Ads and users catapult Facebook sales 52%, shares rally 12%
The world’s biggest social network notched another record period, with fourth-quarter sales jumping 52 percent as the company capitalized on its reams of user information to serve up more ads. The shares rallied 12 percent. 
Facebook CEO Mark Zuckerberg speaks during his keynote address at Facebook F8 in San Francisco, California, in this file photo taken March 25, 2015.
The company now has 1.59 billion users who log into the service every month, especially on smartphones and tablets. That expansion in turn generates more profit, giving Mark Zuckerberg leeway to invest in the company’s future. On a call with investors Wednesday, the chief executive officer spent most of his time talking about virtual reality, artificial intelligence and connecting the rest of the world to the Internet. While those initiatives won’t contribute meaningfully for years, they’re aimed at making sure that more people put Facebook at the center of their digital lives.
“Our strategy is working and we have many more opportunities ahead,” Zuckerberg said. “So we’re going to continue investing to deliver more great results, over the long- term.”
Marketers are flocking to Facebook because of its knack for getting well-targeted ads in front of consumers. The same technology is now being deployed across Instagram, which just marked its first full quarter of ad sales across international markets. Chief Operating Officer Sheryl Sandberg said 98 of Facebook’s 100 top advertisers are also running campaigns on Instagram.
Fourth-quarter sales rose to $5.84 billion, compared with the $5.37 billion average analyst projection, according to data compiled by Bloomberg. About 80 percent of that came from mobile devices.
Ad Load
Not only is Facebook adding users and advertisers, it’s also putting more marketing messages in front of people. While the social network has been careful about overloading news feeds, it was able to boost the percentage, or ad load, in the latest quarter. Facebook said it would stick with this strategy, by making sure that ads are targeted, specific and relevant, blending in with what people would see in their feeds anyway.
“If you’re an advertiser and you want to reach mass scale, you only have two options: Facebook and Google,” said James Cakmak, an analyst at Monness Crespi Hardt & Co. “Facebook remains the fastest-growing platform for advertiser spending, and as they open up new channels for users, that won’t change.”
Fourth-quarter net income more than doubled to $1.56 billion, or 54 cents a share, from 701 million, or 25 cents, a year earlier. Profit excluding some items was 79 cents a share, beating analysts’ average prediction for 68 cents.
Facebook shares climbed to $105.87 in extended trading. The stock, which rose 34 percent last year, hasn’t been immune to this month’s global equity selloff, and is down 9.7 percent in 2016.
The company said 500 million people watch 100 million hours of video on Facebook every day — a trend that will be boosted as Facebook develops products for tracking live events on its application.
Ambitious Projects
For Facebook, the profit from ad sales enables investments in ambitious projects, which are starting to show early signs of progress. Oculus Rift, the virtual reality headset, started its first sales to consumers earlier this month, and the company said there are more than 100 games and experiences coming to the platform later this year. Internet.org, the free Web access initiative for emerging markets, has a Free Basics app now used by 19 million people, and it’s big enough to have sparked protests in India for being too Facebook-centric.
Facebook has also been pushing to get more revenue from international markets — especially in Asia, where executives spent more time in recent months, and where Instagram now advertises. Revenue from Asia jumped 19 percent from the prior quarter to $846 million, accelerating from an increase of 14 percent in the third quarter.
Apart from users of its main social network, Facebook now has several properties that are poised to top 1 billion users, including WhatsApp and Messenger.
“With many levers of growth yet to be pulled, we continue to see many reasons to remain highly optimistic in Facebook,” Brian Wieser, an analyst at Pivotal Research Group, wrote in a note to investors.
Statement summary from Facebook
Q4 2015 Facebook Earnings
In Q4 2015, more people continue to use Facebook:
(NEW)
More than 1.59 billion people now use Facebook each month and 1.04 billion each day, an increase of more than 200 million people monthly and 148 million people daily this year.
In December, 1.44 billion people accessed Facebook on mobile devices, an increase of 21% compared to last year. And 90% of the people who used Facebook on both a monthly and daily basis accessed us via mobile devices.
Q4 2015 Revenue and Business Growth:
(NEW)
Total revenue grew by 52 percent year-over-year to more than $5.84 billion, and advertising revenue grew by 57 percent to reach more than $5.63 billion (up over $2 billion from last year.)
Mobile ad revenue reached $4.5 billion, up 81% year-over-year, and is now 80% of total ad revenue.
Strong growth across all verticals, marketer segments, and regions.
US & Canada and Asia-Pacific continued to be our 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.
Full year 2015 revenuewas $17.9 billion, up 44% year-over-year, or 53% on a constant currency basis.
Full Year 2015 Advertising Revenue was $17.1 billion, up 49% year-over-year.
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 we 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 we 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, we 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 we’re pleased with the initial reaction. 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.
In Q4, we continue to make progress on our three priorities in ads:
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 our 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 Teamfrom 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, we 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 Liftprove to marketers that we are driving real business results and help make our ads more relevant.
