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Facebook’s exploding ad revenue sends earnings soaring past estimates
The net income attributable to Facebook’s stockholders rose to $2.05 billion, or 71 cents per share, in the second quarter ended June 30, from $715 million, or 25 cents per share, a year earlier. Overall, the world’s largest social network reported $719 million in profit, up 186% year-over-year, on $6.43 billion in total revenue, which rose 59% from the year-ago period. During the quarter, the company rolled out new tools to better target app users, measure in-store visits after Facebook ad campaigns, stretch Facebook-powered campaigns to individuals without accounts, improve the already content-rich “Canvas” and “Slideshow” ad products, and expand campaigns on Instagram.
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Instagram hit the 500 million user mark last month and is expected to hit $1.5 billion in mobile ad sales this year, according to an estimate from research firm eMarketer.
Facebook generated $3.82 in revenue per user in the second quarter, up from $2.76 a year ago.
Not only does Facebook have more users to make money off of – it’s also making more money off each of them.
Profit, excluding some items, was 97 cents a share, the Menlo Park, California-based company said Wednesday in a statement.
Chief Operating Officer Sheryl Sandberg said in an interview that people are spending more time each day on Facebook on average.
But Wehner said the company does not plan to monetise them any time soon, and that it is instead focused on building interactions between businesses and users on the apps.
Facebook has been dominating the social media space as well as related online advertising as it seeks to diversify into areas such as messaging, virtual reality and other fields.
“Facebook has shown that you can be a giant and you can be innovative”, said analyst Patrick Moorhead of Moor Insights & Strategy.
Facebook’s growing advertising and user numbers are in stark contrast to Twitter. UBS analyst Eric Sheridan estimates that Instagram is expected to increase at an incredible pace of 66% QoQ, which is much higher than the total revenue growth of 11% QoQ that the market consensus reflects.
While Facebook has toyed with some search ads in the past, it now concentrates on News Feed ads to drive revenue.
Video is part of Facebook’s growing competition for young people whose attention is wandering to Snapchat. He backed that up on a call with analysts, saying the “big theme” Facebook’s working to execute is “to become video first”.
Facebook (NSDQ:FB) is marching into this upcoming earnings release on Wednesday in a unique situation.
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“Our community and business had another good quarter”, said Mark Zuckerberg, Facebook founder and CEO. Video is “one of the big things that if we get right I think it’s going to unlock a lot of sharing and opportunity”, Mr. Zuckerberg said.