
Facebook Profit Jumps 71% Year-over-Year - JumpCrisscross
https://www.wsj.com/articles/facebook-profit-jumps-71-1501100844
======
chollida1
Some fun Facebook facts from the earnings call/report

\- Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and
marketable securities. It's the third biggest S&P 500 company by this metric
that isn't paying a dividend, after Berkshire Hathaway and Alphabet.

\- Facebook's headcount is now at 20,658. That's up 43 percent since last year

\- Average Revenue Per User Rises 23% to $4.73, Down from 4Q 2016

\- Facebook Offers No Break Out of Instagram Revenue

\- 2Q Daily Active Users 1.32 Billion, Monthly Active Users 2.0 Billion

\- Shares Up 1.6% After-Hours, Near Session Highs

\- Zuckerberg: WhatsApp and Instagram Stories each have more than 250 million
people using them daily. Each of those is a single SNAP whose entire daily
user base is around 170 million.

Wow, this is a company that is killing it right now.

Facebook and Google combine to account for up to 99% of advertising growth.

As this relates to SNAP, I have to think that investors will spend atleast a
year spending marketing budges with SNAP but after that, RIP Snap......

Also as a crazy aside, Meg Whitman just resigned from the HP Board and has
been reported to be visiting Uber.....

~~~
teirce
Maybe I'm just a crazy millennial, but I absolutely loathe the idea of FB /
Insta stories. Snapchat going under wouldn't convince me to move over -- I'd
just stop using the service and move on to communicating some other way. And
Stories aren't the only appeal of SNAP, though I suppose they are a large
producer of revenue.

HN just loves to hate SNAP, and I can't really fathom why. I can get being
skeptical but every comment here seems like they /want/ to see the company
fail.

~~~
jdhn
Another crazy millennial here. I don't have an Instagram either, and frankly I
don't want one.

As for why HN hates Snap, I'm not exactly sure. Is it because the average user
on HN is older and isn't targeted by Snap? Maybe it's seen as a frivolous
plaything? No matter what the reason, there's definitely a lot of hate for
Snap on this site.

~~~
eganist
My reasoning for loathing snap was their refusal to even allow a snap client
for windows phone to exist.

~~~
JohnnyConatus
No more entries, we have a winner for the most obscure reason to dislike a
social service.

~~~
michaelbrooks
I don't loathe Snap, but I do dislike their decision for not supporting
Windows 10. Microsoft even offered a cash incentive to Snap for creating an
app and Snap still outright said no. Surely no matter how much you hate a
platform, if you're being offered an incentive, you would say yes?

~~~
daveFNbuck
There's a huge opportunity cost in putting some of your developers on creating
an app for a niche market. Snap probably felt that Microsoft's incentive
didn't cover that cost.

~~~
tazard
Not to mention maintenance and upkeep.

------
StevePerkins
Maybe I live in a bubble, but I just assumed that Facebook would be on a
decline trajectory by now.

Their website is almost meaningless to my day-to-day life at this point. I
login once every couple of weeks, upload some pics of my kids for Grandma to
look at, and then log off. I don't personally know anyone who still uses it
regularly as we did back in 2007. I don't know a tactful way to put this...
but it seems like mostly older people and Walmart shoppers, posting angry
bumper sticker nonsense about Obama or Trump.

Am I just COMPLETELY out of touch? Or it is an Eternal September situation
([https://en.wikipedia.org/wiki/Eternal_September](https://en.wikipedia.org/wiki/Eternal_September)),
where the unwashed masses are still coming on board faster than people like me
are leaving?

Even if it's the latter, aren't they near a saturation point by now? Once
everybody's signed up, where's the growth come from? How do you squeeze out
additional monetization from a platform once there are no new members coming
in, and old ones trickle away because the content is so poor?

~~~
confounded
> _I login once every couple of weeks, upload some pics of my kids for Grandma
> to look at, and then log off_

Pretty much proves the point: Even people who actively dislike the company and
product exhibit engagement and retention that other consumer apps would kill
for. It sounds like you've been using it for a decade!

