Facebook Inc’s fast-growing mobile advertising business helped drive a 61 percent increase in revenue during the second quarter, beating analysts’ financial targets and sending shares to a record-high in after-hours trading on Wednesday.
The world’s No. 1 Internet social network said on Wednesday that it saw an increased interest from both advertisers and users during the second quarter, while the company’s profit margins expanded.
Facebook now counts 1.5 million advertising customers and the company’s advertising business saw strong growth across all of its geographic regions, chief operating officer Sheryl Sandberg told reporters in an interview on Wednesday.
“We’re seeing our existing advertisers spend more and we’re seeing new people come on to the platform,” Sandberg said.
Investors bid up shares of Facebook about 5 percent to US$75.13 in after-hours trading on Wednesday, giving the Internet company a roughly US$190 billion valuation, putting it on par with IBM Corp.
“It might be more expensive from a market cap perspective, but I don’t think anyone was expecting this level of profitability,” JMP Securities analyst Ronald Josey said.
Facebook’s operating margin expanded to 48 percent of revenue in the second quarter, up from 31 percent a year ago.
Overall revenue of US$2.91 billion beat the average expectation of US$2.81 billion, according to analysts polled by Thomson Reuters I/B/E/S.
Facebook executives said on a conference call that the company planned to invest aggressively in new projects, such as the Oculus virtual reality headset business that Facebook recently acquired for US$2 billion.
They also reiterated past comments that nascent advertising efforts in video and in the Instagram photo-sharing app would not contribute significantly to the top line in the near term.
Nor will Facebook take the “cheap and easy” route of putting ads or payment capabilities within its Messenger app, Facebook CEO Mark Zuckerberg said on a conference call with analysts.
JMP’s Josey said that the go-slow approach was not a concern for investors.
“There’s really no rush to add them because their core business is doing so well,” he said.
Facebook said it now counted 1.32 billion monthly users, with roughly 63 percent accessing the service every day.
Mobile advertising revenue grew 151 percent year-over-year, accounting for roughly 62 percent of Facebook’s overall ad revenue.
Facebook’s newsfeed advertisments, which inject paid marketing messages straight into a user’s stream of news and content, have ignited the company’s revenue growth and bolstered the price of its stock price during the past year.
Facebook posted US$791 million in net income, compared with US$333 million in the second quarter of last year. Excluding certain items, Facebook said it earned US$0.42 a share in the second quarter, surpassing expectations of US$0.32 a share.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by