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No. of Recommendations: 2
On 7/24/19, Facebook reported 2019 Q2 earnings after the bell, and reactions were very mixed. In all, Facebook beat analyst consensus on adjusted EPS despite the numerous scandals that have plagued the social media company.

By the Numbers:

Earnings per share (EPS): $0.91 reported, lagging analyst consensus of $1.88. The reported EPS included legal expenses for a recent reversal in the treatment of share based compensation, and a $2 Billion charge related to the $5 billion settlement with the FTC. For those having deja vu, in Q1, Facebook took a $3 Billion charge in anticipation of the settlement, absorbing the remainder in Q2. Excluding the legal expense, earnings would have been $1.99 per share, exceeding expectations. GAAP earnings down 48% year over year, but on an adjusted basis were up by 14%.
Revenue: $16.89 Billion, beating analyst consensus of $14.97 Billion. Revenue up 28% year over year.
Monthly Active Users (MAU): 2.41 Billion, MAU up 8% year over year.
Daily Active Users (DAU): 1.59 Billion, DAU up 8% year over year.

To put it into perspective, the earnings and revenue numbers look decent. Both the monthly and daily user metrics are up 8% year over year. Facebook's operating margin narrowed to 27% down from 44% a year ago. Across individual geographic segments, both revenue and advertising revenue were up across the board.

User Metrics:

Both monthly and daily active users breakouts show US & Canada numbers were up. European user numbers continued to climb. Users in the Asia-Pacific and rest of the world accounted for overall user growth.

Across the full portfolio of Facebook owned applications, there are 2.7 Billion monthly users. More than a third of the Earth's population use Facebook, WhatsApp, Instagram, or Messenger every month. Approximately, 2.1 Billion people use at least one of Facebook's services each day.

Other notable mentions:

To recap, on the Q1 call, Zuckerberg stated Facebook is consulting with security experts on content, end to end encryption for products and services, and ephemeral user information (limit the information availability on the platforms). Additionally, there is expansion for transparency with political advertising especially in the EU, but also elsewhere, globally. In Q2 he mentioned additional engineering resources being devoted to build greater privacy controls to further drive transparency and accountability.

Facebook also has invested in their Facebook Marketplace cutting into the turf of Craigslist and Ebay. Marketplace is seeing millions of interactions per day, and will be expanding into other countries. In Q2, we heard more about Instagram shopping for linking creators to their followers. Additionally, we heard about Libra integration as a payment platform for Facebook's basket of shopping and commerce services, and service for people around the globe to send payments and money.

Interestingly enough, Libra is built on blockchain technology, something Facebook has banned in advertisements on its own platform.


Link to Press Release:

https://investor.fb.com/investor-news/press-release-details/...


Replay of the Conference Call:

https://edge.media-server.com/mmc/p/9ykkuwjn


Link to Conference Call Transcript:

https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2...

Link to Follow Up Call Transcript:

https://s21.q4cdn.com/399680738/files/doc_events/Q2-2019-Fol...


Link to 2019 Q2 Conference Call Slide Deck Presentation (PDF):

https://s21.q4cdn.com/399680738/files/doc_financials/2019/Q2...


More Foolish Coverage:

Facebook's Regulatory Issues Overshadow a Solid Earnings Beat - https://www.fool.com/investing/2019/07/26/facebook-regulator...

Facebook's Regulatory Woes Aren't Over - https://www.fool.com/investing/2019/07/25/facebooks-regulato...

Facebook's Earnings Beat Estimates, but Regulatory and Margin Concerns Loom - https://www.fool.com/investing/2019/07/25/facebooks-earnings...


Outside of the Fool Universe:

Sued for billions, Facebook is accused of killing crypto businesses - https://decrypt.co/8089/sued-for-billions-facebook-is-accuse...


If you like this type of coverage and would like to see more of it, let me know by hitting the "Recommend It!" button or leave a comment. More importantly, feel free to chime in with your thoughts and expectations for FY19.


CMFHeavyMetal

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Ticker Guide for Costco Wholesale (COST), Facebook (FB), iQiyi (IQ), Magellan Midstream Partners (MMP), Retail Opportunity Investments Corp. (ROIC), & Upwork (UPWK)
Disclosure: May own shares of some, or all of the companies mentioned in this post. (http://tinyurl.com/HM-Disclosure)
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