London Daily

Focus on the big picture.
Monday, Oct 06, 2025

Why Facebook generates much more money per user than its rivals

Why Facebook generates much more money per user than its rivals

Facebook is generating more money from users despite the many controversies the company has faced since early last year. It reported average revenue per user of $7.26, up more than 19% from a year earlier and the second-highest ARPU in its history. On the flipside, Pinterest’s ARPU for the quarter came in at just 90 cents.
Despite all the uproar surrounding Facebook, from the company’s mishandling of user data to its unwillingness to fact-check political ads, advertisers are still flocking to its services because they can’t find any better way to reach consumers.

Looking back at third-quarter earnings from Facebook and its rivals, Facebook’s dominance in social media is as clear as ever, and there’s no better metric to illustrate that fact than average revenue per user (ARPU). The company’s high ARPU, which is calculated by dividing quarterly revenue by number of users in the period, shows that consumers are willing to accept more ads on Facebook without abandoning it, and that the company can keep charging premium prices to advertisers.

Facebook on Wednesday reported quarterly ARPU of $7.26, up more than 19% from a year earlier and smashing analysts’ estimates by 17 cents. The figure represents Facebook’s second-highest rate ever and puts it way above Snap at $2.12 and Pinterest at 90 cents. Twitter doesn’t report ARPU, but analysts at Canaccord Genuity calculated it at $5.68 for the period.

Facebook’s continuing financial strength is primarily the result of its ability to hang onto users through a tumultuous 2018, when the hashtag “DeleteFacebook” trended on multiple occasions. Monthly active users increased 8% from a year earlier to 2.45 billion, making it many times bigger than any of its competitors. And there are many new advertising opportunities on Facebook’s Instagram app.

Facebook is not just Facebook. It is Instagram, WhatsApp and Facebook, which is a very robust ecosystem that spans the entire globe,” said Adam Sarhan of investment advisory service 50 Park Investments. “It appeals to just about everyone, and it had several offerings that appeal to different segments of the ever-growing population.”

Facebook shares rose almost 2% on Thursday after the company reported better-than-expected results. On the flipside, Pinterest tanked in extended trading on disappointing revenue and 2019 guidance. The image-sharing site’s ARPU for the quarter came in a penny below estimates.

Pinterest’s main challenge is generating money from users outside the U.S. Its domestic ARPU rate for the quarter was $2.93, but internationally it was only 13 cents. When asked about the ARPU number on the earnings call, CFO Todd Morgenfeld said “it’s mathematics,” because the international business is growing faster than the U.S. business.

“It’s still very early days around things like age targeting, region targeting, dynamic retargeting around our products, products ads and shopping ads,” Morgenfeld said. “That stuff is just table stakes for us to be successful.”

Whether it’s Pinterest or Snap - and even to some degree Twitter - advertisers are still experimenting to see what works, while at Facebook they have a very clear picture of their return on investment.

Snap CFO Derek Anderson said in the company’s recent earnings presentation that Snap is launching “innovative ad products” and has “ample supply and lots of room to grow ARPU through both improved sell through rates and higher yields over time.”

The biggest risk to Facebook’s dominance may be less from competitors and more from regulators and lawmakers, who are scrutinizing the company’s every move. For now, the company is able to squeeze more dollars out of its users because of the levers advertisers can pull with its targeting technology.

Facebook CEO Mark Zuckerberg is particularly focused on Stories, which he predicts will one day generate more revenue than the core News Feed.

Facebook has a powerful combination of the broadest reach, richest user data and best in class ad targeting tools,” said James Cordwell, an analyst at Atlantic Equities. Cordwell, who recommends buying Facebook shares, said it’s a “combination that rivals are just unable to match.”
Newsletter

Related Articles

0:00
0:00
Close
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
×