Facebook Q1 Earnings: Mobile Growth + Strong User Engagement = ‘A Good Start to 2017’

May 5, 2017

Digital Marketing Link Walls By Link Walls

Facebook’s growth story continued strong this week as the company reported 51% advertising revenue growth for Q1 2017 during its quarterly earnings call.  

“We had a good start to 2017,” said Mark Zuckerberg, Facebook founder and CEO. “We’re continuing to build tools to support a strong global community.”  

Facebook continues to benefit from the shift to mobile with mobile ad revenues increasing 58% from a year ago.

Some of the highlights from the Q1 earnings call:

  • Advertising revenue increased 51% to $7.9 billion
  • Total revenue increased 49% to $8 billion
  • Mobile ad revenue increased 58% and represents 85% of revenue. Desktop revenue is up 22%.
  • Net income increased 76% to $3.1 billion
  • Free cash flow was $3.8 billion

User Growth

In terms of user growth, the number of Facebook’s Monthly Active Users (MAU’s) increased 17% to 1.94 billion. Given these historical growth rates, Facebook should tip over the 2 billion MAU mark in mid-June. What’s really astonishing here is that the growth rate has not decelerated in recent quarters — indicating that Facebook is successfully continuing to grow the network.

New Products

Facebook highlighted several new products that were released during the quarter. For brands and retailers, the most important one is Collection. Collection is fairly similar to what Google is trying to achieve with Showcase Shopping ads: Reach higher-funnel intent by highlighting the story of a brand in an immersive experience that is optimized for mobile first.

From a targeting perspective, Facebook has also expanded Dynamic Ads to include broad audiences, which means that Dynamic Ads can now be served to consumers who haven’t been to your website but have indicated an intent to purchase. Facebook and Google are both in a race to aggregate all the various signals at their disposal to create more effective advertising. Savvy advertisers will leverage these programs to weed out the “blind spots” inherent in any ad campaign that result in wasted ad budget.

Long-Term Strategy

Finally, Facebook seems to be taking a page from the Bezos playbook of long-term investing. The company continues to highlight investments that may not pay off for 5 (or even 10) years. The big one this quarter was the addition of augmented reality (AR) features to the camera and Facebook’s plans to open these features up to developers to innovate on as an open platform. Zuckerberg spoke a good deal about these plans at Facebook’s annual developer conference, F8, last month. He even demonstrated the AR features by pointing a camera at a product and showing how the product information immediately integrated into the device.

Facebook has indicated it plans on spending over $7 billion this year on Capital Expenditures (Facebook already announced this quarter that it has broken ground in Nebraska on its 9th data center), so clearly, the company is playing for the long term.

Our message to retailers and brands: Look at where Facebook is going as an indication of where consumer behavior and technology are heading. Those who are optimizing and investing in the mobile experience, new ad format and video will win in the future.