During its inaugural earnings call, Facebook released new data about its user base. The company saw modest overal growth in monthly and daily active user growth during Q1 and Q2 2012, the company revealed more details about the regional breakdown of its active user base, and mobile active users swelled to a higher percentage of its total user base.1
The quarterly reports also validated my prediction that Facebook’s monthly and daily active user growth in North America was reaching a plateau. The data provided by Facebook illustrates that this has occurred. Whether it will significantly affect revenue growth is less clear, since Facebook continues to innovate its advertising offerings.
In its earnings releases, Facebook provided user base data for the previous two fiscal quarters. The company reported 901 million monthly active users in Q1 2012, an increase of 32.5% from the year ago quarter. In Q2, 2012, Facebook’s monthly active users swelled to 955M, a 29% increase from Q2 2011. The company appears on track to cross the 1 billion active user mark by the end of 2012.
Facebook’s mobile user base continues to grow to a larger percentage of its overall user base. According to the company, its mobile user base reached 543 million in Q2. That represents 66% of its total active user base. As the majority of its active users shift to mobile, it will become increasingly important for Facebook to accelerate its monetization efforts on its mobile products.
Facebook also revealed more information about regional trends in its user base. Asia and the rest of world regions saw more substantive increases in monthly active users, while North America appeared to hit a growth plateau. This was something that I predicted after Facebook revealed its regional user base growth trends in its S-1.
Although Facebook saw growth in daily active users in Asia and rest of world regions, Europe still claimed highest overall daily active users. Conversely, North American daily active user growth appears to have plateaued similar to monthly active users. Asia and rest of world appear to be accelerating, and both regions may soon overtake Europe to be the most active regions in Facebook’s user base.
It is not clear how much more Facebook will be able to generate from the North America region (the most profitable portion of its user base), especially as more of those users migrate to mobile. However, the company indicated that it plans to pursue mobile monetization strategies, which could allow Facebook to extract more revenue from what remains the most profitable portion of its user base.
Facebook has seen a predictable amount of growth in its user base. The company is poised to cross the 1 billion active user mark very soon. The significance of this milestone cannot be understated; however, converting its massive user base into revenue growth will be challenging. Facebook’s highest user base growth segments (Asia and rest of world) are also its least profitable.
North American user base growth has also reached a plateau. Although Facebook does not reveal a breakdown, it is likely that much of the North American user base is also migrating to primarily accessing the site from mobile platforms. If this is true, then Facebook will have to accelerate its mobile monetization efforts in order to continue to benefit from its highest revenue generating user base segment.
- Earnings Slides, Facebook Inc., 2012.