Facebook Inc on Wednesday posted surprisingly strong profit and revenue growth as the world’s largest social network grew even larger, with a spike in mobile users and advertising that lifted its stock to an all-time high.
The company reported audience numbers that suggest it is poised to take on mainstream media as an advertising force, helping investors to overlook Facebook’s huge spending on hiring and building data centers.
Facebook now has 8 billion video views per day from 500 million people, compared with 4 billion views in April.
Photo: Bloomberg
In addition, Facebook’s Web site and Instagram photograph-sharing app, which opened up its platform to all advertisers in the third quarter, account for more than 1 in 5 minutes spent on mobile devices in the US, Facebook chief operating officer Sheryl Sandberg said.
“In the medium to long run, we believe that we’re not competing between Facebook and Instagram. We’re competing with other forms of media,” Sandberg told analysts on a conference call after the earnings report.
Facebook had 1.55 billion monthly active users as of Sept. 30, up 14 percent from a year earlier. Of these, 1.39 billion used the service on mobile devices.
“Growth is happening across the board and we’re of course looking for a lot of growth in the future in emerging markets,” Sandberg said in an interview. “We’re also pretty focused on helping bring the next set of people who are not online, online.”
Advertising revenue grew 45.4 percent to US$4.30 billion, with 78 percent of that amount coming from mobile versus 66 percent in the same period last year.
Facebook did not disclose Instagram’s advertising sales figures. However, the app is expected to bring in US$595 million in mobile advertising revenue this year, research firm eMarketer said. Its advertising revenue is projected to grow to US$2.8 billion by 2017.
Facebook’s huge US$3 billion spending, up 68 percent from the third quarter last year, did not seem to worry investors or analysts.
“I think the investors would like the company to continue to invest given that the opportunity is pretty large,” Susquehanna Financial Group analyst Shyam Patil said.
The stock rose about 5 percent to an all-time high of US$109.34 in extended trading, before paring gains to about 4 percent. It closed earlier at US$103.94.
Total revenue jumped to US$4.5 billion in the third quarter, from US$3.2 billion a year earlier. Analysts had expected revenue of US$4.37 billion, according to Thomson Reuters I/B/E/S.
Net income attributable to stockholders rose to US$891 million, or US$0.31 per share, from US$802 million, or US$0.30 per share.
Excluding items, the Menlo Park, California-based company earned US$0.57 per share, ahead of analysts’ average estimate of US$0.52 per share.
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