In our earlier analyses, we observed that Facebook’s user base growth in North America region was outpaced by Facebook’s other regions, especially its emerging market regions Asia and rest of world. In fact, Facebook’s S-1 filing revealed to an extent that this was occurring. Based on the latest quarterly data, we can see that Facebook’s emerging market regions continue to outgrow its established markets on a sequential basis.
Facebook provides data about monthly active users (MAUs) and daily active users (DAUs). MAU data show that Facebook’s growth in North America has slowed substantially relative to growth in its other markets. At a reported 195 million monthly active users, Facebook continues to edge closer to market saturation in North America. As we can see, the growth rate has slowed to between 1% and 2% for the past three quarters.1
According to its 10-Q, Europe region includes all users from Russia and Turkey. Europe region is therefore larger than North America; however, it shows simliar user base growth deceleration. According to Facebook, Europe region accounted for 269 million monthly active users. The region is still growing slightly faster than North America, showing 3% sequential growth. However, Europe region shows a maturation trend simliar to North America.
When viewing daily active users, we can see a similar deceleration trend in North America; however, the same trend is not observed in Europe. It is not clear the reason for this divergence in DAUs. A possible explanation is that Facebook has reached saturation in North America, so MAUs and DAUs are comparable. In Europe, Facebook may be experiencing more mobile usage from its larger user base, which explains the growth in DAUs relative to MAUs.
That Facebook has potentially reached market saturation in North America is not overly concerning. Facebook has an opportunity to increase its ARPU in North America, especially as it increases its focus on mobile advertising. DAU growth in Europe is also positive. If it is the result of increased mobile usage, then Facebook’s focus on mobile monetization is appropriate. The company should continue to see advertising revenue growth driven by these regions.
- Form 10-Q, Facebook Inc., 2013.