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Facebook’s Workplace Product Is on Fire

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Corporate networking platform

Earlier this month, Facebook (FB) hosted the first global summit for its Workplace product. Launched two years ago, Workplace is a collaborative platform designed for corporate environments. It supports instant messaging between colleagues, group communication, and social networking within an organization.

At the summit, Facebook said that Workplace had been a hit, and its user base has doubled in the past eight months or so, according to AFP. Some 30,000 companies, including large employers such as Walmart, have adopted Workplace.

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Workplace feeds Facebook’s non-advertising business

Facebook’s Workplace is available in free and paid versions, with charges starting at $3 per user per month. Workplace is one of the products that feed Facebook’s non-advertising business, where revenue increased 23% YoY (year-over-year) to $193 million in the second quarter. But Facebook is still heavily dependent on advertising dollars, with advertising sales accounting for 98.5% of its total revenue in the second quarter.

At Alphabet (GOOGL) and Baidu (BIDU), advertising sales accounted for 85.9% and 82.1% of overall revenue, respectively, in the second quarter. Twitter (TWTR) and Snapchat’s parent, Snap (SNAP), generated 84.5% and 99.2% of their total revenues, respectively, via advertising in the second quarter.

Pressure to diversify

As competition for advertising dollars has intensified, with Amazon posing a particularly serious threat to Facebook and Google in the digital advertising market, there’s been pressure on Facebook to create new revenue streams outside advertising. This pressure has seen the company introduce paid subscription services, such as Workplace, and venture into providing mobile payment services and selling hardware products.

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