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Facebook beats revenue estimates for Q1 earnings with $1.46 billion, misses on profit

Eliza Kern — Wed, 01 May 2013 20:16:00 +0000

Facebook announced $1.46 billion in revenue Wednesday for the company’s first quarter of 2013, narrowly beating analyst estimates of $1.44 billion in revenue. The company saw first-quarter earnings of $0.12 per share excluding one-time charges, compared to analyst expectations of $0.13 per share. The first quarter revenue of $1.46 billion compares to revenue of $1.18 billion from the same quarter of 2012.

The company reported $219 million in net income and non-GAAP net income of $312 million, which translated to earnings per share of $0.12.

Mobile advertising revenue as a percentage of total ad revenue hit 30 percent in the first quarter, compared to 23 percent in the fourth quarter of 2012 and 14 percent in the third quarter. That growth on mobile is crucial for Facebook, which has been seeing pressure from Wall Street to show that in can perform on mobile, where users are increasingly headed. This quarter, ad revenue was $1.25 billion or 85 percent of total revenue, almost identical to last quarter’s 84 percent, but still down from the 86 percent in the third quarter.

CEO Mark Zuckerberg emphasized mobile app installs as a bright spot for the company, noting that it makes sense for mobile ads to send users to other apps, just as web ads send users to desktop sites.

“This type of ad just makes sense to me on mobile,” he said.

The company touted its performance and growth on mobile during the fourth quarter, but that growth in users has only continued into 2013. The company saw 751 million mobile monthly active users as of March 31, 2013, up from 680 million in December, and representing an increase of 54 percent over the the previous year.

Facebook saw total monthly active users hit 1.11 billion as of March 31, 2013, an increase of 23 percent increase over last year. Daily active users hit 665 million on average for March, compared to the 1.06 billion monthly actives and 618 million daily actie users reported in December 2012. And as previously reported, Instagram hit 100 million monthly active users in February.

In the company’s earnings call, Zuckerberg specifically mentioned Instagram’s growth, something he was less vocal about last quarter.

“I’m really proud of how Instagram is going,” he said. “Kevin and his team made incredible progress since last april, and the Instagram community is growing even faster than the Facebook community did when it was this size.”

And tellingly, since everyone is looking to see when Facebook will begin to earn money from the Instagram acquisition, Zuckerberg mentioned that they’re looking at different ways to give businesses opportunities on the photo-sharing app, not ruling out mobile ads.

“It’s something we’re thinking about,” he said.

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YouTube’s quiet evolution into the heart of Google

Janko Roettgers — Wed, 23 Jan 2013 20:42:40 +0000

Listening to Google’s Q4 earnings call Tuesday, I couldn’t help but notice that there’s been a change in tone with the regards to the way Google execs talk about YouTube. In the past, YouTube has always been treated as one of many parts of its business: worth a shout-out, and maybe a nice data point if time permitted.

This time around, it seemed to move more towards the center. “Video is now baked into all of our products,” said Google Chief Business Officer Nikesh Arora, adding that video is especially important for advertising: “Video is a key language that brands speak.”

Arora said that Google’s top 100 brand advertisers spent 50 percent more money on YouTube in 2012 than during the previous year. He reiterated that the site now generates more than 4 billion views a day. There was also the obligatory Gangnam Style mention, which generated $8 million in ad revenue for Psy, according to Arora. One new metric shared during the call was that 70 percent of YouTube’s in-stream ads are now what the company calls TrueView - ads that viewers can skip, and that advertisers only pay for if they’re not skipped.

Detailing all that data alone said something about the role YouTube is playing for Google these days. But YouTube seemed to pop up all over the call. In fact, the video site was mentioned a total of 23 times, according to the Seeking Alpha transcript. A year ago, YouTube was worth 15 mentions. During the Q4 2010 call, the site only got mentioned six times.

Even more striking: Arora specifically called out YouTube as something that moves the needle with regards to ad revenue, saying that the company’s ad revenue growth in the Americas was driven by “mobile and YouTube.” Google Chief Financial Officer Patrick Pichette also pointed to YouTube as a money maker, saying: “We are obviously… pleased with the YouTube business, particularly the watch page.”

Why is YouTube suddenly becoming such a big deal for Google? Primarily for two reasons: First, YouTube producers have been stepping up their game, and YouTube has invested a lot of money to bring professionally-produced channels to the site, which in turn get higher CPMs from premium advertisers.

And YouTube is expanding its device footprint. The site’s videos can now be viewed on more than 400 million devices. But more importantly, a growing percentage of these views gets monetized. One example: YouTube rolled out its own iPhone and iPad apps last year, which finally enable the company to monetize app-based views on Apple’s devices. Given the fact that YouTube now sees 25 percent of its views on mobile devices, those apps alone should add more than just pocket change to Google’s coffers.

I remember many instances over the years of journalists asking whether that $1.56 billion acquisition of the video sharing site was really worth it. Questions about whether or not Google was losing money with YouTube, always followed by the company declining to break out individual lines of business in somewhat-tense language. I also remember Google events where YouTube seemed to be somewhat sidelined.

All of that has changed as YouTube has grown up. Sure, Google still isn’t breaking out how much it exactly is making with YouTube, but it sure sounds like it has become a key money maker.

