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Comparison Of ARPU For Facebook, Pinterest And Snap

Social media apps. Flickr Image.

Social media companies such as Facebook (NASDAQ:FB), Snap (NYSE:SNAP), and Pinterest (NYSE:PINS) are using the average revenue per user or ARPU metric to measure their business performance.

In particular, the ARPU metric measures how well the businesses monetize from their user base.

For Facebook, ARPU is defined as total revenue in given geography during a given quarter, divided by the average of the number of MAUs or monthly active users in the geography at the beginning and end of the quarter.

While ARPU includes all sources of revenue, the number of MAUs used in this calculation only includes users of Facebook and Messenger, according to the company’s financial reports.

For Pinterest, the definition of ARPU is the same as Facebook but the way they measure the MAUs might be different.

For Snap, ARPU is defined as quarterly revenue divided by the average DAUs or daily active users.

Therefore, each company seems to have its own definition of ARPU and this makes the comparison rather difficult or even meaningless.

However, for the sake of finding out what it looks like, in this article, we are going to go ahead to do a comparison of the ARPU metrics of Facebook, Pinterest and Snap.

Keep in mind that the comparison is not a measure to determine which company is better than the other but rather an overview of what their monetization metrics are and how much headroom they have for improvement with respect to the other.

Let’s go take a look!

Social Media Companies ARPU Topics

1. Wordwide or Global ARPU
2. North America ARPU
3. Europe ARPU
4. Asia Pacific ARPU
5. Summary

Wordwide or Global Average Revenue Per User

Worldwide or global ARPU

Worldwide or global ARPU

* Facebook worldwide APRU includes both advertising and other revenue whereas other companies’ ARPU may come from only advertising revenue.
* Facebook and Snap worldwide ARPU figures are calculated based on the sum of quarterly ARPU figures since they do not provide the annual figures.
* Pinterest only went public in April 2019 and hence, the ARPU data dated back to only fiscal 2018.
* Similarly, Snap only went public in March 2017 and hence, the ARPU data dated back to only fiscal 2017.
* All companies’s fiscal year begins on Jan 1 and ends on Dec 31.

Let’s first look at the worldwide or global average revenue per user or ARPU figures for Facebook, Pinterest and Snap.

From the first look, Facebook’s worldwide ARPU seems to be the dominating one as it is the highest among the 3 companies.

Between fiscal 2016 and fiscal 2020, Facebook’s worldwide ARPU has been on a rise and reached as much as $32.03 USD as of the end of fiscal 2020.

On the other hand, Pinterest’s global ARPU is the lowest at only $4.26 USD in fiscal 2020.

For Snap Inc., its global ARPU reached $10.10 USD in fiscal 2020, a 22% increase compared to the figure a year ago.

While smaller players like Snap and Pinterest have significantly lower ARPU, that is by no means that they are inferior to Facebook.

As Facebook is quite a mature company in the social media space compared to Pinterest and Snap, its monetization channels are expected to be more diverse and well developed than Snap and Pinterest.

Not to mention that Facebook’s user base is multiple times larger.

And, that explains the relatively high ARPU for Facebook.

As such, Facebook’s worldwide ARPU is more than 3X higher than that of Snap and more than 7X higher than that of Pinterest as of fiscal 2020.

Despite the large difference in terms of ARPU figures, all of them are still growing in double-digits in fiscal 2020, suggesting that they may not be competing against one another.

While they are all social media companies, they have a very different platform and they work very differently from one another.

Therefore, it is possible that some users and even advertisers may find themselves engaging in multiple social media platforms.

North America Average Revenue Per User

North America ARPU

North America ARPU

* Facebook U.S. & Canada APRU includes both advertising and other revenue whereas other companies’ ARPU may come from only advertising revenue.
* Facebook and Snap’s ARPU figures are calculated based on the sum of quarterly ARPU figures since they do not provide the annual figures.
* Snap’s North America also includes Mexico, the Caribbean and Central America.
* All companies’s fiscal year begins on Jan 1 and ends on Dec 31.

In terms of average revenue per user from North America, Facebook is again the top moneymaker at $163.86 USD per user as of fiscal 2020.

Snap and Pinterest are pretty close, with both earning $19.65 USD and $15.34 USD per user in North America, respectively.

Again, Facebook is the king of monetization per user in North America.

At more than $160 USD per user, Facebook’s North America ARPU is 8X higher than that of Snap and nearly 11X higher than that of Pinterest in fiscal 2020.

