DAU/MAU Ratio

How to Calculate DAU/MAU Ratio (Step-by-Step)

Constant engagement on a daily basis creates opportunities for ecommerce companies to profit from their user base and for the generation of recurring revenue.

The DAU/MAU ratio compares a company’s daily active users (DAUs) to its monthly active users (MAUs) to estimate how active the typical monthly user is on a daily basis.

• Daily Active Users (DAU) → Counts the number of unique visitors that interact with the site, platform, or app on a specific date.
• Monthly Active Users (MAU) → Counts the number of unique visitors that engage with a site, platform, or app within a specified month.

A company-defined action (i.e. views, clicks, logins) is what qualifies a user as an “active user”, which is applicable for modern media companies (e.g. Netflix, Hulu), social networking platforms (e.g. Twitter, Meta), messaging platforms (e.g. WhatsApp), and mobile application companies.

On their own, neither DAU nor MAU are useful for understanding a company’s user engagement — but the DAU/MAU ratio enables management to understand the percentage of unique visitors that continue to return to the platform.

For instance, a social-media company could consistently show high DAU amounts, yet those users could be first-time users, i.e. the company’s users are not actually returning to the platform and constantly engaging with the app or platform on a daily basis.

Over the long run, the inability to make users return to the platform would catch up to the company, as overreliance on new user acquisition for user growth (and monetization) is far less desirable than relying on recurring users.

User engagement is directly correlated with future growth upside, capacity to monetize a user base, and user retention, which are all crucial components of a financially sound, sustainable company.

“I would argue that the single most telling metric for a great product is how many of them become dedicated, repeat users.”

– Andrew Chen, a16z (Source: Blog)

How to Interpret DAU/MAU Ratio?

There is no set DAU/MAU benchmark that applies to all industries, and the target ratio should be company-specific.

In fact, even comparisons among peer companies operating in the same industry should be done carefully.

Because there is no standardization in how DAU or MAU is calculated, peer-to-peer comparisons can easily be misleading without understanding what the term “active” actually means to each specific company.

However, as a general rule, a higher DAU/MAU ratio signifies more “stickiness”, i.e. there is more active engagement by a company’s existing users.

The DAU/MAU ratio of most companies is often cited to range from around 10% to 25%, yet certain apps can easily surpass 50+%, which normally consist of messaging apps like WhatsApp.

Of course, the closer to 100% the ratio is, the better the user engagement, but realistically that would be unattainable (i.e. it would imply that every user uses the platform every single day).

DAU/MAU Ratio Formula

The formula for calculating the DAU/MAU ratio is as follows.

For example, let’s say that a social media platform’s DAU was 250,000 while its MAU was 500,000 in the prior fiscal year.

The platform’s DAU/MAU ratio comes out to be 50%, which can be interpreted as the average user engaging with the app for approximately 15 days of each 30-day month.

• DAU/MAU = 250,000 ÷ 500,000 = 0.50, or 50%

Drawbacks to the DAU/MAU Ratio

The primary limitation to the DAU/MAU ratio is that the metric is not applicable to all companies (and industries).

For the metric to be meaningful, the business model of the company must promote daily usage, with the most common examples consisting of social media, messaging services, and mobile applications such as mobile video games.

It would be reasonable to expect a consumer to log into their Instagram account every single day, but imagine a consumer booking an Airbnb every single day of the month.

Clearly, the latter scenario would be highly improbable, so the DAU/MAU ratio is not particularly appropriate when assessing companies like Airbnb, Uber, and Lyft (whose services are more sparingly used).

DAU/MAU Ratio Calculator — Excel Template

We’ll now move to a modeling exercise, which you can access by filling out the form below.

First Name *

Email *

Submit

By submitting this form, you consent to receive email from Wall Street Prep and agree to our terms of use and privacy policy.

Email provided

Your Download is Ready

Submitting...

DAU/MAU Calculation Example: Meta Platforms (Facebook)

Suppose that we’re calculating the DAU/MAU ratio for Meta Platforms (formerly Facebook) in each quarter of the fiscal year ending 2021.

Per the latest 10-K filing of Meta, the following DAU and MAU figures — denoted in terms of millions — will be the inputs for our exercise.

• Q1-21
  • DAUs = 1,878 million
  • MAUs = 2,853 million
• Q2-21
  • DAUs = 1,908 million
  • MAUs = 2,895 million
• Q3-21
  • DAUs = 1,930 million
  • MAUs = 2,910 million
• Q4-21
  • DAUs = 1,929 million
  • MAUs = 2,912 million

The chart below shows Meta’s DAU data, followed by its MAU data.

^{Meta DAUs (Source: Q-4 2021 Presentation)}

^{Meta MAUs (Source: Q-4 2021 Presentation)}

Given these quarterly DAU and MAU figures, we can divide the DAUs by the MAUs for each quarter to arrive at an approximate 66% DAU/MAU ratio for all four quarters of 2021.

• DAU/MAU Ratio
  • Q1-21 = 65.8%
  • Q2-21 = 65.9%
  • Q3-21 = 66.3%
  • Q4-21 = 66.2%