On Wednesday, Facebook Inc reported that almost 1.5bn people used the platform at least once a month, making it the most used technology products globally. Its usage is even more than the Microsoft’s Windows OS, says a report from CNBC.
Why Facebook in winning, and Twitter losing
Facebook continues to grow even at a time when rival Twitter is struggling to grow its user base. On Tuesday, the micro-blogging firm interim CEO Jack Dorsey explained that the user growth is slowing as people know little of the relevance of Twitter.
In contrast, Facebook’s mission is known and acceptable to all. During the earnings call, Facebook CEO Mark Zuckerberg credited an easy to understand mission and features supporting the mission for the success of the firm. Mark told investors that the platform has been designed to make people stay in touch with the friends and family, which is “very fundamental.”
The support that Facebook gets from users and investors was clearly visible in the 2Q numbers. The firm was easily surpassed the Wall Street estimates for both revenue and the profits. For the quarter, the firm reported a revenue of $4.04 billion, up 39% from $2.91 billion a year ago.
What’s interesting to note is, the firm uses its massive data base, to come up with new features to add more users. Primarily, Facebook capitalizes its data by selling targeted ads.
For the 2Q, ad sales for the firm came in at $3.8bn, up 43% from last year. The numbers were even better for the social network’s mobile ad business, which saw a rise of 62% in revenue to $2.9bn. What makes it even more impressive is the fact that three years ago the mobile contribution was almost zero.
A worry for investors
Despite the overall good report, on one metric Facebook spurred a worry among the analysts. Expenses for the social network jumped 82% from the same quarter a year ago.
This lead to a fall in the net income to $719m or 25 cents a share versus $791m, or 30 cents a share, a year ago. Excluding some of the expenses, the firm said it earned 50 cents a share while analysts expected adjusted earnings of 47 cents.
Earlier this year, Facebook did warn the investors that it expects the costs and expenses to rise sharply owing to its focus on long-term projects including virtual reality and free internet. In addition, the firm is also investing heavily in new data centers and hiring top talent.
S&P Capital IQ analyst Scott Kessler noted that though investors are worried over the “runaway, undisciplined, expenses and ultimately, unsuccessful expenses,” but states that Facebook is providing proofs with the “growth numbers and that is what ultimately people want to see.”
In after-hours trading on Wednesday, Facebook shares were down 2.58% at $94.49.