Facebook the social network had “broken” analyst estimates on Wednesday, reporting a record breaking second-quarter revenue of $2.91bn, an increase of 61 per cent.
Mobile advertising represented 62 per cent of advertising revenue. Earnings per share, excluding certain items, were 42 cents, up 121 per cent.
Wall Street had expected good numbers but this? Revenue of $2.91bn, 55 per cent higher than a year ago. Revenue surged 61 per cent in the second quarter, fueled by mobile advertising, sending the stock up in extended trading past its all-time closing high.
Sales rose to $2.91bn for the period from $1.81bn a year earlier, topping the average analyst estimate of $2.81bn, according to data compiled by Bloomberg.
Promotions on wireless devices accounted for 62 per cent of advertising sales, the company said in a statement today. That was up from 59 per cent in the prior period and from almost nothing at the time of the company’s 2012 initial public offering.
Bloomberg said the results “once again underline how Facebook, whose stock plunged after going public because of investor scrutiny over its lack of mobile revenue, has quashed those concerns.“
With ads on smartphones and tablets now its core money-maker, the social network has worked to improve the quality of the promotions, added options for video and also debuted applications that can take advantage of audiences on mobile gadgets, said Bloomberg.
“Facebook just has a better advertising offering now,” said Shyam Patil, an analyst at Wedbush Securities. “It’s a higher return on investment for the advertiser and so they’re able to pay more money, increasing Facebook’s revenue, and much of that is on mobile.”
The stock rose in extended trading to as high as $74.77, after gaining 2.9 per cent to $71.29 at the close in New York, putting it above Facebook’s record close of $72.03 in March. Shares are up 30 per cent this year, compared with a 7.5 per cent increase in the Standard & Poor’s 500 Index.
Facebook said it now has 1.32 billion monthly active users, up from 1.28 billion in the prior quarter, with 654 million using the product daily on mobile phones. Revenue per user was $2.24, up from $2 in the prior quarter and $1.60 a year earlier.
“Their advertising model is scaling very nicely,” said Josh Olson, an analyst at Edward Jones & Co. “We’ve seen them take a very careful approach to advertising, doing things so that they don’t alienate their audience.”
Facebook is also producing experimental apps in an initiative called Creative Labs, intended to fuel growth while retaining talented programmers who would otherwise leave to start their own ventures.
The group has released several apps this year, including Paper, which makes a magazine-like experience for the social network, and Slingshot, for sending disappearing photo messages that can’t be opened unless the recipient sends one back