Facebook profits beat expectations

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Facebook has posted another exceptional quarter of growth, with profit up 186% from this time last year.

Facebook earned $2bn (£1.5bn) in the period from April to June, up from $719m in 2015.

Analysts had anticipated revenue of $5.8bn, but the company managed to beat even those high expectations bringing in $6.4bn in revenue.

Chief executive Mark Zuckerberg said the company was particularly pleased with the growth in video.

“Our community and business had another good quarter,” he said, “We’re particularly pleased with our progress in video as we move towards the world where video is at the heart of all our services.”

Shares of the social media giant climbed nearly 7% in after-hours trading.

Video advertising

Facebook has been encouraging businesses to experiment with video and rolling out new advertising platforms for mobile ads.

Mobile advertising made up 84% of Facebook’s ad revenue in the second quarter up from 76% last year. The company has benefited from an influx of advertising money moving away from television and on to digital platforms.

“Facebook still has many growth levers left to pull, not least of which is video advertising,” an analyst from RBC Capital Markets wrote in a client note.

The number of monthly-active-users (MAU) – a key measurement for advertisers – increased by 15% to 1.71 billion as of 30 June 2016.

By comparison, Twitter’s MAU increased by just 3% in that period.

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The number of daily active users topped one billion for the first time. The time spent on the site by daily users also rose.

“Facebook remains a top pick for us, given its position as the largest/most engaging mass-reach internet platform for advertisers, unmatched targeting potential, and very potent monetisation formats,” Cantor Fitzgerald analysts said in a research note.

“Mobile has been the main driver of growth to date, video and Instagram should start moving the needle more meaningfully in the second half of 2016.”

Facebook has been pushing new services, including photo and video-sharing on Instagram and its messaging apps.

The company has also encouraged advertisers to try new means of reaching their targets, including the new Facebook Live feature, where users can watch live streaming videos.

Revenue increased in all geographic areas, climbing 19% in Asia and 21% in Europe.

Even as Facebook celebrates its success, analysts say the company needs to keep an eye on rival Snapchat, which has a fast-growing user base.



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