Zuckerberg: Facebook's core mission isn't enough of a driver

While connecting people is important, Facebook has to take advantage of bigger opportunities

Financial trends and news by Steven Loeb
July 29, 2015
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Following Facebook's better-than-expected, yet somehow still not good enough, second quarter earnings results, Mark Zuckerberg got on a conference call to outline some of the progress the company has made on its multiple different divisions and products, including Instagram, Messenger and Oculus.

Events, for example, is now used by 450 million people each month, and Groups are used by more than 850 million people.

The company's growth, he said, "reflect the on-going investments and improvements we've made, and the quality, performance and usefulness of our services."

That includes its photo-sharing service Instagram, which got upgraded search, and the introduction of trending content.

"With Instagram, the continued growth in the size, and engagement, of the community shows how this is becoming one of the best places to get a real-time snapshot of the world," said Zuckerberg.

Messenger got mobile video calling, and the option to sign up without needing to have a Facebook account. It now has more than 700 million users. WhatsApp has been growing as well, with the launch of VoIP calling, while search crossed 1.5 billion searches per day and has now indexed more than two trillion posts.

And, finally, Oculus, which Facebook bought last year, will be shipped to consumers early next year. 

Just reading that list of services and companies that Facebook has purchased in the last few years shows how far it has come from the simple social network it used to be. 

During the Q&A section of the call, Zuckerberg was asked by Anthony DiClemente of Nomura Securities whether he thought the company's success on engagement was due to its "core value proposition" continuing to resonate with people "as opposed to product innovation."

It's an interesting question: are people drawn to Facebook simply because it helps them connect to other people? Or do they also need those other services? (I can tell you that I use Facebook's core app, and none of its other services, including Messenger, Instagram or WhatsApp. It is that core value that drives me as a user).

"At some level I do think that the core mission and promise of helping to connect people with their friends and family is very fundamental. And everyone has friends and family and wants to stay connected and uses a varity of tools and ways to do that in the world today, which are very often very inefficient and the Internet offers new opportunities to make that a lot better," said Zuckerberg.

"When you look at the specific products, and the work that we're doing, there's this process that we've followed, where we'll basically look at an area of our product that people are using."

The company now organizes itself into product groups, and each product group leader "will not just look at the product at one thing but what are the key three or four or five use cases, which often can really be product lines on their own."

"I think a lot of the success that we've seen has been because of some of the work that we've done a few years back at this point in products like NewsFeed," Zuckerberg said.

"When I look forward I'm very excited about doing the same thing for messaging and groups and video. There's many different use cases, you don't want to look at these as one thing. There are a bunch of different use cases and we want to be the best at each of them, and if you have good people leading those teams then I think you can deliver that over time."

Ultimately, "the mission is fundamentally deeply important to people but that has to be coupled with good, thorough execution of each of the available opportunities."

Q2 numbers

Facebook posted revenue of $4.04 billion for the quarter, beating Wall Street's estimates of $3.98 billion. Adjusted earnings per share came in at 50 cents in the quarter, higher than the 47 cents a share that analysts had been expecting.

Advertising revenue was $3.8 billion for the quarter. It increased 43% from the same quarter the year before. Mobile accounted for 76% of that revenue, up from approximately 62% of advertising revenue in the second quarter of 2013. Revenue from payments and fees for the quarter was $215 million, an 8% decrease year-to-year.

GAAP net income was $719 million, while non-GAAP net income for the quarter was $1.4 billion,

Daily active users (DAUs) were 968 million on average, an increase of 17% year-over-year, while mobile DAUs were 844 million on average, an increase of 29%.

Monthly active users (MAUs) were 1.49 billion on average, an increase of 13% year-over-year, while mobile MAUs were 1.31 billion on average, an increase of 23%.

Facebook shares had gone up 1.7% or $1.70, to $96.99 a share in regular trading. They are now up nearly $20 after beginning the year trading at $78.58 per share. 

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