After a year filled with negative media headlines, Facebook (NASDAQ: FB) reported their full year earnings recently. Despite constant bashing by the press, the business reality and the financial numbers spoke for themselves. Facebook reported top and bottom line beats which left analysts revising their target prices (surprise surprise) on the company.
Here are some key highlights from Facebook’s press release:
– Q4 Revenue grew 30% or 33% on a constant currency basis year over year.
– Daily active users (DAUs) increased 9% year over year.
– FY2018 revenue grew 37% and net income grew 40%.
The Cash Machine
Facebook’s business model whereby users provide free content on Facebook and Instagram has created an enormous network effect and has attracted businesses to buy ads at a low cost – where people gather, that’s where advertisers want to be.
This asset light business model has enabled the company’s gross margins to be at 83% for FY2018 and consistently above 80% for the past few years.… Read the rest