Facebook reported a far better-than-expected 51.7 per cent jump in revenue for the final quarter of 2015 as new advertising formats and an improved mobile app drove a sharp rise in advertising sales, sending its shares soaring in after-hours trading.
The company’s total revenue rose to $5.84 billion from $3.85 billion a year earlier, with ad revenue increasing 56.8 per cent to $5.64 billion in the Christmas shopping period.
Facebook, whose shares were up 7.5 per cent in extended trading yesterday, said mobile ads accounted for 80 per cent of total ad revenue in the quarter, compared with about 78 per cent in the third quarter and 69 per cent a year earlier.
“It’s much stronger ad growth than we were expecting,” said Ken Sena, an analyst at Evercore ISI.
“It signifies the importance of what they’re providing to advertisers,” he said. “They’re providing a very efficient method of distribution for them, they’re making big investments and evidenced by their quarterly performance it seems to be working.”
The company, which has the world’s most popular smartphone app, has also been benefiting from a surge in video views that has attracted advertising dollars.
Facebook said it had 1.59 billion monthly active users as of December 31st, up 14 per cent from the end of 2014.
Of those, 1.44 billion used the service on mobile devices, an increase of 21 per cent.
Analysts had expected the company to report 1.58 billion monthly active users, with 1.43 billion accessing the service through smartphones and tablets, according to market research firm FactSet StreetAccount.
Excluding items, the company earned 79 cents per share. Analysts on average had expected earnings of 68 cents per share and revenue of $5.37 billion, according to Thomson Reuters.
Virtual reality
“It’s phenomenal that they’re accelerating to that level of growth,” said Rob Sanderson, an analyst at MKM Partners. “I don’t think there’s going to be too many people crying for them to start monetising other properties anytime soon because the core business is so strong.”
The company has also begun monetising some of its other units, such as photo-sharing app Instagram, which surpassed 400 million users last year and began selling ads in September.Facebook has also begun taking orders for a consumer version of the Oculus Rift, a head-mounted virtual reality unit. – (Reuters)