It's less of a 'product' than a globalized, cross-generation, ubiquitous
social norm.

~~~
dcre
Exactly right. OP is a monthly active user every month!

------
grandalf
Interestingly, I'm someone who does not click on ads, but the last 3 ads I've
clicked on were on Facebook, and two resulted in purchases.

I can't help it when the ads are for cool things like a $20 USB endoscope.

~~~
atourgates
I work at an agency that does a decent amount of digital PPC advertising. A
year ago, we'd almost entirely steer our customers away from Facebook to PPC-
search advertising. Back then, the campaigns we ran on Facebook were almost
entirely wasted money.

But today, Facebook has really improved their ad platform. They offer pretty
much unparalleled user targeting features, coupled with some clever tools like
product ads that are much easier to use and integrate than Google's.

For some advertisers, we've been able to deliver a much lower CPA on Facebook
than Adwords or other platforms.

~~~
BinaryIdiot
> I work at an agency that does a decent amount of digital PPC advertising. A
> year ago, we'd almost entirely steer our customers away from Facebook to
> PPC-search advertising. Back then, the campaigns we ran on Facebook were
> almost entirely wasted money.

A year ago? You sure you don't mean like 3-4 years ago? 1-2 years ago Facebook
advertising was also really awesome with a high ROI. Almost all the people I
work with who has done, or still does marketing, has moved almost all of their
money into Facebook over the past 2 years because they get a far higher ROI
than any other service including Google AdWords.

I'm actually surprised to not hear about huge declines in AdWord spending
(unless I missed it).

~~~
grandalf
> I'm actually surprised to not hear about huge declines in AdWord spending
> (unless I missed it).

There have been some pretty big signals, the most significant of which has
been the pricing of Google phones, tablets, chromebooks, etc.

Google found that simply selling high margin consumer electronics was a better
investment than growing the user base and delivering a subsidized top-tier
experience.

Thus Adwords faltering has left the door open for Apple to take over some of
Google's former strongholds.

The cost of commodity storage tech and mature open source infrastructure means
that Google's free cloud products compete mainly on the basis of features.
Google's early lead and infrastructure advantage is no longer much of a
factor, and Google's recent attempts at product have been (in my opinion) weak
compared to Apple and even Microsoft.

The problem with Adwords is that pagerank-driven ad units end up being
purchased only by the companies willing to blindly pay the most for the ads.

Since there are better ROI options out there, only the stupidest (or richest,
thus already best-known and tolerant of the lowest yield) companies are the
ones buying Adwords ads. Since Google has departed from its original low
profile ads and moved into a dark pattern where sponsored content is
commingled with actual results, this means that the quality of Google's
content (when viewed simply as content) is declining.

Another big signal was YouTube Red. The ads got so bad that the only way
Google could avoid destroying the platform was to bifurcate it, allowing the
ads-present version to sell all the inventory to the poorest people who can't
pay $10/month to stop the annoyance.

There are two kinds of marketers, those who need to care about ROI, and those
who are expected to spend a percentage of their budget on the top few ad
options. Google is now catering mainly to the second group, mainly because the
second group is larger and cares little about ROI.

------
jumpkickhit
I'll give them credit, Facebook figured out how to monetize themselves.

Versus say, Twitter, which i don't use and still don't understand how it even
exists.

~~~
adventured
Interestingly, Twitter's problem is not monetization, it's cost vs scale.

They managed to do $2.5 billion in sales with about 300 million monthly
actives for 2016 (the 300m is wonky, I don't know what the avg was for the
year etc, but they were near that anyway).

If you scaled them to Facebook's size, they'd be at an equivalent $16.5
billion annually. Account for the benefits of scale that Facebook derives, and
it's reasonable to say they're monetizing OK given their 300x million users.

The problem? Their costs are well out of line. When Facebook had $2 billion in
sales (2010), they generated $600 million in net income. Instead, at that
scale, Twitter is bleeding half a billion dollars on the net income line;
they've basically got a billion dollar profit imbalance vs what Facebook was
doing at the same scale.

Also worth noting, Facebook hit around 500 million users in July 2010 (the
year they did $2b in sales). Twitter is monetizing better than Facebook was at
the same user scale. The negative comparison of course, is that Facebook had
far more users, and still generated $600m in net income (radically better cost
management).

