Mobile printing money

Last night we received highly anticipated results from Facebook. It's ironic that Apple results and Facebook results are released on the same day because the efficiency of the Apple products have made the Facebook mobile experience just that much better. Conversely people want fancy phones so they can access and enjoy their Facebook. Both companies compliment each other well.


Lets delve straight into the numbers, brace yourself. Daily active users increased 21% year on year to 802 million subscribers. Mobile Daily Average Users grew 43% to 609 million year on year. More people are using the network more frequently. Monthly active users increased 15% to a whopping 1.28 billion. They reckon that half the internet world uses Facebook. Amazing considering they are not in China. 1 billion people are now mobile monthly average users, an increase of 34%.


This resulted in revenue growth of 72% to $2.5bn, $2.27bn of that from advertising. And here is the clincher, 59% of that advertising revenue came from mobile advertising. Who would have thought, they have managed to monetise mobile!! And they make money by the bucket loads, net income came in at $642 million, up 193% from this period last year. To put things into perspective, that is just less than what Bidvest makes in an entire year. This equated to Earnings per share of 25c. $1.09 is expected for the full year. The stock trades at $63.5 or 58 times this years earnings. Not cheap but hey, this business is growing fast.


I was very intrigued as to how advertising using the Facebook platform actually works. So I asked my dad who owns a couple of retail stores around Johannesburg, they import incredible furniture interior pieces from around Asia, mostly once off type pieces (blatant family punt). The business is called Sotran. He has a paid for Facebook page, which he pays R32 a day for. In return Facebook will suggest his page on peoples home screens. For instance if I like the Sotran page a percentage of my friends will be suggested the page dependant on their likes. The business is categorised as ‘interiors and household goods' so it targets people who have liked similar pages. If he paid Facebook a higher premium his exposure would increase and a higher percentage of people would be exposed to the page. It is a very powerful tool and the feedback has been great. The page has more than 3000 likes already. In my opinion that is much more effective and interactive than a website.


Knowing how it all works I am even more encouraged that this business is just going to go from strength to strength. And this is just the core advertising business. The Zuck has taken the Google approach by using the huge cash inflows to buy other businesses and diversify, whether they have potential synergies or not. They are hedging against change and slowly becoming a technology investment holding business, I have written about this before. On a side note Whatsapp has reached 500 million subscribers already.


Back to the now 1.2bn subscribers, who else has that many clients? The potential is infinite to connect almost any facet of life whether it be virtual communication, mobile payments, internet connections, gaming, retail, music and many many more. Communication is the core of our human existence and Facebook are about to make Billions from it. By proving that they can monetise mobile I think The Zuck and his management team have proven themselves (not that they had to) to be very smart a savvy operators. They have certainly earned my trust, we continue to add to this one.