Facebook's CC: Messenger users top 200M; slower ad growth expected


Over 200M of Facebook's (FB) 1.28B MAUs use Facebook Messenger, Mark Zuckerberg shares on the Q1 CC. That figure, which comes as Facebook begins requiring mobile users to download the standalone Messenger app to use it, suggests Messenger's user base is on par with Instagram's and ~40% of WhatsApp's. (CC live blogs I, II)

Outgoing CFO David Ebersman notes headcount rose 39% Y/Y in Q1, and expects GAAP costs/expenses will grow 35%-40% in 2014; GAAP growth was 32% in Q1, and non-GAAP growth 26%.

Ebersman also warns Y/Y ad sales growth (82% in Q1) will slow meaningfully going forward. Facebook's 2014 revenue growth consensus (also accounts for payments/other revenue) was at 44.6% going into earnings.

Sheryl Sandberg cautions Facebook's auto-play video ads (launched last month amid high expectations) won't be a major contributor this year. On the other hand, she notes use of Facebook's custom targeting ad tools has grown 10x Y/Y, boosting ROI (and with it, ad prices).

Though accounting for just 16% of Facebook's MAU base, North America produced 47% of Facebook's Q1 revenue, down just slightly from Q4's 48%. Facebook's North American ARPU ($5.85, up $2.35 Y/Y) remains well above its ARPUs for Europe ($2.44, up $0.84), Asia ($0.93, up $0.29), and elsewhere ($0.70, up $0.20).

FB +3.7% AH. Q1 results, details, slides.

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Comments (8)
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    When a number of employees is growing faster than the number of users, or revenues, it's not a good sign.
    23 Apr 2014, 10:09 PM Reply Like
  • khepp
    , contributor
    Comments (35) | Send Message
     
    Fb will continue to grow with all it's strong programs,apps and internal projects not to mention India joining in large numbers every month and China soon to let Fb in will only add to the many layers of investments, I will be there for the gap up, will you.
    24 Apr 2014, 12:27 AM Reply Like
  • eftvox
    , contributor
    Comments (232) | Send Message
     
    I will be for sure khepp. Ever read the book "Good to Great"? I hope Zuck has...long $FB
    24 Apr 2014, 08:46 AM Reply Like
  • bo-Berkeley
    , contributor
    Comments (17) | Send Message
     
    Saying that when employees grow faster than users or revs is "never a good sign" is a absurd overstatement. It ignores the concepts of business cycles, building out human infrastructure for new business lines or international expansion, and the simple fact that during periods of massive rev gains that hiring May not have kept up. I think fb has aspects of all three. Going on here but who the heck knows. What I do know is the blanket statement that hiring sprints are bad is lacking.
    24 Apr 2014, 10:34 AM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    Facebook is not a startup anymore. It has 1bn users and many thousands of employees. The fact that they needed to hire 39% more employees is a huge red flag - Facebook is not Wal-Mart, FedEx or even Amazon. Most of their new products flopped, but they keep hiring. You are welcome to ignore this warning sign, but when the stock drops 50%, look back at this moment.
    24 Apr 2014, 12:09 PM Reply Like
  • eftvox
    , contributor
    Comments (232) | Send Message
     
    I disagree Andrei. Look at the top 10 banks in this country. I bet they don't have 1 billion customers but I bet they have more employees than FB. Case in point, $C has over 350k employees, 250mm customers in 140 countries. $FB at +/- 3,800 employees. QUIT HATING ON A MEGASTAR....Long $FB
    24 Apr 2014, 12:27 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    Banks are cutting employees, not hiring. As an investor, you should be excited when costs are cut.

     

    Facebook employees are very expensive. Salaries are up 10% on average this year across all technology companies. Add this on top of 39% increase in employee count, and their costs are growing way faster than revenues.
    24 Apr 2014, 12:36 PM Reply Like
  • eftvox
    , contributor
    Comments (232) | Send Message
     
    i get excited at total opportunity. for the potential return on $FB, I see their roadmap aligned, costs controlled, upside huge. Banks, not so much. thanks!
    24 Apr 2014, 12:38 PM Reply Like
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