23 October 2016
Facebook now has more than 1.7 billion monthly users, well ahead of any rivals. Photo: Bloomberg
Facebook now has more than 1.7 billion monthly users, well ahead of any rivals. Photo: Bloomberg

Facebook ad revenue trumps analyst estimates

Facebook Inc. reported strong growth in advertisement revenue, trouncing Wall Street’s estimates and sending its shares to an all-time high.

The leading social media company’s mobile app and push into video attracted new advertisers and encouraged existing ones to spend more, Reuters reports.

It now has more than 1.7 billion monthly users, well ahead of any rivals.

Its shares were up 5.4 percent in after-hours trading at US$130.01, after hitting their highest since the company went public in 2012.

“Facebook has shown that you can be a giant and you can be innovative,” said analyst Patrick Moorhead of Moor Insights & Strategy.

“What is working very well is their very quick shift from desktop to mobility. This was their biggest issue when they went public.”

Facebook is adapting better to the shift toward mobile and video than social media rival Twitter Inc., which reported its slowest quarterly revenue growth in three years on Wednesday.

Mobile advertising revenue accounted for 84 percent of the company’s total advertising revenue, compared with 76 percent a year earlier.

Total advertising revenue surged 63 percent to US$6.24 billion, beating the average analyst estimate of US$5.80 billion, according to market research firm FactSet StreetAccount.

The company also saw strong growth in monthly active users, now boasting 1.71 billion as of June 30, up from 1.49 billion a year earlier.

Time spent on its suite of apps, including the main Facebook app, Instagram and Messenger, increased “double digit percentages”, chief executive Mark Zuckerberg said on a conference call with analysts.

David Wehner, Facebook’s chief financial officer, pointed to Asia-Pacific, especially India, as one of the most promising areas for continued user growth.

The region “has been a consistently good performer for us over the last several quarters and we will continue to invest our global sales resources to drive opportunities there”, Wehner told Reuters in an interview.

Excluding items, Facebook earned 97 US cents per share for the second quarter ended June 30. Analysts on average had expected a profit of 82 cents per share, according to Thomson Reuters I/B/E/S.

Net income attributable to Facebook’s stockholders rose to US$2.05 billion, or 71 cents per share, compared with US$715 million, or 25 cents per share, a year earlier.

Total revenue rose 59.2 percent to US$6.44 billion, ahead of analysts’ average estimate of US$6.02 billion.

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