Facebook 4th Qtr Results – Mobile Beats Web Usage

Facebook’s 4th quarter report just came out.  Revenue for the fourth quarter totaled $1.585 billion, an increase of 40%, compared with $1.13 billion in the fourth quarter of 2011.

“In 2012, we connected over a billion people and became a mobile company,” said Mark Zuckerberg, Facebook founder and CEO.

“We enter 2013 with good momentum and will continue to invest to achieve our mission and become a stronger, more valuable company.”

Revenue is still very light in my opinion. However there are two major things to watch going forward that will change the game.  First the company has more than 680 million users who access via mobile up 57% over last year. Second is the graph search product introduction which should explode revenues.

Other highlights from the earnings report:

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Revenue growth: Facebook’s fourth-quarter revenue totaled $1.585 billion, an increase of 40% over the same time last year.

User growth: Facebook grew to 1.06 billion users with daily active users of 618 million.  Solid increases on both fronts.

Monthly active users (MAUs) were 1.06 billion as of December 31, 2012, an increase of 25% year-over-year.

Daily active users (DAUs) were 618 million on average for December 2012, an increase of 28% year-over-year.

Mobile MAUs were 680 million as of December 31, 2012, an increase of 57% year-over-year.

Mobile DAUs exceeded web DAUs for the first time in the fourth quarter of 2012.

Ovum’s Angle:  Analyst firm Ovum put out this statement see below. I agree but for more insight into the graph search read my commentary on the day of the announcement.

“Facebook Q4 2012 results give cause for optimism and suggest the company is on the right track following its disappointing IPO and the lacklustre two quarters that immediately followed.  What stands out from Facebook’s Q4 results is the centrality of mobile for its service strategy and growth.   Revenues from mobile advertising accounted for 23% of total advertising revenues compared to 14% in the previous quarter, with sponsored stories in the mobile news feed and app install ads proving effective.  Wal-Mart alone delivered 50 million mobile ads to customers. This solid progress on the mobile advertising front should be applauded as a key challenge for Facebook has been how to monetize its growing mobile user base, particularly as an increasing number interact with the platform by only via mobile devices.

“Facebook reported 680 mobile monthly active users in Q4, of which 157 million were exclusively mobile. Facebook also noted that the recently launched Graph Search would be a pillar for future growth, although it would not be drawn on details. There will be growing pressure for Facebook to monetize Graph Search over the coming quarters and the most obvious way it could do so is via sponsored search. Although revenues from gifts and games only present a small part of Facebook’s revenues the story on this front was muted, as were insights into Instagram’s contribution to future growth.”

My Angle: 

Facebook will print money with Graph Search.   I’ve never been wrong on my Facebook prediction, going back to the first in 2008. Facebook will crack the code on “discovery” in social networks that will translate into a positive user experience “transactions.”  This will throw off massive revenue.

Below is Mark Zuckerberg concluding his presentation to Silicon Valley during Facebook’s recent Graph Search introduction.

Facebook has a chance to evolve the preferred user experience.  If they keep their platform open they will be a long term loyal consumer base.

About John Furrier

Founder and CEO of SiliconAngle.com.