A Close Look at Facebook, Inc.'s Impressive User Growth

By Markets Fool.com

The growth in Facebook's (NASDAQ: FB) financials during the past year is unmistakable. Net income in the company's most recent quarter, for instance, is up a whopping 166% year over year, hitting $2.4 billion. But how are Facebook's user metrics performing? After all, Facebook's user base is ultimately the foundation of the social network's business model.

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Image source: Facebook.

Despite the rise of new social networks --Snapchat, in particular--a range of metrics suggest Facebook's user base is both healthy and growing.

Facebook's user growth

The sheer size of Facebook's user base is particularly evident in the company's monthly active user count. In the company's third quarter, monthly active users on Facebook hit a staggering 1.79 billion, up about 16% year over year and 4.4% sequentially.

Chart source: Facebook.

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Looking beyond monthly active users, Facebook really excels when it comes to daily active users. An incredible 1.18 billion people use Facebook every single day. Even more, daily active users are increasing at a faster rate than Facebook's monthly active users. In Q3, Facebook's daily active users were up 17% year over year and 4.5% sequentially.

For a social network as big as Facebook, it's surprising the platform is still growing this fast. Continued growth puts the spotlight on the social network's mass-market appeal.

In contrast, consider Twitter's (NYSE: TWTR) slower growth on a much smaller base. For Twitter's third quarter, its 317 million reported monthly active users were up only 3.3% year over year and 1.3% sequentially -- significantly slower growth rates than Facebook is seeing for these same metrics. And Twitter's daily active user growth is also well behind Facebook's: Daily active users on Twitter were up just 7% year over year in the company's most recent quarter.

Twitter's comparatively worse situation for both its user base and user growth shows that every platform doesn't necessarily appeal across a range of demographics the way Facebook does.

Engagement is looking good, too

User engagement on Facebook, of course, is just as important as the size of the social network's user base. Fortunately, Facebook isn't letting investors down on this important metric, either. Measured by daily active users as a percentage of monthly active users, Facebook's engagement was 66% in Q3, up from 65% in the third quarter of 2015 and 64% in the same period two years ago.

And here are a few more intriguing engagement metrics to mull over. The election alone prompted 109 million people on Facebook during the first nine months of the year to make over 5.3 billion posts, comments, and likes related to the election. Facebook is apparently taking seriously its mission to connect the world.

What about Facebook's other social networks?

Of course, Facebook isn't just Facebook. The company has acquired other social platforms and spawned some of its own social products within the Facebook ecosystem. So even these metrics don't fully capture the reach of Facebook's network.

Consider the growth in monthly active users of some of Facebook's other social products during the past year.

Facebook Owned Social Network

Q3 2016 Monthly Active Users

Q3 2015 Monthly Active Users

WhatsApp

Over 1 billion

900 million

Messenger

Over 1 billion

700 million

Instagram

Over 500 million

400 million

User growth and engagement clearly remains one of Facebook's strengths. And given that every additional active user on Facebook's platforms increases the value of the platforms themselves, this is good news for investors. Facebook's network effect should keep users logged in -- and competitors at bay -- for years to come.

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