Facebook Revenue Soars on Ad Growth
April 27 2016 - 4:50PM
Dow Jones News
Facebook Inc. posted a 52% surge in first-quarter revenue,
underscoring the strength of the social network's newer mobile-ad
products and rising popularity of its video ads.
The social network reported net income of $1.51 billion, or 52
cents a share, more than double the $512 million, or 18 cents a
share, it earned in the same period a year earlier.
Excluding certain expenses, the company said it would have
earned 77 cents a share, up from 42 cents a share a year earlier.
Analysts polled by Thomson Reuters were expecting 62 cents a share
on that basis.
Revenue rose to $5.38 billion from $3.54 billion. Analysts
expected revenue of $5.26 billion in the first quarter.
About 1.65 billion people checked Facebook at least once a month
during the quarter compared with 1.59 billion in the previous
quarter. Over the last two years, the bulk of Facebook's user
growth has come from Asia, Africa and South America. About
two-thirds of its users are outside the U.S., Canada and
Europe.
The results were a rare bright spot in the technology industry
after a string of disappointing reports over the past week.
Tuesday, Apple Inc. reported its first quarterly drop in revenue in
13 years, while Twitter Inc.'s first-quarter revenue fell short of
expectations. Google parent Alphabet Inc. missed analysts'
expectations last week.
Facebook's strong results underscore how the social network
continues to gain traction among advertisers. Facebook is expected
to account for about 12% of the $186.81 billion global digital
advertising market in 2016, according to eMarketer. That is up from
10.7% in 2015 and compares with Google's 31% share.
Over the past year, Facebook has launched several new ad types,
such as dynamic product ads, which allow users to scroll through
items in a company's product catalog. It also made it easier for
companies to buy ads on its Instagram image-sharing network; those
ads are inserted in users' feeds.
Video ads are gaining momentum as companies shift funds from
their print and television budgets to pay for Facebook ads. Video
ads on Facebook cost about $4 per 1,000 views during the first
quarter, up from $3.44 a year ago and higher than the $3.14 average
across Facebook, according to marketing-technology company
Kenshoo.
Chief Executive Mark Zuckerberg often describes Facebook's
growth path in three, five and 10-year arcs. It is now investing in
Instagram and video to drive growth, while search and Facebook's
two messaging apps, Messenger and WhatsApp, are expected to power
the company's growth in five years. In 10 years, advanced projects
in virtual reality and artificial intelligence will take center
stage.
During the first three months of the year, Facebook took steps
toward each of those initiatives. It launched the Oculus Rift
headset last month, though a component shortage is delaying
preorders. Facebook beefed up its live-streaming product, Facebook
Live, paying creators to stream live and inserting a button for
live video within the Facebook mobile app. However, many
advertisers and creators question how Facebook plans to generate
revenue from live-streaming.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
April 27, 2016 16:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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