Facebook Posts Strong Profit and Revenue Growth--Update
27 Juillet 2016 - 10:53PM
Dow Jones News
By Deepa Seetharaman
Facebook Inc. once again reported growing profit on the strength
of its mobile advertising business.
For the latest quarter, the social network reported net income
of $2.06 billion, or 71 cents a share, compared with $719 million
or 25 cents per share a year ago.
Earnings per share, excluding certain expenses, were 97 cents a
share, compared with 50 cents on that basis a year earlier.
Analysts, on average, expected Facebook to report 82 cents per
share, according to Thomson Reuters data.
Revenue rose 59% to $6.43 billion, up from $4.04 billion during
the same period a year earlier and compared with the average
analyst estimate of $6.02 billion.
Shares jumped 6% to $130.70 after hours. As of Wednesday's
close, the stock has risen 31% in the past year.
About 1.71 billion people now access Facebook at least once a
month, up 15% from a year ago. More than 1.1 billion people access
the site and app every day, up 17%.
Facebook's report comes as growth at other major tech companies
stalls. Tuesday, Apple Inc. said its quarterly profit fell 27% and
revenue fell for a second straight quarter, along with sales of its
flagship iPhone. Separately Tuesday, Twitter Inc. reported its
smallest quarterly gain in revenue.
Advertisers are turning to Facebook and Instagram, the
photo-sharing app bought by Facebook in 2012 for $1 billion,
enticed by the amount of time users spend on the site.
Marketing-technology company Kenshoo said its clients spent 47%
more on Facebook and Instagram ads in the second quarter versus a
year ago.
Advertisers are flocking to Facebook because its popularity
among users of social networking remains unrivaled. According to
research firm GlobalWebIndex, nearly two in three adults with
internet access outside of China use the Facebook app every month
-- double what the firm saw in early 2013.
Ad revenue in the latest quarter jumped 63% to $6.24 billion,
Facebook said Wednesday. The company said mobile advertising
accounted for about 84% of the company's total ad revenue, up from
76% a year earlier.
Facebook is expected to generate more than $25 billion in
revenue this year. The most lucrative ads are app-install ads and
news feed ads shown in Facebook's mobile app, each of which will
chip in more than $8 billion, according to Credit Suisse
analysts.
Facebook has yet to break out revenue for Instagram, but many
analysts are optimistic about its efforts. Many analysts predict
the app's revenue will hover around $2.5 billion this year.
Still, Instagram faces stiff competition from disappearing chat
app Snapchat, which is quickly making inroads with advertisers.
Tuesday, Jefferies analyst Brian Pitz wrote advertisers may divert
as much as $150 million from their Instagram budgets to Snapchat in
the fourth quarter. In a recent note, Macquarie Research analysts
said Snapchat trends were "concerning."
Another big push at Facebook is video. Facebook is vying for a
piece of television ad budgets by promoting video content in its
news feed. At a Fortune conference last month, a Facebook executive
predicted the social network will be "all video" in five years.
"We're particularly pleased with our progress in video as we
move towards a world where video is at the heart of all our
services," Chief Executive Mark Zuckerberg said in a statement on
Wednesday.
The emphasis on video also includes Facebook Live, its
live-video product launched widely earlier this year. Last month,
The Wall Street Journal reported that Facebook was paying more than
$50 million to nearly 140 media companies, and public figures to
broadcast live.
Facebook says it eventually plans to allow creators make money
from videos posted on Facebook, although no such strategy has
publicly emerged yet.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
July 27, 2016 16:38 ET (20:38 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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