Menu
Facebook revenue surges 39 per cent but costs also soar

Facebook revenue surges 39 per cent but costs also soar

Profit shrunk as costs went up by more than 80 per cent

Facebook's mobile app.

Facebook's mobile app.

Facebook has posted strong sales results for the second quarter, showing continued success in its advertising business, though its costs also rose sharply.

Total revenue for the quarter ended June 30 was $US4.04 billion, Facebook reported Wednesday, up 39 percent from the same period last year and just over analysts' estimates of $US3.99 billion, as polled by Thomson Reuters.

But the company made less money than it did a year earlier, with net income falling by nearly 10 per cent to $US719 million. Earnings per share declined from $US0.30 to $US0.25.

Excluding expenses like income tax effects, Facebook reported earnings per share of $US0.50, which beat the consensus forecast of $US0.47.

In a statement, CEO Mark Zuckerberg called it a strong quarter. But the results also show that Facebook's costs and expenses ballooned by more than 80 per cent.

Despite beating analysts' sales and earnings projections, Facebook's stock dropped more than 2 per cent after the results were released.

Facebook is branching out from its roots in social networking. Over the past year, the company has pursed ambitious projects in areas such as solar-powered drones and virtual reality headgear. It bought headset maker Oculus VR last year for $US2 billion. Facebook is now developing its own virtual reality apps for Oculus.

User growth remained about the same as it's been in the past few quarters. The number of users who logged in monthly grew by 13 per cent to 1.49 billion. That's slower than the pace a few years ago.

Mobile users grew faster, gaining 23 per cent to 1.31 billion, but that was slower than the previous quarter's rise.

With its user base no longer soaring, the company is looking for new ways to grow its ad sales. Earlier this month, Facebook began a new program to share advertising revenue with a select group of video partners.

Facebook hopes to capture a larger share of advertising budgets typically reserved for TV. It's encouraging both users and advertisers to publish more video to its service, and wants to become a prominent video destination like YouTube.

The company has also gradually begun putting more ads in its photo-sharing app Instagram, which the company acquired in 2012. It hasn't yet broken out advertising revenue for Instagram.

Further out, Zuckerberg has said ads or sponsored messages will also be brought to Facebook-owned WhatsApp and Facebook Messenger.

When Facebook went public in mid-2012, investors initially were concerned about the company's ability to grow its revenue on mobile devices. But that's now where Facebook makes the bulk of its money. As of the second quarter, just over three-quarters of its ad sales came from mobile.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuesadvertisingInternet-based applications and servicesfinancial resultsmobilesocial mediainternetFacebook

Slideshows

Top 50 defining moments of the New Zealand channel in 2016

Top 50 defining moments of the New Zealand channel in 2016

Reseller News looks back on a tumultuous 12 months for the New Zealand channel, assessing the fallout from a year of sizeable industry change. Whether it be local or global mergers and acquisitions, distribution deals or job changes, the channel that started the year differs somewhat to the one set to finish it - Reseller News assesses the key moments that made 2016.​

Top 50 defining moments of the New Zealand channel in 2016
​Hewlett Packard Enterprise honours high achieving NZ channel

​Hewlett Packard Enterprise honours high achieving NZ channel

Hewlett Packard Enterprise honoured its top performing Kiwi partners at the second running of its HPE Partner Awards in New Zealand, held at a glitzy ceremony in Auckland. Recognising excellence across eight categories - from distributors to resellers - the tech giant celebrated its first year as a standalone company, following its official split from HP in 2015.

​Hewlett Packard Enterprise honours high achieving NZ channel
Nutanix treats channel partners to Christmas cruise

Nutanix treats channel partners to Christmas cruise

Nutanix recently took to the seas for a Christmas Cruise around Sydney Harbour with its Australia and New Zealand staff, customers and partners to celebrate a stellar year for the vendor. With the sun out, they were all smiles and mingled over drinks and food.

Nutanix treats channel partners to Christmas cruise
Show Comments