Facebook shares hit record high as mobile ad sales soar

Facebook Inc's mobile advertising business grew by more than 50 percent in the second quarter, the company said in its earnings report on Wednesday, as the social network continued to establish itself as the venue of choice for an ever-growing array of online advertisers.

Shares in Facebook, owner of four of the most popular mobile services in the world, rose more than 4 percent to about $173 in after-hours trading. Through Wednesday's close, the stock price had climbed nearly 44 percent this year.

Facebook, which now has more than 2 billion regular users, has been squeezing more ads into its Facebook News Feed while adding more ads to its photo-sharing app Instagram, which has more than 700 million users.

With money cascading from those two services, Chief Executive Mark Zuckerberg said the company was turning attention to monetizing its two messaging services, Messenger and WhatsApp, which have more than 1 billion users each.

"I want to see us move a little faster here but I'm confident that we're going to get this right over the long term," Zuckerberg said in a conference call with analysts.

The company also is accelerating its push into video, an effort aimed at taking advertising dollars from the television industry and increasing the time people spend on Facebook.

Within weeks, Facebook is expected to start a video service that will include scripted shows, a sharp change for a business built on user-generated content.

Zuckerberg said video would be a significant driver of Facebook's business in the next two to three years.

With those possibilities still on the horizon, Facebook said total revenue rose 44.8 percent to $9.32 billion in the second quarter of the year. That beat the average forecast of $9.20 billion among analysts tracked by Thomson Reuters.

Growth was even steeper in mobile advertising, which increased to nearly $8 billion.

"In mobile we're continuing to see great strengths," Facebook Chief Financial Officer David Wehner said in a phone interview with Reuters. "We're seeing more and more ad dollars getting allocated to mobile, and we think that trend will continue."

"KILLING IT ON MOBILE"

Mobile ad revenue accounted for 87 percent of the company's total advertising revenue of $9.16 billion in the latest quarter, up from 84 percent a year earlier.

"They're killing it on mobile," Needham & Co analyst Laura Martin said, referring to Facebook's suite of apps. "They are the de facto mobile advertising monopolies and that's a really big deal."

Martin said she sees no weaknesses in Facebook's business.

Facebook and Alphabet Inc own half of the online advertising market worldwide, and Facebook's revenue growth this quarter outshone Alphabet, the owner of YouTube and Google.

Alphabet on Monday reported a 21 percent increase in quarterly revenue, although it started the quarter from a larger base than Facebook did.

Facebook has not said how much of its revenue is attributable to its Instagram unit, although the photo-sharing app has become a greater focus of its business.

"Clearly, the biggest driver of growth is, overall, Facebook News Feed," Wehner said. "Instagram is making a contribution and an increasing contribution."

But investors want Facebook to find additional revenue streams because the company has warned it is hitting maximum ad load in the News Feed, potentially slowing its overall growth.

So far that has not happened.

"They kept warning about ad load, but the ad load continues to be strong," said Ivan Feinseth, research director at Tigress Financial Partners. "I still think ad revenue will grow, because more advertisers are adapting to this platform because there are so many people out there."

The popularity of Instagram also has put pressure on Snapchat, the app owned by Snap Inc. Instagram has added features similar to Snapchat's and Snap's stock on Wednesday closed at an all-time low of $13.40.

Facebook said about 2.01 billion people were using its service monthly as of June 30, up 17 percent from a year earlier.

For the second quarter, net income attributable to shareholders rose to $3.89 billion, or $1.32 per share, from $2.28 billion, or 78 cents per share, a year earlier. Analysts on average had expected earnings of $1.13 per share, according to Thomson Reuters I/B/E/S.

(Reporting by David Ingram in San Francisco and Rishika Sadam in Bengaluru; Editing by Jonathan Weber and Bill Trott)

source: news.abs-cbn.com

Facebook revenue smashes expectations as mobile ad sales surge

Facebook Inc.'s quarterly revenue rose more than 50 percent, handily beating Wall Street expectations as its wildly popular mobile app and a push into live video lured new advertisers and encouraged existing ones to boost spending.

The company's shares rose 9.5 percent in after-hours trading on Wednesday to $118.39, setting it on track to open at a new high on Thursday, at nearly triple its initial public offering four years ago.

Facebook also announced it would create a new class of non-voting shares in a move aimed at letting Chief Executive Officer Mark Zuckerberg give away his wealth without relinquishing control of the social media juggernaut he founded.

The company plans to create a new class of non-voting shares, which would be given as a dividend to existing shareholders. That would allow Zuckerberg, who wants to give away 99 percent of his wealth, to sell non-voting stock to fund philanthropy and keep the voting stock that assures his control.

Alphabet Inc. passed a similar proposal in 2014 that ensured its founders' control by creating new non-voting shares.

Some 1.65 billion people used Facebook monthly as of March 31, up from 1.44 billion a year earlier. Zuckerberg said users were spending more than 50 minutes per day on Facebook, Instagram and Messenger, a huge amount of time given the millions of apps available to users.

Advertisers are shifting money from television to web and mobile platforms, and Facebook is one of the biggest beneficiaries. It faces fierce competition in the mobile video market, where rivals Snapchat and YouTube also garner billions of video views every day.

