Facebook full year numbers

Facebook (Fays-book). According to the Dictionary of Naryshkine, "to Facebook" is a verb whereby you will completely ignore the people around you in order to post comments or statuses for maximum likes, mostly to people who are "friends", not necessarily your closest 10 besties. These "interactions" can take place in traffic, either driving or walking (both dangerous), at social gatherings when you are supposed to be talking to physical people, somehow the virtual people always seem more interesting. Weirdly, as online dictionaries point out, the word Facebook is often written with an upper case, yet the trademark name is in lower case, facebook.

Enough of that, let us chat about the company and their Q4 and full year results last evening. The results themselves are available here: Facebook Reports Fourth Quarter and Full Year 2015 Results. Annual revenues nearly clocked 18 billion Dollars for the year 2015, a roughly 44 percent increase in a single year. Somehow I don't recall anyone still talking about the disastrous Facebook IPO any more. And don't worry stress balls, the company is monetising mobile just fine.

Net income clocked 3.669 billion Dollars for the year, non-GAAP EPS for the quarter of 79 US cents comfortably trounced expectations. And as we all know, that seemingly is what counts, beating expectations. The same measure for the full year, non-GAAP EPS clocked 2.28 USD. With a share price that is up over 12 percent pre market, the stock is still not cheap by any normal metric. Yet at that pace of growth, the market is certainly affording the company a high multiple. The forward multiple is closer to 33 times earnings.

In terms of users, Facebook (or is it facebook?) clocked over 1 billion daily active users, 934 million mobile active daily users. Monthly active users were 1.59 billion, that is a sizeable number, no matter which way you look at it. There are roughly 7.4 billion people on the planet, which means that only 21 percent of the globe uses Facebook. Of course, many young people are not supposed to have access to the service, there is an age limit, my guess is that it is pretty loose, am I right parents of teenagers, or wrong? The growth rates of users by all metrics are in the high teens or mid twenty percentage growth rates. So yes, Facebook numbers are still growing, and yes, they certainly have their limits, there will be a ceiling. And to think that Facebook only turns 12 next week, astonishing, right? Myspace who?

The Zuck on the conference call: (sign up for free, remember?) Earnings Call Transcript, made some interesting observations about the platforms. 100 million hours of video are watched daily on Facebook. 500 million people use events each month, 123 million events were created in the whole of 2015. That strike rate then seems pretty low? I suppose some events don't need more than 10 people. Yet what still amazes me is that the core business has only 2.5 million active advertisers. There are 50 million small businesses that use Facebook as a platform, makes sense to use that platform rather than replicate something else.

In terms of their other major platforms, my personal favourite, Instagram, clocked 400 million users back in September. Sheryl Sandberg said on the conference call that 98 out of their top 100 advertisers on Facebook advertised on Instagram too. Facebook's "Vine", a looping video app called Boomerang reached number one in the App store in 70 countries after it was launched. Messenger has 800 million users monthly. Did you know that you could simply use the desktop version of Messenger? Really. The company is also testing an artificial intelligence digital assistant for Messenger called M. M for mom or M for Judy Dench? Either way, M deserves respect. You can of course make payments with Messenger, I am not too sure here in South Africa yet?

WhatsApp ended the year with nearly one billion users. WhatsApp is now for free, advertising will come soon no doubt. So I am guessing that Facebook is nearly there in terms of their 1 billion for 3 platforms, by the end of the year WhatsApp crossed that mark, Messenger likely to get there this year and of course the big daddy, Facebook, is there a long time ago. Perhaps Instagram at half a billion by year end. And there is more (wait!), Oculus, the virtual reality hardware starts shipping by the end of March. Pre-orders are open in 20 countries. Tim Cook yesterday said that he thought it was an exciting product, an Apple one to compete at some stage? Zuck ends off on the conference call talking about the addition to his family and continuing to try and leave the world as a better place than inherited. It sounds cheesy, I suspect however that the company could actually do exactly that.

Talking of which, the company continues to grow at breakneck speed, adding 38 percent to their headcount last year, which now numbers 12700 folks. CFO Dave Wehner said on the conference call that the company intends to continue to invest heavily in their existing businesses, across all platforms, capital expenditure levels expected to be between 4 to 4.5 billion Dollars. The pace of growth in their businesses is going to have to keep pace, both the core users and the investors expect this.

The conclusion is simple, if not always cautious. This company continues to grow at a breakneck speed off a bigger and bigger base. User adoption continues unabated, there has to be a ceiling at some stage where users are at a maximum. Equally there may be user fatigue. At the core of us is communication, somehow we are not always good at that. We continue to add to what is turning into a quality business, wonderfully run and most importantly, great experiences that have monetised (and will continue to monetise) all their core platforms. We continue to add Facebook as a core holding to our portfolios.