Shares were down then up then down then up in AH trading…Right now, they’re up but who knows how that will go tomorrow. Revenue rose to $13.73B, a 33% YOY increase, while diluted EPS grew to $1.76, an 11% YOY increase. Earnings growth definitely took a hit from the increased expenses the company forecast last quarter. Total costs and expenses were up 53% YOY. Still, operating margin was 42%. For expenses rising as fast as they are, that seems fairly stellar.
After alerting investors to increasing costs and slowing growth, Facebook reported profit that topped expectations and added additional users despite a difficult year for the social-media giant. The earnings come as the company navigates a harsh year in which it has had to fend off threats of regulation and deal with a massive privacy breach and public discontent over its ability to curb misinformation before another U.S. election.
“We have a long road ahead to prevent these type of attacks in the future,” Mark Zuckerberg told an earnings call of the hacking involving 29 million user accounts late last month. “The upcoming election will be a real test of the protections we’ve put in place,” he added.
From the earnings press release:
“Our community and business continue to grow quickly, and now more than 2 billion people use at least one of our services every day,” said Mark Zuckerberg, Facebook founder and CEO. “We’re building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well.”
Here’s a brief look at the 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 10.33 12.78 2018 11.97 13.23 13.73 EPS (Diluted) Q1 Q2 Q3 Q4 2014 0.30 0.25 2015 0.18 0.25 0.31 0.54 2016 0.60 0.78 0.90 1.21 2017 1.04 1.32 1.59 2.21* 2018 1.69 1.74 1.76
2018 Q3 Earnings (Current):
Revenue Growth (billions)
2017 Q3 TTM Revenue = 36.492
2018 Q3 TTM Revenue = 51.71
YOY TTM Revenue Growth = 41.7%, previous quarter 45.6%
EPS Growth (Diluted)
2017 Q3 TTM Earnings = 5.16
2018 Q3 TTM Earnings = 7.40
YOY TTM EPS Growth = 43.4%, previous quarter 61.7%
P/E (Check Current Price) = 146.22/7.40 = 19.76
Trailing 1Y PEG = 19.76/43.4 = 0.46
Here are some of the other quarter’s highlights:
DAUs (daily active users): 1.49B, +9% YOY
MAUs (monthly active users): 2.27B, +10% YOY
Cash and cash equivalents: $41.21B, previous quarter $42.31B
Cap Ex: $3.34B, previous quarter $3.46B, up 23.1% sequentially
Mobile advertising revenue: Made up 92% of all revenue, up from 88% in prior year’s quarter
Head count: 33,606 45% increase YOY
Yes, I get this is a severely beat down stock and there’s a lot of pressures facing it. Earnings growth will be much slower this year because of the hiring and additional expenses. I get all that. But, for all of its problems, it is growing revenue by 33% and sports an op margin of 42% and trades at a P/E ratio of under 20. I’m fine with holding here.
Long FB (but suspended my account in 2012 and haven’t used any of its platforms since)
Intuit (INTU), MasterCard (MA), PayPal (PYPL), and Square (SQ) Ticker Guide
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