active User base, these regions generated 72% of FB’s total Q2 revenues.
This is something that investors will have to pay close attention to going forward as its core money-making markets experience less and less growth. Investors can take some solace in the fact that Facebook’s photo-sharing app Instagram recently hit 1 billion MAUs on its own, topping Twitter and Snapchat’s (SNAP - Free Report) combined user totals.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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