Facebook has indeed been enjoying a formidable year, characterized by a stellar second quarter performance that’s turned many heads in the financial world. The company’s Q2 earnings have delivered impressive growth in key arenas from user base to revenue to earning per share (EPS), consistently surpassing the market’s anticipation. Interestingly, Facebook’s stock has seen a remarkable surge, credited largely to a financial strategy that kept expenses within budget.
The company’s results showcase an impressive profit upswing, primarily driven by mobile video ads – an area that’s witnessed tremendous upturn, fostering company-wide growth that outshines that of its rival, Google.
In a recent conference call, Facebook’s management provided insight into how they managed to curtail expenses that were initially forecasted to increase anywhere between 40 to 50 percent. Facebook defied these projections by clocking in an expense contraction between 40 to 45 percent. This feat was accomplished alongside a 4% rise in stock records.
A glance at key metrics for the second quarter divulges the full story:
• EPS – $1.32, beating an expected $1.13, as per Thomson Reuters
• Revenue – $9.32 billion, outperforming a predicted $9.2 billion, according to Thomson Reuters
• Mobile ad revenue – a whopping $8 billion compared to an anticipated $7.68 billion, according to StreetAccount
• Monthly Users (MAUs) – Soaring high at 2.01 billion against a forecasted 1.98 billion, according to StreetAccount
• Capital Expenditures – A controlled $1.44 billion, substantially lower than the projection of $1.73 billion, quoted by StreetAccount
A closer look at Facebook’s strategies reveals relentless progress. The company’s robust workforce, currently 20,658 people strong, reflects a remarkable 43 percent expansion from the previous year. According to CFO David Werner, in a conference call with analysts, the numbers of ads prominently displayed on the site have increased by a resilient 19 percent. Furthermore, the average ad price also witnessed a similar surge. Remarkably, capital expenditures were confined to $1.44 billion, a noteworthy 44 percent lower than expected.
Facebook’s Q2 revenue growth rate was twice as robust as its rival Google’s, according to the Alphabet unit’s Q2 earnings report. The mobile ad segment charted impressive growth, with an uptick of 19 percent. In response, Facebook is planning to double its workforce and construct more data centers to manage the bourgeoning traffic, particularly as [Facebook prepares to penetrate the video streaming business](http://techbooky.com/facebook-to-get-original-content/) with its own line-up of original shows.
Spearheading Facebook’s revenue engine, mobile ads alone have spurred an impressive $8 billion income in Q2, a number far beyond initial estimations, and accounting for nearly half of total revenue. In a bid to position itself among the top five video content platforms, Facebook plans to augment its portfolio with a broader range of ad videos and display ads across all app versions, aiming to reach a larger consumer base and provide them with tailored and up-to-date content.