Facebook,
Q2 2019 - Results
August, 01 2019
1. PREVIOUS ANALYSES
Facebook released its Q2 results on the 24th of July so I’m writing a brief analysis.
2. RESULTS
Here’s the usual and very informative presentation:
3. POSITIVES
3.1. Active users are up
The number of active users on the main platform is still growing at a rate of 1,6%.
3.2. Revenue is up
The revenue for this quarter was $16,8B, another second quarter record. Revenue has gone up by 28% from a year ago, so the growth in revenue is actually increasing from the 26% growth rate we’ve seen on the first quarter.
3.3. ARPU is up
It’s amazing how the Average Revenue per user in the US and Canada, which are mature markets, went up by 28%!!! Worldwide, the growth rate in ARPU was 18%.
3.4. FCF is up
Facebook is still generating HUGE amounts of cash. The cash from operations was $8.6B compared to $6.3B a year ago. The FCF went down from the first quarter but it was still 70% higher than a year ago.
3.5. Share buybacks picks up pace
And although the share buybacks are down from a year ago, the truth is that they have increased in relation to the first quarter. In Q1 Facebook had spent $613M and on Q2 it bought back $1,1 billion dollars worth of its own shares.
3.6. Strong financial position
And even spending more money on buybacks, the cash on the bank doesn’t seem to be decreasing – $47B vs $45B on Q1- not to mention that the company has no debt whatsoever.
3.7. Payments is coming to Whatsapp
On the Conference Call Mark Zuckerberg said that they would be rolling out the new payments feature inside whatsapp this year. They’re not looking to monetize it at first, but I’m sure they will somewhere in the future.
4. NEGATIVES
4.1. $5B fine
Facebook has set aside another $2B for the payments of a fine related to the user data and privacy issues.
4.2. Net Income is down
Which led to a depressed net income of about $2.6B.
5. OVERVIEW & CONCLUSION
5.1. OVERVIEW
Not a lot more to add here. Facebook is still a great cash generating business and it will go on like this for many years.
Although the growth in the number of active users is leveling off, the growth in ARPU – one of the 4 highways of growth I’ve outlined on my previous analyses – is more than offsetting it. Payments are coming to whatsapp this year. New checkout solutions on Instagram are coming too. Who knows what they are developing related to AI.
To sum it all up, everything is going according to plan.
5.2. CONCLUSION
This section will be available to paying subscribers in 2019 when we launch the Portfolios.
Don’t forget to check our other analyses.
If you want more, join us at our new:
6. DISCLAIMER
The material contained on this web-page is intended for informational purposes only and is neither an offer nor a recommendation to buy or sell any security. We disclaim any liability for loss, damage, cost or other expense which you might incur as a result of any information provided on this website. Always consult with a registered investment advisor or licensed stockbroker before investing. Please read All in Stock full Disclaimer.