Facebook Inc. (NASDAQ:FB) Leading Pinterest Inc. (NYSE:PINS) And Snap Inc. (NYSE:SNAP) In Terms Of ARPU

Facebook Inc. (NASDAQ:FB) has continued to show strength with solid growth in average revenue per user (ARPU), but its daily active users in Canada and the US have declined. The company’s YoY ARPU in Q3 topped that of rivals like Pinterest Inc. (NYSE:PINS) and Snap Inc. (NYSE:SNAP).

Social networks ARPU grew In Q3 despite shrinking DAUs

The social media giant grew its YoY ARPU by 9% in Q3 to $7.89 while Snap and Pinterest were up 28% and 15%, respectively to $2.73 and $1.03. ARPU is an important metric for investors because it indicates the company’s efficiency in monetizing its users. It is a measure of the company’s total revenue divided by the number of users in the quarter. The social media networks have become victims of their success, with the number of potential new users falling.

When user growth begins to shrink or decline, the companies have to squeeze more value from existing users. This is a stage that Facebook is now in, and although it is still leading in ARPU, investors were surprised last week when the company reported a drop in daily active users. The company said that DAUs in Canada and the US dropped by 2 million to 196 million in Q3, and the company expects DAUs in North America to remain flat in Q4. On the other hand in Europe DAUs remained flat at 305 million for the third quarter running.

Facebook ARPU could improve

However, according to Needham analysts, there is still some space for ARPU improvement in North America. In the US and Canada, ARPU was around $39.63 in Q3 compared with $3.67 in Asia-Pacific, $12.41 in Europe, and $2.22 in the rest of the globe. The key to growth for Facebook will rest with its broader family of apps. In an earnings call, the company executives said they plan to integrate the messaging apps with adverts for running ads on Facebook and Instagram and take users to a WhatsApp and Messenger thread.