~~~
encoderer
Great point. It's easy to judge twitter here, and by many different data
points FB has been an exceptionally well run company, but engineers are a lot
more expensive now than they were in 2010. I imagine Twitter has to pay
interns today what Facebook was paying experienced engineers in 2010 (100%
serious).

~~~
adventured
I definitely agree with the salary inflation. Here's another interesting
contrast between them given that.

Twitter has roughly twice as many employees, versus what Facebook had at a
comparable monthly active user count. It's costing them something in the
neighborhood of $200 million per year to keep those employees.

Twitter's organization size was built up on the assumption of a much larger
userbase that never materialized. Then their leadership chose not to adjust to
the new reality (until perhaps recently, as they seem to be finally focusing
on costs).

~~~
mcintyre1994
Wait, Twitter are paying $200m on employees, bringing in $2.5bn and spending
$3bn (draining half a billion)? I assumed their biggest expense would be
employees, what are they spending $2.8bn/year on?

At that scale spending 4x what Facebook spent on employees at the same level
(assuming 2x as many with 2x salary inflation) barely registers.

------
solomatov
Interesting thing is that GOOG's results which were released several days ago
weren't so stellar. It's good to see real competition in advertisement market.

~~~
dopamean
I'm not trying to be snarky but is it really competition if it's just two
players?

~~~
maneesh
Yes. Isn't a basketball game a competition?

~~~
everly
Are there any leagues with just two basketball teams?

~~~
maybeiambatman
It's funny. Anyone following the NBA right now would tell you it's a league
with just two teams :P

~~~
dopamean
Right. And they'd also say the league is incredible uncompetitive.

------
ZenoArrow
One thing I just can't get my head around... who is clicking on online ads? I
click on maybe one a year, and probably less than that, and I don't think I've
ever bought anything based on what I was shown in an online ad. Perhaps I'm an
outlier, but considering the popularity of ad blockers I don't think my lack
of engagement with online ads is that extreme.

~~~
corobo
There are people out there that fall for 419 scams and spam email. You are on
Hacker News. It's safe to say you're not the average measurement when it comes
to who clicks ads.

On the whole ad blockers are not as popular as you might think, you just hear
about them more frequently due to the circles you browse in.

In any case you say you click on one a year. Lets assume everyone does
likewise and multiply that alone by Facebook's userbase and you've got a good
5 million ad clicks per day.

------
vadym909
Hopefully their newly unionized cafeteria workers can extract a bit more from
them, then Google would have to do the same to Google Express drivers, then
Apple to its coach drivers, and this trickle down effect to non-tech jobs may
actually work. [http://www.mercurynews.com/2017/07/24/hundreds-of-
facebook-c...](http://www.mercurynews.com/2017/07/24/hundreds-of-facebook-
cafeteria-workers-join-union/)

------
virtuexru
> Facebook’s formidable ad business, along with Alphabet Inc.’s Google, soaked
> up 99% of the online ad industry’s growth last year, according to Pivotal
> Research.

Does that seem crazy to anyone else?

~~~
omot
That is absolutely insane. Should we seriously be considering anti-trust
regulators to crack down on their insane growth?

~~~
solomatov
As far as I understand, In the US monopoly is fine unless it leads to increase
of price paid by consumers. EU probably has different opinion.

~~~
darpa_escapee
I was under the impression that even this was okay, it was using a monopoly
position in one market to take over another market that wasn't kosher.

~~~
jonbarker
If I recall correctly in the US court case history they ruled one couldn't
both own the means of production (ie movie studios) and the means of
distribution of content (ie movie theaters). Not sure if the movie business
used market power in one to take over the other, but that would be interesting
to know. If you take it as an assumption that the only things that changed
with the internet were 1) the volume of content increased and 2) the barrier
to entry reduced, then it gets tricky. Example: the Huffington Post proved
that content creators would be willing to do so for personal brand exposure
instead of pay (kind of like I'm doing now as I am now realizing...). FB has
created a content collection and distribution engine "employing" people who
are willing to populate it for free in exchange for some non-monetary benefit.
This doesn't really get FB out of the antitrust problem IMO.

