4 Key Takeaways From Facebook’s $5.38B Q1 2016 Earnings Report

Facebook reached 1.65 billion monthly users and surpassed estimates in its Q1 2016 earnings report with $5.38 billion in revenues

Facebook Q1 2016 revenues

Facebook once again made Wall Street happy with its Q1 2016 earnings report. Facebook’s share price climbed more than 8% in the moments after earnings was announced, reaching more than $117 in after-hours trading, reports TC. Once again beating the Q1 estimates, Facebook made $5.38 billion in revenue and $0.77 earnings per share.

Here are the four major takeaways from Facebook’s Q1 2016 earnings report:

Mobile revenues grew by 76%

Through the first three months of 2016, Facebook made $5.38 billion and banked $1.51 billion in net income. Revenue was up 52 percent year over year, and Facebook is still operating with strong efficiency, coining $1.5 billion in profit in Q1, up 195 percent year over year. Average revenue per user was up 32 percent YoY.

97% of these revenues came from advertising which spiked by 57 percent year over year to hit $5.20 billion. Mobile revenues saw a great rise with 76 percent year over year to hit $4.26 billion and account for 82 percent of the period’s ad revenue.

Gained 60 million users in last 3 months

In Q1 2016, Facebook has been able to add 60 million more users. That means it now has 1.65 billion monthly active users, a 15 percent increase over the first quarter of 2015. Facebook stated that It reached 1.09 billion daily active users in Q1, compared to 1.04 billion in Q4 2015, up 4.8 percent — even faster growth than its monthly user count.

DAU Facebook Q1 2016

Mobile users account for 1.51 billion of the total, a 21 percent year-over-year increase. Facebook which focuses on daily user count than monthly user count, grew to 66 percent from 65 percent last quarter.

During the earnings call, CEO Mark Zuckerberg said that people around the world spend on average more than 50 minutes a day using Facebook, Instagram and Messenger and that doesn’t count WhatsApp. Back in July 2014, Mark had said American users spent 40 minutes per day on its service.

Slow revenue from the developing world

Facebook’s core growth lies in the developing countries but revenues haven’t been great from these countries. Things have turned a bit uneasy, during this quarter the company saw a steep decline in average revenue per user (ARPU) for the Rest of World region.

ARPU Q1 2016 Facebook

ARPU fell to $0.91 per user, unexpectedly down from $1.10 in the Q4, but also down from $0.94 in Q3. However, during the same time Facebook has been able to add more users in the developing world, in fact the network has seen a steady growth in terms of adding users into both Asia-Pacific and Rest of World.

Revenue concerns from developing markets aren’t new for Facebook. Earlier this year ET reported that Facebook made just Rs 9 per user on an average from India, its second-largest market outside the United States, where it earned Rs 630 per user. Nonetheless, Facebook India’s profit after tax rose 33% to Rs 16 crore during 2014-15. We will have to wait and see how this has shaped for 2015-16 timeframe.

Facebook’s mobile-only user count also grew to 894 million, up 8.62 percent from 823 million last quarter. Facebook is still growing solidly in the developing world, the monthly mobile users grew to 1.51 billion, meaning 91 percent of Facebook’s users visit on mobile.

Live videos going big

During the earnings call Mark once again laid emphasis on live videos. “We are in the beginning of a golden age of online video,” he said. Facebook has big ambitions for the use of video across its social network. CEO Mark Zuckerberg revealed that he wants to pursue interactive video formats beyond what Facebook currently offers through its livestreaming and 360-degree videos. “We’re very excited about continuing to do our work to unlock the express and connection that people want to do.”

According to a recent report from Wall Street Journal, Facebook is developing a stand-alone camera app to encourage its 1.6 billion users to create, and share, more photos and videos, people familiar with the matter said. A prototype of the app developed by Facebook’s “friend-sharing” team opens to a camera, similar to disappearing photo app Snapchat. Another planned feature allows a user recording video through the app to begin live streaming. The project is in its early stages and may never come to fruition.

Facebook’s seriousness towards live videos can’t be doubted looking at the aggressive push by the networking giant. COO Sheryl Sandber stated that people are watching three times as much of it on Facebook as they were a year ago.

However, Mark expects VR will have no impact on 2016 revenue. “This is early and it’s going to take a long time. There’s a lot of hype around this.” He explained that while VR, like AI and Internet connectivity are “important to our mission of connecting the world,” they may not pay out for years to come.