Facebook profits continue to surge as mobile ad revenue soars

Nassos Stylianou
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Another impressive quarter for Facebook (Source: Getty)

Facebook has smashed Wall Street revenue and earnings estimates - again.

The social network reported that its revenues jumped from $1.8bn in the second quarter of 2013 to $2.9bn in the three months from April to June this year. Profits soared to $791m, earnings per share of $0.30, up by more than double the $333m, or $0.13, from the previous year.

Its adjusted earnings per share profit was $0.42, handily beating consensus estimates of $0.32 per share on revenue of $2.81 billion.

This is the ninth consecutive quarter that the numbers coming out of Facebook have topped analyst forecasts. After the California-based social network behemoth, a company that has undoubtedly had a huge impact on how we use the internet in recent years, overcame its controversial and rather unflattering initial public offering (IPO) in 2012 and the impact the listing had on its costs, the company has been posting record profits, as the chart below shows.

The amount of data that the site collects on its users, which has stirred up controversy for the company on a number of occasions, makes Facebook a particularly attractive proposition for advertisers. The latest figures reflect that, with no sign of its advertising income slowing.

The company, founded by Mark Zuckerberg as a student at Harvard in 2004, has seen its revenue from advertising surge over the last year. Second quarter ad revenue stood at $2.68bn. Mobile accounted for 62 per cent, three percentage points up on the same figure from January to March.

According to the latest data from research firm eMarketer, Facebook accounted for a 5.8 per cent share of worldwide digital advertising revenues last year, an uptick from 4.1 per cent in 2012.

But Facebook's share of the ad market is set to rocket to almost eight per cent by the end of 2014, according to eMarketer data as digital advertising spend continues to surge, expected to reach $140.2bn this year.

What has particularly impressed investors is how the data points to Facebook eating into Google's online advertising share and is expected to continue to make even more ground in 2014, as the chart below shows.

While user growth may be slowing compared to the rate of adoption a few years ago, Facebook's numbers still point to some healthy growth in the number of users.

Daily active users were 27m higher in the three months ended June compared to the first quarter of the year. Its monthly active users were 1.32bn, up 14 per cent from last year.

The stock has been the top performing stock in the Standard & Poor's 500 Index over the last twelve months. Its price topped $70 a share in trading today for the first time since March and climbedto a new high of $74 in after hours trading, rising by more than 3.5 per cent as investors took well to the latest bumper earnings release coming from Facebook HQ.

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