Facebook profits rocket 71% as ad revenue continues to drive growth

On Monday, Alphabet posted an increase of 21% in its revenue for the quarter, although it began the quarter with a larger base than did Facebook. The social networking company reported $1.32 earnings per share (EPS) for the quarter, topping the Thomson Reuters’ consensus estimate of $1.12 by $0.20.

The social network Facebook reported Q2 earnings after the bell on Wednesday, and like Google, reported impressive revenue gains.

Facebook has announced its financial results for the second quarter of this year and mobile ads are big business for the social network.

Mobile advertising revenue accounted for 87% of the firm’s total ad revenue – an increase from 84% in the same three months a year ago.

Mark Zuckerberg last month stepped onstage in Chicago to talk about a nicer, gentler Facebook – one that wasn’t just intent on “making the world more open and connected”, as he’s often said, but taking it a step further: “Bringing the world closer together”.

The company’s net income for the quarter was $3.9 billion, compared to $2 billion a year ago.

During the earnings call, Zuckerberg revealed that WhatsApp had grown to 1.3 billion monthly users, a billion of whom use the messaging service daily. Indeed, Zuckerberg mentioned on the call that WhatsApp Status, the app’s version of Snapchat Stories, now has 250 million daily users. “Each of those has over 250m daily active users”, Wehner said.

Facebook said it ended the quarter with $35.45 billion in cash and equivalents and marketable securities. Facebook will also have to learn how to better monetize video ads, since users watching videos may stay in one spot on the News Feed rather than scrolling past more ads. But it makes the vast majority of its revenue from advertising to users in the U.S. and Canada. But if the worst comes to the worst and messaging apps prove impossible to monetise, there are still five billion people without Facebook accounts to hunt down…

To that end, Facebook plans to provide more products created to meet the needs of marketers in specific verticals, Ms. Sandberg added. Executives noted Wednesday that Facebook was getting higher prices for its ads, with a 24% increase in average unit pricing, due in part to slower supply of ads, though higher-cost video ads may be playing a part as well. “It’s early days and it’s going to continued to be early days for a while”, Sandberg said.

As far as user growth, Wehner said that product improvements for Android, the Internet.org initiative to provide low-priced, high-bandwidth Internet in developing countries, and carrier data plan promotions, are fueling user growth. The company now has a headcount of 20,658 as of June 30, 2017, according to the earnings release.

Shares went down immediately after the markets closed, but came back up and are now up 1 percent in after-hours trading.