Facebook’s earnings jump, mobile pushes results

7 years ago - Published in Finance, Fundamental Analysis

Facebook reported its second quarter earnings on Wednesday, and the results were predictably positive. The social network passed 2 billion monthly users earlier this summer, with over 1.3 billion using its software every day. The company parlayed that audience into $9.3 billion in revenue and $3.89 billion in net income. That’s a 71 percent higher profit than it reported for this same period last year.

"I want to see us move a little faster here but I'm confident that we're going to get this right over the long term," Zuckerberg said in a conference call with analysts.

Mobile ad revenue accounted for 87% of the company’s total advertising revenue of $9.16 billion in the latest quarter, up from 84% a year earlier.

The boost came from increasing monetisation of video within the Facebook News Feed, as well as growth in the Facebook-owned Instagram.

Facebook has not said how much of its revenue is attributable to its Instagram unit, though the photo-sharing app has become a greater focus of its business.

Facebook and Alphabet Inc own half of the online advertising market worldwide, and Facebook's revenue growth this quarter outshone Alphabet, the owner of YouTube and Google.

Alphabet on Monday reported a 21 percent increase in quarterly revenue, although it started the quarter from a larger base than Facebook did.

Facebook said about 2.01 billion people were using its service monthly as of June 30, up 17% from a year earlier. About 1.3 billion of them use the service every day, said Facebook.

During earnings call, CEO Mark Zuckerberg said that he hopes the company can get more aggressive about finding ways to get advertising and other monetization into its messaging products. That includes its standalone Messanger app and WhatsApp community, both of which have over 1 billion active monthly users.

For the second quarter, net income attributable to shareholders rose to $3.89 billion, or $1.32 per share, from $2.28 billion, or 78 cents per share, a year earlier. Analysts on average had expected earnings of $1.13 per share, according to Thomson Reuters. 
According to the research firm eMarketer, Facebook is expected to generate $36.29 billion in net digital ad revenue this year, a 35% jump from 2016.