Facebook Confrence Call

I have a full position in Facebook and it has preformed quite well. I know that Fb has been warning of an expected ad revenue slow down that has yet to materialize. I read the conference call last night and there is one sentence that I am trying to figure out if I am misunderstanding or maybe David Wehner mispoke? The sentence is pasted below in bold.

Turning now to the outlook, growth engagement and advertising demand remain healthy, but there are certain factors that will impact revenue growth that are worth mentioning. As we have discussed before, we continue to expect that Facebook ad load will play a less significant factor driving advertising revenue growth going forward, and that desktop ad revenue growth rates will slow in the second half of 2017 when we begin to lap efforts to limit the impact of ad blockers.

In addition, we expect that our strategic focus on driving engagement with mobile video may slow advertising impression growth, given the relatively fewer ad impressions in video relative to News Feed. I would also note that we do not see our early efforts in Messenger monetization offsetting the factors that I just mentioned.

For these reasons, we continue to expect that our ad revenue growth rates will come down as the year progresses. We continue to expect full-year 2017 payments and other fees revenue to decline compared to full-year 2016.

Hers Matt’s FB numbers

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		7.011		8.809
2017			8.032		9.321

Surely 2017 revenue won’t be less that 2016 revenue? Do you think when David Wehner said payments and other fees was he talking about total revenue of something else? Any clarification will be appreciated.

Thanks,
Steve

3 Likes

Hey Steve,

For these reasons, we continue to expect that our ad revenue growth rates will come down

All this means is that the incredible growth rate their ad revenues are seeing will slow down. For instance, and these are completely made up numbers, but if their ad revenue is growing at 100% and going forward will only grow by 90% then the ad revenue growth rate will come down.

Do you think when David Wehner said payments and other fees was he talking about total revenue of something else?

Facebook makes about 98.5% of all revenues from ads. The rest of revenue is in a segment called “payments and other fees”. This is the revenue segment that was being referred to in this comment. In other words, the revenue category that makes up 1.5% of all the company’s revenues will be decreasing through the end of the year.

I hope this helps.

Matt
Long FB
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4 Likes

Matt,
Helps a lot - thanks.

Kindest Regards,
Steve