Facebook Inc. provided more evidence on Wednesday that it could turn eyeballs into profit as the maker of the world’s most popular app and social website trounced Wall Street’s estimates, sending its shares to an all-time high.
The leading social media company’s mobile app and push into video attracted new advertisers and encouraged existing ones to invest more. It now has a lot more than 1.7 billion monthly users, well before any rivals.
Its shares were up 5.4 percent in after-hours trading at $130.01, after hitting their highest because the company went public in 2012.
"Facebook shows that you can be considered a giant and you could be innovative," said analyst Patrick Moorhead of Moor Insights & Strategy. "What’s working perfectly is their extremely swift shift from desktop to mobility. This is their biggest issue if they went public."
Facebook is adapting easier to the shift toward mobile and video than social media rival Twitter Inc., which reported its slowest quarterly revenue growth in 3 years on Wednesday.
Mobile advertising revenue accounted for 84 percent of the business’s total advertising revenue, weighed against 76 percent a year earlier.
Total advertising revenue surged 63 percent to $6.24 billion, beating the common analyst estimate of $5.80 billion, according to advertise research firm FactSet StreetAccount.
The business also saw strong growth in monthly active users, now boasting 1.71 billion by June 30, up from 1.49 billion a year earlier. Time allocated to its suite of apps, like the main Facebook app, Instagram and Messenger, increased "double digit percentages," LEADER Mark Zuckerberg said on a conference call with analysts.
David Wehner, Facebook’s chief financial officer, pointed to Asia-Pacific, especially India, among the most promising areas for continued user growth. The spot "is a consistently good performer for all of us during the last several quarters and we’ll continue steadily to invest our global sales resources to operate a vehicle opportunities there," Wehner said within an interview with Reuters.
Facebook is probably the biggest beneficiaries as advertisers move money from television to the web and mobile platforms. The business has been beefing up its presence in the mobile video market, where Snapchat and YouTube pose strong competition.
The business can be courting advertisers to test out Facebook Live, its recently launched live video feature. Executives said these were working to turn into a "video first" platform, and identified private messaging as an evergrowing focus.
Zuckerberg reiterated his company’s 10-year anticipate the decision with analysts. Over another three years, it’ll concentrate on continuing to grow its massive user base, especially in developed nations, and over another 10 years it’ll turn to build new technology to obtain additional people online and using Facebook through internet-beaming drones.
Meanwhile, Facebook still has several untapped areas for revenue opportunities, including its WhatsApp and Messenger apps, both which have significantly more than 1 billion users. But Wehner said the business does not intend to monetize them anytime soon, and that it’s instead centered on building interactions between businesses and users on the apps.
Facebook also owns picture-sharing app Instagram, which recently announced it has a lot more than 500 million users. Facebook has yet to state how much cash Instagram makes, but research firm eMarketer predicts it’ll make $1.5 billion in revenue this season.
Excluding items, Facebook earned 97 cents per share for the next quarter ended June 30. Analysts typically had expected a profit of 82 cents per share, according to Thomson Reuters I/B/E/S.
Net gain due to Facebook’s stockholders rose to $2.05 billion, or 71 cents per share, weighed against $715 million, or 25 cents per share, a year earlier.
Total revenue rose 59.2 percent to $6.44 billion, before analysts’ average estimate of $6.02 billion.
(Reporting by Rishika Sadam in Bengaluru and Yasmeen Abutaleb in SAN FRANCISCO BAY AREA; Editing by Saumyadeb Chakrabarty and Bill Rigby)