Call it a “relief rally.” After Facebook’s Q3 yesterday ($1.26 billion) beat consensus revenue estimates financial analysts changed their outlook on the company, with many shifting recommendations from “neutral” or “hold” to “buy.” As a result Facebook saw its shares gain nearly 20 percent by the close of trading on the NASDAQ today.
The big sigh of relief that could be heard all over Wall Street was about Facebook’s mobile revenues and metrics. There were 604 million monthly active mobile users in Q3 according to the company, representing a steady month over month gain but a big 61 percent gain vs a year ago. Those figures don’t however include Instagram, which has more than 100 million mobile users.
Perhaps most importantly mobile contributed 14 percent of overall ad revenues (roughly $150 million). Indeed, much of the earnings call yesterday was devoted to discussion of mobile users and usage patterns.
Here are a few relevant comments from the earnings call transcript:
CEO Mark Zuckerberg:
[S]ince we released the new faster iOS app, we’ve seen an 80% increase in iOS News Feed loads and more than a 20% increase in iOS engagement in terms of likes and comments. . .
Somebody who uses only our desktop product has only a 40% likelihood of using Facebook on a given day, but someone who uses mobile has a 70% likelihood of using Facebook on a given day . . .
[Instagram has] more than 100 million users . . . there’s more mobile time spent on Instagram than on Twitter.
COO Sheryl Sandberg:
A month ago, we reintroduced Offers, which provides businesses a powerful new way to acquire new customers and drive loyalty. Every time someone claims an offer on Facebook, he or she creates a story that is shared with friends. Since launch, approximately 100,000 pages have created an offer, and approximately 30% of offer claims are coming from mobile devices . . .
Lawson, a leading convenience store chain in Japan, used Facebook Offers to advertise a discount on fried chicken. Over half a million people claimed the offer, 92% of whom did so from their mobile device, generating a 7x return on advertising spend.
Facebook had a blown IPO and then a lackluster Q2 that caused many people to become skeptical about the company’s future, especially given the transition to mobile usage. The Q3 earnings surprise and detail around mobile growth has gone some distance to calming those fears, which is why the stock soared today.
We’ll see if the company can keep it up.