Facebook Rides Mobile Ads to 52 Percent Revenue Surge

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Facebook Rides Mobile Ads to 52 Percent Revenue Surge

Q1 net income was $1.51 billion, nearly triple that of the $512 million it profited in Q1 last year.

Facebook continues its winning ways, reporting a whopping 52 percent surge in revenue in its Q1 2016 earnings report to the U.S. Securities and Exchange Commission April 27.The bottom-line numbers for the social network spoke for themselves: revenue of $5.38 billion, up 52 percent over $3.54 billion a year ago; and net income of $1.51 billion, nearly tripling the $512 million it profited last year.Shares of Facebook stock, which have risen 33 percent during the past year, spiked up 9.5 percent to $119.28 in after-hours trading following the earnings release.The results were in stark comparison to those of fellow Silicon Valley superstar companies such as Apple, which reported its first quarterly drop in revenue in 13 years; Yahoo, which lost $99 million last quarter; Twitter, which missed first-quarter revenue expectations; and Google parent Alphabet Inc., which also missed analysts’ projections.

Facebook, which now has 1.65 billion monthly users, continues to ride the strength of its mobile ad sales—which it started selling in earnest in 2012—and the rising popularity of its video ads to the new profitability. The rapidly expanding development of its Messenger platform to connect users with businesses also is gaining traction and is expected to start contributing to the bottom line soon.

Video ads are selling as advertisers channel funds from print and television budgets. Video ads on Facebook cost about $4 per 1,000 views during the first quarter, up from $3.44 in 2015 and higher than the $3.14 average across Facebook, according to marketing technology company Kenshoo.The company also announced it is proposing to create a new class of nonvoting capital stock, known as the Class C capital stock. The proposal is designed to create a capital structure that will, among other things, maintain 31-year-old CEO and co-founder Mark Zuckerberg’s leadership role at the company for years to come, according to the company.

If the Class C proposal is OK’d by shareholders, the company said it would issue two shares of Class C capital stock as a one-time dividend for each share of Class A and Class B stock.Facebook’s success isn’t just attributable to the social network. In fact, analysts were extremely impressed with the company’s other platforms. In particular, they were pleased to see Facebook is starting to make money from its 410 million Instagram users, and argued it could help the company generate an additional $4 billion to $5 billion in the next two years.WhatsApp and Facebook Messenger also are growing rapidly, which analysts say will only add to the revenue the company generates.

Source: eWeek