The bottom line: two thirds of Facebook users are on the service every day.
Advertisement
Advertising is Facebook’s growth engine with ad revenue soaring 63 percent to $6.24 billion in the quarter ending in June.
Year-over-year, daily active users swelled 17% to 1.13 billion, while mobile daily active users were up 22% to 1.03 billion.
“There’s a common misconception that the law of large numbers will prevent Facebook from growing further”, said Rahul Shah, chief executive of Ideal Asset Management, who says Facebook accounts for about 40% of his allocation.
The average revenue per user is now $3.82, up 15 per cent from last quarter.
Facebook’s growth appears to know few limits. When this is combined with Facebook’s other messenger business, WhatsApp, the company reaches more than 2bn people via these services alone. With an increase in users, Facebook also saw its profit skyrocket. As a result, Facebook’s stock naturally rose by 6.5 per cent. What’s interesting to note is the fact that this quarter’s earnings were less than Q1s in which the company reportedly bagged $4.2 billion.
If it wants to increase revenue, Facebook will either have to add more users to its website, or create better-performing ads that it can sell to companies for more money.
The company is aggressively investing for growth, and total expenses grew 33% year over year.
The earnings performance stands in stark contrast to Twitter, which delivered a big miss on revenue and guidance on Tuesday. Non-GAAP operating margin, which excludes expenses such as stock-based compensation and amortization, increased from 52% to 55% of sales. “Over the next three years, we’re focusing on continuing to build out community and help people share more of what matters to them”, Zuckerberg said on Wednesday.
Facebook did not report how much revenue it makes from video specifically.
The earnings call also revealed an interesting growth area for Facebook in the form of search.
“Facebook has shown that you can be a giant and you can be innovative”.
Advertisement
According to an update released by analysts at FBN Securities the broker has now set a “Outperform” rating on shares of Facebook (NASDAQ:FB) with a price target of 160.
