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Facebook’s Q2 earnings top $4bn

Facebook has unveiled its latest results with total revenues of $4.04bn, for the three months to 30 June, up from $2.91bn 12 months earlier, representing a 39 per cent increase, with mobile accounting for 76 per cent of its total advertising revenue ($3.83bn) during the period.

The social networking giant has released the latest numbers ahead of its scheduled earnings call later today (29 July), when it is set to reveal further insights into how it faired during the quarter, plus give investors additional insight into its priorities in the weeks ahead.

In the press release detailing the results, Mark Zuckerberg, Facebook, CEO, said: "This was another strong quarter for our community.

"Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services."

The social networking giant released the numbers, and further detailed some of its usage statistics during the period including: daily active user (DAUs) numbers 968 million, with mobile DAUs numbering 844 million. These figures represented an annual increase of 17 per cent and 29 per cent respectively.

Additionally, monthly active users (MAU) numbered 1.49 billion, representing a 13 per cent year-on-year increase, with mobile MAUs hitting 1.31 billion, an increase of 23 per cent compared to 12 months earlier.

However, despite meeting with analysts' earnings forecasts, Facebook's shareprice dipped in the immediate aftermath of the earnings release, with its share price down by as much as 2.4%, according to Seeking Alpha.

This was due to Facebook revealing that expenses grew even faster than revenue during the period, with investors focused on Facebook’s surging expenses during the period, which surged 82% during the 12 months to hit $2.77bn, during the period.

The $1bn-plus jump in Facebook’s quarterly revenue partly reflects how larger companies are spending more to capture an audience that spends a large chunk of time on Facebook, but this clearly comes at a cost.

Facebook and its other mobile apps account for anywhere between one-fifth and one-third of what consumers spend on mobile devices, according to analyst estimates.The social networking giant recently beefed up the ad capabilities of its photo-sharing mobile app Instagram with new ad formats and targeting options, with many of users falling within in the under-35 demographic - one that is highly coveted by advertisers.

However, to achieve this Facebook had to significantly beef-up its marketing spend in order to woo new advertisers to its products. This surged in investment costs was also spurred by the social networking giant beginning to share ad revenues with video creators in a bid to attract more high-quality videos to the social network and grab a piece of advertisers’ television budgets.

Meanwhile, speaking on the company's earning's call, Facebook CFO David Wehner also noted how the outfit had to invest significantly in its infrastructure (outlays such as data centres and additional staff) to offer both end users and advertisers additional functionality.

"We're very much in investment mode for infrastructure," he told those listening in on the call.

Also participating in the earnings call, Sheryl Sandberg, Facebook, COO, told listeners about the social network’s three core priorities: capitalising on audience’s shift to mobile; growing the amount of “Facebook marketers”; plus improving its ad products.

Further elaborating on the numbers, she added that Faccebook’s mobile ad revenue grew 74 per cent year on year during the period, and noted that small-to-medium businesses (SMB) were an increasing part of the more than 2 million advertisers using its ad products to bolster their businesses.

Meanwhile, she also noted how Facebook was improving both its mobile and video advertising products, additionally noting how it expanded the number of carousel ads it offered to marketers during the period, as well as the introduction of direct response (DR) ad units, with the introduction of the ‘Buy Now’ button, on both Facebook, and Instagram.

Commenting on the suite of Facebook advertising tools, which it uses to help marketers assess the return-on-investment they get for every advertising dollar spent on Facebook, she noted how the Facebook app-install ad units were the number one driver of new subscribers for US cable network giant HBO.

Additionally, she also noted how its advertising stack Atlas (which helps marketers track the effectiveness of their ad spend) was able to demonstrate concert promoter LiveNation was able to prove that its Facebook ad spend led to a 66 per cent increase in the ticket sales for one of its top artists.

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