Facebook posts 45% revenue gain hitting $9.3bn based on continued mobile growth

The revenue numbers beat earlier estimates by $120m

Despite earlier warnings of a potential slowdown in ad spend, Facebook’s revenue growth remains robust, with the social network posting revenues of $9.3bn for the three months to June 30.

This is based on the back of continued strong advertiser demand for reach of users on their mobile phone — and such ad spend now makes up 87% of Facebook's total revenue.

The numbers were released earlier today (July 26) and represent a 45% year-over-year rise, with the company experiencing a 47% annual increase in ad spend ($9.16bn) plus payments revenues of $157m (although this was down compared to $197m during the same period 12 months earlier).

The numbers beat earlier estimates by $120m, according to Seeking Alpha, with the company also reporting that its average daily active user number was 1.32 billion during the period, and that its monthly active user base was 2 billion (both of these figures represent a 17% increase compared to 12 months earlier).

In the Q2 Earnings call Wednesday, Facebook's leadership, including CEO Mark Zuckerberg, COO Sheryl Sandberg and CFO David Wehner, touched on the technological innovations and advertising strategies that Facebook will focus on as it heads into the second half of the year.

Zuckerberg honed in on artificial intelligence (AI) and how Facebook will use the technology to propel the platform. First, he spoke to expanding meaningful communities, with over 100m Facebook users currently engaging with them. He noted that Facebook will look to bring together AI to “help you discover what matters to you.”

“I expect AI to change the way we do business,” he said.

As far as advertisers, using more AI will allow the platform to customize who sees certain ad messages and to better ensure said messages resonate.

“Now you can put a creative message out there and AI will help you find out who’s interested,” Zuckerberg said.

As far as what’s next for Facebook, Zuckerberg said that they are planning on building a business around Facebook Messenger and WhatsApp with regards to advertising. Right now, they are showing ads to a small number of users but are looking to expand that business.

“I want to see us moving a little faster here but I am confident that we are going to get it right,” he said.

Sandberg spoke about three facets of the business: mobile usage, innovative ad formats and better targeting and measurement systems.

For mobile advertising, she noted that “short form, snackable content is a big opportunity on mobile.” Facebook mobile ads grew 53% and now sit at 87% of total ad revenue for Facebook. Sandberg emphasized that advertisers and marketers need to focus on creating mobile content that is shorter, “thumb-stopping creative,” and optimized for the platform.

As far as innovative ad formats, Sandberg touted advertisements in Instagram Stories, which were released in August 2016. Through those ads, Facebook is looking to help marketers drive brand awareness and increase sales.

She also spoke to targeting and measurement, advocating for getting beyond looking at page views or impressions and honing in on better systems.

Sandberg said it’s important for marketers to “improve their targeting and spend more efficiently” so that is something that Facebook will be working to make better.

As far as user growth, Wehner said that product improvements for Android, the Internet.org initiative to provide low-cost, high-bandwidth Internet in developing countries, and carrier data plan promotions, are fueling user growth.

In the previous two such calls the company’s leadership have used the opportunity to warn of a potential slowdown in its revenue growth rate.

Speaking on May 3, Wehner declared an anticipated deceleration in advertising growth; a trend partly driven by the growth in adblocking, plus additional economic headwinds.

Last quarter Facebook an annual revenue increase of 49% year-on-year, this is compared to a 45% total revenue increase during the three months to June 30.

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