Facebook 2016 Q2 Earnings Update

Investment Analysis Clubs Saul’s Investing Discussions
1

Crushed it!

Coming off an all-time high stock price of $123.34, Facebook in Q2 2016 smashed earnings again. The social network continued steady growth just slightly slower at 3.63% compared to last quarter’s 3.77%, adding 60 million monthly users this quarter to reach 1.71 billion. It scored $6.44 billion in revenue and $0.97 EPS, blowing past estimates of $6.02 billion and $0.82 EPS.

This is Facebook’s 16th beat out of 17 quarters since it went public at $38 per share. Wall Street reacted to the positive earnings with a 7.5% bump in after hours trading to $132.60.

Revenue growth was 59% year over year, which looks favorable compared to competitor Twitter, who yesterday announced its YOY revenue growth sunk to 20% from 60% a year ago. With 84% of ad revenue from mobile, total ad revenue was $6.24 billion.

Read the entire article at https://techcrunch.com/2016/07/27/facebook-earnings-q2-2016/…

Here are the latest numbers as I have them:


Revenue (billions)	Q1		Q2		Q3		Q4
2013			1.458		1.813		2.016		2.585
2014			2.502		2.910		3.203		3.851
2015			3.543		4.042		4.501		5.841
2016			5.382		6.436

EPS (non-GAAP)	        Q1		Q2		Q3		Q4
2013			0.12		0.19		0.27		0.32
2014			0.35		0.43		0.43		0.54
2015			0.42		0.50		0.57		0.79
2016			0.77		0.97

Current 2016 Q2 Earnings:

Revenue Growth (billions)
2015 Q2 TTM Revenue = 14.64
2016 Q2 TTM Revenue = 22.16
Year Over Year Revenue Growth =51.4%, previous quarter 46.33%

EPS Growth (non-GAAP)
2015 Q2 TTM Earnings = 1.89
2016 Q2 TTM Earnings = 3.10
Year Over Year EPS Growth =64%, previous quarter 44.5%

P/E (Check Current Price) = 123.34/3.1 = 39.79

1YPEG = 39.79/64 = 0.62

And if you prefer GAAP, their GAAP earnings were up 184%!

Here are some of the other quarter’s highlights:

Daily active users (DAUs) – DAUs were 1.13 billion on average for June 2016, an increase of 17% year-over-year.

Mobile DAUs – Mobile DAUs were 1.03 billion on average for June 2016, an increase of 22% year-over-year.

Monthly active users (MAUs) – MAUs were 1.71 billion as of June 30, 2016, an increase of 15% year-over-year.

Mobile MAUs – Mobile MAUs were 1.57 billion as of June 30, 2016, an increase of 20% year-over-year.

Cash and cash equivalents: $23.29 billion

Matt
Long FB
MasterCard (MA), PayPal (PYPL), and Verizon (VZ) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

24 Likes
2

Thanks for the great recap, Matt.

After first going public their growth numbers were of course very high and came down over the next couple years. Recently, though, their growth numbers seem to be starting to re-accelerate! And they’ve only just begun to monetize their many potential revenue streams.

I’m thinking of making this one a larger percentage of my portfolio. Even though, it’s doing a pretty good job of that on it’s own.

3 Likes
3

Recently, though, their growth numbers seem to be starting to re-accelerate!

Instagram! Video!

And they’ve only just begun to monetize their many potential revenue streams.

Exactly right, Foodles. FB Messenger and WhatsApp still to come!

Matt
Long FB
MasterCard (MA), PayPal (PYPL), and Verizon (VZ) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

2 Likes
4

and
Advertising revenue rose 63% to $6.24 billion. The price per ad rose 9% in the quarter

and

Monthly active users of 1.7 billion was an increase of 15% year over year, beating estimates of 1.69 billion. Mobile monthly active users rose 20% to 1.57 billion.

Mobile represented about 84% of advertising revenue in Q2, up from 76% in Q2 2015

But word is that Pokeman has cut into FB and TWTR time by mobile users, so maybe not so hot next quarter.

The CEO says Facebook continues to make progress on efforts in the area of artificial intelligence and virtual reality
,
Wedbush analyst Michael Pachter said Facebook has a dominant competitive advantage with several growth levers yet to push
“We expect Facebook to continue its rapid growth overseas and expect it to expand the monetization of underpenetrated Instagram, WhatsApp and Messenger assets over the coming years,” wrote Pachter, who described Facebook’s competitive advantages as “virtually insurmountable.”
…

2 Likes
5

What is your interpretation of the large GAAP vs. non-GAAP numbers. Stock is reasonably priced using the non-GAAP but pretty expensive using GAAP.

thanks - sw

2 Likes
6

Hmm, I have seen great arguments for GAAP and non-GAAP both ways. I am not saying using non-GAAP is definitely right, but I have decided to use it for my own personal use because I think it better reflects the true state of a company. Saul’s argument, in his Knowledgebase, is what convinced me.

If you go to Part 2 in his Knowledgebase, his reasoning can be found about halfway down.

http://discussion.fool.com/knowledgebase-newly-revised-part-2-32…

What’s interesting about using Facebook’s GAAP earnings is that its growing at a faster rate than its non-GAAP earnings. This last quarter for instance GAAP earnings were up 184% YOY. On a TTM basis, GAAP earnings are up 112%. So while, yes, FB’s GAAP P/E is higher, it’s 1YPEG is actually lower using GAAP. Let’s compare them:


EPS (non-GAAP)	        Q1		Q2		Q3		Q4
2013			0.12		0.19		0.27		0.32
2014			0.35		0.43		0.43		0.54
2015			0.42		0.50		0.57		0.79
2016			0.77		0.97

EPS (GAAP)		Q1		Q2		Q3		Q4
2014							0.30		0.25
2015			0.18		0.25		0.31		0.54
2016			0.52		0.71

EPS Growth (GAAP)
2015 Q2 TTM Earnings = 0.98
2016 Q2 TTM Earnings = 2.08
Year Over Year GAAP EPS Growth = 112%
GAAP 1YPEG = 65.26/112 = 0.58

EPS Growth (non-GAAP)
2015 Q2 TTM Earnings = 1.89
2016 Q2 TTM Earnings = 3.10
Year Over Year EPS Growth =64%, previous quarter 44.5%
Non-GAAP 1YPEG = 39.79/64 = 0.62

I hope this helps, SW.

Matt
Long FB
MasterCard (MA), PayPal (PYPL), and Verizon (VZ) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

4 Likes