Summary of Facebook's 3Q13 Earnings Conference Call
On Wednesday, October 30th, Facebook (NASDAQ: FB) had their 3Q13 Earnings Conference Call.
CEO Mark Zuckerberg began the management discussion, "Our mission has always been to connect the world and, to us, that means everyone." Zuckerberg emphasized the following steps introduced this quarter (3Q) to connect everyone.
- Facebook helped launch the global effort of Internet.org in September, which aims to make affordable internet access available to everyone.
- The company acquired Onavo. Zuckerberg reported, "This is a team that builds world-class data compression technology and mobile analytics, and they'll play an important role in helping us build more efficient technologies and services that use less data."
- News Feed is the most used app on smartphones.
- Facebook continues to build mobile apps, most notable this quarter includes messenger and Instagram.
- The first beta version of Graph Search on the desktop indexed more than 1 trillion connections between individuals and things. This quarter, Facebook "started testing what we call Post Search, which allows you to search all of the unstructured text and posts that people have ever made on Facebook, about 1.2 trillion more posts."
- Facebook created the Facebook Al group in September to work on artificial intelligence research and "generate new insights about the world to answer people's questions.
- Zuckerberg commented that Facebook's focus is to connect the community and to develop new services for businesses.
Third Quarter Results reported include:
- 3Q revenue was up 60 percent at $2 billion.
- 3Q total ad revenue was reported at $1.8 billion, a growth of 66 percent YoY.
- Mobile ad revenue grew 49 percent.
- Performance drivers include an increase in marketers ad dollars and product development. There were 1 million active advertisers in the 3Q, and the number continues to grow.
- Facebook estimated that 20 million small/ local businesses have pages.
- In September, 728 million individuals used Facebook on an average day, a 25 percent increase from last year.
- Facebook continues to capitalize on the mobile shift.
- CFO David Ebersman commented, "Our best analysis on youth engagement in the U.S. reveals that usage of Facebook among U.S. teens overall was stable from Q2 to Q3. But we did see a decrease in daily users specifically among younger teens. "
- Total payments and other fees revenue were reported at $218 million, up 24 percent YoY
- Total GAAP expenses for Q3 were reported at $1.28 billion.
- Q3 GAAP operating income had a 37 percent operating margin at $736 million.
- Facebook ended the quarter with $9.3 billion in cash and investments.
Interesting comments regarding social media:
- COO Sheryl Sandberg commented for the very first time in 2013, people will spend more time with digital media than watching TV; eMarketer estimates more than 5.25 hours a day on digital services including mobile, compared with 4.5 hours watching TV in the U.S. Facebook is well-positioned to benefit from this shift. In the United States, Facebook, including Instagram, gets one in eight minutes people spend on the desktop, but one in five minutes on mobile."
- Sandberg reported on Facebook's advertising impact, "Cadbury in the U.K. worked with us to sell their cream egg products the day before Halloween to talk about candy to 16 to 24 year olds. They used Facebook-generated - Facebook media for user generated posts along with TV. They reached 15 million people. 21% of those people they only reached on Facebook not TV and the combined impact of TV and Facebook were sales were up 9%."
- The COO also noted that Nilla Wafer wanted to target 35-44 year old women. Nilla Wafer was able to drive up 9 percent new buyers with the Facebook ads.
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