Facebook: Amazing growth without loss of privacy, strong revenue and user growth in 1Q19

According to Facebook's first quarter 2019 financial report, its revenue increased by 26% year-on-year to $15.077 billion. Affected by the $3 billion fine withheld, the operating profit for the quarter was $3.317 billion, down 39% from $5.449 billion in the same period last year. In the first quarter, Facebook's user and operating indicators continued to improve, with the company's products having a cumulative MAU of 2.7 billion and a cumulative daily active user base of 2.1 billion.

The number of global users has reached 2.7 billion, with more than 2.1 billion daily active users

In the first quarter, the number of users of Facebook, Instagram, WhatsApp and Messenger reached 2.7 billion per month, and the number of daily active users reached 2.1 billion, a net increase of 100 million from the previous quarter.

The company's flagship product, Facebook, continues to maintain steady growth. Monthly active users and daily active users reached 2.375 billion and 1.562 billion, respectively. In the first quarter, the fastest growing regions for Facebook users were India, Indonesia and the Philippines.

In terms of Stories, the number of daily active users of the Stories feature on Facebook and Messenger, Instagram, and WhatsApp has exceeded 500 million.

The company's revenue reached 15.1 billion, excluding the impact of exchange rates, a year-on-year increase of 30%.

In the first quarter of 2019, the company's revenue was US$15.1 billion, a year-on-year increase of 26%. At the same exchange rate, the year-on-year growth rate was 30%.

The year-on-year growth rate in North America was 30%, in Asia-Pacific it was 28%, and in other regions it was 23%. Due to the impact of exchange rates, the year-on-year growth in Europe was only 21%.

In the first quarter, the company's advertising unit price decreased by 4%, and the advertising exposure increased by 32%, mainly due to the increase in exposure of Instagram Stories, Instagram feeds, and Facebook feeds. The decrease in advertising unit price was mainly due to the increase in Stories and their relatively low monetization level.

In addition, the company issued a warning about the growth of advertising revenue in the second quarter. Due to the impact of GDDR supervision and some adjustments in the advertising industry, the company's cancellation of some targeting may reduce the accuracy of advertising, thereby affecting revenue in the second half of the year.

Payment and other revenue decreased 4% year-on-year and 40% quarter-on-quarter, mainly due to higher sales revenue of Oculus and Portal during the peak shopping season in the fourth quarter of last year.

$3 billion set aside to pay fines, driving operating expenses up 80%

The company's operating expenses were $11.8 billion, up 80% year-on-year, of which $3 billion was reserved for fines from the FTC for data usage, and the company expects the loss to be between $3 billion and $5 billion. After deducting its impact, the company's total expenses were $8.8 billion.

The company had 37,700 full-time employees in the first quarter, a year-on-year increase of 36%.

Facebook's first-quarter operating profit was $3.317 billion, down 39% from $5.449 billion in the same period last year.

Facebook's operating profit margin in the first quarter was 22%, compared with 46% in the same period last year; Facebook's net profit in the first quarter was US$2.429 billion, down 51% from US$4.988 billion in the same period last year.

The company will focus on creating "private space" products in the future

The company believes that there is a need for public and private spaces in Internet social products. Facebook and Instagram are two public space products, which are like towns and communities, where people can communicate with each other openly and participate in different communities. Whatsapp and Messenger are more like private space products, which are like the living room at home, and people only share these spaces with close people and small circles.

Public space products like Facebook and Instagram are expected to continue to grow, but the opportunity to build private space products based on privacy is more exciting. The company's plan is to follow the approach it has taken on Whatsapp: focus on the most basic and private use case - messaging - make it as secure as possible through end-to-end encryption, and build more ways for people to interact on top of it.

The privacy-focused private space platform will be built on the principles of private interactions, encryption, reduced permanent storage of information, security, interoperability and secure data storage.

The company expects to achieve this goal in the next five years or more. Although Whatsapp and messenger have a leading edge in most countries in the world, the company mentioned that its products are still not leading in the US, Japan and China markets, and there is no chance to enter markets like China. The best way to expand these markets is to create better services.

The company has gained user trust by improving transparency, while advertising revenue performance remains impressive

Since 2018, Facebook has faced strong regulatory pressure due to various user and data privacy issues, but the company has won user trust by increasing transparency, including increasing transparency in advertising and content recommendations. In order to reduce discrimination, the company has removed gender, age and geographic location targeting for industries such as real estate, recruitment and credit cards.

In the first quarter of 2019, the company's mobile advertising revenue increased by 30% year-on-year to US$13.9 billion, accounting for 93% of the total advertising revenue. Its advertiser structure has become healthier, with the top 100 advertisers contributing less than 20% of revenue, and low dependence on large customers.

Facebook and Instagram feeds ads still account for a large portion of the company's advertising revenue, but Stories ads are contributing more and more to revenue growth. Currently, 3 million advertisers use Stories ads on Facebook, Instagram and Messenger.

E-commerce is a fast-growing business area on the Facebook platform. Last quarter, the company expanded Marketplace advertising to more countries. Recently, the company added payment functions to Instagram. The small-scale test with 23 brands in the United States is the first step. The company is excited about the potential of Instagram shopping in the future.

Other operational indicators:

More than 100 million people use the watch feature every day.