Facebook's revenue jumps 44% y-o-y to $17.93 billion

Facebook, Inc recently reported financial results for the fourth quarter and full year ended December 31, 2015. The social media giant surpassed all expectations for both revenue and earnings in the fourth quarter.

“2015 was a great year for Facebook. Our community continued to grow and our business is thriving,” said Mark Zuckerberg, Facebook Founder and CEO. “We continue to invest in better serving our community, building our business, and connecting the world.”

Full Year 2015 Business Highlights

Facebook reported profits of 79 cents per share on $5.84 billion in revenue for Q4, which is a jump in sales of roughly 52 per cent, compared to $3.85 billion over the same period last year. Facebook surpassed analysts’ estimates of 68 cents per share on revenue of $5.37 billion.
Revenue - Revenue for the full year 2015 was $17.93 billion, an increase of 44 per cent year-over-year. US & Canada and Asia-Pacific continued to be their strongest regions with ad revenue growth of 64% and 57%, respectively. Continued growth in emerging markets and countries like China, where businesses are advertising on Facebook and Instagram to reach people internationally.
Mobile ad revenue reached $4.5 billion, up 81% year-over-year, and is now 80% of total ad revenue.
Full Year 2015 Advertising Revenue was $17.1 billion, up 49% year-over-year.
Income from operations - Income from operations for the full year 2015 stood at $6.23 billion.
Net income - Net income for the full year 2015 was $3.69 billion.
Its Q4 EPS rose 46 per cent from 54 cents the year-ago period.

Reasons of increase in revenue:

Mobile advertising revenue - Mobile advertising revenue represented approximately 80 per cent of advertising revenue for the fourth quarter of 2015, up from 69 per cent of the advertising revenue in the fourth quarter of 2014. Also, the company’s revenue from advertising shot up to $5.64 billion. The social media company has been seriously pushing into video over the last two years and is trying to position itself as a competitor to TV advertising. Ad sales, focus on international markets, its Whatsapp and Messenger properties and other ambitious projects played the role of key drivers of Facebook’s growth.

Facebook’s user base is expanding

ARPU or average revenue per user is also climbing, up nearly 26 per cent to $3.73.
Daily active users (DAUs) - DAUs were 1.04 billion on average for December 2015, an increase of 17 per cent year-over-year.
Mobile DAUs - Mobile DAUs were 934 million on average for December 2015, an increase of 25 per cent year-over-year.
Monthly active users (MAUs) - MAUs were 1.59 billion as of December 31, 2015, an increase of 14 per cent year-over-year.
Mobile MAUs - Mobile MAUs were 1.44 billion as of December 31, 2015, an increase of 21 per cent year-over-year.

Also from the results, Facebook is making money from each user at a faster rate than the amount of users it is signing up.

Fourth Quarter 2015 Other Financial Highlights

Capital expenditures - Capital expenditures for the fourth quarter of 2015 were $692 million.

Cash and cash equivalents and marketable securities - Cash and cash equivalents and marketable securities were $18.43 billion at the end of the fourth quarter of 2015.

Free cash flow - Free cash flow for the fourth quarter of 2015 was $2.14 billion and for the full year 2015 was $6.08 billion.

Facebook’s stock escalated by 7.5 per cent in after-hours trading as a result of the earnings reports.

In Q4, we continue to improve our core products to better serve our existing communities and businesses:

NEW: Groups: For the first time more than 1 billion people used Groups each month on Facebook.
NEW: Interactions and Connections:
- More than 950 million people received a notification that a friend or loved one was safe in a crisis.
- Millions of people supported the people of Nepal after the earthquake, and the people of France after the Paris attacks.
- More than 8 million people used 35,000 Groups and Pages on Facebook to support refugees.
- People from all over the world connected around moments from Star Wars to the US presidential election, the Indian Super League to the Cricket World Cup.
Events: More than 500 million people use Events each month and more than 123 million events were created on Facebook in 2015.
NEW: Video: 100 million hours of video are now watched daily on Facebook.
Instagram continues to drive the shift towards more visual content online. The community continues to grow, and in September Facebook announced a new milestone of 400 million monthly actives.
Messenger: More than 800 million people now use Messenger. In 2015 we grew by almost a quarter of a billion monthly actives, while also increasing engagement.
WhatsApp: Ended the year with nearly 1 billion monthly actives
NEW: Free Basics: In 2015 Facebook launched in 33 additional countries and have now connected 19 million people; launched first trials of Express Wi-Fi, designed to help entrepreneurs bring their communities online. This year, the brand expect to hold our first test flights of Aquila, the first aircraft designed to beam internet into communities from the sky.
NEW: Facebook Lite: Improved to offer a better experience in low bandwidth environments, improving load times and adding features like video. More than 80 million people used Facebook Lite in December.
Oculus: Samsung Gear VR shipped over the holidays and this month Oculus also opened pre-orders of Rift headsets, and we’re excited to begin shipping the world’s best VR experience before the end of March.

Facebook priorities In Q4:

1.) Capitalizing on the shift to mobile:

With 1.44 billion monthly actives on Facebook mobile and 400 million monthly actives on Instagram, Facebook and Instagram are the two most important mobile advertising platforms.
90% of monthly and daily actives use Facebook on mobile.
2015 holiday season was a defining moment for mobile marketing. According to ComScore, total consumer spending on mobile in November and December was up 59% year over year.

2.) Growing the number of marketers using their ad products:

More than 2.5 million active advertisers.
More than 50 million small businesses use our free Pages product.
NEW: 98 of the top 100 advertisers on Facebook also advertised on Instagram in Q4
- NEW: To reach a large global audience for the launch of Halo 5, Microsoft Xbox used video optimized for Facebook and Instagram. Working with their agencies Empower Media Team from Dentsu Aegis Network, Ayzenberg Group, and twofifteenmccann, they understood that people watch video differently in mobile feed than on TV, so they created videos to capture audience attention in the first 3 seconds, even without sound. They drove over 380 million impressions and 49 million video views in key markets and increased purchase intent by 10 pts in the US.
- NEW: Leading up to Black Friday, Shop Direct, the UK's second largest online-only e-tailer, teased upcoming sales with a Cinemagraph video to build awareness. They then retargeted people who saw the video with one-day only deals. On Black Friday, they used Carousel and DPA ads to drive sales of products people had shown interest in. The brand saw a 20x return on ad spend from this campaign, helping them achieve their biggest Black Friday to date and most successful sales day ever.

3.) Making our ads more relevant and effective:

In 2015, Facebok introduced a lot of new ad products to marketers and helping fulfill our potential to deliver personalized marketing at scale. A few examples:
- In emerging markets we launched Slideshow, a video-like ad experience that works well with lower connection speeds and feature phones.
- Introduced Local Awareness Ads globally to help brick-and-mortar businesses reach people near their stores.
- Started testing Canvas ads to help marketers showcase their products in a more immersive way.
On measurement side, tools like the Facebook Pixel and Conversion Lift prove to marketers that we are driving real business results and help make our ads more relevant.
In 2015 Facebook saw more of their advertisers shift from proxy metrics, like clicks, to real business results, like digital and in-store sales.
Continuing to invest in ad tech stack and were especially pleased in 2015 with the growth of Audience Network, which allows marketers to extend their advertising reach and monetize mobile apps more effectively.