Facebook Posts Stellar Q2 Results On Rising Mobile Ad Engagement Across Geographies
Facebook (NASDAQ:FB) posted stellar second quarter results on Wednesday, July 27th. The social media giant’s revenues increased 59% year on year (y-o-y) to over $6.4 billion, significantly beating Reuters’ compiled consensus estimates of $6 billion. This was driven by a significant rise in advertising revenues, which increased 63% y-o-y to $6.2 billion. However, this was slightly offset by a decline in Payments & Other Fees collected in the quarter, which was impacted due to a reduction in games played on the Facebook platform on PCs. In terms of the bottom line, the company’s adjusted net income grew by a whopping 94% y-o-y to $0.97 per share, easily beating consensus estimates of $0.81 per share.
In terms of engagement metrics, there was 4% sequential growth each in Facebook’s daily active users (DAUs) and monthly active users (MAUs) to 1.13 billion and 1.71 billion, respectively. To put this in perspective, this means that over 15% of the world’s population logs in to Facebook on a daily basis. This ratio varies from about 50% in the U.S. and Canada to 8% in the Asia-Pacific region. Facebook’s monthly active user base remained strong across all platforms, including Instagram, WhatsApp and Messenger. At the end of June 2016, the number of MAUs on Instagram, WhatsApp and Messenger were 500+ million, 1+ billion and 1+ billion, respectively.
The company reiterated the growing importance of video in content consumption on the Facebook platform, which should also help its advertising revenue in the long term. We expect that Facebook will continue to account for a larger share of the rapidly growing digital ad market going forward, as its product offerings have become highly popular with businesses of all sizes. Facebook’s long-term outlook looks strong on the back of strong monetization opportunities on its platforms as well as inroads into newer areas such as VR.
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Advertising Revenue
Advertising, Facebook’s primary source of revenue, grew 63% to over $6.2 billion in the quarter. The growth in mobile ad revenues was primarily responsible for the increase. The growth in ad revenues was consistent across all regions, with the U.S. and Canada growing at 69% and Asia Pacific growing at 67% over the prior year quarter. The average price per ad increased 9%, while total ad impressions rose 49% on a y-o-y basis. In the quarter, mobile ad revenues contributed 84% of total advertising revenues, a substantial increase over the prior year quarter.
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