Facebook Delivers 70% Earnings Growth
Facebook who are creating major problems for Australian media Companies along with Google, has reported a 70% increase in earnings.
The social media network that now has over two billion users and is the world’s largest social network beat analyst expectations in the second quarter by reporting a near-70 per cent increase on the year before and well above estimates of $1.13 a share.
Net income was $3.9bn in the quarter.
A 47 per cent leap in revenue year-on-year to $9.3bn helped Facebook also exceed the consensus forecast for revenue of $9.2bn in the three months to the end of June.
Mark Zuckerberg, founder and chief executive, said it had been a “good second quarter and first half of the year”.
Facebook and Google dominate digital advertising. But Facebook has been aggressively battling new contender Snap to protect its share of the market, copying Snapchat’s ‘Stories’ feature, a collection of photos that last 24 hours, in its own apps with Instagram Stories and WhatsApp Status.
Facebook has 2.01bn monthly active users, 1.3bn of who log on every day, compared with 166m daily active users on Snapchat.
Dave Wehner, Facebook chief financial officer, said with Facebook and Instagram, the company had the “two best performing mobile ad products in the market”.
“We’ve seen particular strength with Instagram Stories and WhatsApp Status. Each of those has over 250m daily active users,” he said.
Facebook is growing its user base fastest in the Asia-Pacific region, where daily active users increased by 31 per cent year-on-year. But it makes the vast majority of its revenue from advertising to users in the US and Canada.
Mr Wehner said it still expected the “ad load” to make a less significant contribution to growth in the second half of the year.
in an effort to compensate, it has been looking to expand its video advertising, including creating more long form video, and introducing advertising into Facebook Messenger, its messaging app with more than a billion users.
Shares in Facebook, which have soared 44 per cent so far this year, were up another 4 per cent to $172.27 in after-hours trading in New York.
Tech stocks, as measured by the S&P 500 technology sector, surpassed their dotcom bubble peak last week, with Amazon, Alphabet and Facebook dominating.