By Andrew Rogers?/?Business News Americas
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Regions outside of North America and Europe saw the strongest user growth for Facebook (Nasdaq: FB) in Q2, with Brazil, India and Japan as the key contributors to user-base growth in the quarter, CFO David Ebersman told a conference call with investors.
The total number of Facebook users reached 955mn at the end of Q2, with 9.4% sequential growth in the rest of world (RoW) markets to 268mn, 9.0% growth in Asia to 255mn and more moderate growth in European and North American markets, the company said in a results presentation.
RoW and Asia now collectively account for more users than European and North American markets, but the company has struggled to monetize those users. Despite RoW and Asia accounting for 54.8% of total Facebook users, they accounted for just 20.9% of revenues in Q2.
It is worth noting, however, that these regions also saw strongest year-on-year revenue growth. Revenues grew 73.9% in RoW to US$113mn, 64.6% to US$135mn in Asia, 25.8% in Europe to US$346mn, and 25.3% in North America to US$590mn.
Facebook's total Q2 revenue reached US$1.18bn dollars, up 32.3% on the same quarter in 2011, with increasing Arpu's in its significant Asia and RoW markets as one challenge the company now faces to grow global revenues.
Arpu's in Asia reached US$0.55 and US$0.44 in RoW during Q2, while that figure was US$1.43 in Europe and US$3.20 in North America.
Despite revenue growth, the company saw operating losses of US$743mn in the quarter, driven by US$1.3bn stock-based compensation. Without this item, the company would have seen an operating income of US$515mn, Ebersman said.
The company expects operating expenses to increase significantly in 2H12 compared to the same period in 2011, the executive said, adding that at this stage investment is top priority as opposed to managing for a target margin.
STRATEGY 2012
Facebook's priorities for 2012 remain in the areas of mobile, platform and social ads, CEO Mark Zuckerberg said, adding that over half of Facebook users use the site daily, and over half access the site via mobile.
Mobile is a "huge opportunity" for Facebook, Zuckerberg said, adding that the number of smartphone users worldwide is expected to increase to 4bn-5bn in the next five years.
People are quickly adopting Facebook's mobile service, with the number of mobile users increasing 67% in the 12 months through Q2 to 543mn worldwide. Furthermore, mobile users are more active on Facebook than desktop users, and are 20% more likely to use Facebook on average on any given day, he said.
The company also sees an opportunity to create a social layer for new apps and websites to be built on top of. "Our platform strategy enables millions of developers to build better products and helps us provide a lot of value to the people who use Facebook," Zuckerberg said.
Facebook also sees value in social advertising, according to the executive, who added that the company is already delivering strong ROI on adds despite the fact that most advertising on Facebook isn't currently social.
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