Facebook shares soar on sharp ad sales growth

SAN FRANCISCO • Facebook has provided more evidence that it can turn eyeballs into profit as the maker of the world's most popular app and social website trounced Wall Street's estimates, sending its shares to an all-time high.

The top social media firm's mobile app and push into video attracted new advertisers and encouraged existing ones to spend more. It now has more than 1.7 billion monthly users, well ahead of any rivals.

Its shares were up 5.4 per cent in after-hours trading at US$130.01, after hitting their highest level since the company went public in 2012.

"Facebook has shown that you can be a giant and you can be innovative," said analyst Patrick Moorhead of Moor Insights & Strategy. "What is working very well is their very quick shift from desktop to mobility. This was their biggest issue when they went public."

Facebook is adapting better to the shift towards mobile and video than its social media rival Twitter, which reported its slowest quarterly revenue growth in three years this week. Mobile advertising revenue accounted for 84 per cent of the firm's total advertising revenue, against 76 per cent a year earlier.

Total advertising revenue surged 63 per cent to US$6.24 billion (S$8.5 billion), beating the average analyst estimate of US$5.80 billion, according to market research firm FactSet StreetAccount. Facebook also saw strong growth in monthly active users, boasting 1.71 billion as of June 30, up from 1.49 billion a year earlier.

Time spent on its suite of apps, including the main Facebook app, Instagram and Messenger, increased by "double-digit percentages", chief executive officer Mark Zuckerberg said on Wednesday.

Facebook's chief financial officer David Wehner pointed to Asia, especially India, as one of the most promising areas. The region "has been a consistently good performer for us over the last several quarters and we will continue to invest our global sales resources to drive opportunities there", he said.

Facebook is one of the biggest beneficiaries as advertisers move money away from television to the Internet and mobile platforms. The company has been beefing up its presence in the mobile video market, where Snapchat and YouTube pose strong competition.

It is also courting advertisers to experiment with Facebook Live, its recently launched live video feature. Executives said they were working to become a "video first" platform, and identified private messaging as a growing focus.

Mr Zuckerberg reiterated his company's 10-year plan, saying that it will focus on continuing to grow its massive user base, especially in developed nations, as well as look to build new technology to get more people online and using Facebook through Internet-beaming drones.

Facebook still has some untapped areas for revenue opportunities, including its WhatsApp and Messenger apps, both of which have more than one billion users.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 29, 2016, with the headline 'Facebook shares soar on sharp ad sales growth'. Print Edition | Subscribe