Facebook began as a social network – and then became a media delivery service, a mobile advertising giant and a massive messaging platform. But as its second-quarter financial results reveal, it is also a money-making machine.
Facebook’s quarterly profit and revenue blew past Wall Street estimates on Wednesday as the company’s hugely popular mobile app and a push into video attracted new advertisers and encouraged existing ones to spend more.
Total revenue rose 59.2% to $6.44bn, compared with the estimate of $6.02bn. Facebook shares rose 6.7% in after-hours trading.
Mobile advertising revenue accounted for 84% of the company’s total advertising revenue, compared with 76% a year earlier. Total advertising revenue surged 63% to $6.24bn, beating the average analyst estimate of $5.80bn, according to market research firm FactSet StreetAccount.
Facebook is one of the biggest beneficiaries as advertisers move money away from TV to the internet and mobile platforms. The company has been beefing up its presence in the mobile video market, where Snapchat and YouTube pose strong competition. The company is also exhorting advertisers to experiment with Facebook Live, its recently launched live video product.
Facebook said about 1.71 billion people used the site monthly as of 30 June, up from 1.49 billion a year earlier.
Speaking to investors, CEO and founder Mark Zuckerberg highlighted a number of historic milestones for the 12-year-old company.
Earlier this month, Facebook announced the first successful test flight of Aquila, a solar-powered drone designed to deliver broadband internet access to some of the world’s four billion unconnected people, many of them in the remotest regions of the planet.
“We saw the first successful flight of Aquila to beam the internet to places that have never been connected,” says Zuckerberg. “Eventually we plan to work with telecom operators around the world to connect people who cannot get traditional connectivity today.”
In June, Facebook announced it had signed up its one billionth user on Messenger. Combined with WhatsApp, which it acquired for $19bn in October 2014, the company now connects more than two billion people via chat and voice messaging.
At its F8 showcase in April, the company announced that the two apps combine to handle 60bn messages a day – three times the amount of global SMS traffic. Facebook is now the world’s largest (and only) global phone company.
In May, Facebook announced end-to-end encryption on WhatsApp, and is testing the same feature on Messenger – making it the most secure messaging platform as well.
“The scale we’ve achieved with messaging services makes clear that this is more than just a way to chat with friends,” said Zuckerberg, “which is why we are making it easier to connect with groups and businesses as well.”
This spring Facebook also introduced the ability to take 360-degree photos with a mobile app and upload them to the service. “Ten years ago most people shared text, now it’s photos,” he said. “Soon video will be the heart of all apps and services.”
Over the long term, Zuckerberg says Facebook is focusing on new platforms, such as virtual reality, to offer its 1.7 billion users a richer sharing experience.
Zuckerberg noted that more than one million people use its Oculus mobile VR app each month, and that preorders for Oculus Rift headsets have sold out. Zuckerberg also said that “I, like everyone else, am enjoying Pokémon Go” though there are no known sightings of him playing on the streets of California, as yet.
The company is also working on artificial intelligence driven apps. Its Deep Text machine learning engine can understand the context of thousands of posts per second in 20 languages, said Zuckerberg.
“We have a saying here at Facebook: ‘Our journey is only 1% done’.”
- Instagram now has more than 500 million users
- More than 1.1 billion people used Facebook every day in June, an increase of 17% over last year
- Mobile Facebook users topped 1 billion per day, up 22% year on year
- Mobile ads account for 84% of all Facebook revenue
- More than 300 VR apps have been created for Oculus
- Total posts on Facebook to date: 2.5tn
- More than 2bn searches per day
