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Q1-2016: Facebook ad revenue up 56.8 per cent, income triples

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BENGALURU: Facebook Inc., (Facebook) advertisement revenue increased 56.8 per cent year-on year (YoY)for the first quarter ended 31 March 2016 (Q1-2016, current quarter) at $5,201 million as compared to $3,317 million in Q1-2015. Advertisement revenue growth in percentage terms was led by the US and Canada (64.3 per cent growth) and the A-Pac (62 per cent growth) regions. Ad revenue share by geography in Q1-2016 was: US and Canada - 50.3 per cent); Europe - 24.4 per cent; A-Pac - 16.3 per cent), and the rest of the world (ROW) - 9 per cent.

Facebook reported 51.9 percent growth in total revenue at $5,382 million as compared to $3,543 million in the corresponding quarter of the previous year.The social media giant’s GAAP income in Q1-2016 almost tripled (by 2.95 times) year-on-year (YoY) to $1,510 million, as compared to $512 million in Q1-2015. Non-GAAP income in the current quarter was 87.5 per cent higher YoY at $2,229 million as compared to $1,189 million.

Growth in revenue in percentage terms was also led by growth from the US and Canada (57.6 per cent growth) and the A-Pac (59 per cent YoY growth) geographical regions. A major share of Facebook’s revenue (50.9 per cent) came from the US and Canada region, while the A-Pac regioncontributed 16 per cent to revenue in Q1-2016. Europe’s contribution to Facebook revenue was 24.3 per cent and ROW contributed 8.8 per cent in Q1-2016.

Historical numbers suggest that Facebook’s revenue in Q1 is the lowest for the year, with revenue peaking in Q4. Hence, revenue increase for the year 2016 should be substantial, considering that the company has also launched new revenue generating products.

"We had a great start to the year," said Facebook founder and CEOMark Zuckerberg. "We're focused on our 10 yearroadmap to give everyone in the world the power to share anything they want with anyone."

Please refer to Fig 1 for Facebook’s revenue and Fig 2 for Facebook’s advertisement revenue breakup by geography below.

It is evident from Fig 2 below that the share of revenue from US and Canada, and A-Pac regions has been increasing, while share of revenue from Europe and ROW has been declining.

Facebook’s daily average users (DAU) increased 16.5 per cent YoY in the current quarter to 1,090 million as compared to 936 million in Q1-2015. For the current quarter A-Pac (21.9 per cent YoY growth) and the ROW (21.9 per cent YOY growth) regions lead DAU growth in percentage terms. In Q1-2016 DAU from US and Canada grew by 16.5 per cent YoY, while Europe DAU grew 7.5 per cent YoY. Please refer to Fig 3 below.

The proportion of people logging on to Facebook on their mobiles has grown to 90.7 per cent in the current quarter as compared to 85.3 per cent in Q1-2015 and 90 per cent in the immediate trailing quarter (Q4-2015).

The curve B in Fig 3 below signifies the ratio of DAUs’ to Monthly Average Users (MAU), while curve A indicates the percentage of Mobile DAUs’ to DAUs’. Mobile DAU’s in Q1-2016 have increased 23.9 per cent YoY to 989 million as compared to 798 million in Q1-2015.

ARPU

Facebook’s worldwide average revenue per user (ARPU) in the current quarter was $3.32 in the current quarter as compared to $2.50 in Q1-2015 and $3.73 in Q4-2015. The US and Canada regions lead in terms of ARPU by far. ARPU for the US and Canada region was $12.43 in the current quarter. Corresponding numbers for other regions for Q1-2016 were Europe $3.98; A-Pac1.56; ROW $0.91.

Facebook announcement

Facbook has announced that its board of directors has approved a proposal to amend and restate its existing certificateof incorporation to create a new class of non-voting capital stock, known as the class C capital stock. If the proposal isapproved, Facebook intends to issue two shares of class C capital stock as a one-time stock dividend in respect of each outstanding share of its class A and class B common stock. This proposal is designed to create a capital structure thatwill, among other things, allow the company to remain focused on Zuckerberg's long-term vision for it and to encourageZuckerberg to remain in an active leadership role at Facebook. The adoption of the proposal is subject to the approval Facebook’s stockholders at its 2016 annual meeting of stockholders to be held on June 20, 2016. The record date for thepayment of the class C stock dividend would be set by the board of directors at a later date.

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