But shares of the company tumbled 5.7% to $119.94 after hours as the company signaled that its revenue growth could soon slow. The company said it sees ad revenue growth slowing “meaningfully” in mid-2017 as it will reduce its so-called “ad load,” or the number of ads it shows in a user’s feed.
Facebook is known for its rapid growth, having boosted its revenue by at least 35% year over year every quarter for the past four years, according to FactSet data.
Net income rose to $2.38 billion from $896 million a year earlier. Excluding certain expenses, Facebook reported earnings per share of $1.09, up from 57 cents a year earlier and trumping analysts’ expectations of 97 cents a share, according to Thomson Reuters data.
Revenue was $7.01 billion in the third quarter, up 56% from $4.5 billion a year earlier, topping expectations of $6.92 billion. The results mark the sixth straight quarter that Facebook has surpassed analysts expectations for both earnings and revenue.
Mobile accounted for about 84% of the company’s ad revenue in the third quarter, up from about 78% a year earlier.
Facebook and its rival Google, part of Alphabet Inc., account for the lion’s share of growth in digital advertising. Mobile accounts for nearly half of all the advertising purchased online in the first half of 2016, according to the Interactive Advertising Bureau, and mobile ads recorded the fastest growth of any category compared to the first six months of 2015.
Facebook brought its total monthly active users to 1.79 billion as of the end of the quarter, up 16% from a year earlier.
In July, Facebook executives said they expect growth to slow in the third and fourth quarters, as the company laps the second half of 2015, when revenue growth began to accelerate. But they also said they were doubling down on video, which Facebook expects will drive growth in years to come.
Chief Executive Mark Zuckerberg said then that Facebook would evolve into a “video-first” company by drawing from the same playbook that brought them success on mobile phones. Executives predict that within five years, most of what people consume online will be video.
For Facebook, more video means a better chance to seize television ad dollars—a roughly $70 billion market in the U.S. alone. The social network is also pouring money into its Facebook Live product, which analysts say will allow Facebook to boost the amount of original content shared by users on the platform.
One potential obstacle to the video push is trust. In September, Facebook apologized for overstating how much time its users spent watching video on Facebook. Advertisers are unlikely to spend less on Facebook, analysts say, but they may push for more rigorous and independent ways to measure of ad performance.
Video isn’t the only source of growth for Facebook. It is also taking steps to eventually monetize what Mr. Zuckerberg has called its “family of apps” including the two messaging apps WhatsApp and Messenger as well as the photo-sharing app Instagram. Instagram’s advertising push seems to be going strong as well, analysts say, and Credit Suisse analysts estimate it could generate revenue of $3.2 billion this year from its more than 500,000 advertisers.
For the complete article please visit the
Wall Street Journal
ABOUT
Dynamic Wealth Research was founded on the principle the world is changing at an ever-increasing pace. The greatest profit opportunities an investor will ever find are from massive, sweeping changes. Dynamic Wealth Research analyzes and closely follows these changes, keeps its readers on the leading edge of them, and shows you how to be best positioned these anxious, interesting, and ultimately profitable times.
