Facebook Q3 Earning Report Lays Out Challenges and Focus

As Mark Zuckerberg laid out his company’s Q3 earnings report, he indicated the areas of struggle for the company in the year of legal and political related news headlines, and those struggles have had a financial impact on the company’s user growth. However, he also indicated how the company is expanding into changes in user trends and how the company plans to capitalize in those areas.

In releasing Facebook’s 3rd quarter earnings report, Zuckerberg led by highlighting that the number of those that use one of Facebook’s services continues to increase, with 2.6 billion monthly users reported in Q3 over 2.5 billion monthly users last quarter. Moreover, Zuckerberg noted that “more than 2 billion people use one of our services every day.”

However, that increase is seen coming from geographical areas and systematic areas that are not as profitable for the company. North American Monthly Active Users (MAU) were near steady at 242 million users and Europe decreased from the last quarter. The total increase was accomplished by rises in Asia and the rest of the world.

Meanwhile, Zuckerberg noted there has been an increase in user engagement in software platform areas that are less monetized, notably video usage with Facebook Watch and Instagram’s IGTV on the rise as well as secure messaging with WhatsApp and Messenger. Similarly, there has been an increase in usage of stories by active users. However, Zuckerberg noted that there has not been the same level of revenue return by those areas and noted methods of increasing that shortcoming.

Zuckerberg acknowledged the privacy and election related issues that have burdened the company, but he said that the company has put protections in place to prevent it in the future. However, those protections have not been tested, yet. “The upcoming elections will be a real test of the protections we put in place,” he said and noted the shared responsibility of prior company related errors by the users of the software.

Meanwhile, CFO David Wehner noted some financial challenges on the horizon for the company, as well. Noting in the earning call that the company expected “that full year 2019 total expenses will grow 40-50% compared to full year 2018.”

However, despite these challenges, ad revenue was up 33% for the company for Q3 2018 compared with Q3 2017, and earnings per share of Facebook stock stood at $1.76, influenced by the company buying back $4.3 billion of its class A common stock, and net income at $5.1 billion.

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