------
majani
Considering how Facebook still has so many giant monetization levers to
pull(Groups, Events, Video, Whatsapp and Messenger) their financial
performance is nothing short of amazing,regardless of opinion on the product
itself.

------
corobo
I guess ruining videos is paying off then.

I'll be watching a video lets say it's a downbeat makes-you-feel sort of
video. In the middle Facebook decides it's cash-in time and you get some zany
wacky advert for something or other. Yeah cheers Facebook.

The overall effect is I realise I'm wasting time watching videos and exit out
during the ad, I imagine eventually I'll just not bother watching videos at
all.

I'm also aware most of the videos I'm watching out of convenience are
freebooted too, it's a bit cheeky to profit on those.

------
benjaminbuttons
Anyone please explain what is the utility of FB. The newsfeed quality is
terrible, with lots of spam and inaccurate content. I stopped using FB a while
back, I don't get why a Billion people are still hooked on to this social
media trap.

~~~
evincarofautumn
• All my friends are already there (and many of them are thousands of miles
away from me) so it’s a convenient way to stay in touch or just get a passive
awareness of what they’re up to. Other services don’t fill that same niche for
me.

• It’s an easy way to organise events and participate in small online social
groups for common interests or memes or whatever. (It’s a partial replacement
for forums and newsletters.)

• My newsfeed is now mainly stuff that’s interesting & relevant to me—hell,
even the ads sometimes—because I’m proactive about unfollowing people who post
stuff I don’t care about, hiding uninteresting content, and reporting spam.

• Even though I was an active user before, I worked there, and after having
met many of the the people running the show, I generally trust that they’re
technically competent and care about making something useful & good for
people.

------
mcintyre1994
The insane thing to me is that they've barely gotten started on monetising
outside the Facebook feed. They've taken that, injected ads and garbage until
it's useless for me and almost everyone I know, and billions still use it
every day. Me and almost everyone I know use some combination of instagram,
WhatsApp and Messenger, and they could inject way more ads into all of those.
I'd probably end up not using them any more, but that's clearly not
representative. It's insane how much un-monetised space they have right now.

~~~
fwn
A problem with monetizing messaging is that messaging services are a
commodity. Buying WhatsApp mitigated this problem. Still:

Fancy non-messaging features aside, I have at least two or three functionally
identical channels I use to talk to my contacts. If one service gets too
clumsy with content injection I could probably change the channel without the
other end even noticing it.

------
sidcool
I have met very very few people who actually like Facebook, and still it
continues to make impressive strides, technologically and financially. May be
I am living in a filter bubble where no one likes Facebook and there's a world
somewhere where people are all the time hooked on FB, Instagram and WhatsApp.

P.S. I use WhatsApp and like it, so it makes me minor hypocrite.

~~~
Bakary
You might have noticed a trend in this thread of people claiming to hate
facebook but also still using it regularly

~~~
fwn
...kind of like with public transport.

------
recursion
Link to non-paywalled article:
[http://archive.is/h2465](http://archive.is/h2465)

------
pier25
I barely use Facebook anymore. Are there any reasons other than user growth to
justify the profit jump?

~~~
majani
They keep coming up with great, easy to use ad products that convert.

------
nether
The new tobacco companies.

------
em3rgent0rdr
I suspect a significant portion of this 71% spike is from people fuming about
Trump.

------
CephalopodMD
*since last year

The jump in EPS from the last earnings call a few months ago is just a few
percent - nowhere near that. It's about 18% above expectations. This is good
if you're a shareholder for sure, but the title is misleading.

------
ahassan
Is there an alternate article that isn't behind a paywall?

~~~
neonhomer
@recursion posted this around the same time:
[http://archive.is/h2465](http://archive.is/h2465)

[https://news.ycombinator.com/item?id=14860289](https://news.ycombinator.com/item?id=14860289)

------
barce
How would you define "killing it" to a non-native, English speaker?

~~~
sctb
We detached this subthread from
[https://news.ycombinator.com/item?id=14860331](https://news.ycombinator.com/item?id=14860331)
and marked it off-topic.

