Facebook Beats Analysts’ Q2 Earnings Forecasts

Facebook Inc. (NASDAQ: FB) reported earnings and revenue for the second quarter, which crushed analysts’ forecasts.

The social networking giant announced adjusted earnings of 97 cents per share on $6.44 billion in revenue. Market analysts had predicted that Facebook will report earnings of 82 cents per share on $6.02 billion in revenue.

After the earnings release, FB shares rallied by almost 6 percent during after hours trading, briefly over $131. The all-time closing high of the social media titan during regular hours posts at $121.92.

According to the Facebook CEO Mr. Mark Zuckerberg, “We’re … improving the experience for our community by helping them build more relevant and engaging ads.”

Ad revenue, which is the main revenue stream of the company, touched $6.24 billion. Analysts forecasted ad revenues to hit $5.8 billion for the given period. Mobile ad revenue accounted for the largest chunk of the ad revenues, as it clocked in at $5.42 billion, against the estimated $4.84 billion. This figure reflects that mobile ad revenue soared 81 percent on a year-over-year basis.

The company recorded 1.71 billion monthly active users during the quarter, also beating the analysts estimate of 1.69 billion. Meanwhile, the daily active users also topped the 1.11 billion forecast as it reached 1.13 billion.

The social networking corporation managed to monetize its users more than anticipated, reporting an average revenue per user of $3.82, up from the previous quarter’s $3.32 average revenue per user and higher compared to the forecast of $3.59.

“We’ve worked hard to make becoming an advertiser as easy as possible for businesses,” said Chief Operating Officer Sheryl Sandberg.

Based on the forecasts of eMarketer, Facebook will acquire 67.9 percent of social-media advertising revenues globally this 2016. Zuckerberg pointed out that sharing has increased on the social networking platform and users are spending more time on its applications.

According to Gam investment director and Facebook shareholder Mark Hawtin, “Clearly it was a stellar quarter — mobile advertising growth was significantly faster than the market expected.”

“I think this is more about the pace with which they’re taking their market. … It’s the speed with which it’s happening that’s immensely impressive,” he further added.

During the previous week, the corporation revealed that Facebook Messenger currently has an audience of 1 billion mobile users on a monthly basis.

“The scale we’ve achieved with our messaging services makes it clear that it’s more than just a way to chat with friends,” said the Facebook CEO, highlighting the social media giant’s move into customer service and enterprise chat.

After the company’s developer conference in April, live video, messenger chatbots, and virtual reality have been key parts of its strategy.

According to Zuckerberg, “We’re particularly pleased with our progress in video as we move towards a world where video is at the heart of all our services.”

Facebook executives noted that the capital expenditures of the company significantly grew during the period as it beefed up its infrastructure in order to effectively support video.

“While I’m happy with our progress, we have a lot more work to do. That means making big investments and taking risks,” added the Facebook CEO.

The shares of Facebook Inc. have traded close to all-time intraday highs since the previous quarter’s earnings, breaking above $122 in the current week. Furthermore, the stock is up by 29 percent over the past 12 months.

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