15 Nov

Sluggish User Base Is Denting Facebook’s Revenue Growth

WRITTEN BY Sneha Nahata

Facebook’s DAUs and MAUs

Facebook (FB) witnessed sluggish user base growth during the third quarter of 2018. The Internet giant missed analysts’ expectations on monthly active users (or MAUs) and daily active users (or DAUs).

At the end of Q3 2018, Facebook reached nearly 2.27 billion MAUs, missing the analysts’ expectations of 2.29 billion MAUs. The company’s DAUs of 1.49 billion also lagged Wall Street estimates of 1.51 billion daily users.

Sluggish User Base Is Denting Facebook’s Revenue Growth

Facebook’s weak user growth

Facebook’s 2.27 billion MAUs grew just 1.8% sequentially and increased more than 9% on a year-over-year (or YoY) basis. While Facebook’s MAUs declined in Europe (EFA) to 375 million in Q3 2018 from the second quarter, they grew sequentially in North America, Asia-Pacific, and in the rest of the world and reached 242 million, 917 million, and 736 million monthly users, respectively. Europe MAUs were sluggish due to the impact of the enactment of the General Data Protection Regulation (or GDPR) law in the European Union. The GDPR law is intended to give users more control over their online data.

Monthly users of Facebook’s core platform and its Messenger service reached 2.27 billion in the quarter, a percentage point decline from analysts’ expectations and the preceding quarter’s pace, though the figure grew 10% YoY.

The company’s DAUs of 1.49 billion also increased 9% YoY in the third quarter. However, on a sequential basis, daily active users saw slower growth of ~1.4% in both the first and the second quarter of 2018. Daily user growth came from India (INDA), Indonesia, and the Philippines, where advertisers focus more on TV, print, and outdoor advertising, which is denting the company’s revenues. Daily user growth remained soft in both the North American and European regions.

Peer comparison

Twitter (TWTR) reported its most significant quarter-over-quarter decline in MAUs to 326 million in the third quarter, down from 335 million in Q2 2018. However, MAUs were up YoY from 330 million in Q3 2017. Snap’s (SNAP) Snapchat also posted sluggish DAUs of 186 million, a fall from 188 million DAUs in Q2 2018 but an increase of 5% YoY from 178 million DAUs.

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