Share

Facebook shares at new record on profit surge

San Francisco - Facebook posted surprisingly strong profit and revenue growth as the world's largest social network grew even larger, with a spike in mobile users and advertising that lifted its stock to an all-time high.

The company on Wednesday reported audience numbers that suggest it is poised to take on mainstream media as an advertising force, helping investors to overlook Facebook's huge spending on hiring and building data centres.

Facebook now has eight billion video views per day from 500 million people, compared with four billion views in April.

And Facebook's website and Instagram photo-sharing app, which opened up its platform to all advertisers in the third quarter, account for more than one in five minutes spent on mobile devices in the US, chief operating officer Sheryl Sandberg said.

"In the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media," Sandberg told analysts on a conference call after the earnings report.

Ad revenue

Facebook had 1.55 billion monthly active users as of September 30, up 14% from a year earlier. Of these, 1.39 billion used the service on mobile devices.

"Growth is happening across the board and we're of course looking for a lot of growth in the future in emerging markets," Sandberg said in an interview. "We're also pretty focused on helping bring the next set of people who are not online, online."

Market research firm FactSet StreetAccount had predicted 1.53 billion monthly active users, with 1.36 billion on mobile.

Ad revenue grew 45.4% to $4.30bn, with 78% of that coming from mobile versus 66% in the year-ago quarter.

"Part of the upside came from Instagram. The Instagram monetisation engine has been turned on really rapidly for the coming quarters and years," said Arvind Bhatia, an analyst with SterneAgee.

Facebook did not disclose Instagram's ad sales figures. But the app is expected to bring in $595m in mobile ad revenues this year, research firm eMarketer said. Its ad revenue is projected to grow to $2.8bn by 2017.

Facebook's huge $3bn spending, up 68% from the third quarter last year, did not seem to worry investors or analysts.

"I think the investors would like the company to continue to invest given that the opportunity is pretty large," said Shyam Patil of Susquehanna Financial Group.

The stock rose about 5% to an all-time high of $109.34 in extended trading, before paring gains to about 4%. It closed earlier at $103.94.

Total revenue jumped to $4.5bn in the third quarter, from $3.2bn a year earlier. Analysts had expected revenue of $4.37bn, according to Thomson Reuters I/B/E/S.

Net income attributable to stockholders rose to $891m, or 31c per share, from $802m, or 30c per share.

Excluding items, the Menlo Park, California-based company earned 57c per share, ahead of analysts' average estimate of 52c per share.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.04
-0.7%
Rand - Pound
24.02
-0.5%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.36
-0.1%
Rand - Yen
0.13
-0.7%
Platinum
900.15
+0.4%
Palladium
1,000.00
-0.2%
Gold
2,212.54
+0.8%
Silver
24.59
-0.2%
Brent Crude
86.09
-0.2%
Top 40
68,094
+0.6%
All Share
74,290
+0.5%
Resource 10
56,964
+2.3%
Industrial 25
103,585
+0.3%
Financial 15
16,463
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders