Facebook Delivers on High Second-Quarter Earnings Expectations

AP Images
Mark Zuckerberg

The social network reported quarterly revenue of $4.04 billion, up 39 percent year-over-year.

Facebook responded to high second-quarter expectations with a solid performance, reporting adjusted earnings of 50 cents per share on revenue of $4.04 billion, a 39 percent gain over the $2.9 billion in revenue that the company reported for the same period last year. 

Expectations were high for Facebook heading into the company's Wednesday call with investors. Wall Street was expecting adjusted earnings of 47 cents per share on revenue of $4 billion.

"This is another strong quarter for our community," CEO Mark Zuckerberg said. "Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services." 

Advertising revenue also beat Wall Street's expectations and was up 43 percent to $3.8 billion. It was predicted to grow by 41 percent during the quarter. Monthly active users, meanwhile, grew 13 percent to 1.49 billion for the quarter. 

Mobile is playing a big part in the social network's growth. There were 1.31 billion monthly active users on mobile during the quarter, a 23 percent increase year-over-year, and mobile advertising revenue represented 76 percent of Facebook's total advertising revenue for the quarter. 

But despite the growth, the company's expenses rose 82 percent to $2.77 billion for the quarter. Those increased expenses are the likely cause of a 5 percent drop in stock price during after-hours trading on the Nasdaq. Facebook shares closed up 1.8 percent to $97 for the day ahead of the earnings release. 

In a conference call with investors, CFO David Wehner explained that expenses were up because Facebook considers this an "investment year" for the company as it spends on new data centers and more employees. 

During the call, Zuckerberg gave few new details about Facebook's growing video business, declining to answer whether Facebook would create a standalone video app. "We won't rule anything out," he said. When asked what excites him about VR, he said that he sees it as the next evolution of online media, which started with text and progressed to photos and videos.

comments powered by Disqus