TECH
07/27/2016 05:18 pm ET

Facebook Earnings Crush, Stock Skyrockets

Facebook hit 1.71 billion users and record high share price.
KAY NIETFELD via Getty Images

By Yasmeen Abutaleb and Rishika Sadam

July 27 (Reuters) - Facebook Inc’s quarterly profit and revenue blew past Wall Street estimates on Wednesday, sending its shares to a record high, as the social media company’s popular mobile app and push into video attracted new advertisers and encouraged existing ones to spend more.

Facebook shares rose 6.5 percent in after-hours trading to $131.40, their highest since the company went public in 2012.

Mobile advertising revenue accounted for 84 percent of the company’s total advertising revenue, compared with 76 percent a year earlier.

Total advertising revenue surged 63 percent to $6.24 billion, beating the average analyst estimate of $5.80 billion, according to market research firm FactSet StreetAccount.

The company also saw strong growth in monthly active users, now boasting 1.71 billion as of June 30, up from 1.49 billion a year earlier. David Wehner, Facebook’s chief financial officer, pointed to Asia-Pacific, especially India, as one of the most promising areas for continued user growth.

Asia-Pacific “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,” Wehner said in an interview with Reuters.

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.

The company is also courting advertisers to experiment with Facebook Live, its recently launched live video feature.

Facebook still has several untapped areas for revenue opportunities, including its WhatsApp and Messenger apps, both of which have more than 1 billion users. But Wehner said the company does not plan to monetize them any time soon, and that it is instead focused on building interactions between businesses and users on the apps.

Facebook also owns picture-sharing app Instagram, which recently announced it has more than 500 million users. Facebook has yet to say how much money Instagram makes, but research firm eMarketer predicts it will make $1.5 billion in revenue this year.

Excluding items, Facebook earned 97 cents per share for the second quarter ended June 30. Analysts on average had expected a profit of 82 cents per share, according to Thomson Reuters I/B/E/S.

Net income attributable to Facebook’s stockholders rose to $2.05 billion, or 71 cents per share, compared with $715 million, or 25 cents per share, a year earlier.

Total revenue rose 59.2 percent to $6.44 billion, ahead of analysts’ average estimate of $6.02 billion.

(Reporting by Rishika Sadam in Bengaluru; Editing by Saumyadeb Chakrabarty and Bill Rigby)

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