In 2015 we saw more of our 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.
Facebook CEO Mark Zuckerberg speaks during his keynote address at Facebook F8 in San Francisco, California, in this file photo taken March 25, 2015. The company now has 1.59 billion users who log into the service every month, especially on smartphones and tablets. That expansion in turn generates more profit, giving Mark Zuckerberg leeway to invest in the company’s future. On a call with investors Wednesday, the chief executive officer spent most of his time talking about virtual reality, artificial intelligence and connecting the rest of the world to the Internet. While those initiatives won’t contribute meaningfully for years, they’re aimed at making sure that more people put Facebook at the center of their digital lives.
“Our strategy is working and we have many more opportunities ahead,” Zuckerberg said. “So we’re going to continue investing to deliver more great results, over the long- term.”
Marketers are flocking to Facebook because of its knack for getting well-targeted ads in front of consumers. The same technology is now being deployed across Instagram, which just marked its first full quarter of ad sales across international markets. Chief Operating Officer Sheryl Sandberg said 98 of Facebook’s 100 top advertisers are also running campaigns on Instagram.
Fourth-quarter sales rose to $5.84 billion, compared with the $5.37 billion average analyst projection, according to data compiled by Bloomberg. About 80 percent of that came from mobile devices.
Ad Load
Not only is Facebook adding users and advertisers, it’s also putting more marketing messages in front of people. While the social network has been careful about overloading news feeds, it was able to boost the percentage, or ad load, in the latest quarter. Facebook said it would stick with this strategy, by making sure that ads are targeted, specific and relevant, blending in with what people would see in their feeds anyway.
“If you’re an advertiser and you want to reach mass scale, you only have two options: Facebook and Google,” said James Cakmak, an analyst at Monness Crespi Hardt & Co. “Facebook remains the fastest-growing platform for advertiser spending, and as they open up new channels for users, that won’t change.”
Fourth-quarter net income more than doubled to $1.56 billion, or 54 cents a share, from 701 million, or 25 cents, a year earlier. Profit excluding some items was 79 cents a share, beating analysts’ average prediction for 68 cents.
Facebook shares climbed to $105.87 in extended trading. The stock, which rose 34 percent last year, hasn’t been immune to this month’s global equity selloff, and is down 9.7 percent in 2016.
The company said 500 million people watch 100 million hours of video on Facebook every day — a trend that will be boosted as Facebook develops products for tracking live events on its application.
Ambitious Projects
For Facebook, the profit from ad sales enables investments in ambitious projects, which are starting to show early signs of progress. Oculus Rift, the virtual reality headset, started its first sales to consumers earlier this month, and the company said there are more than 100 games and experiences coming to the platform later this year. Internet.org, the free Web access initiative for emerging markets, has a Free Basics app now used by 19 million people, and it’s big enough to have sparked protests in India for being too Facebook-centric.
Facebook has also been pushing to get more revenue from international markets — especially in Asia, where executives spent more time in recent months, and where Instagram now advertises. Revenue from Asia jumped 19 percent from the prior quarter to $846 million, accelerating from an increase of 14 percent in the third quarter.
Apart from users of its main social network, Facebook now has several properties that are poised to top 1 billion users, including WhatsApp and Messenger.
“With many levers of growth yet to be pulled, we continue to see many reasons to remain highly optimistic in Facebook,” Brian Wieser, an analyst at Pivotal Research Group, wrote in a note to investors.
Statement summary from Facebook
Q4 2015 Facebook Earnings
In Q4 2015, more people continue to use Facebook:
(NEW)
More than 1.59 billion people now use Facebook each month and 1.04 billion each day, an increase of more than 200 million people monthly and 148 million people daily this year.
In December, 1.44 billion people accessed Facebook on mobile devices, an increase of 21% compared to last year. And 90% of the people who used Facebook on both a monthly and daily basis accessed us via mobile devices.
Q4 2015 Revenue and Business Growth:
(NEW)
Total revenue grew by 52 percent year-over-year to more than $5.84 billion, and advertising revenue grew by 57 percent to reach more than $5.63 billion (up over $2 billion from last year.)
Mobile ad revenue reached $4.5 billion, up 81% year-over-year, and is now 80% of total ad revenue.
Strong growth across all verticals, marketer segments, and regions.
US & Canada and Asia-Pacific continued to be our 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.
Full year 2015 revenuewas $17.9 billion, up 44% year-over-year, or 53% on a constant currency basis.
Full Year 2015 Advertising Revenue was $17.1 billion, up 49% year-over-year.
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 we 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 we 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, we 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 we’re pleased with the initial reaction. 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.
In Q4, we continue to make progress on our three priorities in ads:
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 our 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 Teamfrom 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, we 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 Liftprove to marketers that we are driving real business results and help make our ads more relevant.
In 2015 we saw more of our 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.
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