Facebook Puts Another Great Quarter in the Books

Facebook reported another stellar quarter Wednesday, with revenue of $4.5 billion coming in ahead of consensus expectations of $4.37 billion, and EPS of $0.57 beating the consensus by a nickel.
By Jack Mohr ,

This commentary originally was sent to Action Alerts PLUS subscribers on Nov. 4, 2015, at 5:10 p.m. EST.

Late Wednesday, Action Alerts PLUS holding Facebook (FB) - Get Report reported another stellar quarter, with revenue of $4.5 billion coming in ahead of consensus expectations of $4.37 billion and earnings per share of $0.57 beating consensus by a nickel.

Revenues were up 41% year over year, driven by growth in mobile advertising revenue, which made up 78% of overall ad revenue, up from 66% in the same quarter last year. Impressively, total sales would have been even higher, up 51% year over year, if not for negative foreign exchange effects. Total advertising revenue came in at $4.3 billion, which was a 45% jump from last year's third quarter, and was up a staggering 57% in constant currency. Free cash flow for the quarter was $1.41 billion.

As for the all-important engagement metrics, Facebook beat estimates across the board, demonstrating its increasing brand dominance across the social media space. Monthly active users, or MAUs, came in at 1.55 billion, which was better than consensus expectations of 1.53 billion, and were up almost 15% year over year and 4% sequentially. The platform boasted 1.01 billion daily active users, or DAUs, vs. expectations for 1 billion, a roughly 17% increase year over year and a 4.3% jump from last quarter. When it comes to mobile, MAUs were 1.39 billion (up 23% year over year and 6.11% sequentially) vs. estimates for 1.35 billion, and DAUs came in at 894 million (up 27.2% year over year and almost 6% sequentially). All in, 65% of users returned to the platform in one way or another each day.

To put these massive numbers into perspective, Facebook's 1 billion-plus active users per day are more than the amount of people who watch the World Cup final, and this number continues to accelerate for the company. That said, it is easy to see why Facebook commands the No. 1 destination for marketers when it comes to advertising their products and services. The company's average revenue per user (ARPU) of $2.97 worldwide, which came in ahead of expectations, is a testament to the desirable marketing platform that Facebook has created. Impressively, ARPUs were up sequentially and year over year in all of the company's major operating regions, and were a staggering $10.49 per user in the U.S. and Canada.

We are obviously impressed, albeit not surprised by any means, with CEO Mark Zuckerberg and his team in their ability to take this company to new heights with each rolling quarter. The company has stated that it strives to be the best minute and the best dollar anybody spends, and it is clearly making good on that promise as its investments have allowed the company to meet the tough demands of today's social-media-savvy user. Even better, despite the success it has had, the company has an immense amount of growth ahead of it, not only through the continued efforts to update the Facebook platform (for users, businesses and advertisers), but also through the monetization of WhatsApp, Instagram, Messenger and virtual reality. While the company did not break out any information on these subsidiary segments in the release, we will be listening closely for any updates on the call.

All in, this exceptional type of quarter has become second-nature to the social media giant, and we can't wait for what's next.

Action Alerts PLUS

, which Cramer and Mohr co-manage as a charitable trust, is long FB.

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