Facebook has reported a 76.6 per cent surge in quarterly profit, fuelled by robust growth in its mobile ad business.
Following its first-quarter earnings report, the company said it expects revenue growth to be down “meaningfully” after it stops increasing the frequency of marketing spots in the news feed later this year to avoid driving away users. Facebook shares fell as much as 4.2 per cent as that message overshadowed first-quarter sales. Facebook said about 1.94 billion people were using its service monthly as of March 31, up 17 per cent from a year earlier.
Analysts on average had expected monthly active users of 1.91 billion, according to financial data and the analytics firm FactSet.
Mobile ad revenue accounted for about 85 per cent of the company’s total advertising revenue of US$7.86 billion in the first quarter ended March 31, compared with about 82 per cent a year earlier.
Analysts on average had expected total ad revenue of $7.68bn, according to FactSet.
The social media juggernaut is expected to generate $31.94bn in mobile ad revenue globally in 2017, up 42.1 per cent from a year earlier, according to the research firm eMarketer.
That would give Facebook a 22.6 per cent share of the worldwide mobile ad market, with arch-rival Google projected to be the leader with a 35.1 per cent share, according to eMarketer.
Facebook has been updating its offerings and launching new features to keep users hooked.
The company said it would add 3,000 people over the next year to monitor reports of inappropriate material on its network and removing videos such as murders and suicides.
The move comes after videos of a fatal shooting in Cleveland and of a father in Thailand killing his daughter on Facebook Live were uploaded on the network, drawing widespread criticism.
Net income attributable to Facebook shareholders rose to $3.06bn, or $1.04 per share, in the first quarter from $1.73bn, or 60 cents per share, a year earlier.
Total revenue rose to $8.03bn from $5.38bn.
Facebook said it would no longer report non-GAAP expenses, income, tax rate, and earnings per share.
It is also stepping up efforts to combat fake news, which emerged as a major issue in last year’s US presidential election.
Apart from the core Facebook network, which contributes a lion’s share to the overall revenue, the company’s photo-sharing app Instagram has started adding to revenues although the company does not provide a figure. WhatsApp, which Facebook purchased for around $20bn, has not started making money yet.
It will take time for the company to prove that other bets, such as its heavy investment in video and its apps including Messenger can start contributing significantly to revenue in future quarters.
“A great quarter, but what comes next?” said Rob Sanderson, an analyst at MKM Partners. “We’re just kind of in this wait-and-see mode in terms of the impact on the business. We don’t know how much ad load has driven growth.”
Facebook is more focused on improving the quality of ads and targeting the messages to make them more valuable, rather than their quantity, said the chief operating officer Sheryl Sandberg.
“We carefully track the impact of ads on the user experience,” she said. Ad load will not be a significant contributor to revenue even after this year, the company said.
* Agencies
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