Keep in mind that Pinterest’s North America ARPU comes only from the U.S. whereas Facebook and Snap’s North America ARPU comes from multiple countries, including Central America for Snap.

What that means is that Pinterest’s monetization channel has only been focused on the U.S. market and for other countries in the American continent, they have yet to be substantial to the company.

Therefore, that is leaving a lot of headroom for Pinterest for growth in the future.

Similar to the worldwide or global ARPU which we saw earlier, all companies are witnessing a double-digit growth rate in average revenue per user in North America, illustrating that there are rooms for every player in this region.

Europe Average Revenue Per User

Europe ARPU

Europe ARPU

* Facebook Europe APRU includes both advertising and other revenue whereas other companies’ ARPU may come from only advertising revenue.
* Facebook and Snap’s Europe ARPU figures are calculated based on the sum of quarterly ARPU figures since they do not provide the annual figures.
* Snap’s Europe also includes Russia and Turkey.
* Pinterest does not break down the Europe ARPU numbers and may possibly be insignificant.
* All companies’s fiscal year begins on Jan 1 and ends on Dec 31.

For average revenue per user that comes from Europe, Facebook is again generating the most money per user, at $50.95 USD in fiscal 2020, from its social media platform.

In contrast, Snap’s ARPU from Europe is only one-tenth of what Facebook generates in the same region, notably at $5.53 USD per user in fiscal 2020.

Pinterest does not break down its ARPU that comes from Europe.

I am assuming that this region contributes an insignificant amount of revenue to the company.

Therefore, Pinterest should have plenty of headroom to grow not only in North America but also in Europe given that its current monetization strategy has only been focused on the U.S.

Again, both Facebook and Snap are witnessing a breakneck ARPU growth rate in Europe which has been double-digit since fiscal 2016.

However, Snap’s revenue per user has been growing at the fastest rate in Europe, notably at more than 30% in every single year.

In short, Europe is the 2nd most lucrative market after North America for social media companies like Facebook and Snap.

Asia Pacific Average Revenue Per User

Asia Pacific ARPU

Asia Pacific ARPU

* Facebook Asia Pacific APRU includes both advertising and other revenue.
* Facebook’s fiscal year begins on Jan 1 and ends on Dec 31.

For Asia Pacific average revenue per user, only Facebook breaks down the data in its financial statements.

For other social media companies like Pinterest and Snap, the Asia Pacific ARPU data is lumped together with other countries and is categorized as the international region.

In this aspect, I am assuming that the ARPU figures from the Asia Pacific region have been insignificant for Snap and Pinterest.

That said, Facebook’s ARPU from the Asia Pacific tops out at $13.77 USD in fiscal 2020, the highest in the last 5 years and represents a 9% increase from a year ago.

Compared to all other regions, Facebook’s ARPU figures for the Asia Pacific region are the lowest.

At less than one-tenth of North America and one-fourth of Europe’s ARPU figures, the Asia Pacific region represents one of the largest but least utilized regions in the world for monetization for not only Facebook but also other social media platforms.

Despite almost a trillion in market cap, Facebook still has plenty of growth ahead for monetization in the Asia Pacific given the size of the population and the relatively low ARPU in this region.

Conclusion

Of all regions in the world, North America, notably the U.S., contributes the most revenue per user to Facebook, Pinterest and Snap.

All of the social media companies including Facebook, Pinterest and Snap, are seeing significant growth in monetization per user in North America due mainly to the size and maturity of the online advertising market in this region.

In contrast, Asia Pacific has the lowest ARPU figures for all companies, including Facebook, Snap and Pinterest.

Snap and Pinterest have not even broken down the ARPU figures coming from the Asia Pacific, illustrating the insignificant revenue per user that may come from this region for both companies.

Despite the size of the population in the Asia Pacific, this region is still under-explored and untapped for most social media companies like Facebook, Snap and Pinterest.

While Facebook has been the largest among the 3 companies in terms of ARPU figures, it doesn’t mean that smaller players are losing.

Instead, we are seeing significant growth in smaller players like Snap and Pinterest in ARPU numbers in all regions in the world.

References and Credits

1. Financial figures for all companies discussed above were obtained and referenced from their respective financial statements which can be obtained from the following links:

a) Facebook Investor Relations
b) Snap Investor Relations
c) Pinterest Investor Relations

2. Featured images in this article are used under Creative Common Licenses and obtained from Wall Boat and ijclark.

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