Facebook recently expanded its live video product, rolling out several new features and making it more prominent on the app to encourage users to create videos and share them. The quarterly results showed success attracting advertisers with the move, and the company was able to expand its operating profit margin to 55 percent from 52 percent a year earlier.

"The company consistently 'warns' about higher spending, but they consistently manage their spending to deliver earnings upside. They're an impressive company, and they leave very little room for criticism," said Wedbush Securities analyst Michael Pachter, who called the operating margin a good surprise.

Facebook did not offer details on sales of its Oculus Rift virtual reality headset, but emphasized that the device was in its early days and said that sales would not significantly impact 2016 revenue.

The results come after disappointments for investors from several major Silicon Valley firms.

"After Intel and IBM last week, and then Twitter and Apple yesterday, this is by far the best number I’ve seen in technology," said Daniel Morgan, senior portfolio manager at Synovus Trust Company which owns about $40 million worth of Facebook shares, commenting specifically about Facebook ad revenue.

Facebook has not begun advertising on some of its most popular apps. "They haven't yet turned on the monetization spigot for Messenger or WhatsApp, so there should be significant headroom still," said Jan Dawson, chief analyst at Jackdaw Research.

The company's net income attributable to common shareholders nearly tripled to $1.51 billion, or 52 cents per share, in the first quarter from $509 million, or 18 cents per share, a year earlier.

Excluding items, the company earned 77 cents per share, beating Wall Street's 62-cent consensus.

Total revenue rose to $5.38 billion from $3.54 billion, with ad revenue increasing 56.8 percent to $5.20 billion. Mobile ad revenue accounted for about 82 percent of total ad revenue, compared with about 73 percent a year earlier.

Analysts on average had expected revenue of $5.26 billion.

If the stock proposal is approved - and Zuckerberg has a majority of voting stock - the company will effectively carry out a 3-for-1 stock split, issuing two shares of non-voting Class C capital stock as a one-time stock dividend for each share of Class A and Class B common stock.

Zuckerberg and his wife, Priscilla Chan, announced last year that they would give away 99 percent of their Facebook shares to fund charitable endeavors.

Investors said they were not concerned that Zuckerberg would have increasing control, pointing to the company's consistent ability to grow and exceed expectations.

"I honestly don't think anyone cares if he has more power, since he's done everything right since they went public," said Pachter.

source: www.abs-cbnnews.com

Facebook shares soar as mobile drives big jump in ad sales

Facebook Inc. smashed investors' expectations with a 52-percent jump in quarterly revenue as it sold more ads targeted at a fast-growing number of mobile users, sending its shares sharply higher after hours.

The world's biggest online social network bucked the trend of underwhelming tech results from Apple Inc and eBay Inc, in the face of economic uncertainty around the world and a strong U.S. dollar depressing the value of overseas sales.

"It's phenomenal at these (currency headwind) levels that they're accelerating to that level of growth," said Rob Sanderson, an analyst at MKM Partners.

Facebook's dominance in mobile advertising helped to allay Wall Street concerns over its heavy investments in messaging service WhatsApp and virtual reality unit Oculus, which have not yet generated profits.

"I don't think there's going to be too many people crying for them to start monetizing other properties anytime soon because the core business is so strong," said Sanderson.

Facebook shares rose almost 12 percent in after-hours trading to $105.32.

They were helped by Chief Financial Officer David Wehner's comment on a call with analysts that he expected operating expenses to increase by 30 to 40 percent over the course of the year, a slower clip than last year.

Total revenue rose to $5.84 billion from $3.85 billion a year earlier, with ad revenue increasing 56.8 percent to $5.64 billion in the holiday shopping period, when spending on advertising typically spikes.

Excluding some items, the company earned 79 cents per share. Analysts on average had expected earnings of 68 cents per share and revenue of $5.37 billion, according to Thomson Reuters I/B/E/S.

Apart from focusing on mobile, Facebook has been ramping up spending on what it calls "big bets," including virtual reality, artificial intelligence and drones to connect the remotest parts of the world to the Internet.

Chief Executive Mark Zuckerberg, who returned from two months of paternity leave on Monday, has said virtual reality represents the next major computing platform.

In January, Facebook began taking orders for a consumer version of the Oculus Rift, a head-mounted virtual reality unit.

The company has also begun monetizing some of its other units, such as photo-sharing app Instagram, which surpassed 400 million users last year and began selling ads in September.

Facebook said mobile ads accounted for 80 percent of total ad revenue in the quarter, compared with about 78 percent in the third quarter and 69 percent a year earlier.

"It's much stronger ad growth than we were expecting," said Ken Sena, an analyst at Evercore ISI.

Facebook's service is not available for users in China but it can sell ads to companies there.

"It signifies the importance of what they're providing to advertisers," he said. "They're making big investments and evidenced by their quarterly performance it seems to be working."

The company, which has the world's most popular smartphone app, has also been benefiting from a surge in video views that has attracted advertising dollars.

Facebook said it had 1.59 billion monthly active users as of Dec. 31, up 14 percent from the end of 2014. Of those, 1.44 billion used the service on mobile devices, an increase of 21 percent.

Analysts had expected the company to report 1.58 billion monthly active users, with 1.43 billion accessing the service through smartphones and tablets, according to market research firm FactSet StreetAccount.

Up to Wednesday's close at $94.45, Facebook's stock had risen nearly 25 percent in the past 12 months.

source: www.abs-cbnnews.com