Programmatic Lunch

Power of Video Sends Facebook Shares to All-time High

Tim Maytom

Facebook Zuckerberg F8
Facebook has revealed its financial results for Q2, exceeding Wall Street expectations with almost $6.5bn (£4.9bn) in revenues, which sent its share price skyrocketing to an all-time high.

Monthly active user growth was steady at 3.63 per cent, slightly below last quarter's rate, but enough to add 60m users in three months and take total monthly active users to 1.71bn. It also hit a significant mobile milestone, with 1bn daily users on smartphones and tablets.

Revenue growth was 59 per cent year-on-year, with ad revenue making up 97 per cent of the $6.44bn the company brought in. 84 per cent of ad revenues came from mobile (up from 76 per cent in Q2 2015), demonstrating how crucial it has become to the company's finances.

The firm's mobile app and push into video has attracted new advertisers to the platform and encouraged existing ones to spend more, driving growth in revenues as the service's stickiness (it's daily active users divided by monthly active users) stayed steady at 66 per cent, meaning users are remaining with the social network even as it grows older and evolves.

The company is also becoming more efficient as it gets older, bringing in $2.05bn in profits this quarter, compared to $719m a year ago. Average revenue per user is now $3.82, up 15 per cent on the previous quarter, and while users in developing economies bring in less, they are growing faster, up 24 per cent.

"Our results show our progress as we work to make the world more open and connected across our three-year, five-year and ten-year horizons," said Mark Zuckerberg in the earnings call following the results. "Over the next three years, we're focused on continuing to build our community and help people share more of what matters to them.

"The next five years are about building our newer products into full ecosystems, developers and businesses. And over the next ten years, we're working to build new technologies to help everyone connect in new ways."

The earnings call also revealed an interesting growth area for Facebook in the form of search. Facebook now sees 2bn searches per day, up from 1.5bn last year, and Zuckerberg said that a move into search advertising was on the cards, but was likely to be far down the line.

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