Facebook has released its Q3 2018 earnings report, which shows increases in both users and revenue. But the topline summary isn't the whole story here.
First off, on users - Facebook added 24 million daily active users, taking it up to 1.495 billion people who are logging onto the platform every day.
That's a good result, but the concern here is that European DAU numbers dropped for the second consecutive quarter, while North American usage remained flat. These are the markets where Facebook generates the vast majority of its income (as shown in the chart below), and while expanded growth in other regions bodes well for future opportunities, a decline in usage in the core markets could be problematic.
Similar usage trends are reflected in the monthly active user stats - which, it should be noted, increased to 2.27 billion overall.
Of course, declines like this need to be viewed in context - 2.27 billion users is huge, no other platform is even close, and this figure doesn't account for usage of Messenger, WhatsApp or Instagram. Facebook, on balance, is still in a very strong position, but the fact that some users are turning away from the platform does raise concerns for future viability, and revenue opportunities.
Could it be that the ongoing privacy issues and data leaks are making people switch off? Various reports have suggested that Facebook is seeing less engagement, but the numbers show that it may also be seeing users tune out entirely.
It's still a small trend right now, but it may still be part of a larger, future shift.
In terms of revenue, Facebook generated the 13.73b for the quarter, compared to market estimates of $13.78b.
Again, a small trend, and its only down (slightly) on market estimates. Facebook, overall, is performing very well, but there are little cracks developing that the platform needs to patch up, which are not being helped by the ongoing reports of metric errors and data breaches.
A big positive, however, is that Facebook is generating more revenue per user in most regions - so even if you were to take the slowdown in overall usage in Europe and North America into account, much of that would be offset, in a revenue sense, by Facebook finding ways to generate more income from its audience.
With the most significant growth in the 'Asia-Pacific' and 'Rest of the World' segments, Facebook need to see ARPU improvement here, but the overall stats show that Facebook is still building its business, it's still evolving its revenue generation tools.
In the accompanying notes, Facebook reported that more than 2 billion people now use at least one Facebook-owned platform every day, across Facebook, WhatsApp, Instagram and Messenger, so again, the company is performing very well. It's only against its own, previous reporting bar that Facebook 's performance doesn't look as great, but the bar has been set very high. The platform is not at risk of losing out in any significant way as yet.
Facebook also noted that mobile advertising revenue "represented approximately 92% of advertising revenue for the third quarter of 2018, up from approximately 88% of advertising revenue in the third quarter of 2017". Mobile remains the key focus - as does, according to CEO Mark Zuckerberg, Stories, video and groups.
On the Q3 earnings call, Zuckerberg said that Stories and private messages are Facebook's fastest growth vectors, with ephemeral content also on the rise. As social media is used in more cases to come back and haunt big name users in particular, people have become increasingly wary of the public nature of the platforms. Trends have shown the migration towards more private forums, so its little surprise that Facebook has also noted this as a key area of growth. Expect them to push new Messenger monetization options to tap into such.
But Stories? On Facebook? I don't know about that yet. But then again, Zuck would be the one with the data.
And another interesting point of note: Facebook's headcount is now up to 33,606 - up 45% year-over-year. That's no doubt been impacted by the company hiring more content moderators and fact-checkers to improve the integrity of its platform, but it must also put a larger drag on future revenue projections. That, and the fact that Facebook will likely have to do a lot more to get such issues under any level of control.
Really, it's a fairly straightforward report from The Social Network - there's nothing overly standout as a concern or a win at this stage, despite the ongoing indications of usage slowdowns in key regions. That could become a much more significant consideration over time, but the numbers also show that Facebook has options to offset this and maintain its performance.
A few areas to watch, but nothing to be alarmed about just yet.