Facebook’s revenue growth has been stunning as the company raced from a mere $272 million in annual sales in 2008 to $27.63 billion in 2016. That’s not a tenfold jump in sales, it’s a hundred-fold jump. And the best part about that growth is that, despite its 11-figure annual revenues, Facebook has managed to keep its double-digit growth intact.
Most of us keep looking at the ever-expanding user base as the primary reason for this tremendous growth story, but user base expansion is only one part of the equation. Average revenue per user is its better half.
When both these metrics keep rising the way Facebook’s has done in the last several years, the end result is strong double-digit growth.
Facebook’s average revenue per user, or ARPU, has more than doubled in the last ten quarters, from $2.24 per user in the second quarter of 2014 to $4.83 by the fourth quarter of 2016. These numbers look even bigger when we look at how user base has expanded during the same period.
In the last two years, Facebook’s user base has been expanding at a faster rate in Asia Pacific and Rest of the World. In the last eight quarters, Facebook added 224 million users in Asia Pacific, 170 million from Rest of the World, 48 million from Europe and 23 million from the United States – around the same period that saw their ARPU grow from $2.81 to $4.83.
ARPU has grown across all regions, and continues to grow in APAC and Rest of the World, where their numbers are increasing at a rapid clip. There is still a lot of room for Facebook to expand its user base in developing markets. As internet penetration grows, these regions will keep adding more and more users to Facebook’s network. The growing ARPU will be compounding the effect of user base addition, which will continue to fuel Facebook’s revenue growth into the future.
Facebook cannot be growing at these levels for ever. It has to and will come down at some point in the future. But for now, the combination of growing ARPU and user base is enough for them to keep adding the billions at top.
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