Following what can only be described as a tumultuous week for
managed to hold on to much of the gains it enjoyed after
announcing yet another blowout quarter last week. The question
going forward is: How does the king of social media continue its
run of stellar revenue, earnings, and user growth?
The challenges for Facebook include finding the means to grow
its already impressive 1.32 billion monthly average user (MAU)
base, and further monetizing its growing suite of services,
without alienating all those users. To those ends, CEO Mark
Zuckerberg and team just may have found the answers Facebook fans
were hoping for.
On a roll
Like its wannabe brethren
, Facebook's recent 2014 Q2 was strong across the board.
Facebook's revenues jumped 61% to $2.91 billion, in large part
because it was able to grow its mobile MAUs, and even more
importantly, generate significantly more revenue from the over 1
billion "friends" on the go.
As upstart Twitter demonstrated after announcing its own Q2
earnings last week, it's a very good time to be a social network
in this age of digital advertising. As more and more marketing
departments look online for generating new business, Facebook and
Twitter, among others, look to continue reaping the rewards.
With just over $312 million in revenues last quarter, Twitter
is far removed from the world Facebook occupies. But there's no
denying 124% revenue growth is certainly a step in the right
direction for Twitter, and its much-maligned lack of user growth
even got a shot in the arm. With 271 million MAUs, Twitter still
has a long way to go to catch Facebook, or even one of its many
assets like WhatsApp, but at this point, even baby steps are
seemingly enough as Twitter's valuation continues to climb.
Though Facebook is further along in its business cycle, it
also enjoyed stellar growth in virtually all areas of its
business. Not only has top-line revenue climbed, but earnings,
margins, and operating income were all much improved compared to
last year. Which begs the question: How does Facebook continue
its impressive run of financial and user growth?
Internet.org is getting the world online
Nearly 82% of Facebook's daily average users (DAUs) are outside
of North America for a very simple reason: Domestically, most
everyone that's going to utilize the service already is. That
means Facebook needs to look elsewhere to continue growing its
user base, and it's taking steps to make that happen.
When the Internet.org initiative was first announced, it
sounded like a great concept, connecting the rest of the world to
the Internet. Now, the partnership that includes some of the
world's most influential companies is taking action, and Facebook
and others, including Twitter, may reap the long-term rewards.
Mobile phone owners in Zambia are able to download an app
that provides users with a set of free Internet services
including, not surprisingly, Facebook.
Zambia may not top the list of emerging growth markets, but
this is just the first of many steps for Facebook and its
Internet.org partners to get the world online. As many users as
Facebook has, it's just a drop in the bucket relative to the
world's population, and that's what Internet.org hopes to
In what may be the first of many steps to generate additional
revenue growth, Facebook will soon require its mobile users to
download its Messenger app if they want to chat. Though Facebook
said it's separating its Messenger app to "avoid confusion," it
may turn out to be the first step in differentiating the many
pieces of FB -- Instagram, Oculus, WhatsApp, and Messenger for
example -- to better monetize each asset as a separate
Facebook hopes that separating services like Messenger will
make it easier for prospective advertisers to determine what its
particular value is, compared to Instagram or other Facebook
properties. Perhaps Facebook's future will see clients buying ads
-- video or traditional -- on one, two, or even three disparate
Final Foolish thoughts
Facebook's recent string of outstanding financial results has
both analysts and shareholders applauding. But in a world of
"what have you done for me lately," Zuckerberg needs to
continually look for new growth opportunities. Getting the rest
of the world online, and generating the most bang for his buck
from Facebook's disparate businesses, are two ways Facebook can
keep growing into the future.
More from The Motley Fool:
Warren Buffett Tells You How to Turn $40 into
Internet.org and Other Steps Facebook Is Taking
to Fuel Growth
originally appeared on Fool.com.
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