It’s complicated
Facebook shares fall as company forgoes profit for spending.
Facebook Inc. said quarterly revenue beat forecasts but profit fell 9 per cent at the social media company on heavy spending to boost mobile revenue and future growth.
The company had warned that 2015 would be a year of heavy investment, but analysts have said this is likely to translate into significant revenue streams in coming years.
Total costs and expenses jumped 82 per cent to US$2.77 billion in the three months ended June 30, Facebook said on Wednesday.
Facebook chief operating officer Sheryl Sandberg said in an interview the huge increase in expenses was for “growth we need now and in the future.”
“We’re investing in the next set of services and what will be future investments like Messenger, WhatsApp and Oculus,” she added.
Macquarie Research analyst Ben Schachter said Facebook’s costs and spending met expectations. “We think the company has a lot of opportunities ahead of it, so we want to see them investing quite heavily in those investments,” he said.
Facebook shares fell about 2.5 per cent in after-hours trading. As of Wednesday’s close of US$96.99, the stock has risen 24.3 per cent this year, valuing the company at US$276.4 billion.
For the quarter, revenue jumped to US$4.04 billion from US$2.91 billion.
Net income attributable to stockholders fell to US$715 million, or 25 cents per share, from US$788 million (30 cents) a year earlier.
Excluding items, the Menlo Park, Calif.-based company earned 50 cents per share. Analysts on average had expected earnings of 47 cents per share on revenue of US$3.99 billion. Advertising revenue grew 43 per cent to US$3.83 billion. Mobile ads accounted for 76 per cent of that, up from 62 per cent in the same quarter last year.
Facebook, the world’s largest social media network, said it had 1.49 billion monthly active users as of June 30, up 13 per cent from a year earlier. Of these, 1.31 billion accessed the service through mobile devices, a rise of 23 per cent.
Daily active users increased to 968 million in June, up 17 per cent from the same month last year.
“It’s particularly impressive that users are more engaged than ever before — that the percentage of monthly users who visit every day continues to grow,” said Nate Elliott, an analyst with Forrester Research.