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Facebook profit falls 9 percent as costs soar, shares slip
Posted On Jul 29 2015
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Facebook has seen success with video ad placements, and recent research indicates that TV advertisers are leveraging the social network to stretch the reach of their campaigns. Facebook-only entertainment ad campaigns in the US reached 13.4% of the 18-to-24 targeted age group, or almost a quarter of overall reach among the demographic. Both these figures are above Wall Street’s consensus estimate that is calling for the company to earn $0.47 per share on revenue of $3.994 billion.
Facebook has “lots of levers to pull” to continue growing over the coming years.
“Investment sentiment has been positive in ’15 for Facebook shares, but has grown incrementally more positive recently in our view, given explosive video growth on the platform and the broad opening of the Instagram platform to advertisers”, John Blackledge, an analyst with Cowen and Company, wrote in a research note ahead of the earnings report this week. “Video is sure to be an increasingly important part of Facebook’s growth”.
Facebook recorded a 17% increase in daily active users, which brought them to 968 million. Mobile DAUs grew 29% from June 2014 to 844 million in June 2015.
Of these, 1.31 billion accessed the service through mobile devices, a rise of 23 per cent. In last year’s second quarter, Facebook posted revenue of $2.9 billion and adjusted earnings of 43 cents per share. Payments and other revenue fell 8% year over year to $215 million.
Mobile ads accounted for 76 percent of Facebook’s advertising revenue of $3.83 billion in the second quarter, compared with 62 percent in the same quarter previous year. The average estimate going into the report was for 1.476 billion, up from 1.44 billion last quarter, per Factset. Most of Nanigans customers are direct response focused – meaning they’re trying to drive a specific action, like an install or a purchase -which is particularly interesting given that video ads have traditionally been attractive to company’s trying to raise brand awareness.
