Facebook Tops Expectations, Again

We continue to be amazed at

Second-quarter total revenue of $10.3 billion was up 47% year over year. Facebook’s ad revenue rose 49% over last year to $10.1 billion, driven by 16% year-over-year growth in monthly average users, or MAUs, accompanied by a 26% increase in average revenue per user, or ARPU. Regarding the bottom line, Facebook reported third-quarter operating margin of 49.6%, up by approximately 500 basis points year over year, due to slightly higher gross margin and lower growth in SG&A expenses. While the firm lowered its year-over-year operating expense growth expectation for 2017, it did note that in 2018, operating expenses are likely to increase by 45%-60% from 2017, as Facebook continues to invest in video content and higher R&D headcount. Plus, further investments in data centers around the world will push Facebook’s capital expenditure to $14-$15 billion in 2018, nearly double our estimate for 2017.

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