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Most app developers make less than $500 a month (chart)

Rani Molla — Thu, 04 Oct 2012 21:16:46 +0000

We know that not every app is Angry Birds and not every app developer is Rovio. But just how tough are things for the workaday app developer? In a recent GigaOM Pro study (subscription required) of app developers, more than half of the respondents say they make less than $500 a month from their paid apps (see chart below). Perhaps not surprisingly, app development isn’t a full-time job for most of them. Some 75% of 352 respondents either hold another job or do app development only as a portion of their main job. (The picture is even grimmer for developers of advertising-dependent apps — a third of those developers make less than $100 a month in ad revenue, according to the study.)

On the high (and much more rare) end of the spectrum, about 5 percent of app developers in the survey make over $20,000 a month. These developers tend to be part of big app firms.

Click to enlarge
Rani Molla/GigaOM

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Development strategies for the app-developer community

The capex connection: Why we pay for privacy on the Web

Derrick Harris — Thu, 01 Mar 2012 07:55:03 +0000

There is a big connection between Facebook’s large and growing infrastructure budget and advertising, the latter of which is the primary culprit behind many privacy concerns. The gist is that ad-supported web platforms such as Facebook have to spend lots of money on infrastructure in order to maintain adequate performance levels and power new features. However, that means every dollar spent on infrastructure has to add up to even more money brought in by advertising. Simply put, the true costs of building new infrastructure take a huge bite from a company’s bottom line — in more ways than one.

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When It Comes to TV Content, Is YouTube Screwed?

Chris Albrecht — Mon, 29 Jun 2009 22:49:53 +0000

Over the past year, YouTube has made a concerted effort to embrace premium content like TV shows to attract ad revenue. But according to a new report from Screen Digest analyst Arash Amel, the video-sharing giant faces an uphill battle as the Hollywood networks and studios gobble up most of the market for ad-supported TV programming online.

In his report “US Networks claim half of free online TV market,” Amel says that the broadcasting and cable business in the U.S. will shed $2 billion in ad revenue by 2013, dropping to $67 billion from $69 billion in 2008. While TV ad dollars go down, there will be an increase in ad revenue generated by TV programming on the web. Amel says that ad-supported, web-based TV programming generated $448 million in revenues in 2008, and the total ad revenues from online entertainment programming, sports, news and events will be more than $1.45 billion by 2013.

While online ad revenues will grow, they will only account for 2.2 percent of TV ad revenues by 2013, according to Amel. The bummer news for networks is that increase in web revenues won’t cover the $2 billion in overall ad losses. The good news for networks, though, is that they’re doing a good job of keeping Google/YouTube at bay when it comes to premium content.

Amel writes that combined, the network web sites (ABC.com, NBC.com, etc.) and Hulu accounted for 53 percent of the ad-supported online TV market in 2008 (the remainder going to “online video services of major sports leagues, video services from traditional online portals, and direct services from other major channel groups and content owners”). Further, Hollywood’s dominance should perpetuate itself. From the Screen Digest press release:

In contrast, third party platforms such as YouTube, Joost and other portals, which have no direct vertical affiliation with major rights holders, nor direct access to premium content rights, will struggle to aggregate ad-supported movies and TV shows. The Hollywood Studios and major rights holders will continue to limit such deals, instead preferring to build their own syndicated ad-supported online video services – such as Crackle, developed by Sony Pictures, and the CBS Audience Network. This is a trend that will gather momentum. As a result, third party ad-supported video platforms may have to either diversify into new forms of their own original programming, exit the content aggregation business and offer technology and advertising solutions to the content-owners’ and broadcasters’ own services, or settle on the low-margin business of becoming affiliates of the player-platforms distributed by the content rights holders themselves.

Screen Digest’s comments come after recent numbers from TubeMogul that found full-length TV shows are not that popular on YouTube, averaging just 7,407.9 views per episode.

Funny Amel should mention original programming as a survival strategy for the likes of YouTube. Over the weekend we wondered what the role of original web series was anymore as so much emphasis is placed in creating web extensions of offline brands.

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For News Corp, MySpace Offers Hope

Om Malik — Fri, 10 Oct 2008 16:51:43 +0000

Updated: Earlier this morning, Rich Greenfield, the scary smart media analyst at Pali Capital, slashed his price target on News Corp to $20 from $27, citing big concerns over slowing advertising revenues for newspaper and television stations. And since this is a global problem, there is little room for News Corp to hide.

He is forecasting a 1.5 percent decline in revenues for News Corp.’s newspaper business, a 9.5 percent decline in its TV revenues and a 7.8 percent decline in revenues at its filmed entertainment division. Greenfield cut his earnings and overall revenue estimates on the media behemoth as well. The good news? Rupert Murdoch is sitting on $6 billion in cash, which means he could grow revenues through acquisitions. Cash, if not king, is indeed a king-maker.

Since he didn’t offer an analysis of the Internet part of News Corp.’s business, especially MySpace, I emailed him to find out what he thought about that. He didn’t go into much detail but he did say, “MySpace is one of their BEST-performing assets right now…MySpace is doing great.” Last year Murdoch said he expected MySpace to bring in about $750 million in revenue for its fiscal year ended in June, the lion’s share of the $1 billion in revenue forecast to come from the company’s Fox Interactive division. If the big shift from old media to online accelerates, Rupert’s kingdom does have enough assets to capitalize on that shift. But then, I wouldn’t count on any ad dollars just yet.

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