A quarter of the world’s population use Facebook. What’s next for the tech giant?

According to Q1 FY12/17 results announced by Facebook on May 3, 1.936 billion people use Facebook monthly. With the global population believed to be around 7.5 billion, this means around a quarter of the world’s population use Facebook. The Facebook user base continues to grow, rising 17% YoY in Q1.

No signs of slowdown in user growth

The Facebook subscriber base continues to grow apace. Daily active users (DAU) in Q1 were up 18% YoY to 1.284 billion, and up 5% QoQ.

Monthly active users (MAU) were up 17% YoY to 1.936 billion, growth of 4% QoQ.

User numbers have been growing steadily every quarter, to the point where one-quarter of the world’s population now use Facebook. Growth was driven by an increase in users in the Asia-Pacific region, where users increased 27% YoY – a far higher rate of growth than the 6% recorded for the Europe-US region. User numbers continue to grow in developed markets, albeit at a slower pace. Thanks to this, combined with strong growth in developing markets, there is no sign of a loss of growth momentum.

Facebook has far more users than any other social media service (SNS). According to these companies’ published data, Twitter has 328 million MAU, LINE has 171 million and Instagram (part of the Facebook empire) has 700 million. These data confirm that Facebook, which has almost 2 billion MAU, is streets ahead of the competition.

Facebook is expected to hit the 2 billion MAU mark in Q2 FY12/17.

Earnings strong, SNS giant entering uncharted territory

Facebook achieved very strong earnings, as well as growth in user numbers. Q1 FY12/17 sales jumped 49% YoY to $8.032 billion, operating profits leapt 66% YoY to $3.327 billion and net profits surged 76% YoY to $3.064 billion – an even stronger set of results than analysts were forecasting.

The company generates the majority of its sales from mobile advertising, which accounted for 85% of sales in Q1. With user numbers rising, mobile advertising revenue is expected to continue to grow strongly.

But, there are causes for concern. Advertising display capacity is nearing saturation, and this could have an adverse impact on earnings growth. Facebook intends to offset this by expanding the advertising business of group company Instagram, and by increasing moving image advertising, which has a high unit price, so these are key areas to watch for future earnings.

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Also, the company needs to address the issues of fake news and inappropriate posting (abusive and inhumane posts, etc.). Strengthening its system for monitoring such posts could become a heavy cost item for Facebook.

Facebook has become an SNS of unprecedented size. Facebook claims it is not a media company, but it often wields more influence than any media company. Growth in its advertising revenue demonstrates that advertisers recognise that influence. The world is watching to see how much longer this SNS giant can maintain healthy growth.