Facebook 18Q4 growth & margin analysis

Users

Take-away: return to growth in Europe, approaching saturation in N-America.

• DAU: slight growth in N-America, return to growth in Europe. Higher growth in Asia and RoW.
• MAU: same, except stable in N-America.
• DAU/MAU ratio almost stable at 65.6%.

ARPU

Take-away: growth still high, payments making a leap in N-America.

• Advertising: highest growth in N-America, down just slightly
• Payments: big jump in N-America (+51.0%), less in Europe (+13.3%).

Growth

Take-away: growth down just slightly qoq, mobile ads still growing bigger, Oculus (and Portal) starting to become meaningful.

• Overall growth was down to 30.4%.
• By source: mobile ads up to 91.5%, desktop ads down to 6.9%, payments and other up to 1.6%.
• By geography: N-America up (49.9%), Europe up (24.5%), Asia down (16.3%), RoW down (9.3%)
• Geographic area yoy growth was down a few points from 18Q3, most of all in Europe.
• Hence yoy revenue contribution from Europe was down, but qoq it was up.
• Advertising growth (30.2%) was down from 18Q3.
• Mobile ads growth down slightly (+36.1%).
• Desktop ads growth down sharply (-17.1%).
• Mobile/desktop now 93/7.
• Geographic growth similar to overall geographic growth.
• Payments and Other Fees was up sharply (+42.0%), probably of Oculus (and Portla) sales (less on reduced desktop games).
• Sharp growth in N-America and Asia (both 54.5%). Europe much slower (+18.5%). RoW still down (-14.3%).
• Contribution to total revenue still small but up (1.6%).

Margins

Take-away: efforts directed at fake news and privacy take a toll; hardware has lower margins.

• Gross margin 83.5% (down from 87.6% last year). Probably on higher scrutiny expenses and lower margins on hardware.
• EBIT margin 46.2% (down from 56.7% last year). Mainly up from increased Marketing and Sales (14.6% of sales vs. 10.6% last year).
• Employee count at 35,587 (+1,981 qoq, +42% yoy).
• Productivity: revenue per employee $163k (down from $179k last year).