Facebook earnings have smashed through market estimates, embarrassing analysts whose wildest dreams still underestimated reality. In a week when Twitter and Apple disappointed on their quarterly earnings calls, the Book of Face exceeded Wall Street’s highest estimates for earnings per share by 10 percent.
The stellar results reflected not just domination of mobile advertising, but an utter domination of the entire social space.
Mark Zuckerberg credited long bets on mobile and acquisitions such as Instagram for the big win. He acknowledged that the move away from desktop, and the massive punt on blue sky schemes like virtual reality were “very controversial initially,” but he insisted they were “good decisions for our community and our business.”
“Facebook has been built by a series of bold moves, and when I look out at the future I see more bold moves ahead of us than behind us,” Zuckerberg said.
Revenue boomed, and monthly active users increased 21 per cent year over year, in contrast to Twitter which showed some growth, but offered revenue guidance well below expectations. The micro-blogging service warned that its previously healthy income stream from big brand ads appeared to be drying up.
Meanwhile ad revenue at Facebook soared on the back of greater engagement.
Zuckerberg told analysts that sharing on Facebook had increased overall, with users spending more time on its various apps, both as a whole community and on a per person basis.
The market had factored in revenue growth of 48 per cent and was caught flatfooted by the surge to 52 per cent year over year. Almost all of the growth came from advertising, which delivered $US5.02 billion, up from $US3.54 billion last year.
Most of the ad revenue flowed from mobile; 82 per cent for the quarter, an increase from 73 per cent in the same quarter of 2015. This is evidence of a stunning turn around for a company which initially struggled to escape the desktop. COO Sheryl Sandberg said that more than 3 million businesses were actively using the network’s ad products, with 200,000 also selling on Instagram. The photo sharing service is almost virgin territory for Zuckerberg when he goes hunting for new profits.
Chief financial officer, David Wehner, identified mobile news feed ads as the big driver of growth. His boss pointed to video as another potential gold mine. ”We’re at the beginning of a golden age of online video,” said Zuckerberg.
There was one bright spot on the desktop. Apple’s flat hardware sales contrasted markedly with the crashing fortunes of Wintel manufacturers. In desktop, even stagnant counts as a kind of growth.
This article originally appeared on B&T’s sister business site www.which-50.com
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